Legislation Prohibiting Payment of Interest on Compensation Awards Under the 1980 Omnibus Territories Act ( 1981 )

Legislation Prohibiting Payment of Interest on Compensation
Awards Under the 1980 Omnibus Territories Act
Congress may eliminate or modify claims which are purely statutory w ithout violating
the Fifth Amendment to the Constitution, unless those claims have ripened into final
judgments. Thus, legislative repeal o f a provision requiring payment o f interest on
compensation awards authorized by 48 U.S.C. § 1424c is constitutionally permissible,
except insofar as it purports to affect cases in which an award o f damages has become
final.
July 29, 1981
M EM ORANDUM OPIN IO N FOR T H E COUNSEL TO T H E
D IRECTO R, O FFIC E O F M A N A G EM EN T A N D BU D G ET
This responds to your request for the views o f this Office with
respect to the constitutionality of proposed legislation prohibiting the
payment of interest on compensation awards made under certain provi­
sions of the 1980 Omnibus Territories Act, 48 U.S.C. § 1424c (Supp. IV
1980). For the reasons that follow, we believe that any such prohibition
would be constitutional unless it were applied to final judgments
awarded under § 1424c.
I. Background
In the latter stages of World W ar II and into the postwar years, the
Department of Defense established certain military bases on the island
of Guam. The land used for these bases was acquired from local
landowners either through negotiated sale or through condemnation
proceedings, generally conducted under military authority. See 123
Cong. Rec. 31073 (1977) (remarks o f Rep. Burton); Franquez v. United
States, 604 F.2d 1239 (9th Cir. 1979). Thereafter, some .local landowners
contended that the United States had treated them unfairly and thus
deprived them of their right to just compensation under the Fifth
Amendment.
The statutory provisions at issue here responded to these contentions.
In 1977, Congress passed 48 U.S.C. § 1424c, which grants the district
court of Guam jurisdiction
to review claims of persons, their heirs or legatees, from
whom interests in land on Guam were acquired other
235
than through judicial condemnation proceedings, in which
the issue o f compensation was adjudicated in a contested
trial in the District C ourt of Guam, by the United States
between July 21, 1944, and August 23, 1963, and to award
fair compensation in those cases where it is determined
that less than fair m arket value was paid as a result of (1)
duress, unfair influence, or other unconscionable actions,
or (2) unfair, unjust, and inequitable actions of the United
States.
U nder these provisions, fair compensation is defined to include “such
additional amounts as are necessary to effect payment of fair market
value at the time o f acquisition, if it is determined that, as a result of
duress, unfair influence, o r other unconscionable actions, fair market
value was not paid.” 48 U.S.C. § 1424c(c). Since the enactment of a
1980 amendment, Pub. L. No. 96-205, § 301, 94 Stat. 84, 87-88, this
provision has required payment of interest on sums not paid.
II. Discussion
A t the outset, we note that the rights created by 48 U.S.C. § 1424c
are statutory in nature. If landowners in Guam have a constitutional
claim to just compensation under the Fifth Amendment, and if just
compensation must include interest payments, see Shoshone Tribe o f
Indians v. United States, 299 U.S. 476, 497 (1937), nothing in § 1424c
bars an appropriate suit in the Court of Claims. The allowance of
interest payments under the current provision does not affect the avail­
ability o f such payments under the Just Compensation Clause; similarly,
the disallowance of interest payments under a statutory amendment
would not affect suits in which recovery was sought, not under the
statute, but for a constitutional “taking.” W e do not believe that 48
U.S.C. § 1424c should be understood to preempt existing statutes that
may provide remedies for constitutional takings.
In this light, the primary issue raised by your inquiry is whether, in
cases in which the Fifth Amendment does not require compensation,
legislative repeal of the allowance o f interest by § 1424c would be
constitutional. W e believe that such a repeal would be permissible
except to the extent that it purported to affect judgments that are final
in the sense that a determination of damages and liability has been made
and the time for the taking of an appeal has passed.
T he general rule is that once an award of damages has become final,
Congress may not constitutionally eliminate the liability of the United
States under a final judgment. The rule was stated in McCullough v.
Virginia, 111 U.S. 102, 123-24 (1898):
It is not within the power o f a legislature to take away
rights which have been once vested by a judgment. Legis­
lation may act on subsequent proceedings, may abate ac­
236
tions pending, but when those actions have passed into
judgment the power of the legislature to disturb the rights
created thereby ceases.
In certain cases, of course, Congress may alter the remedies issued in a
final judgment, but there is no authority for the proposition that Con­
gress may eliminate a final judgment for monetary relief. The basic rule
is stated in numerous cases. See, e.g., Pennsylvania v. Wheeling and
Belmont Bridge Co., 59 U.S. (18 How.) 421, 431 (1855) (allowing Con­
gress to overturn final judgment requiring removal of bridge as obstruc­
tion to navigation, but stating “if the remedy in this case had been an
action at law, and a judgment entered in favor of the plaintiff for
damages, the right to these would have passed beyond the reach of the
power of Congress”) (dictum); Hodges v. Snyder, 261 U.S. 600, 603-04
(1923), (“a suit brought for the enforcement of a public right . . . even
after it has been established by the judgment of the court, may be
annulled by subsequent legislation and should not be thereafter en­
forced; although, in so far as a private right has been incidentally
established by such judgment, as fo r special damages to the plaintiff or
fo r his costs, it may not be thus taken away”) (emphasis added); Daylo v.
Adminstrator o f Veterans’ Affairs, 501 F.2d 811, 816 (D.C. Cir. 1974);
Comm'rs o f Highways o f Towns o f Annawan, et al. v. United States, 466
F. Supp. 745, 764-65 (N.D. 111. 1979) (“It is clear that the River and
Harbor Act of 1958 could not . . . interfere with plaintiffs’ rights under
the condemnation decrees”); Battaglia v. General Motors Corp., 169 F.2d
254, 259 (2d Cir. 1948) (Congress may eliminate or modify claims, “so
long as the claims, if they were purely statutory, had not ripened into
final judgment”).
In our view, these cases compel the conclusion that once an award
under § 1424c has become final, the prevailing party has a “vested
right” to them, and Congress may not remove that right without
violating the Fifth Amendment. For this reason, we believe that any
legislation insulating the government from liability under the Act may
affect only those claims that have not been made subject of a final
judgment. At the same time, the cases cited above stand for the propo­
sition that, before final judgment has been entered, Congress may affect
the relevant claims by eliminating the provision for payment of interest.
We understand that the claims to be litigated in district court in
Guam will be subject to a bifurcated proceeding: an initial trial on
damages, in which the verdict is solely advisory; and a subsequent trial
on liability. If a claimant prevails at the liability stage, the determina­
tion of damages will become relevant, though it is subject to modifica­
tion by the trial judge. Under this procedure, the award will not
become final for Fifth Amendment purposes until the time for the
taking of an appeal from the liability ruling has passed.
237
III. Conclusion
For the reasons stated above, Congress has the authority to eliminate
interest payments on awards made under 48 U.S.C. § 1424c unless the
right to such payments had become “vested” in the sense that it is the
subject of a final judgment. In all other cases, Congress may modify
§ 1424c without violating the Fifth Amendment.
L a r r y L . S im m s
Deputy Assistant Attorney General
Office o f Legal Counsel
238