Full opinion text
FRIENDLY, Presiding Judge: I. Introduction In this opinion we continue the discussion of the nature of the Rail Act in Part III of our opinion of October 18,1976, 425 F.Supp. at 270-71, and shall consider the constitutionality of compensating the transferors in other than cash, an issue on which we requested briefing by our notice of April 14, 1977. We shall also deal with certain of the issues outlined in our Memorandum of June 16, 1976, 425 F.Supp. 266, 281-87, relating to the determination of net liquidation value (NLV) under § 306 of the Rail Act, of constitutional minimum value (CMV), and of value of other benefits (VOB). In accordance with our Memorandum of June 16, 1976, 425 F.Supp. at 289, opening briefs on the issues of NLV, CMV, and certain other matters were received on January 6, an answering brief of the Government parties on February 20, and reply briefs on March 18, 1977. By order of December 15, 1976, we set a schedule with respect to the VOB issue which required initial briefs to be exchanged on February 22, 1977 and further briefs on March 18, 1977. We heard oral argument on April 12 and 13, 1977. In the meanwhile, discovery has been continuing under the supervision of Judge Thomsen. As indicated in the Memorandum of June 16, 1976, 425 F.Supp. at 277-78, the court believed that extensive briefing and argument of certain general questions at this time would permit us to announce our views with respect to a number of legal issues and enable us to establish procedures for the further conduct of the necessarily complex valuation proceedings required by the Rail Act, and thereby reduce the time and expense, huge under the best of circumstances, which will be required to conclude this case. We thought then, and we think now, that simply to appoint a number of special masters who would be set loose without any guidelines from us “would produce utter chaos,” 425 F.Supp. at 277. We remain convinced of the wisdom of proceeding in the manner outlined in our June 16, 1976 Memorandum, even though it now appears that decision on some issues that have been briefed would be premature. Even as to such issues the efforts of counsel will not have been wasted, since these questions, or most of them, will have to be decided at a later date. II. Reorganization v. Eminent Domain: The Propriety of Compensation Other than Cash In our memorandum of June 16,1976, we noted that “a question lurking in the case is whether the standard of valuation should be different if the Act be regarded as a reorganization statute, as an eminent domain statute or as both,” 425 F.Supp. at 280 (footnote omitted), and requested that this issue be included in the first round of briefing. Responding to such briefing in our opinion of October 18, 1976, 425 F.Supp. at 270-71, we said that perhaps the question could be more accurately stated as being whether the Act involves a taking and, if so, whether the “constitutional minimum” required both by the terms of the Act and by the Fifth Amendment differs if the Act should be regarded as a reorganization statute enacted under the bankruptcy power or as a statute enacted under the commerce power or as both. For reasons there developed, we deferred decision until after the final round of briefing and argument called for by our June 16 Memorandum. ■ The issue has lost much of what once seemed to be its significance because of the concession of the Government parties (Brief at 12): We do not contend that the Act cannot involve a “taking” or that the Fifth Amendment standard differs depending on which powers Congress invokes. See also id. at 14-15. Indeed, it now appears that the chief, if not the sole, importance of the question how far the Act is a reorganization statute may be in its bearing on the issue framed in our notice of April 14, 1977: whether payment in the manner provided in the Rail Act, namely, that net liquidation value shall be paid in securities of ConRail and certificates of value and that only the excess of constitutional minimum value, if any, as finally determined, shall be paid in cash, is constitutional. A large step toward answering this question was taken by the Supreme Court in the Rail Act Cases, 419 U.S. 102, 95 S.Ct. 335, 42 L.Ed.2d 320 (1974). The plaintiffs there asserted that the Rail Act is basically an eminent domain statute and, because compensation is not in cash but largely in stock of an unproved entity, will necessarily work an unconstitutional taking. A variant of the argument is that, even if a reorganization statute, the Rail Act would be unconstitutional unless the Tucker Act remedy is now held to assure payment of any amount by which the market value of stocks and securities awarded by the Special Court is less than the value of the rail properties conveyed. 419 U.S. at 137, 95 S.Ct. at 355 (emphasis in original; footnote omitted). The Court held that the bankruptcy power authorized Congress to provide a mix of ConRail securities and USRA obligations in payment for the properties to be conveyed to ConRail and that any taking compensable in cash was limited to the “shortfall” between the value of the properties and the value of the consideration which the Rail Act provided, 419 U.S. at 150-56, 95 S.Ct. 335. Although, as a result of the 1976 amendments’ substitution of the certificates of value (CV’s) for the USRA obligations provided in the Rail Act as initially adopted, the “shortfall” will be different and in all probability, less, the Supreme Court’s analysis remains broadly applicable. Various transferors point out that the only estate before the Court in the Rail Act Cases was the Penn Central (PC) and that the decision thus is not conclusive on other bankrupt estates and certainly not on the nonbankrupts. Certain bankrupt transferors contend that while the Court could fairly have concluded that the Rail Act was in part a reorganization statute as to the PC in view of its preponderant share in the properties to be conveyed to ConRail and the ConRail securities to be received, the situation of the other lines is quite different since the ConRail securities will represent predominantly the earning power of PC’s transferred properties whereas their properties may have proportionately higher earning power and that this disparity would not necessarily be taken care of by the allocation of the ConRail securities issuable in consideration of the conveyances since they would still be afflicted by the assumed low earning power of the PC assets. The non-bankrupt transferors repeat this argument and further contend, citing Callaway v. Benton, 336 U.S. 132, 69 S.Ct. 435, 93 L.Ed. 553 (1949), that the bankruptcy power does not extend to them; they refer to the Government’s concession on the 180-Day Appeals, which we have permitted it to withdraw, Norwich & Worcester R.R. v. United States, 408 F.Supp. 1398, 1405 (Sp. Ct.1976), “that no contention was being made that the acquisition of rail properties from nonbankrupts would be on any other than an eminent domain basis,” see Final System Plan (FSP), Vol. I at 127-28. The first contention need not detain us long. While the Supreme Court’s decision is conclusive only with respect to PC, the Court was well aware that the Rail Act operated similarly with respect to the other bankrupt railroads, see 419 U.S. at 108-17, 95 S.Ct. 335; if the Court had thought that the Rail Act must be characterized differently as to the other bankrupt estates, it surely would have said so or at least entered a caveat, particularly since in our opinion in the 180-Day Appeals, 384 F.Supp. 895, 951-52 (Sp.Ct.1974), with which the Court was entirely familiar, we had dealt with and rejected a contention very similar to that here considered. Far from qualifying its holding, the Supreme court flatly stated, [W]e believe that there is nothing in the Act fundamentally at odds with the expressed purpose of Congress to supplement the reorganization laws, see H.Rep. 29, and, with the Tucker Act, the Rail Act is valid as a reorganization statute. 419 U.S. at 150, 95 S.Ct. at 362. In contrast, the nonbankrupts are right in saying that, in light of the concession of the Government parties in the 1974 proceedings, noted in the portion of this Court’s opinion written by Judge McGowan, 384 F.Supp. at 963-64, that any taking of their properties under the Rail Act would be an exercise of eminent domain, our decision in the 180-Day Appeals cannot be read as holding that as to them the Act was in part a reorganization statute and that a taking occurred only with respect to the “shortfall” between the constitutional minimum value of their property and the value of the consideration they ultimately will receive. We shall likewise assume in their •favor that the Supreme Court did not consider whether its analysis would apply to them. However, we now hold that as to them also the Rail Act is a valid reorganization statute and that payment may be made in securities of ConRail and CV’s with cash payable only for any “shortfall.” While Congress recognized the distinction between bankrupt and nonbankrupt railroads, see § 303(c)(1)(A), and directed this Court to make separate findings regarding the constitutional minimum value of profitable railroads, see H.R. Rep. No. 93-744, supra at 59 (1973), the Act in other respects applies equally to the rail properties of “railroads in reorganization in the region,” § 206(c)(1), and to “railroads leased, operated or controlled by any railroad in reorganization in the region.” Id. The nonbankrupts had agreed that their properties should be operated, in most cases for many years, as an integral part of railroad systems that are now bankrupt. These roads depended financially on rental or similar payments from the bankrupts. Most, although not all, were controlled by the bankrupts, a considerable number to the extent of being wholly owned. As the Government parties note (Brief at 246, n.286): New of the nonbankrupts employed their own personnel or operated their own rolling stock; and most, according to their financial statements, passively received income from sources such as rentals, dividends, interest, and the sale of property. Many were “profitable” only because they continued to state uncollected rentals as income. The nonbankrupts formed an integral part of the bankrupt systems; indeed the shipping and traveling public had no notion of their separate existence. Most of them had no rolling stock and for this and other reasons could not be operated except in connection with the bankrupt system of which they had so long formed a part; to the extent that they could have resumed independent operations, this is one of the options foreclosed by the Rail Act to be considered in determining the NLV and CMV and, accordingly, the extent of the “shortfall.” In exercising the bankruptcy power Congress may act on the basis of reality rather than under the constraints of corporate forms that had no substantial meaning to anyone until the northeastern railroads underwent a financial crisis which imperiled their continued operation in the public interest. It is appropriate to quote Mr. Justice Sutherland’s remarks in Continental Bank v. Chicago, Rock Island & P. Ry., 294 U.S. 648, 668, 671, 55 S.Ct. 595, 603, 604, 79 L.Ed. 1110 (1935): From the beginning, the tendency of legislation and of judicial interpretation has been uniformly in the direction of progressive liberalization in respect of the operation of the bankruptcy power. And these acts, far-reaching though they may be, have not gone beyond the limit of congressional power; but rather have constituted extensions into a field whose boundaries may not yet be fully revealed. Cf. Capital Telephone Co., Inc. v. FCC, 162 U.S.App.D.C. 192, 195, 498 F.2d 734, 737 (1974), where the court permitted the FCC to “look beyond the corporate entity” in order to achieve the “fair and equitable distribution of radio service” mandated by the Communications Act. Callaway v. Benton, supra, 336 U.S. 132, 69 S.Ct. 435, 93 L.Ed. 553, is not to the contrary. As we observed in Norwich & Worcester R.R. v. United States, supra, 408 F.Supp. at 1404-05, that case “does not hold at all that the bankruptcy power could not extend to the rail properties of solvent lessors of railroads in reorganization. So far as here relevant, it held only that § 77 of the Bankruptcy Act did not purport to do so.” The considerations that led the Supreme Court to conclude in the Rail Act Cases that securities of ConRail and obligations of USRA might constitutionally be used as payment for the assets compelled to be transferred with a cash award only for any “shortfall” between their value and the just compensation required by the Fifth Amendment, thus support the same conclusion with respect to the ConRail securities and CV’s provided for in the amended Act not only as to the PC, the carrier before the Court in the Rail Act Cases, but as to all transferors, both bankrupts and nonbankrupts. Indeed, we would reach this conclusion independently. As the Court observed, 419 U.S. at 150, 95 S.Ct. at 362: No decision of this Court holds that compensation other than money is an inadequate form of compensation under eminent domain statutes. The one federal case and the state cases cited by some transferors as so holding are not impressive. Most of them were decided many years ago and evince attitudes reflective of an earlier stage in the development of the economy when compensating a condemnee in securities would force him to resort to an imperfect, discontinuous market to retrieve their value. In some, the state attempted to compensate the condemnee with land, e.g., Vanhorne’s Lessee v. Dorrance, 2 Dali. 304, 315-16, 2 U.S. 304, 1 L.Ed. 391 (Cir.Ct., Pa. Dist. 1795); Groce v. Greenville, S. & A. Ry., 94 S.C. 199, 202, 78 S.E. 888, 889 (1913); Reynolds v. State Board of Public Roads, 59 R.I. 120, 194 A. 535 (1937); Shurtleff v. Salt Lake City, 96 Utah 21, 23, 82 P.2d 561, 562 (1938), or by affording the right to use the same or other property taken, e.g., State v. Smith, 25 Wash.2d 520, 544-45, 171 P.2d 853, 855 (1946). Other cases were decided under state constitutional provisions which expressly or impliedly required compensation to be paid in money, e.g., Martin v. Tyler, 4 N.D. 278, 292-93, 60 N.W. 392, 397 (1894); Gardiner v. Henderson, 103 Ariz. 420, 424-25, 443 P.2d 416, 420-21 (1968), and thus have no relevance to an interpretation of the just compensation clause of the Fifth Amendment. We shall not attempt to discuss in detail all of the decisions the transferors have cited. We note only that the transferors would have us mechanically apply the rulings of these cases while ignoring their underlying rationale — that the compensation required by the Fifth Amendment must be sure and certain and equivalent in value to the property taken. The payment scheme of the Rail Act complies with that requirement. The CV’s “constitute general obligations of the United States of America for the payment or redemption of which its full faith and credit are pledged,” § 306(a). The value of such a certificate, carrying 8% interest and redeemable not later than December 31, 1987, § 306(c)(1), can readily be computed by reference to other Government obligations for which a wide market exists. The method for determining the market value of the ConRail securities, which is to be deducted in fixing the base' value of the CV’s, § 306(c)(5), accords with commercial practice; while there is some risk that these securities may be overvalued, there is equal risk that they may be undervalued. Experience has taught us that cash itself may fluctuate in value. Application of the Rail Act, with supplementary resort to the Tucker Act if needed, will afford the transferors “a full and perfect equivalent of the property taken,” Monongahela Navigation Co. v. United States, 148 U.S. 312, 326,13 S.Ct. 622, 626, 37 L.Ed. 463 (1893). The Constitution requires no more. III. Net Liquidation Value (NLV) We deal in this section with a variety of questions relating to the determination of net liquidation value under § 306 of the Act relating to the certificates of value (CV’s). It is well to emphasize that these are questions of statutory construction, not of constitutionality; we will consider the constitutional questions in Part IV. (1) DOT’s contention that NLV is limited to scrap value We begin with the contention of the Department of Transportation (DOT) that the only kind of liquidation contemplated by Congress for the purpose of fixing the face value of the CV’s would be a liquidation for scrap. The principal basis for this claim is that when Congress adopted the amended Act in 1976, the only theory of liquidation value which was before it was the discussion in the New Haven Inclusion Cases, 399 U.S. 392, 90 S.Ct. 2054, 26 L.Ed.2d 691 (1970), which DOT argues proceeded on a scrap value theory. This is an insufficient basis for so restrictive a reading in the absence of any expression by Congress that it meant us to fix NLV on that basis alone. “Liquidation,” as used in common speech, connotes all available methods of disposition, including but not limited to disposition for junk. Moreover, the Supreme Court’s New Haven opinion did not proceed exclusively on a scrap value theory. In its discussion of the Bronx freight yards, the Court found that track-age and electrical facilities in the yard would not have been dismantled, but rather maintained for continued rail use. “It is not rational,” the Court stated, “to suppose that the managers of the hypothetical liquidation sale,, devoted to obtaining the highest possible price for the assets of the debt- or, would have ignored the best use of the yard facilities and stripped them of more than $4,000,000 in value.” 399 U,S. at 456-57, 90 S.Ct. at 2092 (footnote omitted). Congress was told in the FSP, Vol. I, at 125, that the Master Liquidation Plan (MLP) assumed “that the estates would be required to sell substantial assets for continued rail use” and that “the liquidation plan postulated by USRA is for an orderly transfer of the transportation services to other railroads. . . . ” While the FSP added that “the prices for such sales would be regulated and fixed at the pricing levels which would obtain if all rail operations over the lines of the bankrupts actually ceased and as if the. assets of the railroads in reorganization actually were dismantled and disposed of for other uses,” id., and that the prices of transfers to other railroads would be “computed as if the estates had actually been allowed to exercise their asserted rights to liquidate by selling all their assets for non-rail uses,” id., the FSP furnished no explanation for this strange assumption, and there is no indication that Congress endorsed it. (2) The transferors’ contention that for purposes of determining NLV, the United States may be regarded as a purchaser At the other extreme, we likewise reject the contention of the Trustees of the Penn Central that the directive in § 306(c)(4) that net liquidation value be “determined by the special court” gives us free rein to incorporate into NLV our guess as to what the United States would have paid for the properties if the Rail Act had not been enacted. We here rely in considerable measure on the legislative history of § 306, reviewed in Part V of our Opinion of October 18, 1976, 425 F.Supp. at 274-75. First, the House Report on the 1976 Amendments stated that the Committee concurred with USRA’s general approach toward valuation, H.R. Rep. No. 94-725, 94th Cong., 1st Sess. 90 (1975), and intimated that this Court should be guided, although it would not be bound, by that approach: While the Committee finds persuasive the Association’s particular methodology in arriving at its estimates of net liquidation values, it also recognizes that these determinations must be left to ultimate judicial review and determination. Id. Although, as indicated in the previous section of this opinion, Congress cannot be supposed to have endorsed every statement in the FSP’s analysis how NLV would be determined, it surely did not mean us to depart so far from the Association’s “particular methodology” as to regard the Government as a prospective purchaser and to guess what it would have paid. As noted above, the FSP stated, “In essence, then, the liquidation plan postulated by USRA is for an orderly transfer of the transportation services provided by the estates to other railroads. . . ” Vol. I, at 125 (emphasis added). Second, we may look to the New Haven Inclusion Cases as some evidence of the type of liquidation Congress had in mind for purposes of determining NLV. While, as we have noted, that decision does not support the notion that only scrap value can be considered in determining NLV, it contains no hint that the Federal Government could have been considered as a potential purchaser of the New Haven’s assets. Beyond all this, whatever may be the proper characterization of the role which Congress intended for the United States under the Rail Act, it was certainly not that of a “willing buyer.” It would thus be impermissible, as a matter of statutory construction, to take account in fixing NLV of the possibility, probability or, as the transferors would have it, certainty that, failing the Rail Act, the United States would have been obliged to make other arrangements for continued rail service. This would be true even if we were required to take account of that factor in fixing CMV. However, as will be shown in Part IV of this opinion, we are not required or even permitted to determine CMV in this manner. Congress created the CV’s to afford a bridge, partial or total, between the value of the ConRail securities and CMV — not to constitute part of a bundle that might exceed CMV, with the consequent need for corrective action by this court under § 303(c)(3). See H.R. Rep. No. 94-725, supra at 90 (“[T]he Committee believes that the certificates of value will assure to each transferor consideration equal to the requirements of a constitutional minimum.”). (3) The contention of the Government parties that, for purposes of determining NLV, potential sales to other government bodies must be disregarded This leads us to the renewed contention of the Government parties that in determining NLV, and for that matter CMV, potential sales to other governmental bodies may not properly be taken into account. Just as we see no reason why sales to other railroads for railroad use should be excluded from consideration in fixing NLV, as the Government parties other than DOT now concede, Brief at 72-74, we likewise see no basis for assuming that when Congress spoke of liquidation it meant to exclude sales to public bodies. It must have been known to Congress that there had- been such sales, particularly of commuting lines, and there was every reason to suppose that in the event of such a catastrophe as a general cessation of railway service in the Northeast, states and municipalities would at least endeavor to salvage the lines on which hundreds of thousands of citizens traveled to and from work in the cities. Indeed, other sections of the Rail Act reflect Congressional recognition of the active role state and local governments would assume in ensuring continued rail service. Section 304(c)(2)(C) of the Act provides that rail service may not be discontinued if a financially responsible person “including a government entity,” offers to purchase the rail properties in order to continue service. Section 403 provides for federal loans to enable state and local governments to make such purchases. See also New Haven Inclusion Cases, supra, 399 U.S. at 450 n.66, 90 S.Ct. 2054 (citing Penn Central negotiations with Connecticut and New York for state takeover of New Haven commuter services). Of course, if the Government parties were right in their contention that prices payable by public bodies cannot be taken into account in determining CMV, this would argue against taking the possibility of such sales into account in determining NLV for reasons similar to those on which we partially relied in rejecting the notion that NLV could take account of a possible sale to the United States. However, for reasons developed in Part IV of this opinion, we largely reject that contention. (4) The method for determining scrap value As already indicated, although the Government parties other than DOT concede that the transferors are entitled to attempt to prove NLV based on sale of part or all of their property to profitable railroads, the only figures presented to Congress in the FSP contemplated sale for scrap in accordance with the MLP. Vol. I, at 124-26. This plan was more fully described in a report dated March 1, 1976. The report disclosed, as FSP had already done in some degree, Vol. I, at 145-46, that one of MLP’s assumptions was that a considerable amount of time after the conveyances would be consumed in obtaining regulatory approvals. Recognizing that the time required in fact would unpredictably differ with the nature of the trackage, the Report assumed a uniform date of January 1, 1979 for the commencement of the wind-down. At the oral argument in April, 1977, counsel for the Government parties advised the court that they no longer considered valid the assumption of a three year delay before the sale program could begin and that they were developing an alternative approach. In response to the court’s request that the Government parties promptly inform it and the other parties of significant changes contemplated in MLP, the Government parties filed a statement on July 5, 1977. MLP will now eliminate any assumption that any time after April 1, 1976 would have to be spent in securing abandonment authority. The parties appear to agree that most issues concerning the methodology of the MLP are not yet ripe for decision — a rather obvious conclusion since MLP is still evolving. However, the Government parties have asked us to uphold the validity of the model for purposes both of NLV and CMV insofar as it pre-supposes a coordinated method of withdrawal. In contrast, the transferors seemingly invite us to rule that the model is invalid on precisely this account, since the scrapping of one railroad, particularly if PC were the one, might avoid any need for scrapping others. We decline both invitations. The Government parties stress that what they term the “retrieval model” embodied in the MLP assumes the presence of the Rail Act and apparently argue that this requires a hypothesis of simultaneous withdrawal. It is surely true that the Rail Act compelled the operation of all the roads until April 1,1976 and the cessation on that date of operations over the mileage that was transferred, with a consequent fulfillment of “Brooks-Scanlon rights” at that time. But, as developed in our CUE opinion, 439 F.Supp. at 1372, the railroads were constitutionally entitled to cease operations after a reasonable period for securing abandonment authority on applications which (save in the case of EL) would have been filed in early 1973 but for the discussions leading up to the Rail Act. Since the Rail Act foreclosed this right, each transferor must be allowed to prove, if it can, that exercise of this right, even in the form of a sale for scrap, would have yielded more than MLP. A transferor cannot, of course, realistically assume that it would have been operating in a world where it was the only railroad engaged in a liquidation for scrap. If it presents a plan which does not appropriately allow for this, the Government parties can object on that account. By the same token, we see no reason why the Government should not be permitted to come forward with figures based on MLP, as it may be revised, since at the least this shows what one possible method of disposition for scrap would have been. What is important is that the transferors should now make known what they intend to advance as their scrap liquidation plans, so that the Government parties will know what cases they will be obliged to meet. We direct that each transferor should serve and file such a plan not later than December 9, 1977. While most of the revisions of MLP have been promised by this fall, we are distressed that some (real restate valuations and a variety of other studies including the highly important subject of discount rates) will not be ready until 1978. We direct that the Government parties make every effort to expedite this work. (5) The method for determining values attainable on sales for railroad use The Government parties concede (Brief at 74) that: Any transferor is entitled to attempt to show that it had (before the Rail Act was passed) and would have exercised (had the Rail Act not been enacted) a right to take some specific course of action to realize rail use values from its properties. However, the Government parties insist, id., that any endeavor on the part of transferors to show that such a course would have produced values exceeding the sale of their properties for scrap must conform to an “alternative scenario.” They say this must meet four criteria: “(1) consistency, (2) feasibility, (3) legality, and (4) the assumed absence of the Rail Act or any other new governmental action designed to keep the rail properties indefinitely in operation.” (Govt, brief at 77). Application of the last of these criteria would, in practical effect, make presentation of an alternative scenario impossible since, as appears from our CUE opinion, 439 F.Supp. at 1376, 1383-84 nn.59 & 60, 61, many transferors claim they would have reached the point of cashlessness in early 1974 and Erie Lackawanna (EL) claims it would have reached this point in the winter of 1975 absent the emergency assistance provided by the Rail Act. At oral argument Government counsel relented in some important respects from the rigidity of the position taken in brief. The Government indicated that it would not demand proof that the transferors had received actual offers at identifiable prices. This might well be difficult to show in view of the fact that once serious discussion of what was to become the Rail Act began in the winter of 1973, profitable railroads had little incentive to conduct discussions directly with the various reorganization trustees. Hence it would be enough to show that, in the phrase used by counsel for EL at oral argument, profitable railroads should in their “own self interest” have wished to purchase various lines of the transferors. On the point mentioned at the end of the preceding paragraph, the Government parties also conceded that an alternative scenario might legitimately assume that the Government would have provided emergency assistance in some form for a reasonable period “to permit adequate ICC review of the abandonments or transfer applications,” Transcript at 296, and to avoid liquidation “in chaos,” Transcript at 283. Furthermore, counsel for the Government parties did not exclude the idea that the alternative scenario could take account of possible regulatory reforms including those made by the Railroad Revitalization and Regulatory Reform Act of 1976, which would have made purchases more attractive. We believe these concessions were well advised; indeed they may not constitute the limit. If the Rail Act had not been passed, Congress still would have had powerful ineentives to attempt to preserve at least some of the rail transportation previously furnished by the bankrupt entities in the Northeast and to make reasonable funds available to the reorganization trustees while studies were being prepared and negotiations with other railroads were proceeding; the parties will doubtless differ whether these would have been loans or grants. Although the Government parties may well be right in saying that the transferors cannot legitimately hypothesize that Congress would have done more in the way of interim financial aid to keep the bankrupt estates alive pending negotiations with other railroads than it did in the Rail Act pending the development and consummation of the FSP, the Government equally cannot sustain the proposition that Congress would simply have sat by and done nothing. However, the Government parties have not receded from their most basic position relating to the alternative scenario, namely, the requirement of consistency. For example, they would insist, with r iason, that it would be improper to fix NLV or CMV on the basis that a number of transferors would have been able to sell lines connecting the same points to a single profitable railroad when that railroad would have wished only one, or to assume that a particular line would have substantial traffic because a parallel line was being dismantled and then to make the same assumption in valuing the parallel line. From this premise, the Government parties go on to insist (Brief at 81) that “all transferors seeking to show rail use values for particular lines should be required to set forth explicitly their underlying assumptions about all other lines whose dispositions would bear on their properties’ value.” As a practical matter, this would seem to require a joint presentation by all transferors proposing to offer evidence of higher values attainable by sales for rail use. Such a course of action by the transferors would surely be desirable and, at the conclusion of the oral argument on April 13, we suggested that the transferors should not await the issuance of this opinion but should begin conversations among themselves with a view to seeing whether a unified alternative scenario could be developed and to report to us if any progress along these lines had been achieved. We have received no report as to what, if anything, has been done. While we believe that, as in the case of sales for scrap value, each transferor is entitled to make its own proffer as to what it would and could have done by way of sales for rail use, the Government parties are right in saying that a most difficult problem will be presented if transferors make basically inconsistent proposals. It is in everyone’s interest that all reasonable efforts should be made to eliminate or at least to reduce these inconsistencies. We therefore direct that any transferor seeking to present evidence of values to be obtained by sales for rail use shall exchange its proposal with all other transferors not later than January 9, 1978; that the transferors shall then meet among themselves with a view to a maximum ironing out of inconsistencies; that they shall deliver their proffers, as these may be revised in the light of such discussions, to the Government parties on a date not later than March 9, 1978; that the Government parties shall indicate any objections on the score of inconsistency within another 30 days; and that finally revised proffers shall be filed with this court not later than 30 days after the transferors’ receipt of the Government’s objections. We do not deem it practical at this time to specify the level of detail to be contained in such proffers, beyond saying that they should be sufficiently particularized to be meaningful. We also agree with the Government parties that the proffers of sale for railroad use must meet the criterion of legality. In saying this, however, we would not wish to be understood as ruling that the transferors must carry the burden of showing that the proposed transactions would have been approved by the Interstate Commerce Commission under criteria which the ICC had evolved in dealing with sales of profitable railroads. The Commission would have been confronted with a situation quite unlike those with which it had been presented in previous merger cases. Just as the'antitrust laws have received a different application in the case of the acquisition of a failing business, International Shoe Co. v. FTC, 280 U.S. 291, 301-02, 50 S.Ct. 89, 74 L.Ed. 431 (1930); Citizen Publishing Co. v. United States, 394 U.S. 131,136-38, 89 S.Ct. 927, 22 L.Ed.2d 148 (1968); Department of Justice Merger Guidelines ¶¶ 9, 15, 21 (1968), reprinted as amended in 1 Trade Reg. Reptr. [CCH] ¶ 4510, the Commission would have been permitted, indeed required, to apply different criteria, particularly as to the preservation of competition within the Northeast Region and of competitive balance outside it, when it was confronted with a situation where the alternative to some sort of approval would have been the cessation of substantially all railroad operations in the Northeast. There is also the possibility that if the Commission showed signs of an undue tendency to proceed along traditional lines, Congress might have stepped in. Thus, we do not at all exclude such possibilities as joint action by the transferors in the Northeast Region or joint purchases by profitable railroads to the west and south which ordinarily might have been deemed objectionable under the antitrust laws. Finally, we record our disagreement with the suggestion of the Government parties that the Interstate Commerce Commission would or could have used its power to withhold approval so as to insist on the inclusion of unprofitable mileage to a degree that would have driven down the price that purchasers would pay to the level of scrap value, a view which now appears to have been the basis for the extracts from FSP, Vol. I, at 125, cited above, p. 1004. We do not intimate that the Commission would have had no alternatives other than complete acceptance or rejection of the proposals as made. On the other hand, the suggestion that the Commission would or legally could have required purchasers to take on more and more unprofitable mileage on the basis that no harm was being done to the transferors so long as the purchase price was no less than scrap value appears to us to be unsupported by authority and in effect to negate the concession that sales for continued rail use would have been a permissible, indeed the preferred, form of liquidation. IV. Constitutional Minimum Value (CMV) The basic position of the Government parties is that CMV is the market value of rights of which the transferors were deprived by the Rail Act. These would include (1) the right to use their properties for a profit and (2) the right to sell the properties for continued rail use by others or, failing this, for scrap. While conceding the existence of (1) in principle, the Government parties consider it to be largely if not wholly theoretical on the submissions that have been made to date, since nearly all transferors have asserted, notably in their briefs on CUE, that their properties were hopelessly losing and were destined to remain so As already indicated in Part III, the Government parties further submit that scrap value should be determined in accordance with a Master Liquidation Plan (MLP) and insist that proposals in regard to sale for rail use should conform to a single “Alternative Scenario.” While the transferors attack the MLP and the demand for a single Alternative Scenario on the grounds indicated in Part III of this opinion and others, their major contention with respect to CMV is that the entire approach of the Government parties is wrong. Pointing to numerous declarations of members of the executive and legislative branches during the consideration of the Rail Act and to recitals in the Preliminary System Plan they assert that even a temporary, let alone a permanent, cessation of their operations would have caused such economic and environmental problems as to be unthinkable. They say that the value of properties which have this crucial importance to the nation but which can no longer be operated at a profit, at least in part because of national and local regulatory and promotional policies and demands, cannot be limited to what could be obtained by way of sale to private or even other public bodies. They therefore urge that, in fixing CMV, we must “consider,” with what weighting is not altogether clear, many factors other than the market value of the rights of which the transferors have been deprived. These include such concepts as gross liquidation value, original cost less depreciation, trended original cost less depreciation reproduction cost less (or even without) depreciation, assemblage value, the value of “externalities,” and “societal value.” In an attempt to conform these concepts more nearly to the conventional wisdom that property being condemned is generally to be valued on the basis of what a willing buyer would pay a willing seller, the reply brief of the PC Trustees envisions a bargaining process in which the buyer would begin by offering an amount equal to value for continued rail use for some properties and scrap value for others, knowing that the seller would not take less, and the seller would begin by demanding reproduction cost less depreciation, knowing that the buyer would not pay more, and bargaining would then ensue. This has the further effect of bringing CMV in line with NLV and thereby avoiding the need for proceedings in the Court of Claims. Before going further it is useful to comment on what seems to us to be a difference in the concept of “property” held by the Government parties on the one hand and certain transferors on the other. Some transferors challenge the Government parties’ valuation theory at a fundamental level by arguing that what was taken, and what must be valued, is “property,” not “rights” to use or sell or, in a favorite phrase of the Government, “foreclosed options.” If they mean by this that the Government’s “foreclosed option” approach is only a valuation standard rather than a description of what was taken and that we should begin our valuation analysis on the premise that “property” rather than certain “rights” were taken, our answer is that the definition of what was taken is so closely related to the valuation question that the two cannot be treated separately, see Bonbright, Valuation of Property 99 (1937) (hereafter Bonbright)\ if the point is that “property” is something more or different than certain legally-protected rights, and for this reason alone must be valued on some basis other than by consideration of the rights of which the transferors were deprived, we must disagree. For “property” is nothing more than a collection of rights and can be valued on no other basis; talk of property as having some reified existence simply makes for confusion. See Ackerman, Private Property and the Constitution 26-27, 201-03 (1977), and numerous sources cited therein; 2 Nichols, Eminent Domain § 5.1[1], at 5-8 to 5-10 (3d ed. 1976); Cohen, Property and Sovereignty, 13 Cornell L.Q. 8, 11-12 (1927); cf. Bonbright at 100-08. As Mr. Justice Roberts said for the Court in United States v. General Motors Corp., 323 U.S. 373, 377-78, 65 S.Ct. 357, 359, 89 L.Ed. 311 (1945), a condemnation case: It is conceivable that the [term “property” in the just compensation clause] was used in its vulgar and untechnical sense of the physical thing with respect to which the citizen exercises rights recognized by law. On the other hand, it may have been employed in a more accurate sense to denote the group of rights inhering in the citizen’s relation to the physical thing, as the right to possess, use and dispose of it. In point of fact, the construction given the phrase has been the latter. (Footnote omitted). See also United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 81, 33 S.Ct. 667, 57 L.Ed. 1063 (1913), and Boom Co. v. Patterson, 98 U.S. 403, 408, 25 L.Ed. 206 (1878). . Some of the transferors argue for a constitutional minimum value in excess of what could have been obtained by sale to private entities or governmental bodies other than the United States on the basis that the United States should be included in the market, while others argue that in the peculiar circumstances of this case the ordinary willing seller-willing buyer approach is simply inappropriate. In answering the first contention, the Government parties naturally emphasize Mr. Justice Holmes’ famous aphorism in Boston Chamber of Commerce v. City of Boston, 217 U.S. 189, 195, 30 S.Ct. 459, 460, 54 L.Ed. 725 (1910), “[T]he question is what has the owner lost not what has the taker gained.” That statement alone, when read in context, does not greatly aid the Government parties since it was made in rejecting a claim that the owner of land being taken by Boston for use as a street and the owner of an easement of access could aggregate their interests so as to produce a larger value than if the city took the respective rights of each. However, this was not to be the Court’s last word on the subject. In McGovern v. New York, 229 U.S. 363, 371-72, 33 S.Ct. 876, 877, 57 L.Ed. 1228 (1913), the New York courts had upheld the exclusion of evidence to prove the enhanced value of the land taken as part of a natural reservoir site and also the “fair and reasonable value of the Ashokan reservoir site which the city is condemning,” of which the land taken was a part. In affirming, Mr. Justice Holmes said: It is conceded ‘that the owner is not permitted to take advantage of the necessities of the condemning party,’ and it would seem that it might well be that the commissioners regarded it as too plain to be shaken by evidence, on the public facts, that the value of the land for a reservoir site could not come into consideration except upon the hypothesis that the City of New York could not get along without it and that its only means of acquisition was voluntary sale by owners aware of the necessity and intending to make from it the most they could. It is just this advantage that a taking by eminent domain excludes. (Emphasis supplied). The italicized statement is not inconsistent with remarks in McGovern and other cases, City of New York v. Sage, 239 U.S. 57, 61, 36 S.Ct. 25, 60 L.Ed. 143 (1915); Olson v. United States, 292 U.S. 246, 256, 54 S.Ct. 704, 78 L.Ed. 1236 (1933); United States ex rel. TVA v. Powelson, 319 U.S. 266, 275-76, 63 S.Ct. 1047, 87 L.Ed. 1390 (1943); United States ex rel. TVA v. Powelson, 138 F.2d 343 (4 Cir. 1943), cert. denied, 321 U.S. 773, 64 S.Ct. 612, 88 L.Ed. 1067 (1944), upholding recognition of special suitability of the property taken for the governmental purpose if the owner had the ability to unite his land with other parcels essential to the project and the properties could have been put to the desired use without a taking by the particular condemnor. In United States v. Miller, 317 U.S. 369, 375, 63 S.Ct. 276, 280, 87 L.Ed. 336 (1943) (footnotes omitted), the Court made a statement having the same sweep as its earlier one in McGovern : Since the owner is to receive no more than indemnity for his loss, his award cannot be enhanced by any gain to the taker. Thus although the market value of the property is to be fixed with due consideration of all its available uses, its special value to the condemnor as distinguished from others who may or may not possess the power to condemn must be excluded as an element of market value. To be sure, the point covered by this statement was not in controversy. The issues were whether the owner should have “the benefit of any increment of value added to the property taken by the action of the public authority in previously condemning adjacent lands,” id., to which the Court answered that he should, except for an increment “arising from the known fact that the lands probably would be condemned,” id., 317 U.S. at 377, 63 S.Ct. at 281; and whether the lands in question “[were] so situated as to entitle respondents to the benefit of this increment,” id., at 375, 63 S.Ct. at 281, to which the Court answered that they were not. Still the holding that value arising solely from the prospect of condemnation must be excluded does seem to hinge on a premise that the taker must be excluded from the market. The Government parties rely also on statements that the just compensation clause demands indemnification and nothing more. Thus the Court said in United States v. Miller, supra, 317 U.S. at 373, 63 S.Ct. at 279: The owner is to be put in as good a position pecuniarily as he would have occupied if his property had not been taken: and in United States v. Reynolds, 397 U.S. 14, 16, 90 S.Ct. 803, 805, 25 L.Ed.2d 12 (1970): The owner is to be put in the same position monetarily as he would have occupied if his property had not been taken. See Bauman v. Ross, 167 U.S. 548, 574, 17 S.Ct. 966, 42 L.Ed. 270 (1897); Olson v. United States, supra, 292 U.S. at 255, 54 S.Ct. 704; Westchester County Park Comm’n v. United States, 143 F.2d 688, 691 (2 Cir.), cert. denied, 323 U.S. 726, 65 S.Ct. 59, 89 L.Ed. 583 (1944). These statements gain added meaning when they are read in conjunction with Mr. Justice Frankfurter’s opinion in Kimball Laundry Co. v. United States, 338 U.S. 1, 5, 69 S.Ct. 1434, 1438, 93 L.Ed. 1765 (1949): The value compensable under the Fifth Amendment, therefore, is only that value which is capable of transfer from owner to owner and thus in exchange for some equivalent. Its measure is the amount of that equivalent. Here, if the “property had not been taken,” the transferors would have had, at least so far as now known to us, hopelessly losing railroads, on the verge of “cashlessness.” See p. 1008, supra. The only value “capable of transfer from owner to owner” was the value obtainable by sale to private or governmental bodies other than the United States for continued rail use or by sale as scrap. The transferors answer that the United States had even greater compulsion to buy than other governmental bodies would have had and that, if we should sustain inclusion of the latter in the market, as subsequently we broadly do, there is no reason to exclude the former. It appears to us, however, that inclusion of the taker in the market, in the sense of here attempting to reconstruct a bargaining process between the transferors and the United States, is inconsistent with the basic principle of eminent domain. While suitability of the property for a public purpose may properly be considered, this will not affect market value unless there is a prospective buyer other than the taker. It would be incongruous if the owner of an abandoned warehouse standing in the way of a contemplated highway or runway, who is relegated to market value if the building possesses some, were allowed the benefit of a hypothetical bargain with the taker because the structure had become so dilapidated as to have no market value at all. The essence of eminent domain is not only that it enables the condemnor to acquire property which the condemnee may not wish to sell but that it allows the condemn- or to do this at a cost determinable in accordance ■ with some external standard rather than by hypothesizing a bargaining process in which the condemnor’s needs are an element and there is simply no way of determining the point where the bargain would ultimately be struck. See also Note, supra, 90 Harv.L.Rev. at 604. To reiterate Mr. Justice Holmes’ statement in McGovern, supra, 229 U.S. at 372, 33 S.Ct. at 877, “It is just this advantage [to the condemnee] that a taking by eminent domain excludes.” Thus, the usual meaning of the Fifth Amendment’s just compensation ■ clause is that the taker must pay the market value of the property, without considering its own presence in the market. In these circumstances, that rule would value each transferred property at the higher of scrap value or its sales value to parties other than the United States. A. Decisions Applying Rules Other than the Market Value Rule The transferors respond that, however we might view the matter if it were one of first impression, the decisions discussed up to this point have been qualified by others which have established that, in a case like this, a court must consider values beyond those attainable in the market, notably reproduction cost or some variant upon it, whether on the theory of including the condemnor as part of the market or because market value is simply not an appropriate measure of just compensation. The transferors have advanced several lines of decisions to support this argument. We shall consider each of them: (1) Takings of property not held for profit The transferors refer us to federal cases such as United States v. Certain Property, 403 F.2d 800 (2 Cir. 1968), and numerous state court opinions, e.g., Idaho-Western Railway Co. v. Columbia Conference of Evangelical Lutheran Augustana Synod, 20 Idaho 568, 119 P. 60 (1911), County of Cook v. City of Chicago, 84 Ill.App.2d 301, 228 N.E.2d 183 (1967), City of Wichita v. Unified School Dist. No. 259, 201 Kan. 110, 439 P.2d 162 (1968), Newton Girl Scout Council, Inc. v. Massachusetts Turnpike Auth., 335 Mass. 189,138 N.E.2d 769 (Sup.Jud.Ct.1956), where a condemnor has taken property such as schools, churches, or parks not held for profitable use and the courts have allowed the owner to recover a sum sufficient to enable him to replace the property. See 4 Nichols, supra, § 12.32[3][d]; Note, Just Compensation and the Public Condemnee, 75 Yale L.J. 1053 (1966); see also Bonbright at 419; .1 Orgel § 40, at 181-85. One can find in such cases statements like that in Idaho-Western Railway Co., supra, 20 Idaho at 583, 119 P. at 65: Whenever the property is of such character and nature that it has no market value, its value for the uses and purposes to which it is being devoted and to which it is peculiarly adaptable may be shown There are, as well, statements that appear to support the transferors’ position that “[i]n such cases just compensation is arrived at by considering reproduction costs, replacement costs and other measures of value designed to approximate the true worth of the condemned property.” PC Lienholders’ reply brief at 20-21. Whatever literal application such statements may have and, of course, the railroads here in question did possess some market value — the transferors’ argument misses the true thrust of these decisions. The basic principle, as the Supreme Court said in the extracts from the Miller and Reynolds opinions quoted above, is that the owner is entitled to be put in as good a position as if the taking had not occurred. This means, in situations such as those here under discussion, being provided with the funds needed to build another school or church or to create another park. In United States v. 564.54 Acres of Land, 506 F.2d 796, 800 (3 Cir. 1974), the court stated: The community entity is entitled to be made whole, and making it whole means more than forcing it to abandon its nonprofit community use and accept what it could obtain in the marketplace from a profit motivated purchaser. Simply stated this method insures that sufficient damages will be awarded to finance a replacement for the condemned facility. Nothing less would afford just compensation. And since the owner of a facility devoted to a non-profit, public use has a proprietary as well as a community interest in it, if the fair market value exceeds the costs of the substitute facility, such an owner should be entitled to the higher of the two measures of compensation. See also State of California v. United States, 395 F.2d 261, 264-66 (9 Cir. 1968). Here the transferors have no desire to be put in a financial position that will enable them to build another railroad; they want to exit from the railroad business, not to enter it. As the Supreme Court said in the Rail Act Cases, supra, 419 U.S. at 156, 95 S.Ct. 365, Complainants evidence no interest in retaining their property for longer than the Rail Act requires. Indeed, their position is really that they want to be free to dispose of it sooner. Thus, there is no interest asserted in retaining the properties themselves; the only interest is in making sure that creditors receive fair compensation for those properties. In short, the notion of indemnity which is the root principle of the line of decisions here being reviewed is of no avail to the transferors in this case. (2) Use of reproduction cost to value a plant being used for a profitable purpose but unmarketable as such The transferors rely on the portion of United States v. Certain Property Located in the Borough of Manhattan, 306 F.2d 439, 445-49 (Foley Square) (2 Cir. 1962), relating to the newspaper II Progresso as showing that when there is no market for property, reproduction cost may be used. Apart from the fact that the court ruled against the owner, not for him, the argument ignores the point central to the court’s discussion. This was that II Progresso, although operating in a 84 year old building and with rather outmoded machinery, was making a profit and wished to continue going on just as it had been. See id., Appendix to Brief of Defendants-Appellants, at 1114a (District Court decision). Even so, the court sustained a zero award for the building on the basis of evidence that it had no value as a loft building and the absence of evidence that it had any more value as a printing plant. Evidence of reproduction cost of the machinery less depreciation was held to have been properly admitted as one way of getting at the amount required to indemnify II Progresso — by providing the funds it would need to start a similar operation elsewhere, 306 F.2d at 449. Here, as we have just seen, the transferors advance no such theory of indemnity. Unlike II Progresso, they want to discontinue their business, not to continue it at a new site. (3) Cases where the market value of property is temporarily distorted or eliminated by governmental action Another group of cases said to require a departure from market value as a criterion in this proceeding concerns situations where market value has been adversely affected by governmental activity. The transferors claim that the Government’s regulatory actions and its subsidization of other competing forms of transport bring them within the thrust of these decisions. It will be useful first to review the cases and then to consider their applicability. Some of the eases concern compensation for property whose ordinary use and marketability were affected by wartime governmental regulation. In United States v. Buxton Lines, Inc., 165 F.2d 993 (4 Cir. 1948), the federal government requisitioned a cargo ship with the idea of converting it to a troop transport vessel but returned the ship four months later when the conversion proved impractical. Rejecting the Government’s claim that only a nominal amount was owed since the owner would not have been able to sell, charter or otherwise profit from the ship under wartime market conditions, the court ruled that just compensation must be set at “the sum which would probably be arrived at as the result of fair negotiations between an owner willing to sell and a purchaser willing to buy after due consideration of the elements affecting market value”, adding that “[t]he purchaser willing to buy may be merely a hypothetical figure ... as long as his absence is not attributable to the fact that the property has no value.” Id. at 996. However, this holding was rested on the special fact that the [ship] could quite easily have been used during the period in question, the only difficulty being the absence of a private market as a consequence of the war and Government policies. Id. Specifically, the condemnee offered evidence that the Government had prevented it from accepting a foreign company’s lucrative offer to purchase the ship. Id. at 997. Buxton holds little more than that the Government cannot by order destroy a market, with buyers who would have been willing to pay high, perhaps even exorbitant, prices, and then say the property is worth nothing. Swiss Federal Railways v. United States, 112 F.Supp. 357, 125 Ct.Cl. 444 (1953), is a parallel case. The Court of Claims there rejected the Government’s contention that just compensation for certain