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United States v. 275.81 Acres of Land, More or Less

United States District Court, W.D. Pennsylvania

June 10, 2014

United States of America, Plaintiff,
v.
275.81 Acres of Land, More or Less, Situated in Stonycreek Township, Somerset County, Commonwealth of Pennsylvania, and Svonavec, Inc., Defendant.

MEMORANDUM OPINION AND ORDER OF COURT

DONETTA W. AMBROSE, Senior District Judge.

The factual and procedural details of this condemnation action are well known to the parties and I need not repeat them in detail here. In short, the United States of America filed a Complaint for Condemnation on September 1, 2009, for the taking of property under the power of eminent domain and for the ascertainment and award of just compensation to the owners and parties in interest. (ECF No. 1). The subject property consists of 275.81 acres of land owned at the time of taking by Defendant, Svonavec, Inc., and located in Stonycreek Township, Somerset County, Pennsylvania. This site includes approximately six acres of land on which United Airlines Flight 93 crashed on September 11, 2001. The United States acquired a fee simple estate in the 275.81 acres, including oil and gas rights and eight acres of coal, subject to existing easements and certain rights of third parties. See ECF No. 1. The public use for which the property was taken was for the administration, preservation, and development of a Flight 93 National Memorial. Id.

The parties in this case agreed that the issue of just compensation for the taking of the land involved should be determined by a commission, and I found that the appointment of such a commission was appropriate under Federal Rule of Civil Procedure 71.1(h)(2)(A) for just reasons, including the complex appraisal methodologies and valuation issues involved. See Docket Nos. 137, 144. Accordingly, On July 9, 2013, I appointed an impartial three-person commission pursuant to Rule 71.1(h) to determine just compensation to be paid to Defendant by the United States. See ECF No. 144.

A trial on just compensation was held before the Commission on October 7-11, 2013. On December 9, 2013, the Commission issued a 72-page report concluding that the "just compensation" for the 275.81 acres of land in fee simple, including oil and gas rights and eight acres of coal, acquired by the United States under its power of eminent domain on September 2, 2009, is $1, 535, 000. (ECF No. 189). On March 26, 2014, I entered an Order adopting the Report of the Commission. (ECF No. 215). On that same date, I entered a Judgment in the amount of $1, 535, 000 as just compensation for the Government's taking of Defendant's interest in the subject property. (ECF No. 216).

Pending is Defendant's Motion to Amend Judgment to Include Mandatory Award of Interest. (ECF No. 217). The Motion requests an award of interest on the unpaid balance of the judgment as well as an award of interest on alleged wrongful detention of estimated just compensation. Id . The United States opposes Defendant's Motion. (ECF No. 218). For the reasons set forth herein, Defendant's Motion is granted in part and denied in part.

I. Appropriate Interest Rate

The Declaration of Taking Act provides that:

Compensation shall be determined and awarded in the proceeding and established by judgment. The judgment shall include interest, in accordance with section 3116 of this title, on the amount finally awarded as the value of the property as of the date of taking and shall be awarded from that date to the date of payment. Interest shall not be allowed on as much of the compensation as has been paid into the court. Amounts paid into the court shall not be charged with commissions or poundage.

40 U.S.C. § 3114(c)(1). Section 3116 of the Act, in turn, provides that the "district court shall calculate interest required to be paid" under the Act as follows:

(1) Period of not more than one year.-Where the period for which interest is owed is not more than one year, interest shall be calculated from the date of taking at an annual rate equal to the weekly average one-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date of taking.
(2) Period of more than one year.-Where the period for which interest is owed is more than one year, interest for the first year shall be calculated in accordance with paragraph (1) and interest for each additional year shall be calculated on the amount by which the award of compensation is more than the deposit referred to in section 3114 of this title, plus accrued interest, at an annual rate equal to the weekly average one-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the beginning of each additional year.

40 U.S.C. § 3116(a).

Here, the parties do not dispute that Defendant is entitled to an award of interest on the unpaid balance of the judgment in this case. The parties disagree, however, as to the rate of interest that should apply. The Government contends that I should apply the interest rate set forth in 40 U.S.C. § 3116(a), outlined above. Despite the mandatory language of the statute, Defendant argues that this rate is inadequate and that a different, higher interest rate - i.e., Moody's Aaa Long-Term Corporate Bond Yields - should govern.

Defendant's minimal arguments in support of its position are unpersuasive. As an initial matter, most of the case law upon which Defendant relies in support of a higher interest rate involves takings not governed by the DTA and/or takings that pre-date the 1986 amendments to the DTA that added the variable interest rate formulation now provided in the statute.[1] In addition to the unambiguous mandatory language of the amended interest provision, the legislative history surrounding the 1986 amendments makes clear that Congress's intent in enacting the amendments was to "provide for uniformity in the district courts in their determination of the appropriate rate of interest to be applied in condemnation cases." United States v. Certain Land Situated in the City of Detroit, Wayne County, Michigan , 286 F.Supp.2d 865, 870 (E.D. Mich. 2003), aff'd 450 F.3d 205 (6th Cir. 2006). In particular, the House Judiciary Committee's Report accompanying the bill that ultimately became law stated that the "purpose of H.R. 5363 is to amend the interest provisions of the Declaration of Taking Act... to establish a uniform statutory rate of interest in eminent domain cases." H.R. Rep. 99-914, reprinted in 1986 U.S.C.C.A.N. 6202. The Report further noted that "this legislation will solve a long-standing problem encountered in eminent domain cases brought in district courts under the Declaration of Taking Act regarding the appropriate rate ...


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