Law School Case Brief
Reg’l Rail Reorganization Act Cases - 419 U.S. 102, 95 S. Ct. 335 (1974)
The Tucker Act, 28 U.S.C.S. § 1491, which confers jurisdiction on the Court of Claims to render judgment on any claim against the United States founded upon the Constitution or any federal statute or regulation, guarantees an adequate remedy at law for any "taking" of railroad properties which might occur as a result of the provisions of the Regional Rail Reorganization Act of 1973, 45 U.S.C.S. §§ 701 et seq., which require (1) the conveyance of the properties of railroads in certain regions of the country to a private state-incorporated corporation (Conrail) in return for the stock of such corporation, federally guaranteed obligations of the federal corporation which is to devise the final system plan for such railroads' reorganization, and other benefits accruing under the transfer, and (2) the continuation of rail services by the railroads pending formulation of the final plan; the Tucker Act remedy is not rendered inadequate on the grounds that it comes too late, that the valuations involved might be complex, or that Congress might not appropriate the money awarded by the Court of Claims.
In response to a rail transportation crisis following the initiation of bankruptcy reorganization proceedings by eight major railroads in the midwest and northeast, Congress enacted the Regional Railroad Reorganization Act (Act), 45 U.S.C.S. §§ 701 et seq., to reorganize railroads into a single viable system operated by a private, for profit corporation set up by the government. In exchange for conveyance of the bankrupt railroad properties to the corporation, the railroads were to receive shares in the corporation. Plaintiff Penn Central Transportation Co., the largest of the eight railroads, claimed that the Act was a taking of rail properties without payment of just compensation in violation of U.S. Const. amend. V. The district court held that certain provisions of the Act violated the Fifth Amendment and the bankruptcy uniformity laws under U.S. Const. art. I, § 8, cl. 4. The district court enjoined enforcement of the Act.
Could the provisions of the Regional Railroad Reorganization Act be deemed as a taking of rail properties without just compensation in violation of the Fifth Amendment of the U.S. Constitution?
The United States Supreme Court held that the provisions of the Regional Rail Reorganization Act as to continuance of railroad service pending implementation of the final reorganization plan, and as to conveyance of the railroad properties to Conrail, did not effect a "taking" without just compensation in violation of the Fifth Amendment, since a Tucker Act remedy against the government was not barred by the Regional Rail Reorganization Act but was available to recover any deficiency of constitutional dimension in the compensation provided for the property transfer or the compelled interim continuation of rail services. According to the Court, the Regional Rail Reorganization Act, in view of the availability of the Tucker Act remedy for any constitutional shortfall in the compensation to be received by the railroads, was not to be considered as being merely an eminent domain statute, but was valid as a reorganization statute enacted pursuant to Congress’ bankruptcy power, and did not violate procedural due process requirements.
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