*1 ACT RAIL REORGANIZATION REGIONAL CASES* 16, 1974
Argued December October 1974 Decided 74-165, al., *No. Blanchette et Property Trustees Penn Transportation Central Co. v. Corp. Connecticut General Insurance al.; 74-166, et Smith, No. Property Trustee York, New New Haven & Railroad Co. al.; v. United 74-167, States et No. Hartford Railway United States Assn. v. Corp. Connecticut General Insurance al.; et 74-168, No. United States et al. v. Connecticut General Corp. al., Insurance et on appeal from the United States District Court for the Eastern Pennsylvania. District of *4 BreNNAN, J., opinion Court, delivered the in which Burger, J., C. and White, Marshall, BlackmuN, Powell, and Rehnquist, JJ., joined. Douglas, J., dissenting opinion, post, p. filed a 161. J., dissenting statement, post, filed a p. 161. Stewart,
Solicitor General Bork argued cause for the United States et al. With him on the briefs Assistant were Attorney Hills, Jones, General Keith A. and Jerome E. Lloyd N. Cutler argued the cause for the Sharfman. Railway United States Assn. With on the briefs him Perlik, William R. Lake, were William T. Jordan Jay Hillman. Horsky Charles argued A. the cause for al., et Blanchette Trustees of the property of Penn Cen tral Transportation Co. With him on the briefs were Clagett Brice M. Paul R. Duke. A. Louis Craco argued cause for Connecticut General Insurance Corp. him et al. on With were Frederic L. briefs
Ballard, Brown, Bryan. Walter H. Thomas L. Jr., and Berger David argued cause and briefs for Penn filed Joseph Auerbach Central Co. cause for argued the Smith, property Trustee of the New Haven York, New and Hartford Railroad Co. With him on briefs were Morse, Raker, Wm. Moore, James Morris Charles W. and Jr. Brockman Adams filed a brief argued cause and amici curiae Representatives certain United States as reversal.† urging opinion delivered the of the
Mr. Justice Brennan Court. appeals
These from cross-appeal direct and the are judgment three-judge District for the Eastern Pennsylvania District of Rail Regional declared the Reorganization (Rail Act of 1973 Act), 87 Stat. seq. (1970 701 et S. C. Supp. Ill), U. unconstitu- ed., part in enjoined tional and F. its enforcement.1 by Packet, Attorney of amici †Briefs curiae were filed Israel Gen eral, MacDougall, Special Attorney General, and Gordon P. Assistant Pennsylvania; by for the Commonwealth of F. Maxwell for David Reading Co.; by Trustees of and John F. for the Donelan National League. Industrial Traffic judgment
1The was entered in cases. One three consolidated brought action was in the District Court for the Eastern District of Pennsylvania by Corp. Connecticut General Insurance and others against States, Railway the United United States Association (USRA), Treasury Transportation and the and Secretaries of the Interstate Commerce in their ca the Chairman of Commission incorporators pacities A second action directors of USRA. brought for the was the District Court District of Columbia Co., Penn Central Penn Central a creditor and sole stockholder of (Penn Central), reorganization Transportation Co. now Act, against Bankruptcy the same defendants named 77 of the brought A third action was in the District in the first action. Smith, Trustee District of Columbia Richard J. Court for the York, the New New Haven & Hartford Rail property against States, USRA, (New Trustee) Haven United road Co. *6 108 (1974). jurisdiction, post,
Supp. probable We noted p. 801. reverse. We
I
Introduction A rail transportation seriously crisis threatening national welfare precipitated eight major was when rail- roads region northeast and midwest of the coun- try reorganization entered proceedings under 77§ Act, 11 Bankruptcy U. § 205.3 After C. interim meas- Secretary Transportation. and the of Three-judge courts were con- but, vened in by each suit parties, consent of the the second and third were actions transferred to the Eastern District and consoli- court; disposition dated for three-judge before the convened in that action. The of Trustees Penn Central intervened. appeals
Three direct cross-appeal and one from the District judgment Court’s were consolidated for decision in this Court. No. appeal 74r-165is the Central; of Penn Trustees 76-167 No. appeal USRA; appeal No. 74-168 is the of the United States; and No. 74-166 cross-appeal is the of the New Haven Trustee. 2The Rail Act “Region” defines as "States Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Island, Rhode York, New Jersey, New Pennsylvania, Delaware, Maryland, Virginia, Virginia, Ohio, Indiana, West Michigan, Illinois; and District of Columbia; portions contiguous those States in which are properties located rail owned operated doing railroads business primarily in jurisdictions (as aforementioned determined by order).” [Interstate (13), Commission Commerce] § (13) (1970 U. S. C. 702 ed., III)'’. Supp. parte Ex ICC Order No. 293, approved January 14, 1974, Louisville, delineated areas near ICy.; Louis, Mo.; St. Manitowoc, Wis., Kewaunee and in Region. cluded in Reg. 39 Fed. Central, In addition Penn (In Reading railroads are the re Reading Co., Bky. 71-828, Pa.), No. (In ED Erie Lackawanna re Co., Erie B72-2838, Ohio), Lackawanna R. No. ND Central of New (In Jersey re Central R. Jersey, Co. New B401-67, J.), No. N. Lehigh Valley (In Lehigh Valley Co., Bky. re R. 70-432, No. ED Pa.), (In Boston & Maine Corp., re Boston & Maine Bky. No. 70-250-M, Mass.), (In Ann Ann Co., Arbor re Arbor R. Bky. No. insufficient,4 Congress to be concluded that proved
ures required reorganization solution of the crisis the rail- stripped facilities, single, of excess into a viable roads, operated by for-profit corporation. system private, system such a 77 rail Since cannot created under reorganization law, significant financing and since federal be necessary plan make such workable, would Con- gress supplemented with the Act, § 77 Rail which be- *7 January 2, came effective on 1974. The salient features of the Rail Act are: Reorganization
1. reorganiza of each railroad in 77§ must proceed pursuant tion Act the Rail unless the district court having jurisdiction over reorganization its (a) finds, days within 120 2, 1974, after January “that reorganizable the railroad is on an income basis within a reasonable time under section [77] and that public interest would be served by reorganization better such a 74-90833, Mich.), Lehigh ED (In Lehigh and the & Hudson River re Co., 72-B-419, SDNY). & Hudson River R. No. following lessors of leased lines of Penn Central also filed petitions in the District Court for the Eastern District of
§77 Pennsylvania Bky. in Jersey No. 70-347: United New Railroad & Co.; Co.; Beech Creek Cleveland, Cincinnati, Canal Railroad Chi- cago Railway Co.; St. Pittsburgh & Louis Cleveland & Railroad Co.; Connecting Co.; Railway Co.; Delaware Railroad Erie & Pittsburgh Co.; Michigan Co.; Railroad Central Railroad Northern Railway Co.; Co.; Philadelphia, Central Penndel Baltimore & Washington Co.; Philadelphia Co.; Railroad & Railroad Trenton Pittsburgh, Youngstown Railway Co.; Pittsburgh, Ashtabula & Fort Wayne Chicago Co.; Railway & and Union of Railroad Co. Baltimore. 4 included Emergency These Rail of Services 84 Stat. seq., 1975, 45 U. S. C. 661 which Secretary et authorized the § guarantee up Transportation $125 million in certificates issued reorganization by found, alia, if trustees railroads he inter that a threat imminent there was cessation of essential rail services and only practicable meeting expenses necessary means of guaranteed such issuance continue services was the of such certificates. 110 5 (b) chapter,” a this reorganization
than within this days January 2, 180 after “finds that chapter fair provide process does not which would be equitable reorganiza to the estate of the railroad (1970 tion . . (b), (b) ed., . 45 U. C. 717 § § Supp. III).6 Appeals (b) from 207 orders § be taken days entry Special within 10 to a Court con (1970 stituted under 209 (b), (b) 45 U. S. C. Supp. Ill), and must be decided ed., days Court within 80 appeal after is taken. Sec tion (b) expressly provides shall “[t]here no review of special the decision of court.” reorganization The Erie Lackawanna and Boston Maine courts & each reorganizable determined that its railroad is on an income basis time; within a reorganization reasonable those railroads will not proceed Co.,-F. under the Rail Act. In re Erie Lackawanna R. Supp.- (ND 1974); Corp., Ohio In re Boston Maine & 378 F.
Supp. (Mass. 1974). reorganization Three courts found that the Rail Act does provide process equitable is fair and to the estates jurisdiction. Co., railroads under their In re Penn Central Trans. *8 (ED 382 Supp. 1974); Lehigh Valley F. Co., 856 Pa. In re R. 382 (ED Supp. 1974); F. (Sec 854 In re Penn Pa. Central Trans. Co. ondary Debtors), (ED Supp. 382 F. In R. 1974); 821 Pa. re Central - Jersey, (NJ Lehigh Co. Supp. 1974); New -F. In re & Co., (SDNY 1974). Hudson Supp. River R. 377 F. Special 475 The (b), 7, infra, 30, established under see n. September on §209 1974, reorganization reversed the orders in those cases and directed Act, Supp. Rail 384 F. 895. reorganization
Two other pro- courts held that the Rail Act does equitable process vide a fair and reorganization ordered that proceed Reading Co., In under the Rail Act. re Supp. 378 F. - — (ED 1974); Co., 481 In re Ann F.'Supp. Pa. Arbor R. (ED 1974). Mich. 7 (b) in provides pertinent part: 209 Section n '‘Within 30 days 2, January 1974, after shall [USRA] judicial panel application litigation make on multi-district by 1407 of authorized section Title 28 for the consolidation
111 Railway Appellant 2. United States Association corpo as a (USRA) is established new Government (a) (1970 ed., Supp. C. 711 (a), § § ration. 201 45 U. S. III). prepare System must a “Final Plan” USRA in restructuring reorganization the railroads into “financially system.” self-sustaining rail service (a)(1) (1970 Supp. III). C. (a)(1), §716 U. S. ed., 714- 712, See S. C. 202, 204-206, §§ §§ U. (1970 ed., Supp. III). System The Final Plan must provide by of designated properties for transfer rail reorganization private state-incorpo railroads in to a (Con Corporation rated Consolidated Rail corporation, rail), (a), (1970 Supp. 45 U. (a) ed., §301 §741 S. C. in return for Ill), plus up $500 securities of Conrail, obligations by million of USRA guaranteed United States, and “the other benefits to such railroad accruing by transfer.” §206 reason such 45 U. C. (d)(1), (1970 (d)(1) ed., Supp. also §210, §716 see III); (1970 Supp. C. 720 III).8 U. S. ed., single, three-judge in a district court of States of the United judicial proceedings respect system all with final to the by plan. court proceedings special . . Such shall be conducted . composed judges which shall be three Federal who shall be selected panel special .... The court authorized to exercise any judicial powers judge respect in of a district with district proceedings powers reorganiza- such and such shall include those of special power tion The court have to order court. shall leased, conveyance properties operated, of rail of railroads or con- reorganization region....” trolled a railroad Litigation Panel on Multidistrict selected Circuit Judicial Friendly, Judge McGowan, Judge Henry J. Circuit Carl and District compose Judge Court. Roszel C. Thomsen (c) designation provides as follows for the rail Section System Plan: for the Final properties *9 “ (c) Designations. designate— system plan shall
“The final reorganization in in properties of railroads “(1) rail which to Plan System Final proposed must submit a 3. USRA January 1974, §§207 after days within (d), 717 (c), §§C. (a), 45 U. S. (d), (c), by any railroad leased, or controlled operated, region or of railroads reorganization region— in the in "(A) [Conrail]; be to shall transferred operating “(B) profitable a railroad shall be offered for to sale railroad; and, operated by such region accepted, if
in the such offer is desig- designate shall be made to plan shall what additions such (A) paragraph in the event subparagraph nation under of this profitable offer; to accept railroad fails such
“(C) leased, acquired purchased, otherwise from shall be or [Con- Passenger ; by Corporation . . . the National Railroad rail] “(D) may by or purchased from a State be or leased [Conrail] regional authority to the needs transportation a local or meet service; intercity passenger commuter and and rail “(E) required operated [Conrail], a by if not otherwise to be government entity, person, or a are for use for responsible suitable public purposes, transpor- including highways, other other forms of tation, conservation, transmission, energy health care education or facilities, ; or .. . recreation and
“(2) properties which in the profitable operating rail railroads region may be offered for or to profitable sale to other rail- [Conrail] operating subject (4) in region paragraphs (3) roads and (d) of this subsection section.” (d) provides
Section 206 respecting as follows transfers to Conrail: “(d) Transfers. conveyances pursuant
“All transfers system plan or final subject be made in with, to, following shall accordance principles: “(1) properties All rail by profit- transferred [Conrail] railroad, by able by any trustees reorganization, of a railroad leased, operated, railroad reorganiza- or controlled railroad region,
tion in the shall be transferred in exchange for stock and other (including obligations securities of [USRA]) [Conrail] and the other accruing benefits to such railroad reason of such transfer.” (b), 213,
Sections 210 provide respects federal funds as follows:
“(b) obligations! Maximum authority.
“Except provided as otherwise in the last sentence of this subsec- *10 (1970 ed., by July 26, 1976.9
(a) Supp. Ill), is, of if House Con “effective” neither The Plan becomes days session disapproves it within 60 continuous gress tion, obligations aggregate issued of of amount [USRA] outstanding ex- which be at one time shall not this section to $1,500,000,000 aggregate which amount issued ceed [Con- $1,000,000,000. aggregate amount of exceed Of the shall not rail] $500,000,- obligations by [USRA], not than issued to less [Conrail] solely and 000 shall be for the rehabilitation modernization available by chapter properties acquired rail under this and not [Conrail] by (c)(1)(C) this disposed pursuant to section [Conrail] Any title. subsection modification to the limitations set forth this joint- Congress.” by adopted by shall be made resolution (1970 ed., III). Supp. 45 U. S. C. § “(a) Emergency assistance. authorized, implementation Secretary pending
“The reorganiza- system plan, pay railroads in final to the trustees of to es- necessary provision of the continued such sums as are tion payments by Such transportation such railroads. sential services Secretary upon reasonable terms such shall be made establishes, recipients must Secretary except that conditions as that in no than at a level less agree provide to maintain and service January 2,1974. effect on “ (b) appropriations. Authorization for Secretary for to the appropriated to are be “There authorized necessary, exceed as are carrying this such sums out section 213, 45 C. U. S. expended.” $85,000,000,to available until remain (1970 III). ed., Supp. 723§
“(a) Secretary Transportation], [of Secretary for to the appropriated
“There are authorized be exercising functions other preparing purposes reports necessary, are chapter such sums as performed this him under expended. until remain available $12,500,000, not to exceed “(b) Office. Com- to the appropriated to be [Interstate “There are authorized carrying its func- out Officein Commission for use
merce] C. §§ (a), 45 U. S. (4), 208 §§ 102 after submission. required III).10 USRA Supp. (1970 (4), (a) ed., effective days its after Plan within 90 to transmit necessary, not to exceed are chapter such under this sums tions *11 expended. until . . . $5,000,000, remain available to “(c) Association. purposes to be to appropriated
“There are authorized [USRA] chapter such expenses under this carrying its administrative of out $26,000,000, necessary, remain available are not to to sums as exceed III). (1970 ed., Supp. expended.” §214, C. 45 S. until U. §724 ' conveyed properties upon rail are “Prior to which the date Secretary, approval with chapter, this to under [Conrail] agreements railroads [USRA], into with authorized to enter of leased, region (or operated, or reorganization railroads in in by acquisition, reorganization) in main- railroads for the controlled tenance, equipment neces- improvement or of facilities and railroad sary system plan. improve in property to will be the final Agreements specifically pursuant entered into section shall this identify quality pursuant made type improvements and to be agreements. (b) title, Notwithstanding such 720 of this section (a) obligations 720 of this title in shall issue section under [USRA] an agreements require amount sufficient to and finance such shall obligations. However, to assume such [Conrail] [USRA] not issue obligations under in an in aggregate this section amount $150,000,000. (1970 .” §215, ed., excess of . . 45 U. C. §725 III). Supp. 9 period days The provided (c) of 450 207 was extended § days by 93-488, L. Pub. 88 Stat. effective Oct. 1974. 10Concerning congressional System Plan, of the review Final 208§ provides:
“(a) General. system “The Board of Directors of shall deliver the final [USRA] adopted
plan Congress to both Houses of and to'the [USRA] Committee Foreign on Interstate and Commerce of the House of Representatives and the Committee on Commerce of the Senate. system plan The final approved shall be deemed the end at period days first 60 calendar of continuous session of after such Representa- date of transmittal unless either the House of which, Special (b), §
date to the Court jurisdiction all given “proceedings exclusive with respect system plan.” (b) final 719§ U. S. C. (1970 Supp. III). Special “within 10 Court ed., . . of” days deposit after . Conrail securities and USRA obligations “shall. .. order the trustee trustees each in to convey railroad forthwith” reorganization ... “all title, properties Conrail and in right, interest the rail in reorganization such railroad . . .” in the designated System (b), Final Plan. (b) U. S. C. (1970 III). ed., Supp.
4. The next determines whether conveyances rail properties “(A) to Conrail ... are public fair equitable interest are to the reorganization estate of each railroad in accordance with the standard of fairness and equity applicable to the approval plan of a of reorganization . . under . section [77] *12 . . . [or] (B) whether the transfers or conveyances equitable are more fair and than is a required as consti- tutional minimum.” 303 45 (c), § U. (c) § S. C. 743 passes or tives the Senate during resolution period stating such that it system plan. does not favor the final "(b) plan. Revised “If passes either the House or the disap- Senate a resolution of
proval (a) section, under subsection [USRA],- of this with the cooperation Secretary and assistance Office, of the and the shall prepare, determine, adopt and system plan. a revised final Each plan such revised be Congress shall pursuant submitted to for review (a) to subsection this section. “(c) Computation.
“For purposes this section— “(1) continuity only by of session of is broken an die; adjournment sine
“(2) days which is in on either House not session because of adjournment days day an of more than 3 to a are certain excluded computation 60-day period.” in the 45 U. C. 718 § § III). (1970 ed., Supp. 116 Special If finds
(1970 ed., Supp. III). Court that Special fair Court equitable, is not transfer additional, order Conrail must or issuance reallocate, (subject the overall obligations securities and USRA for this $500 million limitation on obligations USRA or against Conrail, or decree purpose), judgment enter a (c)(2). a combination of these remedies. §303 not Special judgment Court is authorized to enter against provides the United States. 303 also Section if the Court decides that the considera- exchanged tion rail properties for the is “more fair and equitable required than is minimum,” as a constitutional adjustments § 303 shall (c)(1)(B), necessary it make so the “constitutional minimum” is not exceeded. § (c) (3). Appeal (c) from 303 determinations is to (d).11 this Court. Although reorganization
5. subject railroads to the Act are free to and dispose abandon service as they wish rail any properties designated for transfer under Plan, System the Final §§ 304 (a)-(c), §§ U. S. C. (d) Section provides:
“(d) Appeal. finding “A pursuant (c) or determination entered to subsection may appealed this section directly be Supreme Court of the United injunction States manner an same order be Provided,
appealed section of Title appeal 28: That such Supreme exclusive and shall filed in Court not more than 5 days finding such after special determination entered Supreme court. The shall appeal dismiss such within 7 *13 days entry appeal after the such an if of it determines that such an appeal would expeditious not be in the interest of an conclusion of the proceedings grant highest priority shall the and determina- any tion appeals of such which it determines not to dismiss.” required We are not to consider validity in case this of the. this attempted congressional regulation of the disposition any Court's of appeal judgment from a entered pursuant (c). subsection
117 (1970 ed., Supp. Ill), until that Plan becomes (a)-(c) “may discontinue service or abandon effective none . . do so line of railroad . . . unless . authorized to regional and unless no affected State or local or [USRA] transportation authority reasonably such ac- opposes 304(f). tion ...”
II
Proceedings in the District Court
questions concerning
Constitutional
the Act are raised
in
by parties
this litigation
with
Penn
interests
(Penn
Transportation
Central
Co.
Central),
largest
eight
of the
in reorganization.12
principal
railroads
The
brought by
major
The suits here were
and
creditors
sole shareholder of Penn
Penn
was
of
product
Central.
Central
merger
Pennsylvania
of the
Railroad with the New
Central
York
Merger Cases,
(1968).
Railroad.
A
Penn-Central
U. S.
merger
condition
promise
was Penn
in the
Central’s
to take
York,
New
New
&
as an
Hartford Railroad
Haven
Co.
operating entity,
promise
and that
was
Haven Inclu
fulfilled. New
sion Cases,
(1970).
The Penn Central dominates the northeast-midwest re- gion. It manufacturing serves of the plants employ- Nation’s 55% country’s ing employees. industrial More than 60% 20% freight all pass cars in the loaded States Penn United over Central’s 20,000 track, miles of over and of Penn traffic Central involves 70% other railroads. Region, Rail Service in the Midwest and Northeast Reg. 5392, (1974); 93-620, Fed. Rep. H. R. No. p. (1973) (hereinafter Rep.). (including H. Since 1973 Penn Central lines) its leased operating accounted for mile- 94% age operating revenues bankrupt six 87% railroads involved under merger the Rail Act. The failed anticipated savings realize reorganiza- and Penn Central entered proceedings years tion merger two approved. after the was Huge operating losses made reorganization inevitable have con- Collapse tinued. Financial Company, of the Penn Central SEC Report Staff The Penn Central in a Trustees Report February 10, 1971, Concerning Reorga- Premises Afor nization, Documentary Joint Submission 1,No. concluded that *14 was that District Court plaintiffs of contention prop- rail taking of respects effects a in two Rail Act compen- just payment Central without of Penn erties They Amendment. Fifth in violation sation, USRA securities and that first, the Conrail contended, would not received other to be obligations and benefits rail equivalent constitutionally required be the This by be transferred. compelled (b) properties § was re- claim “conveyance issue. This taking” is F. by Supp., jected premature. the District Court as taking They contended, second, at 517-518. result from just compensation without will property
their upon discontinuance imposed the severe inhibitions they particular, lines. In service and abandonment of opera- (f) of rail compels claimed that continuation System pending implementation tions Final Plan con- beyond if even erosion of the Penn Central estate This is the period. during stitutional limits occurs this agreed “erosion taking” issue. The District Court (f) required operations extent, to this continued incurred huge operating already and viewed the losses Penn making ripe Central as this contention for deter- mination, saying: persuaded significant possibility are
“[W]e a point exists that of erosion either has been or soon so can be be reached that it said con- that [the plaintiffs tention of interim unconstitu- below] “overriding problem obligation of Penn Central ... found in an perform public company as a service certain areas and under simply certain which profitable conditions lend do not themselves to operations, operator is, only no matter who the or how efficient. possible remedy authority for public here is to lend its to a hand speedy produce losses, elimination of which conditions respond adequate compensation with if it upon insists a continuance of the conditions.” ripe operations loss
tional continued taking *15 Supp., F. at 525. adjudication.” rejected of the argument The District Court United inif the Penn Central Trustees that States, USRA, and uncompensated limit of permissible fact the constitutional ade- plaintiffs should be would have an passed, erosion remedy in the Court of quate at law Claims con- Act, Tucker 28 U. 1491. The C. District precluding strued the Rail Act as a Tucker remedy, stating: persuaded are legislative sup-
“We history ports the conclusion fi- intended that obligations express nancial be limited to terms of the Article I, Act. Section Clause [of provides no money shall be drawn Constitution] from the Treasury of the except United States consequence of an appropriation made law. Sec- (b) tion 213 the Rail and section 214 en- Act], [of titled ‘Authorization for Appropriations’ place an express ceiling expenditures. on Section 210 de- scribes obligational the maximum authority [USRA], and authorization for appropriation is limited to ‘such necessary amounts as are dis- charge obligations arising United States under this section.’ (Emphasis supplied.) Judicial review is delineated with specificity Sections (a) 303 with no mention of the Court of Claims.” F. Supp., at 528-529. The District Court therefore (f) gov- declared erning interim abandonments
“null void as violative of the Fifth Amendment of the United States to the Constitution, extent that it would require operation continued of rail services at a loss in violation of the constitutional rights the owners and creditors of a railroad.” below defendants enjoined consequently It provisions any enforce action to taking “from abandonment, respect to (f) ... with Section been or has which of service cessation, or reduction competent court of be determined may hereafter necessary preservation for the jurisdiction to Constitution.” guaranteed by United States rights relating 303§ declared that Court also District properties pursuant conveyance the final of rail System Final Plan is Amend- Fifth contravening
“null and void as compensation provide . . it fails ment . insofar as *16 pending implementation interim final for erosion System .” of the Final Plan . . . “from cer-
Finally, enjoined the District Court USRA Special pur- System Plan to the Court tifying Final (c).” suant to 383 F. 530. Supp., Section at challenged The Rail Act was in the District Court also 8, as “uniform” requirement I, § within the of Art. cl. 4, Constitution, provides of the which that power shall have the to enact “uniform Laws on sub- ject throughout of Bankruptcies States.” United The District Court as dismissed this contention without except provision merit as to one of 207 (b). § The sec- tion provides if any reorganization determines court 180-day proceedings under 207 (b) § that the Act provide equitable does not a fair and process for the reor- ganization of debtor, the debtor shall reorganized not be pursuant Act, and the reorganization court “shall the reorganization dismiss proceeding.” The District part declared this of 207 (b) “null void, and as I, violative of Article Section Clause ...,”13 and en- 13For infra, reasons stated Part VI opinion, of this have we pass upon no occasion the correctness of this conclusion. taking ac-
joined parties any “all . from or enforcing, . . (b) ... implement, tion to much Section so proceedings for purports require pending dismissal reorganization Bankruptcy Act.” Section Ill The Issues Decision major (1) The dividing parties issues whether are an law in action at the Court of the Tucker Claims under Act, U. S. C. will recover any available to deficiency constitutional the compensa- dimension in provided tion alleged under the Rail Act for either taking” alleged “erosion “conveyance taking,” and (2) if the Tucker Act remedy is whether available, it is an adequate remedy. The United States, USRA, and the Penn Central Trustees contend supple- that if resort to a remedy mental under the Tucker necessary, Act is it is both available adequate. plaintiffs The below con- tend that Rail precludes Act to the Tucker resort and if remedy, it does not, remedy inadequate. Court, speaking through Judge Friendly,
comprehensively both canvassed in a issues, thorough concluded opinion, Rail Act does not bar *17 resort to the necessary Tucker Act remedy and that the remedy adequate. independent Our examination of the brings issues us to the same conclusion, substantially for reasons by Judge the stated Friendly Parts VII of Special VIII-A the Court opinion. 384 F. Supp. (1974).14 938-951 Special opinion Part VIII-B of the Court argu considers the pf the ments of investors smaller But several lines. those investors parties are not the before us. cases opinion of the Court’s Special question Part VIII-C discusses the deny the Court of Claims is free to whether the existence of the uni- on the ruling Court’s disputed is the District Also Clause. Bankruptcy under formity of the Rail Act the operable portions of the currently We hold that the are uniform.
IV
A
Alleged
Taking”
The
“Erosion
speaking
In
opening
States,
its
United
brief, the
all
in-
parties
federal
case
except USRA, argued that the
law,
volved no
a matter of
taking” because,
“erosion
the
eompelled-loss
implementation of
operations pending
System
the
taking
Final
Plan would not constitute
property
against
bankrupt
railroad
claimants
estates.
argument
general
was
rule that
have,
if
public
the railroad “be
granted
taken
an
interest in the
its
use of the railroad it
withdraw
by
grant
discontinuing
kept
the use when that
use can
only
up
at a loss,” Brooks-Scanlon Co.
Railroad
v.
Comm’n
Louisiana, 251 U. S.
also
(1920); see
Bullock v. Florida
rel.
Comm’n,
ex
Railroad
rail
service
Chicago,
P. R.
Bank
v.
R. I. &
nois Nat.
& Trust Co.
v. Denver
RFC
Co.,
see also
(1935);
United States maintained In just good-faith Reply 3-4, its Brief such a effort. position System that the Final it abandoned however, implemented Plan was sure to within reasonable period: unanticipated now
“Difficulties unforeseen could delay implementation in fact final sys- of the final plan. tem For example, could, theory, successively disapprove proposed sys- several final plans. tem Thus, whatever probabilities, parties and this Court have no absolute assurance plan will in be implemented fact within a reasonable time. For that reason, we have deter- mined that a taking property through interim ero- although sion, extremely unlikely, remains a theoret- ical possibility under the Rail Act.
“Accordingly, we believe that an injunction pre- venting denying from applications [USRA] for dis- continuance of service under Section (f) in those might circumstances be appropriate unless, as we contend, a remedy for any otherwise uncompensated taking will be available under the Tucker Act. We are persuaded therefore this Court reach must and decide the 'Tucker Act question’ presented by appeals.” these (Footnote omitted.) We conclude in any event availability of a Tucker remedy if the Rail Act an effects “erosion taking” ripe adjudication. It is true that there has been no definitive determination that erosion of the Penn Central estate has reached unconstitutional dimen- *19 124 un- suffered losses has estate is, that
sions—that in interest public light in even reasonable But reorganization. pending rail service continued that found Court Reorganization Penn Central basis an income on “reorganizable Penn Central is not Bankruptcy 77§ time under within a reasonable 1974). And it was Pa. (ED 842 Supp. 831, Act.” 382 F. Penn Central sus- Court that stipulated in the District through mid-1970 1973 ordinary net losses from tained $851 and aggregating approximately that million, on of the Rail Act following two months enactment railway in net 2, Penn Central had deficits January 1974, income, income, net and income operating income, total charges. fixed It reasonable to available for is therefore compelled operations conclude rail continued implementation pending these conditions of the Final System Plan accelerate erosion of the interests plaintiffs through post-bankruptcy below accrual of claims having priority Thus, over their claims. failure to decide availability of the Tucker Act would raise the distinct possibility plaintiffs those would suffer an “erosion taking” adequate compensation without assurance that provided.15 will ever be Yet there must be at the time of 15 severely pursuant limited funds available and 215 213 §§ emergency plant for pending assistance maintenance im plementation System Final Plan do not assure that ade quate compensation any will be taking.” available for “erosion Sec provides $85 tion 213 emergency million in grants for continued transportation provides essential $150 services while million §215 obligations TJSRA improvement plant. for maintenance adequate Nor is provided by assurance possibility that Conrail provided securities and other benefits can for unconstitutional erosion when Special Court proper determines consideration conveyed for properties rail to Conrail. As the itself found: parties
“The Government . . this court could . [contend] compensate system for unconstitutional erosion in the final "reasonable, adequate provision certain and
taking Nation Cherokee v. Southern compensation.” obtaining Co., Kansas R. Joslin (1890); U. S. see also 641, Mfg. City Providence, Co. v. ; (1923) U. S. Dow, United States v. There- U. S. fore determine if we must the Tucker Act is available.
B *20 Availability Remedy Any Tucker Act of for Taking”
“Erosion Act, provides The Tucker perti- U. S. C. in part: nent
"The of jurisdiction Claims have shall judgment upon render any against claim the United States founded either upon any the Constitution, or Act Congress, any of or regulation of an executive department, upon or express implied or any contract plan, by fixing either a prior valuation to the date date of con veyance specific award, deficiency or a (e)(2)(B), or a judgment against (c)(2)(C). Conrail under The earlier valu §303 ation hardly satisfactory date would permissi method be even if t*3 ble, since would respect this not cure proper erosion with to rail conveyed. ties permissible that were not It would be for the final system plan provide compensation or for to direct for us erosion be made in should the case of railroad some of whose properties conveyed. However, are if, opponents urge, as the inadequate compensation consideration now authorized is as themselves, properties enlarging of the amount be claims that against made it be Supp., would of no avail.” 384 F. at 925-926. “[*] explained by version Act, report Tim House of the it, accompanying provided that value consideration must ‘[t]he equal equitable properties the fair and rail value of the as of the conveyance.’ date Report However, House at 53. Report, Act such contains no limitation and the Conference R.H. Rep. 93-774, Cong., (1973), 93d No. 1st Sess. makes no mention the deletion.” unliqui- liquidated or for United
with the States, in tort.” sounding in cases not damages dated public property for taking upon A founded a claim compensa- just without of the Rail operation use Act would plainly of the Fifth Amendment tion violation “any against claim within the words fall literal upon founded . . the Constitution . . United States . . Rail however, inquired The District whether the Court, affirmatively Act the Tucker Act provided remedy, remedy held that to “read Tucker Act into [Rail] legislation Act” if not “judicial would on a grand, arrogant, Supp., scale.” 383 F. at 529. The wrong inquiry. District Court made the
question expresses whether the Rail an affirma- showing congressional tive permit intent recourse to remedy. a Tucker Act Rather, it is whether has the Rail Act withdrawn grant the Tucker Act jurisdiction to the Court of Claims to hear suit involv- ing the Rail . upon Act “founded . . the Constitution.” For we agree with the Court that
“the true issue is whether there proof is sufficient that prevent intended to such recourse. The Act being admittedly point, [Rail] silent on the the issue becomes whether the scheme [Rail] Act, supplemented by the legislative history, suffi- ciently Congressional evidences a intention with- to draw remedy a that would otherwise exist.” F. 384 at Supp., 939.
Our decisions affirm that this is the correct inquiry. The general rule is that whether or not the United States intended, so there is a taking, “[i]f claim is ‘founded upon the Constitution jurisdiction and within the of the Court of Claims to hear and determine." United States Causby, v. 328 U. 267 (1946). S. the author “[I]f ized action . . . does constitute a taking of property for
127 just compensation be Fifth which there must Amendment, impliedly promised the Government has remedy for pay that and has its compensation afforded Yearsley recovery by a suit the Court of Claims.” v. Co., (1940).16 Ross Construction 309 U. See Kincaid, U. In Hurley Yearsley, also v. S. 95 through Hughes, Mr. Chief Justice Court, speaking went on to hold “it cannot be doubted that remedy compensation to obtain from the Government is as comprehensive requirement the Constitu- tion . . . S., (Emphasis supplied.) U. 22. at
We turn Rail Act inquiry then whether the withdrew the Tucker Act remedy “that would otherwise Supp., exist.” 384 F. argument at 939. The it provisions should be read so rests on Act said the Rail plainly Congress’ to evince no determination federal beyond funds those expressly committed Act were by the paid for the properties. rail The provision first referred provides to is which for impaneling Court and the consoli- dation it of before judicial respect “all proceedings with system to the final plan.” argument sig- attaches nificance to the omission authority in the Special Court to enter judgment against the United States. placed Reliance is also on two of the Act’s funding provisions. Section 210 (b), captioned “Maxi- passage Yearsley As this indicates, from the Government action must be taking private authorized. property “The by an officer of the United public use, States being without authorized, expressly by necessary implication, do so act some Congress, Government,” not act of recovery and hence available in the States, Court of Claims. Hooe v. United *22 (1910). Youngstown U. See also Sheet & Tube Co. v. Sawyer, S.U. These inapposite cases are since the Government actions at by issue here are authorized Rail Act. “aggre- obligational authority,”
mum provides may be . . which gate amount . obligations [USRA] $1,500,000,- outstanding at one not exceed time shall 000 which the to aggregate issued amount [Conrail] “[a]ny shall not exceed $1,000,000,000 and by made modification to . be limitations . . shall [these] joint adopted resolution Section Congress.” explicitly appropriates up Secretary to the $12,500,000 to Transportation, expenses pay “preparing to reports and exercising performed by other functions to him under chapter,” $5,000,000 this appropriates up carry- Interstate Commerce Commission its use ing functions, up out its appropriates $26,000,000 purposes to USRA “for of carrying out its administrative expenses ... But provisions these at equally support infer- least ence that Congress was so convinced huge that the sums provided equal would surely or exceed required con- stitutional minimum that it never upon pos- focused sible need for a in the suit Claims. That this very well have been the ease is evident in a state- ment the House Report:
“The timely implementation of System the Final Plan cannot be obstructed controversy over the payment for the properties. The Committee is of opinion that provisions of this title of the [Rail] Act, and especially provision for deficiency judg- ment payment of obligations of .. [USRA] . are more than adequate guarantee cred- that the itors 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 System Final Plan.” H. Rep. 55.
That inference also finds support in the provision of *23 reduce to (c) (3) that authorizes
§ and bankrupt they estates if “are fairer to payments mini- required than is as a constitutional equitable more provision suggests Congress thought mum.” That possible by the Rail Act compensation made required by the and Constitution, could well exceed that Tucker gave no consideration to withdrawal provided because it was sure Rail Act itself remedy the constitutional minimum compensation. at least Finally, the manner which Congress 601, 45 (1970 ed., Supp. expressly Ill), U. S. C. addressed “Relationship the Rail Act’s other plainly laws” implies that no Congress gave thought to consideration remedy. of withdrawal of Tucker Act Section (a) (2) provides that the inapplicable “antitrust laws are respect any with action taken to formulate imple- system plan ment .”; (b) provides final . . 601§ provisions of the Interstate Commerce Act “[t]he and Bankruptcy inapplicable Act are to transactions chapter necessary this the extent to formulate implement system the final plan pro- whenever a any vision of such Act is inconsistent with this chapter”; (c) provides that, provisions § 601 of section “[t]he (2) (C) of Title 42 Policy Environmental [National Act of shall apply respect with action 1969] authority taken under of this chapter before effective system date of final plan.” Yet despite this clear evidence was necessity aware of the to deal expressly with laws., inconsistent Congress nowhere ad- dresses the Tucker Act question. argued
It that any uncertainty in the scheme text of the Rail Act is cleared up legislative history from the House and the Senate that discloses that Con- gress meant the Rail Act to jurisdiction withdraw the the Court of Claims under the Tucker Act. To the con- trary, history we read the more legislative disclosing no than a Act’s repeatedly emphasized belief that the Rail provisions for compensation for the as- properties rail sured payment of the constitutional This is minimum. *24 plainly import the of the oft-stated view the tax- that payers would not be unduly by pro- burdened the sums vided, g., see, Cong. e. (1973) (remarks Rec. 36354 of Rep. Metcalfe); id., (remarks Rep. at 36359 Conte); and explanation also of Senator Hartke’s the Report id., Conference Senate, 43094-43095, to the at which included the statement:
“If we did nothing while rail continuing to mandate there is the distinct service, possibility in view of prior the action of Congress that a number these people could make against a claim the Government which could be sustained in the Court of Claims.” 17“Mr. providing HARTKE. We are the creditors of this corporation required would be common in take stock new the quasi-government operation: they In words, exchanging other are present security their interest in properties the rail for common stock in the corporation. new “The properties railroad then properties become the new corporation free and clear of liens and encumbrances. In other
words, the being assets are rights transferred being and the are changed. The property nonrailroad will remain in bankruptcy court to be dealt with them. One can talk what is about avail- liquidated if able the railroad is put through wringer, but even then the chances of these getting money creditors their is [sic] relatively slim, country and this cannot afford cessation of rail service while the railroads put through are wringer. what, effect, So in is called the theory ‘cram down’ forces them accept this kind of settlement judges have ruled is If nothing this fair. we did continuing while service, mandate rail there is possi- the distinct bility in prior view of the action of that a number of these people could make against a claim the Government which could be sustained in the Court of Claims.”
As the and we this state- remarked, agree, “not with view that ment context inconsistent was so bill, Senator convinced as amended adequate such conference, compensation pro- contained pre- visions that suit in the Court of Claims could not vail, particularly in view of what he had characterized as a ‘rather slim’ chance of the getting money creditors their through rather than liquidation, meaning that such a claim could not be maintained.” F. at Supp., 941. argument
We do not think that in support of read- ing the Rail Act to withdraw the Tucker remedy aided on colloquy the House side between managers House of the bill, Cong. Rec. 42947 (1973).18 colloquy That does not even concern the with- Speaker, “Mr. KUYKENDALL. Mr. I would like to ask *25 gentleman Washington clarify point, from the one and that is deficiency judgment. matter of the colloquy a lot There was of in original expressed the debate which fears that the Federal court had key Treasury. the to the gentleman give interpretation guarantees
“Will the us his of the keep we have to happening that from in proceedings? the court Speaker, “Mr. ADAMS. Mr. there is a definite limitation on the Any total amount can be that authorized under this bill. amounts go beyond that, shifting way that or the of the spent, in which it is approved by is Congress, signed an act of to be the is joint bill, President. It defined as a in the resolution the and managers, statement of and the it was the of man- clear intent the agers any other amount than stock common was to be the at possible lowest limit meet guarantees. the constitutional “Mr. Speaker, KUYKENDALL. Mr. true, it not I is will ask gentleman (Mr. Adams) Washington from creditors, course, given of protection, are Directors, and of the Board under the officials, control of Government of owner the entire is shares, block stock of 100 million it whatever is? gentleman
“Mr. ADAMS. The
is
correct.
It is controlled
United States,
long
so
as the Secretary determines that there
anis
only
It concerns
jurisdiction.
of Claims
of Court
drawal
powers
and the
against Conrail
deficiency judgment
Special Court.
referred
what
is
upon
put
Finally,
reliance
statements,
in
form
history”
"subsequent
legislative
House
Hearings of the
during Oversight
by Congressmen
on
Aeronautics
Transportation
on
Subcommittee
this Court
filed in
an amicus brief
and on
14,
June
remarks
But post-passage
Congressmen.
on behalf of 36
change
serve to
however
cannot
legislators,
explicit,
Act’s
before
Congress expressed
intent of
legislative
v. Mine Workers
g.,
States
e.
United
passage. See,
America,
statements
Such
"During period it is controlled a board of direc- that tors which consists of officials. Government way
“Mr. KUYKENDALL. There is no the Federal court judgments taxpayers Congress or on assess the this credi- tors; is that correct? gentleman is
“Mr. ADAMS. The correct. they way KUYKENDALL. There is no can assess the “Mr. money? for the gentleman is correct.” “Mr. ADAMS.
you beyond held limit on erosion us the constitutional are it went point opinion at that we that just long, spe- too a it was but that is unreasonable, cific individual case point. at that
“QUESTION: you think, And so the Tucker Act, be would in that available situation?
“MR. repeal ADAMS: Of We did course. Tucker (Emphasis Act.”19 supplied.) In sum, we find history cannot the legislative that supports argument the Rail be con- Act should strued withdraw remedy. the Tucker Act The most that can be said ambiguous is that the Rail Act is on the In question. circumstance, applicable canons of statutory require construction us to conclude that Rail Act is not to be read remedy withdraw the the Tucker Act.
One canon of construction is that repeals by implica disfavored; tion g., are See, e. National Mercantile Bank Langdeau, v. 371 U. 555, S. 565 (1963); United States v. Co., Borden 308 U. S. 198-199 (1939); Arnell v. States, United 384 U. 165-166 Rather, since the Tucker Act and the Rail Act are “capable of co-existence, duty it is the courts, absent a clearly expressed congressional intention to the contrary, to re- Arg. Tr. of Oral 50-51.
At three other during times argument oral Representative Adams implied that the Tucker Act was available for takings resulting from id., (“As the Rail Act. See at 48 asking Justice White was his question, right there a maybe for some sue we hold failure — id, party long, they could”); then (“Now too at 49 far as the Causby Hurley v. Kincaid and the other Tucker concerned, case cases, try we repeal did not the Fifth Amendment cer- tainly jurisdictional statements”); id., at 50 repeal the Tucker Act (“If you decide, however, may be, place there along some line, process, mistake, you lawful then say reach and Tucker Act case will have to party decided when and if some can they merits”). decide that have a case created on the *27 Mancari, S. 417 U. Morton v. as gard each effective.” Act is the later the Rail (1974). Moreover, 535, 551 Special Court: agree with the and we the two statutes wholly or even as not be read “A new statute will exists unless there amending prior one partially provisions between ‘positive repugnancy’ be recon- cannot and those of the old that new . . a sound founda- principle ciled. . This rests on given had serious Presumably tion. broadly based thought statute, to the earlier here holding jurisdiction of the Before Claims. the result of the earlier been consideration has it repealed qualified, is reasonable a court showing on legislature’s language using insist that it has made a considered determination to that Supp., end....” F. at 943.
The other relevant canon of
comes
construction that
into
play
that when
ambiguous,
a statute is
“construc-
go
tion should
in the direction of
policy.”
constitutional
Johnson,
States
United
v.
(1944).
U. S.
There are clearly grave doubts whether
the Rail Act
would be constitutional
if a Tucker
not
remedy
were
available as compensation for any
ero-
unconstitutional
sion
compensated
under the Act
In
case,
itself.
such
as the Special Court observed,
one admissible
“[w]hen
will preserve
construction
a statute from unconstitution-
ality and another will condemn it, the former is favored
even if language, . .
arguably
legislative
.
history
point somewhat
strongly
more
way.”
another
384 F.
Supp., at 944.
In other words our “task is not
destroy
if Act we can, but to construe
if consistent with
it,
will of Congress, so
to comport
with constitutional
limitations.” CSC v. Letter Carriers,
Lynch States, v. United 292 U. (1934), fully sup- *28 re- a situation Lynch presented
ports our conclusion.
that
Court to determine whether
statute
quiring this
be con-
taking was also to
effected an unconstitutional
by an earlier
withdraw a cause of action created
strued to
11, provided
Act of
Economy
1933,48
statute. The
Stat.
17
granting
pertaining
yearly
in
“all laws
§
that
hereby repealed_”
renewable term insurance are
Dis-
by
Appeals for the
trict
affirmed
the Courts of
Courts,
Fifth
the
Cir-
Circuit,
(1933),
F. 2d
and
Seventh
States,
cuit,
(1934),
Wilner v. United
“Fifth. repealing all laws ‘granting or pertaining yearly renewable term insurance,’ Congress intended to take to take intended also right, the contractual it away to take power had since it remedy; away given effect should remedy, statute away purported as it if void insofar extent, even suggestion right. away the contractual to take construction. It is rules of is at war with settled necessarily void part bad in is not true statute legislative A entirety. provision in its within separable from power may be allowed to stand if it is unobjectionable provision the bad. no however But that, itself, appears can it both stand unless standing given legal can be alone, provision *29 unobjec- effect legislature the the that intended provision provisions tionable in to stand case other Kansas, held Dorchy bad should fall. 264 U. S. v. Here, 290. both those essentials are absent. There separate provision is no in 17 dealing with the remedy; and appear Congress it does not wished deny remedy repeal the if the of the con- right tractual was held void under Fifth Amend- the ment.” S.,U. at 586.
Similarly, separate provision is no in Rail “[t]here [the dealing with the Act] and it does remedy; [Tucker Act] not appear the statute or legislative history] [from its deny wished to remedy” if Rail Act should cause an “erosion taking” that would require payment just compensation.
We accordingly hold that the Tucker Act remedy is not barred by the Rail Act but provide is available to just compensation for any taking” “erosion by effected y the Rail Act.
A Alleged The “Conveyance Taking” The District Court declined to decide whether provisions governing procedures for and terms of (the “con- conveyance properties rail to Conrail
final issue) Fifth veyance taking” Amendment, violate the thus entirety.20 rendering the Act invalid Rail its “persuaded pre- District was that these are issues Supp., mature.” 383 F. at 517. challenges final-conveyance
Briefly, pro- to the basically visions assert that Rail Act is an eminent compensation domain statute not in cash and, because largely necessarily but unproved entity, stock an will A taking.21 work an unconstitutional variant argument is if that, reorganization statute, even the Rail would be Act unless the Tucker unconstitutional remedy payment by is now held to assure amount which the value market of stocks and securities awarded of the rail Court is less than the value properties conveyed. goes The New Haven Trustee further; he argues reorganization even if a statute, the Rail Act violates process by substantive due failing equitable assure “fair and equivalent” the rail properties at their “highest valued use.” The best New Haven Trustee also conveyance contends that provisions constitute a taking such as that threatened interim they require operations erosion: of the railroad continue, albeit in a different form, liqui- even if the *30 “highest dation value for and best use” greater than the going value the railroad as a Finally, concern. 20 conveyance The provisions are the heart of the Rail Act. Thus, if it they unconstitutional, were clear that strong were argument might they made are be that from inseverable the re mainder of the Act and that as a whole is void. 21The Reply New Haven Trustee his Brief 45-46 seems to concede any that valuation at market value Conrail stock may be suggests, however, He then might sufficient. it be that reasons, for impossible, legal practical to offer Conrail stock many publicly years. Thus, claims, for way he there bewill no value, ascertain market and he implies that the market value will effectively be zero. contend that parties creditor and the
New Haven Trustee process, due deny procedural conveyance provisions before conveyance final they because mandate the. no because fairness, and
meaningful of its determination consideration provision made for creditor or stockholder voting upon System of or Final Plan. “conveyance parties urge
All of the now that tak- However, because ing” ripe adjudication. issues are for existence ripeness involve, part, at least issues upon con- rely live “Case or we Controversy,”22 cannot parties cessions of the determine whether and must Controversy” ripe issues are in the or decision “Case ripeness Further, questions sense. to the extent that judicial unnecessary involve the from exercise of restraint decision of Court must de- issues,23 constitutional termine whether to exercise that restraint and cannot bound by parties. the wishes of the
The in- holding prematurity District Court’s was statutory fluenced scheme requires several steps decisional before the final conveyance. possi- bility reorganization that the might court determine (b) § 207 the Rail Act process is fair and equitable to the railroad estate, might disapprove the Final System Plan, (a), § 208 or that Special Court would not order conveyance pur- the final suant to § 303 (b), led the District conclude that question the final-conveyance whether provisions are constitutional was “too speculative to warrant antieipa- 22 Aetna Ins. Co. Haworth, v. 227, (1937); 240-242 U. S. Life Maryland Casualty Co. Co., Coal & Oil 270, v. 312 U. S. Pacific (1941); Refugee Joint Anti-Fascist McGrath, Committee v. 123, S. id., (1951); U. 140-141 (Frankfurter, J., at 154—155 concurring). A, Ashwander v. TV (1936) U. S. (Brandeis, 346-347 J., concurring); Ullman, Poe v. 502-503 U. *31 Bank, judicial Peoples
tory Eccles v. determinations.” 426, 432 U. S. (1948).24 But subsequent opinion, District Court’s Penn Central Reorganization Court determined that Rail Act did provide process that would be fair and Co., In equitable re Penn Central Trans. to the estate, (ED Supp. 856 1974). appeal F. Pa. On Special Court 207 (b), that determination has been reversed, although Court has not rendered its judgment, pending our decision of this case. 384 F. Supp., at supra. 955. See n. agree
We parties with the this change in circum stance has substantially posture altered the of the case as 24Judge disagreed majority Fullam with the on ripe below final-conveyance issues, ness some of the Supp., 383 F. at 530-533. Among things, other validity he observed of the final-con veyance provisions was inextricably interwoven with the issues con cerning interim three-judge erosion which the court did address. suggested, supra, 122-124, As at constitutionality requiring operations deficit reorganization railroad a railroad in de pend part upon reorganization; the likelihood of a successful if the provisions conveyance facially for the final unconstitutional, were there be might would little likelihood of reorganization, such and it be necessary permit immediate abandonment for that reason alone. Supp., 383 F. believe, Judge Fullam, at 530-533. We unlike Tucker compensate any Act is available to taking unconstitutional might supra, which arise from interim erosion. See at 125-136. How- ever, his observation about the interrelationship of the tak- “erosion ing” taking” “conveyance pertinent. issues is still If it were entirely reorganization place clear that no could take under the Act conveyance provisions because unconstitutional, might its were it pointless permit continuing erosion of the estate and the inevitable buildup huge of a Tucker Act Thus, claim. we would have to decide portions severely limiting those of the Act whether are abandonments conveyance provisions. severable from Because we find that some final-conveyance require juncture issues resolution at this independent reasons, we need not determine whether we would have anyway completely to confront of them order to determine the validity provisions. of the abandonment *32 issues. final-conveyance the maturity of regards the Dis time of the case at been the may have Whatever reasons doubt, for be little decision, there can Court trict taking” is “conveyance that some of detailed, to be since time. And, this be decided at can and must sues the situa it is timing, ripeness peculiarly question of the the time at situation tion now rather than the govern.25 decision that must Court’s District now lead Act will First, the Rail implementation date exact although the conveyance, inexorably to final It is determined. presently be conveyance cannot that to it reject plan presented true that can the first Act, pre- while Rail USRA, and that the (a), scribing timing presentation of the precision with pres- (c) (d), does not mandate the plan, §§ The any particular time. plans entation of successive at will does, contemplate Rail Act that USRA however, present becomes plans, (b), continue to until one (a). “effective,” §209 we must assume there Thus, compliance mandatory will be with the Rail Act’s in respect terms this Final System and that a Plan will at some be Special (c).26 time certified to the 209§ Court. might appropriate only
25 It be under different circumstances ripe, decide that the issues are and to remand to the District Court for their However, determination on the merits. such a remand here would both unnecessary. undesirable The Rail Act provides implementation. Any delay strict timetable for its by remanding seriously occasioned impede to the Court District could timetable accomplishment and frustrate of the Rail Act’s objectives. Further, fully these issues have been ventilated parties Special these same in the Court, proceeded which- to decide them. parties stipulated have likely” that some of the “[i]t properties designated rail Penn sale, Central will be transfer, conveyance System or other Final Plan executed under App. 205, 318-319, Rail Act. 370-371. Since the Penn Central system overwhelming percentage holds an trackage, see n.
Second, is mandated to order the conveyance properties of rail included System the Final granted Plan and is no discretion not to order the trans- fer.27 While mandatory language necessarily does not deny a court of equity Bowles, Hecht Co. v. flexibility, supra, reorganized to be Act, under the it is inconceivable that all of the Penn properties Central rail could be eliminated from the System Final destroying Plan possibility without achieving *33 goals of 101, (a), the Act. See 701, (1970 206 45 U. S. 716 C. §§ §§ ed., III). Supp. contemplate that, While the Act does under the System Plan, Final properties some of the may designated rail be for existing profitable transfer railroads, to (c) (1) (B), 206 206 §§ (d)(2), (c)(2), (a)(2), (b), 209 303 303 (c)(1) 45 U. S. C. §§701 (B), 716(d)(2), 719(c)(2), (a)(2), (b) (1970 743 ed., Supp. 743 Ill), no such transfer purchaser can occur unless agrees the railroad purchase. (d) (4). to the portion If substantial the Penn properties rail Central were an attractive investment an existing railroad, reorganization the presumably of the Penn Central accomplished could have 77, been without recourse the to plan novel Thus, envisioned the Act. can properly we assume that properties some Penn Central will be transferred to Conrail. (a) provides: Section 209 “Notwithstanding any pro other law, system vision of plan the final subject ... is not to review by any except court in accordance with this section. After the final system plan becomes title, may effective under section 718 of this it be respect concerning reviewed with to matters the value rail properties conveyed plan to be under the and the value of the con sideration properties.” to be received for such (b)(1) Section days that commands within 10 after the com- pensation provided System in the Final deposited Plan has been Special pursuant (a), with the Special Court Court §303 conveyance. (b) “shall” (2) order the provides Section 303 that the conveyance enjoined by any “shall not be restrained or court.” Finally, (c)(1) provides: properties rail have §303 “After conveyed been special . . . the court . . shall . whether . decide . . conveyances public transfers or . are in .. and are fair interest equitable (Emphasis added.) Thus, . . . statutory .” com- mand System is that once the presented Final Plan been has disapproved, Special and not can Court review it only conveyance. after it has ordered the (1944), U. S. central scheme of the Rail Act defers decision over the any controversies terms of the transfer rail until properties after the Rep. 55; Rep. 93-601, transfer has occurred. H. S. No. p. (hereinafter 34 (1973) Special Rep.).28 S. Court’s opinion .suggests the mandatory convey order to prevent probably could not from re- fusing the conveyance, indirectly to order if aby direct if injunction, appellees’ it were convinced that rights constitutional were certain to be violated. 384 931; Madison, F. at Supp., Marbury v. Cranch 137 (1803). possibility But the a court decline later enforce Rail Act written because of unconsti- its tutionality cannot contingency pre- constitute a itself termitting constitutionality earlier consideration of the SACB, of the Act. Cf. Albertson v. 382 U. 76-77 It appears, then, conveyance of Penn Cen- tral’s properties prevented rail Conrail cannot debtor its or stockholder; and, creditors while the *34 conveyance exact terms of the remain to be decided, an order the Special of Court directing conveyance the is
28 provision The Senate bill a might contained that be read as authorizing conveyance the to refuse to order the if equitable. it it (c)(2). found not 2767, fair and S. See §303 Rep. However, provision S. 35. this was deleted. It seems fundamentally (b) (c)(1) at odds with of the Senate §§ bill, expressed by and with the intent the Report, Senate Committee infer, therefore, as cited in the text. provision that the We was precisely eliminated at conference to make clear that the order of conveyance mandatory, is litigation concerning and that valua 93-744, tion is occur Rep. to after the transfer. H. See R. Conf. No. pp. 57, (1973), that, except provisions which states for certain pertinent here, not the bill final follows the of Senate version the clarifying implementation “subject scheme, to changes.” technical and added). (Emphasis court, no empowers The Rail
virtually certainty. a prevent to it. Court, including this violative conveyance allegedly Thus, occurrence rights way hypothetical is no of Fifth Amendment inevitability operation the speculative. Where the certain individuals is it is irrele against a statute patent, justiciable of a that controversy the existence vant to a delay disputed provisions time before the there will Pennsylvania Virginia, 262 will come into effect. v. West Sisters, (1923); 592-593 Pierce v. 553, Society S.U. (1925); Carter Co., 268 U. v. Carter Coal S. “One does have to await U. injury preventive consummation threatened obtain If injury certainly relief. is impending enough.” Pennsylvania v. West Virginia, supra, at 593.29
True, there are even though situations where, an al- injurious legedly event is certain occur, the Court delay resolution of questions constitutional until a time closer to the actual occurrence of disputed event, when a better might factual record be available. Cf. Public reason, concerning For this justiciability decisions ap of eases of prehended prosecution criminal pertinent. are not Because the de instigate prosecution cision a criminal usually discretionary with prosecuting authorities, person even a with a settled intention disobey -the law can never be sure that the sanctions of law will be against Further, invoked him. injury whether or not will occur is to some extent within the complaining control of the party himself, since can he decide to abandon his dis intention to obey the reasons, law. For maturity these disputes such prosecution begins resolution before a case-by-case is decided on a basis, by considering complainant the likelihood that will dis obey law, certainty such disobedience will take particular form, any injury present by the occasioned threat prosecution, prosecution likelihood actually will ensue. *35 Compare Zwickler, v. Golden 394 (1969), U. S. 103 with Albertson SACB, v. (1965); U. 70 Thompson, 382 v. S. 415 U. S. Steffel (1974). 459 Several Rickover, 369 U. Press v. Affairs case. in this course militate, however, against factors future or in the short First, now to be made decisions tak “conveyance whether or not the may be affected constitutionality The ing” are now issues decided. validity with the may
final be interwoven conveyance The Penn 24, supra. n. provisions. abandonment See mainte for may expending Trustees funds delay Central if con conveyance nance in the interval before the final reorganization linger stitutional about ultimate doubts Reply under the Act. Brief Penn Central Rail See for Trustees 12.
Second, the for carefully Act is a structured method It planning reorganization scheme. implementing present reorgan- necessitates the denial to the railroads ization of options example, otherwise available. For the New Haven Trustee filed Court a District motion to dismiss the an proceeding, up and to set equity receivership liquidate Penn Central’s assets. long reorganization So pos- the Rail Act remains an sible, equity receivership is not available.
Third, and particularly significant, because of the struc- ture of the Act there is no better time to decide the con- stitutionality of mandatory the Act’s conveyance scheme prevent minimize or irreparable injury. precise contours of System the Final Plan will not be known shortly until before its certification to Court.30 System The Final Plan will become “effective” if it is not dis approved by either house of within days 60 calendar continuous session from the time it is transmitted to Congress. (4), (a), (a). that, After §§102 it still have to changed be if agreements USRA is unable to execute profitable with purchases railroads for from reorganized (within railroads days date) of the effective sales Conrail or to other profitable (within railroads 60 days of the date). effective §206 (d) (4). Thus, possible it is System the Final Plan certi- *36 will finally the courts
Until Plan has been developed, prop- concerning not more the rail have settled facts properties, conveyed, erties to be those valuation be the value Conrail stock and securities to other do now. they transferred to the Penn Central than estate After the Final Rail Act System Plan is effective, prohibits judicial except initial review of its terms Special (b) Court. review (a), §§ And this Further, is to occur conveyance, after not before.31 all parties agree, complex- because of its conveyance, ity and lapse probable because of the time before long valuation review be completed, practical effect will irreversible once it is made.
Thus, we will be position no better than we later are now to validity final-conveyance confront the of the provisions. delay in Rather, decision will create the seri- risk ous that consideration of validity pro- of those may visions either hasty be too protection afford rights or too late to prevent conveyance or assure com- pensation if the Rail were found unconstitutional.32
We therefore, basic hold, “conveyance taking” issues are now ripe adjudication. for This does not mean however that we need decide now all of the contentions pressed upon us. “Even where some provisions of the Special lied to the days Court will be not known until 60 after the effective date of the Plan. days The Plan must be certified within 90 date; however, effective (c). it can be certified earlier. 209§ Special jurisdiction Court have derived from the Con stitution itself to convey refuse to if the terms the transfer are clearly supra, unconstitutional. See But, at 142. as the noted, any hasty such review would and made without adequate Supp., information. Thus, 384 F. at 931. while review stage at this is a possibility, theoretical it would not afford a better opportunity present than the one for light an informed decision in well-developed facts. See also n. infra. ripe are enactment legislative comprehensive aof immediately of the enactment portions adjudication, deter judicial open for thereby thrown are not involved Party v. constitutionality.” Communist mination of *37 (1961). SACB, 1, 71 367 U. S. valuation proper over the example, controversy
For properties rail be to applied both theory upon depends provided compensation of Conrail stock postponement for forcefully contingencies argue will it stipulated have parties its resolution. Plan is System Final until impossible be to ascertain Con- properties will be transferred to effective which rail or the value theory, or their on valuation rail, value proper- exchanged rail of the consideration to be deter- App. 319, Thus, 371. it cannot 205, ties. theory valua- impact any particular mined now what may have when applied equation, tion to either side of the parties nor can we know where the of the various interests is, which lie—that methods valuation would result higher compensation to the estate or cost to Con- lower rail. Rulings questions plainly on these would be rul- ings upon “hypothetical may situations that not Longshoremen’s Boyd, Union v. 347 U. S. [arise].” 222, (1954).
Moreover, valuation peculiarly require issues a much developed more prepared. record than has been Without evidence figures of actual supporting various valuation theories, a able legal court not to discern “what it issues is deciding, what effect its decision will have on the adver- purpose some useful saries, to be achieved in [or] decid- ing them.” Public Comm’n Wycoff Co., Service v.
U. S. Clearly the record on these issues does yet provide “confining par- circumstances of ticular situations,” SACB, Party supra, Communist v. at which best inform adjudication. constitutional ample opportunity litigate later will be
Finally, there ma- factual record has after the valuation controversies Special terms The Rail Act in vests tured. determina- responsibility with initial for valuation In subject this Court. that circum- tions,33 review stance, Special we should await Court’s deter- surely Co., Wycoff Public Comm’n v. supra, minations. Service attempt 246. we at Were decisions valuation we Court’s questions determinations, before the necessarily speculative interpreta- would be forced to a subject tion aof statute not clear on the of valuation be- fore the with given court entrusted its construction has us benefit of its Public Service Comm’n views.34 Cf. Co., supra; Wycoff v. Great Atlantic & v. Tea Co. Pacific Grosjean, 301 U. 412 (1937).
In sum, “conveyance taking” ripe we hold issues, *38 adjudication for the questions (a) of the availability the Tucker Act if remedy the exchanged consideration upon conveyance final of the properties rail is less than the (b) constitutional minimum, whether stocks, however valued, part can be prop- consideration for rail the erties, (c) procedural whether due be process will denied the by statutory process for conveyance. We hold further that decision of the questions concerning 33The House bill attempted to theory define the valuation be applied to properties conveyed. the rail (5); H. R. see H. Rep. However, equitable 31.. definition of “fair and value” is not in the Rail Act adopted. 34The New Haven conveyance Trustee’s contention that pro visions will taking constitute a they because mandate continuation indefinitely rail services similarly premature, is because it premised upon hypothetical relationship between the railroad’s liquidation “highest value for and best going use” and its value as a concern. Both of these are stipulation unknown, values and the proper valuing method of properties justici the railroad not itself able now. prop- rail applied to either method of valuation to premature. therefor is or the consideration erties B Any Remedy
Availability Tucker Act for Taking” “Conveyance availability of the precludes Whether Rail Act con- which the Act for remedy Tucker amount con- finally properties exchanged sideration for the rail need minimum veyed falls short of the constitutional that conclusion detain us. The that led to our reasons an unconstitutional Act, Rail insofar as it work Tucker taking render a erosion, due to interim does not “conveyance remedy unavailable apply equally to taking” issue. a difference party suggested No has in result in- supported. can be The Rail Act authorizes clusion System Final Plan different kinds in exchange properties, subject consideration for the rail to adjustment by assure fairness and equity. Congress fully expected this consideration provide would the minimum compensation required by the Constitution; provide it wished to no more. how- If, ever, hopeful expectation should fulfilled, not be the consideration exchanged for the properties rail should prove to be less than the constitutional minimum, Tucker Act will be jurisdictional available as the basis a suit in the Court of Claims for a cash award to cover any constitutional shortfall.
C Adequacy Remedy “Conveyance the Tucker Act for
Taking” It argued, that, remedy is even if a Tucker however, Act open, remedy remains is inadequate it fails because basic deficiencies in the conveyance provisions cure
149 that while contrary, to the Act.35 We hold, the Rail might raise serious the Rail Act provisions conveyance pre Tucker Act suit were if a questions constitutional guarantees an the Tucker availability of cluded, which taking might, for adequate any at law remedy Fur provisions. final-conveyance occur a result of of “fair ther, remedy, payment Tucker Act with the re compliance with the equitable consideration” in organization procedural due assured, statutes process is satisfied.
Primarily,
it is contended that
the Tucker Act remedy
“conveyance
because
inadequate
taking”
is an exer-
power
cise of the eminent domain
and therefore requires
full cash
rail
payment
properties.36
Since
rea-
our
35It
is also contended that
inadequate
the Tucker Act is
since
Congress may
appropriate
money
not
awarded
the Court of
But,
wrote,
Claims.
as Mr. Justice Harlan
seems
“there
to be no
why
sound
may
reason
rely
good
Claims
on the
Zdanok,
faith of
States.” Glidden Co. v.
the United
530,
370 U. S.
States,
(1962).
571
Hanson Lumber Co. v. United
See
Albert
also
581,
Corp.
Clark,
(1923);
Silesian-American
U. S.
v.
469,
(1947).
U. S.
reject
We
suggestion
as well the
remedy
that a Tucker Act
comes
Hurley
too late. See
v. Kincaid,
(1932).
No compensation decision of this Court holds other money than is an compensation form of inadequate be eminent domain can statutes. Statements opinions found in full compensation that the “must be a perfect equivalent Mononga- property taken,” Navigation States, hela Co. v. United 312, U. S.
(1893); must perfect reimburse “the full and equivalent in money Miller, of the property taken,” United States v. 317 U. (1943); S. 369, monetary must be the “full equivalent of property taken,” Reyn United States v. olds, 397 U. (1970); see also Almota Farmers Elevator States, & Warehouse Co. v. United 409 U. S. (1973).37 in none Yet, of these cases was com- Congress might wish to consider whether to abandon the whole Act if it turned out that the entire properties value of the rail must be paid in cash. 37At complaining parties agree least that, two to the extent compensation to the rail paid obligations estates of USRA guarantees, backed federal the securities can figured at face equivalent perfect money. value as the Reply Brief for Cross-
pensation in a form than cash at issue. The clear other *41 implication other decisions is that consideration other than example, any special cash—for benefits38 prop- to a erty remaining properties may owner’s be counted in the — just compensation. Ross, determination of Bauman v. 548, (1897); 167 U. P. S. 584 see 3 Nichols, Eminent Do- main 8.62 seq. (rev. 1974).39 3d § et ed.
We need however, determine whether not, compensa- tion in the form of securities would be constitutional if merely Rail were an statute; eminent domain Appellant 45; New Haven Trustee Appellee Brief for Penn Central (h), 210, (e) (2). Co. 56. See 206 §§ special-benefits compensation may The rule of later have direct reorganization. relevance provides to the Penn Central The Act equity that determination of the fairness and of the terms of the transfer should take into account other “securities and benefits” added) (emphasis (c)(2). provided to the railroad estate. §303 (d)(1). parties See also disagree The here about what “other §206 Act, benefits” be under and the extent to which such may be particular, counted as constitutional consideration. In there a dispute is up $250,000,000 over whether sums to in benefits paid to be expenses Conrail as for reimbursement certain labor are “other benefits” evaluating counted in exchange. See (1970 ed., III). 45 U. C. Supp. given For the § reasons supra, 146-147, at with respect problems, other valuation this issue presently premature. that, claim is also made whatever the compensa form of proper Amendment, legislature tion Fifth under the cannot specify the compensation form of but must leave the decision argument the judiciary. upon This reading is based an erroneous Monongahela Navigation States, Co. v. United U. S. (1893). Monongahela only legislature not, by held that could setting paid either a fixed to be property amount for condemned or principle arriving amount, at settle the constitutional right, just Monongahela compensation. Thus, did no more than general restate the principle courts, that the not legislature, are ultimately assuring entrusted with compliance with constitutional nothing commands. It said about whether can dictate the mode compensation rather than the amount. no have arguments
for the in favor of this construction merit.
First, express provision it is despite contended that (b) of 301 in- agency that Conrail “shall not be an strumentality Government,” of the Federal 45 U. S. C. (b) (1970 § 741 ed., Supp. Ill), participation federal through board federally appointed members of the of directors Conrail a federal instru- constitutes mentality.40 From premise proceeds the contention the conveyance is an eminent domain. exercise of But Conrail a federal reason of instrumentality the federal representation on board of That its directors. representation provided protect was *42 to the United States’ important interest in assuring payment obligations of the guaranteed by the voting United States. control of Full Conrail will shift to the obligations if shareholders federal fall below of Conrail’s responsi- indebtedness. The 50% bilities of the federal directors are not different from those of the other operate directors —to profit Conrail aat for the benefit of its shareholders. Conrail Thus, will be bas- ically a private, not a governmental, enterprise.
Second, it is contended the provisions Rail Act’s for a compelled conveyance and the of continuation rail pending services formulation of the Final System Plan constitute the Act a condemnation statute. We see (d) provides: Section 301 “(d) Board of Directors. “The Board of Directors of shall consist of 15 individuals [Conrail] in bylaws
selected accordance with the articles and of [Conrail]: Provided, long per more, That so centum or as determined by Secretary Treasury, outstanding the the indebtedness of obligations owing consists of or other debts [Conrail] [USRA] guaranteed by States, to or the United three of the members of such Secretary Transportation], board shall be the the Chairman [of president and and five of the members of such [USRA] appointed by by President, board shall be individuals as such and with the advice and consent of the Senate.” either. Con- features of the Act significance
no these clearly leg- intended gress, enacting provisions, those The Rail bankruptcy power. Act, islate to the pursuant Act, sup- like 77 of which the Rail Act Bankruptcy in the direction plements, merely step “advances another subject liberalizing bankruptcies,” law on the Chicago, Trust Co. v. Continental Illinois Nat. Bank & Co., R. I. & P. R. (1935), “far- 294 U. S. gone beyond reaching though be, [it has] [it] . . . Ibid. That .” congressional power limit of Co., & teaching of RFC v. Denver R. G. W. R. 328 U. (1946), where the Court sustained the “cram-down” reorganization provision authorizing §of a court plan despite rejection confirm by creditors. The its provisions Court said: “We think that for confirma- objection courts tion over creditors’ are within bankruptcy powers Congress. powers Those are adequate to eliminate claims administrative valuations judicial with review they are adequate require acquiesce adjustment creditors in fair claims, of their long gets creditor so as the all the value of his lien and his Id., any free share of assets.” at 533.41 Similarly, attempt distinguish An is made to provisions “cram-down” *43 (e) (e) provides 77 because 77 for a vote of § all classes § reorganization creditors after the court plan determined that a has equitable. is fair and A permitted only “cram-down” is- if the reorganization any objection by court finds a class of creditors “not justified.” reasonably right object But the plan creditors’ to to a approved by severely the court has a scope. plan limited “If a gives equitable dissenters, fair and treatment to the elements which plan equitable make the fair and reasonably cannot be the for a basis justified rejection.” RFC v. Denver Co., & G. W. R. R. 328 U. objection S. A “reasonable” must be based upon arising original facts approval plan by the the after Ibid. The omission in court. very the Rail Act of this limited right objection cannot constitute the Act an eminent domain statute. provide to duty has the Court Special Act,
the Rail
equiva-
equitable”
“fair
with
estates
the railroad
conveyed.
properties
the rail
for
securities
Conrail
lent
Rail
in the
are defects
there
argued that
Finally, it is
Act
identify
review that
judicial
provisions
Act’s
argu
The
power.
domain
eminent
as an exercise
yet ar
has not
Although the time
ment
is frivolous.
reorgani
Conrail, the
to
mandatory transfer
rived for the
to assess
opportunity
had a full
zation courts have
estates.
the rail
Act’s scheme to
fairness of the Rail
deter
reviewed those
(b).
has
§
opportunity
(c)
will have an
§
minations and under
con
not the
transfer, although
to review the terms
Rail Act itself
veyance
addition,
itself.
In
neither the
the in
nor
determine
procedures
finally
thereunder
respective
will be decided
terests
creditors. Those
will distribute
reorganization courts,
which
creditors the
properties.
consideration received for the rail
are, therefore, ample
safeguards...
There
adequate “[
protect
rights of secured
the extent
creditors
...
Wright
of the value of the
v. Union Central
property.”
Co.,
(1940);
Ins.
311 U.
North Ameri
cf.
Life
.
SEC,
can
(1946)
Co. v.
all the his Co., supra, G. W. at 533. Denver & R. R. RFC v. reorganization statutes Act does differ from other This however, requires conveyance it §77, such possible to ascertain whether this last condi- before it is mandated Thus, conveyance tion will be met. any prior judicial finding that will be ade- without there quate reorganized company resources of whatever compensate and, eventually, kind debtor estates their creditors. Because of congressional this insistence upon accomplishing the transfer whatever the ultimate equity the compensation any provisions, deficiency magnitude constitutional in the value the limited compensation provided under the Act will indeed be a private taking of property public for use. Cf. North SEC, American Co. supra, v. at 710.43 Since have we already determined, however, that there would be then recourse to a Tucker suit in the Court of for Claims a cash any award to cover constitutional shortfall, Rail provide Act does adequate taking assurance that any compensated. will be
The remaining contentions regarding the validity provisions the final-conveyance require little discussion in view of the availability of a Tucker Act suit.
The first contention is even that, if considered as a reorganization statute, the Rail Act fails assure that will creditors receive the full value of their liens in stock or securities. However, we have already held be- that, cause the possibility that the Rail Act will work a tak- ing, there must assurance of equal consideration constitutional shortfall, and that a Tucker Act remedy provide available to that assurance. Thus, the value of parties question None of the any “taking” effected Rail Act will be “public use.” Cf. Parker, Berman v. U. *45 is backed the Act provided and securities the stocks payment of cash essentially guarantee up by what di- constitutional equity and of of fairness for lack remedy perfectly, Act fulfills The Tucker mensions. provision approved underwriting of the then, function the Cases, U. S., Haven at 486-488. in the New Inclusion Tucker cures availability of Act the Similarly, pro- problem of might what otherwise be troublesome process. Tucker Act assures that cedural due be made eventually railroad estates and the creditors will for conveyed. Complainants whole the assets evidence no in retaining longer interest their than property the Rail Act requires. position really Indeed, their to they dispose want be free to it sooner. Thus, of there is no in retaining properties interest asserted only themselves; making interest is in sure that compensation creditors receive fair properties. for those hand, On procedural the other sequence is vital accomplishing the of goals judicial If Act. review of the terms the transfer was required before the con- veyance occur, could the conveyance might well come too late to resolve transportation the rail long crisis. As are creditors fair assured with value, their interest, for properties, requires Constitution nothing more.
VI Validity the Rail Act Under Uniformity Requirement Bankruptcy Clause
We finally consider the contention because the that, Rail provisions apply Act’s only to railroads in reorga- nization in the “region,” the statute lacks uniformity required by I, Art. cl. giving Constitution Congress power “To establish . . . uniform Laws on the subject Bankruptcies throughout the United States.”
The District held that “recourse to the bank-
ruptcy justify Congressional necessary clause to action is only if action impairs obligation of contracts.” (Fullam, at In Supp., J., concurring). F. that re- the court spect, virtually found Rail adds nothing powers already granted reorganization to the admittedly courts under the “uniform and pro- valid visions of Act. . . . Bankruptcy Authority conveyances order free clear of liens, 'cram already down’ a plan reorganization, exists under 77,§ *46 newly by and is not created or added the Act.” [Rail] Ibid.
The court determined, however, provision that one the “newly Rail Act is by created added the [Rail] (b) Act.” 207 requires Section the reorganization court § dismiss the 77 if proceeding it finds that the railroad is not on an reorganizable income basis within a reason- time, able and that the Rail Act provide does not a process which would be fair and equitable to the estate the railroad reorganization. The District Court Cases, noted that the New Haven Inclusion supra, held that inasmuch plan as the disposed of the New Haven’s assets to the Penn Central for continued operations, 77 reorganize could used to enterprise the as i an holding investment “at company, plan least where the contemplates that the bulk of properties the rail will continue operated to be by as a railroad someone.” F. Supp., 383 at 534. The District Court held § that (b) precludes of the Rail Act like reorganization a under by § 77 requiring dismissal 77§ proceedings, and to that extent uniformity violates the clause since this only dismissal relates to debtors within region cov- ered Rail Act.
We not need decide whether the District Court was cor- rect in respect. Following this the decision of the District Court, the Penn Reorganization Central Court issued its 180-day finding that, order although Penn Central is not an income under Rail Act reorganizable 77,§ on basis provide process equi- which would be fair and does Supp. table to the debtor’s estate. 382 F. 870-871. Rather than 77 proceeding required dismiss the § (b), however, stayed pending § the court its order an appeal to the Special Special Court found Court. that the processes prescribed in the Rail Act are fair and if a equitable remedy Act, exists under the Tucker reversed. Supp., F. at 910-911. The Rail Act expressly provides this holding is nonreviewable. (b). Although today § we need not address the issue whether judgment subject Court is we do review, remedy hold that the Tucker Act is avail- able for uncompensated taking occurring under Rail Act. holding possibility That obviates Penn Reorganization Central Court will ever confront provisions proceeding dismissal of (b) of the Rail Act. remains,
There another however, aspect of uni- formity Appellees issue for decision. urge *47 entire Rail Act uniformity violates the The clause. argument uniformity by is that the required the Consti- tution is geographic, Moyses, Hanover National Bank v. 186 U. S. (1902), and operates since the Rail Act only a single in statutorily defined geo- the Act region, is graphically nonuniform. argument
The has certain appeal surface but without merit flexibility it overlooks because the inherent provision. in the constitutional upheld Section was challenge a like against ground on the of the “capacity of bankruptcy clause to meet new conditions they have been as disclosed as a result of growth tremendous of business and development of human activities from 1800 present day.” to the Con- tinental Illinois Bank Nat. & Trust Chicago, Co. v. R. I. & Co.,
P. R. at 671. The therefore held S., 294 U. Court that, far-reaching stat- though § was a distinctive and ute, treating bankruptcies a distinctive railroad as and special problem, “beyond congres- was it not limit power.”44 sional uniformity not provision deny does
power to take into account that exist differences between parts country, different of the fashion legislation geographically problems. to resolve isolated “The problem with dealt Bankruptcy [under Clause] present in significant parts variations different country.” Wright v. Vinton Branch, 300 U. We agree
n. therefore with the the uniformity was clause “to intended hobble Congress by forcing it into nationwide enactments to deal calling with conditions for in remedy only regions.” certain Supp., 384 F. at 915.
The national rail transportation produced crisis that problems the Rail Act centered rail carriers in the operating region Act, defined and these were problems Congress addressed.45 No reorga- railroad 44The Court observed that it is not unusual railroads disparate receive treatment bankruptcy laws: “Railway corporations definitely had been opera- excluded from the (c. tion 412, §4, 838, 839), law probably 36 Stat. corporations because such liquidated ordinary could not be- in the way railway unit; A distribution assets. is a it can not up disposed be divided piecemeal goods. like a stock It sold, all, if must sold a going at as a unit and as Its concern. activities can continuous, not be halted because its uninterrupted operation necessary public interest; and, in the preserva- for the interest, tion of that well protection as as for the of the various private involved, reorganization interests evidently regarded was the most corporation feasible solution whenever had become *48 ” ‘insolvent S., or unable to meet they its debts as mature.’ 294 U. at 671-672. 45 Rep. 25-29; Rep. H. 6-14. S. the Rail meaning
nization within Act, proceeding, the effective was that defined on pending region outside 180-day following during period date of the Act or inAct fact the statute’s effective date. Thus the Rail operates uniformly upon bankrupt oper- railroads then all ating respect in the uniformly United States and with all creditors of each of these railroads. uniformity apply
The requires clause that the Rail equally debtors, plainly to all and this creditors all requirements. Act fulfills those Vanston Bondholders Protective Green, Committee (1946) v. U. S. 156, (Frankfurter, J., concurring). provision “No any Act restricts right creditor wheresoever located to obtain relief because of regionalism.” Supp., 383 F. at 519.
Our construction of Bankruptcy uniformity Clause’s provision comports with Court’s this construction of other provisions “uniform” of the Constitution. Money
Head Cases, U. 580 (1884), involved the levy on ships’ or agents owners a 50-cent tax passenger not United States citizen who an entered port American port from a foreign “by steam or sail vessel.” Individuals engaged in transporting passengers from Holland the United levy States challenged the contrary I, to Art. cl. under which Congress empowered lay and collect “all Duties, Imposts and Excises shall be uniform throughout [which] the United States.” The argument was that the head tax violated uniformity clause because it was not also levied on noncitizen passengers entering country this rail other of conveyance. inland mode upheld The Court the tax, stating:
“The tax is uniform when operates it with the same force every effect place where the sub- ject of it is found. The tax in this case ... is uni-
161 operates precisely port and alike in every form passengers States where such be United can S.,U. at 594. landed.” imposed entering That the tax was not on noncitizens Nation across inland borders did not render the tax non- legislation uniform since “the evil to be remedied this immigration has no existence on our inland borders, Id., quarter regulation.” in that needed no such at Similarly, designed 595. the Rail solve “the remedied,” evil and thus uniformity satisfies the requirement Bankruptcy argument Clause. The the Rail Act differs from head- tax be- statute cause its own terms Rail Act applies only to one designated region is without merit. The definition of region reality does not legislation obscure applies to all railroads under reorganization pursuant during applies. the time the Act
Reversed. Me. Justice opinion dissents from the Stewart judgment of the Court, substantially for set the reasons II out in dissenting Part opinion of Mr. Justice Douglas.
Mr.
dissenting.
Douglas,
Justice
created,
These cases have
as did the Penn-Central
Merger cases,1
“hydraulic pressure” which,
Mr. Jus-
tice Holmes once
“makes
said,
previously
what
was clear
States,
Baltimore & O. R.
Co. United
(1967);
v.
See
386 U.
Merger Cases,
Penn-Central
New Haven Inclu
(1968);
U. S. 486
Cases,
sion
& O. R. Co. v. United
seem and before which even well settled ciples of law will bend.” If the rule of law under moral order is measure always only I our as have we can responsibility, assumed, *50 985, the Rail Act January 2, 1974, hold of 87 Stat. seq. (1970 Supp. Ill), 45 U. C. et ed., §701 S. undertakes to sanction conveyance, a fraudulent those as were used 13 Eliz.,3 words in and in Bankruptcy our Act. I conclude, have been reluctant so to it implicating as our legislative does branch in gi- a lawless maneuver of gantic proportions. But, baldly put, present is a law de tour to that end. force
Article I, 10,§ of the Constitution bars the States passing from a law “impairing Obligation Con- of Though tracts.” the Federal Government en- is not so joined, it restrained is the Fifth Amendment which provides that person no deprived can be “property” of process without “due I of law.” assume it conceded is Congress, apart from bankruptcy power I, in Art. 8, impair § not the obligation of contracts without violating the Due Process Clause.4 bank- But “[t]he ruptcy power, like the other great powers substantive of Congress, subject is to the Fifth Amendment,” Mr. as Justice Brandéis, writing the Court in Louisville Bank Radford, v. 295 S.U. 589 555, held. (1935),
This does not mean that so far as rail carriers are concerned the can creditors pound exact their flesh, of dismembering or liquidating the public debtor. The in- 2 States, Northern Securities Co. v. United 193 U. S. 401 (1904) (dissenting opinion). Eliz., (1570); 5 Glenn,
3 13 c. Conveyances G. Fraudulent & Pref (rev. 1940). erences ed. 4 The Gold Clause cases are on a footing, different for as Chief Mr. Hughes wrote in Norman v. Justice Co., & Baltimore O. R. 294 U. S. (1935), power currency to regulate the system monetary establish the was involved. in may not be
terest subverted that manner. As the in Continental Illinois Nat. Bank & Trust Co. v. said Co., Chicago, I. & R. P. a R. (1935), 294 U. S. involving reorganization rail § case a C. Bankruptcy Act, U. S. 205: “A railway unit; up a not it can be divided disposed piecemeal goods. stock of must like a It if sold, all, going sold at a unit con- and as Its cern. can be halted because its activities continuous, uninterrupted operation necessary . . .” public in the . interest Congress made in findings (a) such 101§ these cases (1970 III). Act, (a) Supp. U. C. ed., congressional Hence the objective in the Rail Act of preserving the part assets these six railroads5 as continuing enterprise form of a new *51 (for corporation convenience called well Conrail6) is Bankruptcy within the Clause. question remains, The by whether the however, means it has chosen has transgressed constitutional boundaries.
I The property is “taken within the public for use” meaning of the Fifth Amendment. the mandate is First of Congress. The provides Rail Act obligatory an transfer of companies the assets these to Conrail. The creditors, trustees, reorgani- stockholders, zation judge have no other option. The record makes abundantly clear parties what all the concede, that Con- rail, though dubbed “a for-profit corporation” by § 301 5 Penn Transportation Central subsidiaries; Lehigh Co. and its Valley Co.; Railroad Jersey; Lehigh Central Railroad Co. of New & Railway Hudson Co.; River Reading Co.; Railway Arbor Co. Ann 6 Consolidated Corp. Rail created Act, 301 of the 45 U. S. § C. (1970 ed., III). Supp. §741 164 (1970 ed., (b) 741 C. § 45 U. S. Act,
(b) of enterprise an being prospect Ill), shows no Supp. be losses Penn Central profitable on a basis.7 operating were 31, 1973, 1970, and December 21, June tween judg whose Court,8 Reorganization million, $851 and the reorganization reviewing, found that we are not ment values The possible. was not on an income basis based on today’s decisions are therefore ride on only The con operations.9 profitable future prospect of provides which framework of the Act sideration form of “se taking for the “just compensation” §716 45 S. C. Conrail, curities” of (d)(1), §206 U. If “securities” III). those (d)(1) (1970 ed., Supp. insofar as they only will have value stock, are common income in entity which generates Conrail will be a viable If charges. fixed the trustees excess costs Act, U. S. C. 11 cannot Bankruptcy § 77 § expect meet, make there is no reason to ends sure, re eligible to be made Conrail, Conrail can. obligations Railway ceive United Associa- States 7 (the debtor) Reorganization that Penn-Central found time”; reorganizable was "not on an income basis within a reasonable In Penn-Central Trans. re ruling appealed. been has not Co., (ED 1974). Supp. F. Pa. Ill), (b), 719(b) (1970-ed., Supp. Section U. S. C. § alia, inter judges which, designates Special Court of three federal equitable.” question pass plan is to on the is “fair and whether (c) (2), (c) (1970 III). (2) Supp. pre ed., 45 U. C. A liminary important decision Court which in certain *52 aspects Reorganization rendered with that of the Court was conflicts Co., In re Penn Central Trans. September 30, Supp. 1974. 384 F. 895. study by Trustees, A the Penn Central on file with commissioned 1970, ICC, estimates for Penn Central assets as of December “liquida $13,585,493,000 and a “continued railroad use" value of Physical $3,532,110,000. tion of non-rail uses” at PCTC Asset Valu Study (Apr'. 1973, May 30, 1973), ation revised ICC Fin. Docket (Joint 40). Documentary No. 26241 Submission No. nonprofit incorporated (USRA), an association
t-ion obligations exceeding issue not by the Act to created guaranteed by Secretary which $1,500,000,000, are (1970 ed., Supp. § 45 U. S. Treasury, §C. half more than III). billion and a But this one Conrail; billion one billion can be issued the one solely "not available for $500,000,000 less than shall be proper- the rehabilitation and modernization” rail appor- $500 million ties, 210(b). Hence might § plan Special creditors. But if tioned under (c), § § Court determines U. under S. C. (c) (1970 Ill), ed., Supp. the value of se- curities given exchange property creditors for the prior payment pledged under law of their claims is less fair of the properties conveyed, than the value can (c) (2) § only do three things:
1. Reallocate securities issued; 2. Require securities; Conrail to issue additional 3. Enter a judgment against deficiency Conrail. The common stock of only Conrail plainly token payment. Issuance new by different securities Conrail would have to have rights interest dividend be marketable and would back bring play into some of the forces that plague present trustees under 77. Any by securities issued Conrail must “minimize potential actual or of Conrail, debt burden” 206§ (1970 (i), 45 U. C. 716 (i) ed., Supp. III). More- over, (d) § 301 of the Rail provides long that so as more half than the debt of Conrail guaranteed the Government, a majority of the 15 desig- directors are nated from outside —the Secretary of Transportation, Chairman and the President of the USRA, and five others named with President consent the Senate. One cannot read the Rail Act and believe thought that federal money going *53 166 any debt made subordinate could be
into Conrail make assumption would contrary A created Conrail. superfluous. (d) quite of purpose watch-dog the serviced, it could were debt Yet, unless Conrail’s new element add no if it could were, be and even it marketed by the creditors received compensation value the upshot plan. The reorganization these railroads under a by Conrail acquired compensation properties for that sprinkling a in stock with mostly paid would for Conrail be Conrail, assum- Association issued of the bonds of the in operations they expended were not ing that operation and started its Conrail between the time it plan reorganization. final date of the has not properties The value of the to be transferred New Haven Inclu- yet been determined. We held Cases, New (1970), sion U. S. where being Haven was shut its that sold, road down and assets just “highest be and compensation was to measured In value” case that value best of the assets sold. that light findings was In of the liquidation value. Reorganization cases, we present Courts in the cannot say federally guaranteed $500 that million of bonds anywhere reasonably comes near any assured value.10 9, supra. alone, n. In the case of See Central Re Penn organization every suppose that Court said “there is reason to considerably properties the included would be worth more than Supp. 856, (ED 1974) J.'). $500 (Fullam, million.” F. Pa. Judge concurring opinion Fullam’s in the District Court noted: simple values, “As a matter of if there is no maximization ‘going sense, justification concern’ value in the usual there is no for continuing reorganization proceeding, unless either or both following (1) that, prospect conditions are established: a reasonable streamlining, consolidations, changes because of and other in circum- stances, (2) earning power profitability restored; can be prospect preserving public reasonable need for debtor’s appropriated public railroad is such that it use, will assemblage values operating inherent its as an railroad will *54 any be Value of substantial amount cannot attributed because of Conrail, to the common stock of most problems existing will inherited Con- by roads be in prospects generating its income excess rail and nil, charges fixed if are, and remote. would costs It irony entry judgment against be call of a deficiency adequate up any deficiency. Conrail to make For that only any judgment would value which the away eat at common stock of Conrail had.
The vicious character of legislative these decisions is provision emphasized by the cram-down Rail Act. In 77 is a proceedings provision pre- there cram-down holdup one class from a of a plan. vent fair and equitable 77, Section however, allows a if only cram-down Court plan finds the fair equitable and first after security holders have had their hearing. Under the Rail Act the assets are first transferred to Conrail even before Court has made its “fair and equitable” finding. Moreover, security holders never have a vote plan. on the
Congress has procedural lowered all the barriers and foisted on these rail a conveyance carriers of their which, private assets if done parties in control bankrupt estate, would conveyance. be a fraudulent Here it is by Congress’ achieved purporting “public act in the interest.” That ais taking public for a purpose; but Fifth Amendment standards it is a taking property without of just assurance compensation.
II The Court relies, as parties do all who seek to sustain on statute, assumed availability of a suit recognized paid be Authority for. Port Trans. Cf. Corp. Hudson Rapid Tubes, v. 457, Hudson 20 N. Y. 2d 231 N. E. cert. denied (1967).” 390 U. Supp. 510, (ED 383 F. 1974). Pa. (Footnote omitted.) C. Act, 28 U. S. Tucker under the Claims the Court of liquidation fair between shortfall to recover § receive bankrupt roads compensation the value and the ini- while General, The under the Rail Act. Solicitor below could reversed judgment arguing that the tially pitches now question, Tucker Act reaching without chiefly upon of the statute argument support his availability Act suit. of Tucker jurisdiction on the Act confers Tucker
Claims against upon any claim judgment
“to render Constitution, upon the founded either United States *55 regulation an ex- any or of any or of Congress, express implied or department, upon any ecutive or liquidated or for States, contract with the United unliquidated damages sounding in tort.” cases expressly nor expressly permits The Rail Act neither says 1491. excludes a suit under USRA that “[o]ne the Rail Act in vain for a sentence such searches jurisdiction ‘The Court of Claims shall have no over property any person action that has been alleging ” pursuant just compensation.’ taken to this Act without only analysis. But this observation is It beginning merely is not to note that the Rail Act carves out enough exception express no to 1491 in “Statutory words. inter- pretation requires upon more concentration than isolated words; rather, given consideration must be to the total corpus pertinent policies inspired law osten- sibly Boys’ Markets, Re- provisions.” inconsistent v. Inc. Clerks, tail precept U. S. This requires us inquire whether provisions that are not mutually exclusive their terms are so divergent ap- proach they particular cannot in a setting.. co-exist Congress may provide a mechanism dealing for with a particular problem its structure and purpose is inconsistent with a traditional avenue of relief applicable circumstances, Under these a broader class of cases. remedy,
Congress have the traditional supplanted view, by implication. my precisely In this is what albeit Congress has done in the Rail Act. provides
The Act for bringing strict timetable Con- operation. expected present rail into USRA System days the Final to Congress Plan within 570 of the Rail Act.11 The Plan enactment is deemed approved specifically disapproves unless within a specified period. (b). plan § 208 Once the is approved, certify USRA must it to the three-judge Special Court (c). within 90 days, § Within 10 days after certification, deposit Conrail must its stock and securities with the Special §303 Court, (a), the court must conveyance properties direct to Conrail pursuant plan days within thereafter, (b). 303§ Congress plainly expedition sought process in the creating This is apparently Conrail. the reason for deferring until after the transfer of properties question of valuation and distribution of stock to the contributing policy railroads.12 The of expedition carries over provisions into the judicial participation in this process. Appeals from decisions the reorganization district concerning courts the inclusion of the debtor *56 in provisions roads the of the Rail Act exclusively lie to 11 (c), 717(c) (1970 Section 207 45 C. ed., U. S. Ill), Supp. § required the executive committee present sys of USRA to the final plan tem to USRA’s of approval board directors for 420 within days Act, after enactment of days the later extended to 540 days Pub. L. 93-488. 30 presentation Within after committee, “approve the executive system the board shall a final plan requirments all of which meets the of [prescribing section 716 plan general goals].” and the plan contents The is then sub Congress, (a), (1970 mitted to 45 (a) U. S. ed., Supp. C. § § III). 93-620, Rep. pp. H. R. No. (1973) (hereinafter See 54-55 cited Rep.). as H. be Special appeals the its decision in must Court; these (b) days, made within 80 §207 §717 45 U. S. C. (b), (1970 Plan is III). ed., Supp. System Once the Final C. approved by Congress, (b) 45 U. S. Act, § (1970 719 (b) ed., Supp. provides for consolidation Ill), in the with Special judicial proceedings Court “all respect system plan.” to the final The decision of Special regarding distribution of Conrail stock pursuant (c) directly appealable securities to “the give appeal this Court. We are directed highest priority” days and even to dismiss within it seven if pendency we conclude that its in “would expeditious proceedings.” interest of an conclusion of the (d). §303
A in the quite suit Court of Claims would be an odd judicial procedures to the appendage just streamlined described. language (b) in vesting § 209 Special judicial Court “all proceedings respect with system plan” the final immediately raises doubt that a remedy is compatible Tucker with the Act.13 The doubt amplified when one looks at the entire scheme judicial participation. I do not think that Con- gress, in setting up Special consolidating pro- Court, ceedings, limiting appeals, and demanding expeditious decisions, intended at the same time permit yet another round of litigation on compensation question to begin language This' originated in the Senate bill. The bill House provided had for consolidation proceed Court of “all ings kind which arise or concerning system arise final plan implementation (§501 (a)). thereof.” Report The House explains guarantees that “Title V . . . day their creditors preserves court and their judicial right Constitutional to a determina just tion compensation property.” their Rep. H. 47. The Senate language incorporated bill, was in the appar final ently significance no was attached to disparity between the two Rep. versions. See 93-744, H. R. Conf. pp. No. 56-59 *57 mandated procedures all the Court of Claims after in the had been exhausted. Rail Act expe- obvious, policy of the of frustration Despite avail- remedy a Tucker Act the inference that dition, special might justified able were it not still be that limit the compensation arrangement features of be seen, federal As will these features infusion funds. they important Congress, were and are circumvented if a suit in the Court of Claims allowed. Special Court, after it has directed transfer to right,
Conrail “all and interest” in the properties title, designated System roads contributing in the Final Plan, (b), § 303 must determine prop whether the transfers of erty from the bankrupt equitable roads are “fair and Special estate.” But only Court has limited rectifying any tools for or inequity finds, unfairness it on powers limitations its quite con clearly indicate gressional intent to limit the commitment of federal The preferred funds. form compensation to the debtor roads is stock of Conrail. If (c)(2)(A). the stock is insufficient, Special Court next order distribution of Government-guaranteed obligations of Conrail, (c) (2) § 303 (B), but these are limited in face $500 value to million,14 absent an joint authorization by resolution to exceed the limitation. If shortfall remains after distribution of stock and Govern ment-guaranteed obligations, Special Court is directed judgment enter a deficiency against Conrail, § 303 (b), (b) (1970 Under ed., U. S. C. III), Supp. §210 §720 USRA is Government-guaranteed authorized to obligations issue exceeding $1.5 Only $1 billion. billion, however, may be issued Conrail, $500 and of this amount million must be made available solely for rehabilitation properties acquired modernization from contributing roads. This $500 leaves obligations million available to the for distribution to the estates under (c)(2)(B). §303 *58 (c) (2) (C). judgment against corporation is apparent purpose pro with not the United States, Treasury liability unanticipated from a tecting the Representative Adams, prin magnitude. As one House, explained in the cipal architects of Rail Act exposure specific were when assurances about the federal early in on the bill: sought debate specific
“Mr. There a limitation in ADAMS. is $200 says the final bill more than million which no $500 raised to Government loan million] [later acquisition can used for in guarantees event, if in in years so court 5 to 10 should come with higher only judgment a would be value, against corporation this new that is there. New placed
“Under the Haven case the court was position in this kind if up it loads that new corporation by with a requiring debt structure it to bonds, issue additional it lowers the value of the common which paid it is stock, being what terms of these assets.
“Mr RUPPE. Does it not deliver have to more stock? It seems from reading language me that we corporation have to cause the securities in payment issued properties to have a value and equitable is a fair value by which as determined the court.
“Mr. ADAMS. That but that is this correct, corporation’s taxpayers United money.” Cong. States Rec. 36355 The possibility might there be a large deficiency judgment id., was not unnoticed. See (re- at 36352 Rep. marks of Skubitz) (remarks and 36355 of Rep. Shoup). But who those adverted this possibility noted have opportunity would an to consider later
whether to deal with it the limitations on the relaxing amount of guarantees Government loan available Con- rail, by joint means of as provided resolution 210 (b). Congress was thus have “second look” at the debt structure of Conrail after the valuation proceedings concluded; point had at that Con- gress might improve corporation’s balance sheet an public clear, additional commitment from isWhat funds. *59 however, is that Congress preserve intended to a choice whether to allow Conrail to life begin large with a defi- ciency judgment unalleviated further federal aid.15 Congress choose, Were so to the creditors of the bank rupt roads, deficiency armed large judgment, might levy with a cause a upon to be made assets. Conrail's Since the value of Conrail stock presumably held would assets, levy reflect the value of the a would give merely change the estates additional value but would Liquidation would, its most, form. at terminate further erosion of unprofitable asset value operations. due to continued An Representative amicus brief submitted Adams for himself Representatives suggests and 35 liquidation other would allow get they involuntarily, the creditors to relinquished, back what to 7). (p. But, ignores Conrail noted, position as the Court this probable during pendency erosion of asset value of valuation proceedings, possibility debt, difficulty of new senior and the unscrambling Co., In the assets. re Penn Central Trans. 384 F. Supp., at 930.
Appearing argument, Representative as amicus curiae at oral majority Adams made indicating statements that the now reads as a remedy conclusion that a Tucker Act suit would be available to uncompensated taking.” Ante, an “erosion at 132-133. Yet this position contrary submitted, to that taken in the brief Mr. Adams urges reaching which us decide to the case without the Tucker Act question specifically colloquy printed, injra, cites 174r-175. at properly post-enactment expressions The notes that these caution, warning applies should be treated with a as much equally “relatively spontaneous responses spontaneous of counsel to Lodge questioning Irvis, Court,” from the Moose No. 107 v. (1972), U. to the more statements that considered appear entirety, post- written submissions. Viewed their first, is, is available remedy Tucker hold that a To wholly security holders to compensation of just to leave and, might grant it chances that speculative choose, opportunity second, Congress of that deprive to obtain permitted would bankrupt estates since after the United States deficiency judgment against exhausted. have been Rail Act under the proceedings in the eventuality given were an such against Assurances managers between two following colloquy report: conference on the House, during debate I would Speaker, Mr. “Mr. KUYKENDALL. clarify Washington from gentleman like to ask the deficiency point, one and that is the matter in the colloquy origi- There was lot judgment. Federal expressed which fears nal debate key Treasury. court had the to the interpretation of us his gentleman give “Will the keep happening that from we have to guarantees proceedings? in the court Mr. there is a Speaker,
“Mr. definite ADAMS.. *60 can that be author- limitation on the total amount beyond that Any go ized under this bill. amounts way spent, or in which it is that, shifting the the by approved signed is to be an act of Congress, joint defined by the President. It is as a resolution in and and bill, managers, the statement any managers it was the clear intent of the that amount other than common stock was to be at the possible lowest limit to meet the constitutional guarantees. Speaker,
“Mr. KUYKENDALL. Mr. is it not ambiguous expressions are and enactment add little to statute legislative history. Moreover, and Mr. Adams’ remarks bear an fully interpretation nonavailability with consistent of the Tucker infra, Act. See at 177. Washington I gentleman will from
true, ask (Mr. Adams) are creditors, given that the course, Board of protection, Directors, is the the control of Government owner of officials, entire block of of 100 million what- shares, stock it ever is?
“Mr. gentleman ADAMS. The is correct. It is controlled the United States, long so as the Sec- retary determines that obliga- there is an amount of tion funds which the United might, States way ever, have have do with. anything to “During period it controlled time, a board of directors which of Government consists officials.
“Mr. KUYKENDALL. There is no way Federal the taxpayers court assess Con- this on gress judgments the creditors; is that correct?
“Mr. ADAMS. gentleman is correct. way “Mr. KUYKENDALL. no can they There is money? assess the for the “Mr. ADAMS. The gentleman is correct.” Cong. Rec. 42947 (1973).
None of these comments expressly refer to the Court of Claims of to the Tucker implication Act. But the depriving “key courts of Treasury” the federal powerful, [ing] Congress the reference to “assess for the money” equally since so, practical is in terms what the Court of For Claims does. im- me, the port of the words is clear: there was no possibility to be that an aggrieved party was have against recourse United States such a way to circumvent limi- *61 tations on federal funds embodied in Rail the Act.16 On House Report The in specifically its cost estimate notes those cost elements as ceiling fixed, to which the is not such open- as the curiae, amicus Adams argument Representative oral as Congress repealed had not the Tucker Act. stated that majority The upon seizes this statement a concession might brought that suit be in of to Court Claims the operating ended to authorization for a federal contribution subsidies paid authorization, originally for rail local This contained service. bill, appears Act, in the of House in 402 of the Rail (1970ed., Ill), subject U. S. C. of Supp. to an annual limitation §762 $90 Significantly, possible million. is there no of a mention judgment of pro- Claims potentially of uncertain but astronomical portions. H. Rep. Report See The sec- 30. Senate similar. In a “Minimizing Taxpayer tion Expense” explains: entitled it money required “Although implement the amounts of to the ration- restructuring bankrupt alization and the in of railroads the North- by east authorized legislation this substantial the seem to uninitiated, every design effort made has been a bill which mini- taxpayer. Indeed, very mizes the cost process to the S. the direct U. by healthy which the bill would the create new railroad out of bankrupt strong ones arose from this desire limit the use money. Federal permit bill is written to the thus transfer required properties rail the bankrupt exchange in for estates corporation securities of new reorganization plan via a under umbrella proceeding Bankruptcy of a Section 77 In Act. addition, guarantees calls for the bill use Federal loan rather grants than direct possible. procedure wherever This allows for the necessary private funds to come from in exchange sector loans repaid which are to be Corporation recipi- new or other guarantees ents. The use of loan instance was this felt to be particularly appropriate they support since will a new with railroad earnings excellent prospects.” 93-601, Rep. p. No. In the section on cost estimates it obligational is noted: “The authority of the $150,000,000 Association limited to finance Secretary’s agreements reorganization with railroads in for the acquisition, improvement maintenance and prior rail facilities completion system plan. final Under the bill addi- obligation authority tional necessary implementation for the system plan designated final must system in the final plan and Congress.” Id., affirmatively approved by joint resolution of at 125-126. Had intended to remedy allow a Tucker Act addition to all that Act, was created the Rail all of fore- going assurances would have been worthless.
177 interpretation But compensation. supplement a con- by the manifestations of his overborne words is Mr. Adams’ intent reviewed above. trary congressional import however, straightforward have a remarks, posi- with colloquy with the cited above and accords filed which Court, tion taken in the brief he with this uphold urged us to the Rail Act without to a reference remedy. Tucker Act His remarks confirm that Tucker Act remains available to enforce obligations (and the United against against Con- merely States rail) created For example, Act. should Gov- good guarantee ernment fail to make on its of bonds 210, issued under holders thereof could obtain relief in the Court of Claims. are asked
We
to infer a Tucker Act remedy by apply
ing the canon that
interpretations
favors
of statutes that
avoid substantial constitutional questions.
See,
g.,
e.
United States ex
Attorney
rel.
General v. Delaware &
Co.,
Hudson
213 U. S.
407-408
United States
(1909);
366,
Fuey Moy,
v. Jin
241 U.
(1916);
394
S.
Richmond Screw
States,
Anchor Co. v. United
275 U.
331 (1928);
S.
Benson,
Crowell v.
285 U. S. 22,
(1932);
62
Screws v.
States,
United
91,
(1945).
U. S.
As originally
proposition
stated,
was that where a statute is “rea
sonably susceptible of two interpretations,”
the courts
will choose the one that steers
clear
collision
con
with
stitutional
limitations. United
Attorney
States ex rel.
General v.
Co.,
Delaware & Hudson
supra, at
Texas
407;
v.
Co.,
Eastern Texas R.
U.
217 (1922). The
principle
applied
preserve
so as to
substantially the
legislative purpose, even where a statute must be tailored
question
avoid a
of constitutional
infirmity.
See
States,
v.
Screws
supra;
United
Crowell Benson,
v.
supra;
FTC v. American
Co.,
Tobacco
264 U.
S. 298
In
more recent applications,
the Court has on occa
however,
sion
abandoned
fidelity to congressional
intent
United
question.
to avoid a constitutional
order
See
States v.
Rumely,
States v.
United
(1953);
345 U. S.
CIO,
J., concur-
(1948) (Rutledge,
U. S.
I
In
in a
ring).
cases,
engaged
those
believe,
*63
judicial
Acts,
rewriting
congressional
the relevant
I
only
concurred in the
the con-
reaching
result
after
questions
Today’s
stitutional
deci-
Court avoided.
sion, however, goes
beyond
Rumely
well
was
what
done in
In
and CIO.
those
as in
cases,
applied
most
have
the canon of construction,
the Court has narrowed the
congressional regulatory
in order
scheme
to avoid con-
fronting
possibility
of overreaching.
United
See
ex
Attorney
States
rel.
General
Delaware
v.
& Hudson
Co., supra; United
Jin Fuey Moy,
States v.
supra; Texas
Co., supra;
v. Eastern Texas
FTC
R.
To-
v. American
Co.,
Holden,
bacco
supra; Blodgett v.
275
142,
U. S.
148
(1927) (Holmes, J., concurring); Missouri
R. Co.
Pacific
Boone,
v.
“ ‘A fairly statute must be if construed, possible, so as only to avoid not the conclusion that it is unconsti- tutional, but also grave upon doubts that score.’ But difficulty avoidance- of [Citation omitted.] pressed will not be the point of disingenuous eva- sion. Here the intention the Congress is revealed distinctly permit too us to . ignore it ...
problem Id., must be faced and answered.” at 379. State, Aptheker Secretary v. 378 U. S.
See also CIO, supra, United v. at 129-130 States (1964); (Rutledge, J., concurring). Act a back- against
The drafters of the Rail
wrote
Tucker Act
ground
reorganization law,
in which the
escaping
has
been
a device
regarded
never before
as
leg-
questions. Challenges
bankruptcy
constitutional
islation
permitting
deprivations
unconstitutional
property have occurred before. Our
until
today
cases
have faced
challenges
adverting
these
without
Tucker
Continental
Bank
remedy.
Illinois
See
Nat.
& Trust
Chicago,
Co. v.
Corp.,
R. I. & P. R.
The Court Claims is without power to enforce its judgments. While those amounting $100,- to less than are paid general from a appropriation, payment 000. judgments exceeding special this sum require action by Congress. Ordinarily, of course, Congress pays these
17 Louisville Joint Stock
Radford,
Land Bank v.
held that
Act,
the first
provided special
Frazier-Lemke
which
relief to farm
mortgagors
bankruptcy,
was
taking
an unconstitutional
mortgagee’s
security.
theory
by
Had the
offered here
the Govern
applied there,
ment been
the Court could have avoided the issue
by inferring
remedy.
possibility
a Tucker Act
The
of such a course
Hurley
Kincaid,
escaped
attention;
could
have
the Court’s
v.
(1932),
just
years earlier,
will amaze have en- would I believe cannot statute. might in the end it been told that this law had it acted billion not for one pockets taxpayers’ dig have to into 10 or perhaps for unknown but appropriated billions — it author- property “just compensation” billion —for be “taken.” ized to
Ill Con- 8, empowers I, Article cl. of the Constitution Bank- subject of gress to establish “uniform Laws on the held ruptcies throughout This the United States.” “geo- required many years requirement back that treat graphical” purpose Its main was to uniformity. in one area as in against claimants debtors the same Frankfurter, concur- another. As stated Mr. Justice v. Protective Committee in Vanston Bondholders ring Green, (1946):18 172-173 U. S. uniformity
“The is a requirement Constitutional wholly It is requirement geographic uniformity. existing obligations satisfied when of a debtor are bankruptcy alike treated administration throughout regardless State country, bankruptcy which the court sits. Na See Hanover *65 tional Bank Moyses, 181, 190. v. 186 U. S. To estab 18 requirement “uniformity” preclude The varia does local tions, rights depend that make of creditors or debtors peculiarities on relating, g., exemptions, validity of state law e. to dower mortgages, right through bankruptcy and the against enforce state remedies Stellwagen conveyances. Clum, fraudulent v. 245 S.U. 613- (1918); Wright Branch, v. 440, 463 Vinton 300 U. S. 7n. bankruptcy mean
lish uniform laws of does not among forty-eight out differences wiping in commercial trans governing States their laws actions. The did not that Constitution intend have legal consequences transactions that different in they place took shall because different States come they passed out with the same result because bankruptcy In through court. absence of bankruptcy such differences are familiar results system federal having forty-eight diverse codes of local law. These inherent in fed differences our day eral scheme a bankruptcy before are not wiped out or transmuted day after.” The Solicitor argument General makes curious the Commerce power Clause which supports the continu- system ance this rail requires uniformity. no But it is the power bankruptcy gives Congress power to cut on down obligation contracts. Recourse to the Bankruptcy necessary Clause to sustain this statute, for, as noted below, it significant impairment authorizes beyond permitted 77.§ applies
The not across the in only Nation but midwest and northeast region of the United States. Sec tion 102 (13), 45 U. (13) S. C. (1970 § ed., Supp. so III), indeed defines "region.” "region” It to that that USRA is confined § 202 (b) S. 712§ U. C. (b), (1970 ed., Supp. Ill), performance of its various duties. Reporting features of the Act only reach rail roads this “region.” § 203 (a), (a) 45 U. C. 713§ (1970 Supp. III). ed., Secretary The of Transportation is likewise so confined. 204 (a), 45 (a) U. S. C. 714 (1970 Supp. III). So is ed., the new office—Rail Serv ices Planning Office—in the Interstate Commerce Com mission. (a), (d), §§ C. (a), U. S. (d) §§ (1970 III). ed., Supp. system plan” “final covers *66 only (c), (d), “region.” (a), rail service in this §§206 III). In (1970 Supp. (c), (d) ed., 45 U. S. C. (a), §§ its short, pro the Act have to be to make would amended rail in midwest and applicable cedure carriers not is region. northeast The Solicitor therefore General says applies with quite wrong when he that the Rail reorganiza the same force and effect wherever railroad are found. tions
The a bankruptcy court, for Con- Court gress powers” has it given reorganization “such “a (1970 court” has. (b), (b) ed., § 209 45 U. C. 719§ Supp. III). railroad in as de- reorganization” “a And, in fined (12) § 102 includes those in 77 of the Bank- ruptcy pro- Act. That means in 77§ that a railroad ceedings but not in located midwest northeast has region more six benign treatment than the rail car- riers before inus these cases. importance The of that among security difference is felt the ranks of holders: security holders in of rail carriers who now or the future are a 77 reorganization in the will South West receive more plaintiffs considerate treatment than below in these cases. The differences are minor but ex- not ceedingly substantial.
(1) Under § we 77, as held the New Haven Inclusion Cases, supra, plan approved was whereby rail assets were disposed of a view with to reorganizing the remain- ing enterprise as an investment company. Under the Rail Act, (b) § 207 mandates a if chapter dismissal “this provide does process which would be fair and equi- table to the estate of the railroad.” U. S. C. 717§ (1970 (b) Supp. III). As the Reorganization ed., held, plan approved in the New Haven Inclusion Cases would permissible not be under the Rail Act, as. the Rail Act nowhere envisages a bifurcated reorga- nization, one for nonrail assets and another rail assets. only choice between an overall reorganization on *67 whereupon one a dismissal hand and all the diversi- equity receivership explored.
ties of the old can Thus, be security companies holders of under the Act reorganized deprived security are of of advantages which holders rail enjoy. § other carriers 77 proceedings In (2) conveyance a sale or a pursuant plan assets 77,§ under lien on those assets is transferred to the proceeds. (o). § But (b)(2) §303 reason of the Rail Act the transfer is “free of any and clear liens or encumbrances.”
(3) Under 77 (d) § plan a can be consummated, before judge (as well as the Interstate Commerce Commis- sion) must find to be it “fair and equitable.” Under the Act, Rail that (c), finding § is made only post ex facto. pressures Thus the are on to plan consummate the with no open alternatives the Special Court except dis- missal. The choice under § which the New Haven Inclusion Cases illustrate, is barred; security and the holders here lack the expertise benefit of the Inter- state Commerce Commission to which the courts give very great Ecker deference. v. Western See R. Pacific Corp., 318 U. S. 472-475 post ex facto finding on “fair and equitable” prerequisite of this plan security robs these protective holders of measures security enjoy holders in reorganizations of rail car- riers in other geographical areas.
(4) While the Rail Services Planning Office is directed public to hold hearings on the “preliminary system plan,” § 207 (a)(2), it is USRA that prepares system the final plan, §§ 207 (c), (d), and submits it to the Congress. § 208. That submission to Congress is, however, per- functory in the plan sense that clears that hurdle unless Congress disapproves it. Under (e) § the se- curity (“all parties holders in interest”) have right to be heard before the approves court plan. Under the The denial hearing granted. like Rail Act no of due to a denial times amount be heard at right a right on whether such opinion I no process. intimate re- constitutionally all rail eliminated from could be holders of some security But where organizations.19 those who given right 77 are rail carriers it, denied below are plaintiffs are claimants against “uniform- obviously lacks that provision of Rail Act this mandates. ity” which the Constitution vari- recognized that local While we have heretofore credi- governing rights law ations reason state bankruptcy without *68 may tors debtors honored and violating uniformity we have never sanc- clause,20 the procedure tioned a harsher for the same bankruptcy region applied class of in one than same debtors is class in a region. bankruptcy may, different The court course, empowered of be to make orders on the its turn availability of credit which be existent in one area but not in But another.21 down to this day we have never dreamed allowing debtors in the same class and their creditors treated more in leniently region one than in another.22 (e) security Under a two-thirds vote of each class holders § by plan normally required.
affected
is
bankruptcy
court,
however, may
approve
plan
though
even
the two-
nevertheless
lacking
equitable
thirds vote is
if it
plan
finds that
fair
rejection
by
security
itof
a class of
holders “is not reason
ably justified
light
in the
respective rights
of the
and interests of
rejecting
those
it and all the relevant
facts.”
For an instance where
we
bankruptcy
sustained a
court
approving
plan
in
that a class
security
see RFC v. Denver & R. G. W. R.
rejected,
had
holders
Co.,
495,
(1946).
328 U. S.
531-535
18, supra.
N.
21Wright
Branch,
Vinton
v.
My conclusion by of the Consti- “uniformity” required I, 8, § Art. cl. does not mean it is unconstitutional in its tution entirety. however, ways It does that the four mean, “uniformity” before lacking which must be remedied present group security holders can be made to (b) suffer both from of the Act and from the cram- provisions 303, including down the absence of security meaningful right holders to be heard on the fairness of a law. pressure
We are to bow to the urged events and expedite in public reorganization interest the of these carriers. An emergency gives six rail often I the occasion to act. But know of no emergency that permits it disregard Compensation Just Clause of the Fifth Amendment or the uniformity requirement of Bankruptcy Clause of the Constitution.
I
“hydraulic
pressure”
fear that
generated
this
case will
impact
have a serious
on a historic area of the
jealously protected over
law,
the centuries
courts of
equity
justice.
in the interests of
*69
case, adopted special procedures
bankruptcies.
in that
for all railroad
Money
Cases,
inapposite are the Head
Similarly
(1884),