United States v. 14,770.65 Acres of Land in County of Richland (616 F. Supp. 1235, 1985)

MEMORANDUM OF DECISION

GORDON, Senior District Judge.

This condemnation proceeding concerns the acquisition of land by the United States under its power of eminent domain for the Congaree Swamp National Monument, a unit of the National Park System established by Congress in the Act of October 18, 1976, Pub.L. No. 94-545, 90 Stat. 2517. The tract now at issue, comprising some 14,770.65 acres of the total 15,138.25 acres acquired for the monument, is located in Richland County, South Carolina, and was formerly owned by defendant Congaree Limited Partnership (“Congaree” or “the landowners”), a limited partnership organized under the laws of the State of Illinois. Plaintiff is the United States (collectively, “the government”), acting through the National Park Service (“NPS”) of the Department of the Interior (“DOI”), the acquiring agency, which of course is represented herein by the government’s primary litigation arm, the Department of Justice (“DOJ”).

Although the fair market value component of the just compensation due to Congaree for the property which is the subject of this action has been decided by this Court, there remains for resolution the amount of damages for delay in payment, or interest, which the government is obligated to pay as part of just compensation. Specifically, the issue now before the Court on cross-motions by the parties, is a determination as to the date from which the government’s interest obligation commences to accrue.

The Court has carefully reviewed the motions, briefs, supporting papers of both parties, replies thereto filed by both parties, evidence proffered and the entire record in this case. Oral argument on the issue was heard on May 8, 1985. After full consideration of all the foregoing, including proposed findings submitted by the parties, and being fully advised in the premises, the Court concludes that, under the principles of U.S. v. Dow, 357 U.S. 17, 78 S.Ct. 1039, 2 L.Ed.2d 1109 (1958), and its progeny, as applied and adapted to the rather peculiar facts of the subject case, the defendant Congaree shall prevail and shall recover interest as an element of just compensation from February 23, 1978, the date of taking in this case. Now, pursuant to this disposition, the Court finds and concludes the following facts:

I. FINDINGS OF FACT

Background

For a number of years prior to passage of the legislation creating the Congaree Swamp National Monument, attention had been directed to the virgin hardwood forest located in the flood-plain of the Congaree River as an area worthy of preservation. A larger area including the tract now at issue had been considered for inclusion in the National Park System as early as 1963, and by the mid-1970’s attention was focused primarily on the so-called “Beidler Tract” owned by defendant Congaree. Legislation proposing creation of the “Congaree Swamp National Preserve” was introduced in the House of Representatives in February 1976, and in the Senate in May of that year. [Government Documents 3, 6, 7, 10, 11, 12, and 13.]

The goal of this legislation, as revealed by the legislative record before this Court, was to preserve the Beidler Tract for the enjoyment and education of future generations. Accordingly, considerable discussion and attention was given, during the process of legislative consideration, to defendant’s then-ongoing program of timber sales on the property. As early as April 1976, NPS officials initiated discussions with representatives of defendant concerning protection of the tract from further harvesting, and, by August 1976, defendant was requested by both NPS and by members of Congress to agree to a voluntary moratorium on further sales of timber from the property. Acceding to these requests, defendant agreed to a voluntary moratorium on further timber sales from its property until October 1, 1977. [Government Documents 9 and 19; Congaree Document 1.]

During the same time frame, Congress, “in order to preserve and protect for the education, inspiration, and enjoyment of present and future generations an outstanding example of a near-virgin southern hardwood forest situated in the Congaree River floodplain in Richland County, South Carolina,” enacted legislation creating the Congaree Swamp National Monument Act of October 18, 1976, Pub.L. No. 94-545, 90 Stat. 2517. Other pertinent provisions of the authorizing legislation read:

The monument shall consist of the area within the boundary as generally depicted on the map entitled ‘Congaree Swamp National Monument,’ numbered CS-80, 001-B, and dated August 1976 (generally known as the Beidler Tract), which shall be on file and available for public inspection in the offices of the National Park Service, Department of the Interior. Following reasonable notice in writing to the Committees on Interior and Insular Affairs of the Senate and House of Representatives of his intention to do so, the Secretary of the Interior ... may make minor revisions of the boundary of the monument by publication of a revised map or other boundary description in the Federal Register, but the total area may not exceed fifteen thousand, two hundred acres. (emphasis added).

Sec. 2(b) With respect to any lands acquired under the provisions of this Act which at the time of acquisition are leased for hunting purposes, such acquisition shall permit the continued exercise of such lease in accordance with its provisions for its unexpired term, or for a period of five years, whichever is less: Provided, that no provision of such lease may be exercised which, in the opinion of the Secretary, is incompatible with the preservation objectives of this Act, or which is inconsistent with applicable Federal and State game laws, whichever is more restrictive.

Sec. 5(a) The Secretary may not expend more than $35,500,000 from the Land and Water Conservation Fund for land acquisition nor more than $500,000 for the development of essential facilities.

The record thus demonstrates an unequivocal intention on the part of Congress, expressed both in the statute itself and its legislative history, that the Beidler Tract be preserved in its then-existing condition and acquired for the permanent enjoyment of the people of the United States. [Government Documents 23 and 34.]

Acquisition of the Timber Sales Tracts

Upon enactment of the legislation, the primary executive branch responsibility for carrying out the expressed will of the Congress devolved upon the DOI, acting through the NPS. Though the voluntary moratorium on further timber sales was in effect, there were three areas of the overall tract on which preexisting timber sales contracts had been executed, and which were still active. NPS quickly moved to prevent further operations under those contracts. In connection with this effort, NPS informed Senator Thurmond on March 1, 1977, that the government was “determined to stop further cutting within the boundaries of Congaree Swamp National Monument.” [Government Documents 39-43 and 45-47; Congaree Document 2.]

On April 11, 1977, efforts to reach a negotiated purchase having failed, the government commenced condemnation proceedings against the Timber Sales Tracts, naming as defendants, inter alia, Congaree and the entities to whom Congaree had sold timber harvesting rights. The government described the nature of its acquisition by stating that:

The interest in the property to be acquired is as to Tracts 101-03, 101-04 and 101-05, an estate in fee simple title, subject to existing easements for public roads and highways, public utilities, railroads, and pipelines.

[Complaint for Condemnation, ¶¶ 1, 2 and 4 (filed April 11, 1977), in United States v. 367.60 Acres of Land, Civ. Action Nos. 77-652, 77-653 and 77-654.]

In addition to the foregoing complaint commencing the proceedings as to the Timber Sales Tracts, the government also filed on April 11,1977, a declaration of taking as to those properties, accompanied by a deposit of the government’s estimate of the just compensation owed to defendants. The declaration of taking had the effect of vesting in the government title to, and the immediate right to possession of, the Timber Sales Tracts, and on April 12, 1977, the Court entered its “Order for Delivery of Possession,” directing that all defendants surrender possession immediately to the United States. [Declaration of Taking (filed April 11, 1977) and Order for Delivery of Possession (filed April 12, 1977), in United States v. 367.60 Acres of Land, Civ. Action Nos. 77-652, 77-653 and 77-654; see 40 U.S.C. § 258a.]

Proceedings Regarding the Large Tract

At the time condemnation proceedings were commenced on the Timber Sales Tracts, no proceedings were begun as to the remaining acreage of the Beidler Tract (i.e., the Large Tract), on which defendant’s voluntary moratorium on further timber sales was still effective. By mid-May of 1977, NPS had available to it an approved appraisal of the Large Tract, which showed a value for that property of $32,-936,000. This amount, when combined with the amounts already deposited in connection with the Timber Sales Tracts, was within the congressionally authorized limit on acquisition expenditures, in effect at that time, of $35,500,000 set forth in the Act establishing the Monument.

During 1977, discussions between Congaree and NPS regarding proposals by both parties for a negotiated purchase of the Large Tract were unsuccessful. The voluntary moratorium on further timber sales expired on October 1, 1977. Congaree was unwilling to extend that moratorium further due to the fact that the general partners of Congaree felt themselves to be under a fiduciary obligation to generate income from the property, for the beneficiaries of the trusts which were Congaree’s limited partners, through resumed sales of timber harvesting rights. The government, on the other hand, asserted that (a) it could not purchase the entire property immediately, even at its own price, because Congress had not yet appropriated sufficient funds, and (b) it could not acquire the property by declaration of taking because (i) such a course of action could result in a court award in excess of the statutory authorization ceiling, there being so little margin between NPS’ appraisal and said ceiling, and (ii) such a course of action would unconditionally commit the government to pay the court award, thereby requiring Congress to raise the authorization ceiling, whereas NPS desired to maintain for Congress the additional options of reducing the size of the area to be acquired or of deauthorization of the project if the court award exceeded the authorization ceiling. It was in this context that condemnation proceedings to acquire the Large Tract were commenced. [Government Documents 69, 72-74, 75, 77, 70 and 80; Congaree Document 3.]

The Subject Case

On October 14,1977, two weeks after the landowner’s voluntary moratorium expired, the United States commenced a condemnation proceeding against the Large Tract. As in the case of the Timber Sales Tracts, the government’s complaint set forth, inter alia, the nature of the action, the statutory authority underlying it, the purpose for the acquisition, and the estate to be acquired.

In part, the complaint stated:

1. This is an action of a civil nature brought by the United States at the request of the Solicitor of the Department of the Interior of the United States of America 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.

2. The authority for the taking is under and in accordance with the Act of Congress approved August 1, 1888, 25 Stat. 357, as amended, 40 U.S.C., sec. 257; the Land and Water Conservation Fund Act of 1965, 78 Stat. 897, as amended, 16 U.S.C., sec. 460Z-4, et seq.; and under the further authority of the Act of Congress approved October 18, 1976, 90 Stat. 2517, 16 U.S.C., sec. 431, which act authorized the Congaree Swamp National Monument; and under the authority of the Department of the Interior and Related Agencies Appropriation Act, 1978, 91 Stat. 287, which act appropriated funds for such purpose.

3. The public use for which the property is to be taken is for the proper administration, preservation, and development of the Congaree Swamp National Monument for the use, benefit and enjoyment of the public.

4. The interest in the property to be acquired is as to Tract 101-02, an estate in fee simple title, subject to existing easements for public roads and highways, public utilities, railroads, and pipelines. (Emphasis added.)

Complaint in Condemnation ¶¶ 1-4 (filed October 14, 1977), in United States v. 14,770.65 Acres of Land, Civ. Action No. 77-2046. Aside from a difference in the appropriations statute cited, the complaint as to the Large Tract recited the same statutory authority for the taking as had the earlier complaint involving the Timber Sales Tracts, with the exception that since the government did not file a declaration of taking as to the Large Tract, no reference to 40 U.S.C. § 258a was made.

The Government’s Motion for Possession

In an attempt to assure preservation of the Large Tract in its then-existing condition and “to allow Congress to intelligently determine if the public benefit from the project is balanced by the cost of the acquisition,” Government’s Motion for Order of Possession, at p. 5 (filed November 14, 1977), and instead of a Declaration of Taking as was filed on the Timber Sales Tracts, the government filed, on November 14, 1977, a Motion for Order of Possession.

The government’s “Motion for Order of Possession” asked this Court “to enter its order granting the United States possession of the ... [Large Tract ], subject to those possessory rights, if any, granted by lease for hunting purposes.” In the memorandum filed with this motion, the government quoted at length from the legislative record to demonstrate Congress’ intent that the property be preserved, summarizing with the following:

It can readily be seen that it was the concern of both the Legislative and Executive Branches of Government to preserve the Beidler Tract and its interdependent eco-systems for future generations of Americans. Section 2(a) of the Act provided that the Secretary of Interi- or was authorized “ * * * to acquire lands, waters and interests therein * V’ Pursuant to this authority and in furtherence [sic] of the Congressional direction the instant case has been filed.

[Government’s Motion for Order of Possession, at p. 1 (filed November 14, 1977); Government’s Memorandum of Points and Authorities in Support of Motion for Order of Possession, at pp. 3-4 (filed November 14, 1977).]

The government went on to argue that possession of the Large Tract was necessary to prevent the timber sales operations then envisioned by Congaree. In arguing that the Court could appropriately enter an order of immediate possession, the government, in its supporting memorandum, asserted that Congaree would not be harmed if the government’s request were granted:

The landowner is protected for, if the Government does not acquire title, the United States must pay for the possession actually had. See, e.g., Danforth v. United States, supra [308 U.S. 271] at 285 [60 S.Ct. 231, 236, 84 L.Ed. 240 (1939)]; Commercial Station Post Office v. United States, supra [48 F.2d 183] at 185-86 [(8th Cir.1931)] and cases cited therein.

Rule 71A(i)(3), F.R.Civ.P., provides that:

At any time before compensation for a piece of property has been determined and paid and after motion and hearing, the court may dismiss the action as to that property, except that it shall not dismiss the action as to any part of the property of which the plaintiff has taken possession or in which the plaintiff has taken title or a lesser interest, but shall award just compensation for the possession, title or less interest so taken. [Emphasis in government’s memorandum.] Therefore, even if this action would be dismissed, the defendant is guaranteed payment for possession taken. This is adequate provision for payment as required by the Supreme Court. Joslin Co. v. Providence, 262 U.S. 668, 677 [43 S.Ct. 684, 688, 67 L.Ed. 1167]; Hanson Lumber Co. v. United States, supra [261 U.S.] at 587 [43 S.Ct. 442 at 444, 67 L.Ed. 809].

If the Government completes the acquisition of title through the condemnation process, the defendants are likewise uninjured by the early grant of possession. The taking of possession fixes the date of evaluation, so that the trial is concerned with value on a date certain. United States v. Dow, supra. Not only does the early taking of possession fixed [sic] the date of evaluation, but interest on the award runs from the date of possession; thus providing compensation for the possession. E.g., United States v. Dow, supra [357 U.S.] at 22 [78 S.Ct. at 1044]. [Emphasis added.]

[Government’s Memorandum of Points and Authorities in Support of Motion for Order of Possession, at pp. 6-7 (filed November 14, 1977).]

Defendant Congaree opposed the government’s motion, arguing that separate statutory authority was necessary for the government to acquire possession without making any deposit of estimated just compensation. Such an independent statutory basis not being present in this instance, Congaree asserted that to have possession the government had to file a declaration of taking and a deposit of estimated just compensation. Accordingly, in Congaree’s view, the Court was without authority to enter an order granting the government’s motion.

With the filing of the foregoing materials (i.e., the government’s motion and supporting memorandum and Congaree’s response in opposition), the matters in dispute at that time distilled to the following:

(a) The government sought the right to possession of the Large Tract in order to preserve same; the government was unwilling to make any deposit of its estimated just compensation, in whole or in part; and the government was desirous of maintaining the option of abandoning the acquisition (an option which would not be available to it if it sought and acquired possession through employment of the Declaration of Taking Act).

(b) Congaree sought to prevent the government from gaining possession of the Large Tract. Acquisition of possession pursuant to court order, according to Congaree, required that a declaration of taking be filed along with a deposit of the government’s entire estimate of just compensation (which at that time was $32,936,000), which deposit in turn could be withdrawn from the Court by Congaree, as allowed by the Declaration of Taking Act. Such a declaration of taking would, of course, automatically vest in the United States title to the said lands in fee simple absolute and would irrevocably commit the United States to the payment of the ultimate award of just compensation; no abandonment could thereafter occur. 40 U.S.C. §§ 258a, 258c, 258e.

The matter now before the Court was not initially disputed then—as its supporting memorandum shows, the government acknowledged its obligation to pay interest from the time it entered into possession. Congaree obviously was of the same view since it did not make any contrary assertions in its opposing response.

The Stipulation Agreement

The record reveals that after the filing of the government’s motion for possession, the parties entered into lengthy negotiations in an effort to resolve the issues presented by that motion and Congaree’s opposition thereto. Those negotiations resulted ultimately in the Stipulation of February 23, 1978, which was submitted for approval and was approved by order of this Court on the same date.

A detailed recitation of all that transpired in those negotiations is unnecessary to deciding the issue presently before the Court. It is instructive, though, briefly to summarize the facts and circumstances surrounding those negotiations to reflect the views of the parties on the specific matter here at issue. In doing so, the record reveals no contemporaneous dispute regarding the issue now before the Court. As laid out above, the government’s November 1977 motion and memorandum had acknowledged Congaree’s right to interest from the date of possession if title were later acquired. This entitlement having been recognized at the outset, the matter apparently was not the subject of debate. Near the close of negotiations, Congaree’s counsel made reference to the previously acknowledged right to interest from the time of possession. Perhaps not surprisingly, in view of the government’s previously stated position and the lack of any obligation by it to respond, the government’s agents did not offer any disagreement. [Congaree Documents 4 and 5; Government Documents 86-88, and 90-95; Plaintiffs Memorandum of Points and Authorities in Support of Motion for Order of Possession (filed November 9, 1977).]

On February 23, 1978, the parties jointly requested the Court to enter an order of temporary possession. In their joint motion, signed by counsel for both the government and Congaree, the parties represented that they had agreed to a resolution of the issue of the government’s right to immediate possession in accordance with the terms of a stipulation, which was attached to the joint motion, approval of which was requested from the Court. In this regard, the joint motion at paragraph “4” noted:

The parties have agreed, and the stipulation provides, that the Court may enter an order of possession in accordance with and subject to the terms of the stipulation.

The stipulation itself, in the introductory paragraphs thereof, clearly states its purpose:

WHEREAS, Congaree Limited Partnership, defendant, represents that it is the owner of a fee simple estate in the land described in the complaint filed herein as Tract No. 101-02 (hereinafter referred to as the “Beidler tract”); and

WHEREAS, the United States, plaintiff (hereinafter referred to as the “government”), seeks to obtain immediate possession of the Beidler tract in order to preserve the plant and animal life on said tract; and

WHEREAS, the government recognizes that it will be liable to pay just compensation for the Beidler tract if it acquires it; and

WHEREAS, the government has filed a “Motion for Order of Possession” in this Court requesting such possession without the necessity that it file a declaration of taking or deposit its estimate of just compensation into the registry of the Court; and

WHEREAS, the defendant has by its pleadings filed herein, resisted the government’s motion for possession of the Beidler tract without the government first employing the declaration of taking method of acquisition and depositing estimated just compensation into the registry of the Court for defendant’s use and benefit; and

WHEREAS, the government and the defendant desire to resolve the foregoing problems;

NOW, THEREFORE, IT IS AGREED BY AND BETWEEN THE PARTIES:....

Responding to the joint request of the parties, the Court entered on February 23, 1978, an Order allowing the government to enter into possession of the Large Tract and approving the Stipulation.

In terms of the dispute that then existed, as has been heretofore summarized, the Stipulation provided as follows:

(a) as to possession—Congaree assented to entry of a Court order allowing the government to have temporary possession for a period of one year (which term could be increased or decreased);

(b) as to employment of the Declaration of Taking Act—the government was not required to file a declaration of taking but agreed to do so within the term of the Stipulation or else abandon the condemnation proceeding (Civ. Action No. 77-2046);

(c) as to deposit of estimated just compensation—the government paid into the Court for the use of Congaree $2,000,000, which sum was to be applied toward the just compensation found owing to Congaree for whatever interest ultimately was acquired, either for the fee simple (if the acquisition was completed through filing of a declaration of taking) or for temporary possession (if the acquisition was abandoned).

Each of the foregoing disputed matters before the Court was resolved in the Stipulation by a compromise of the respective positions of the parties. [Joint Motion for Approval of Stipulation and Entry of Order Granting Plaintiff Temporary Possession (filed February 23, 1978); Stipulation (filed February 23, 1978); Order (filed February 23, 1978).]

Although the Stipulation approved in the Court’s Order of February 23, 1978, is fairly lengthy and detailed, the provisions necessary to understanding the issue now presented are relatively few. Paragraph 1 of the Stipulation provided for a deposit of $2,000,000 to be made by the United States “for the use and benefit of the defendant.” The Court’s Order notes that this deposit was made on February 23, 1978. Paragraphs 2 and 3 set forth the purpose of the deposit and how it was to be applied, in pertinent part, as follows:

2. That the deposit provided for in paragraph 1 of this stipulation will enable the government to have possession of the Beidler tract and the right to acquire it pursuant to the provisions of this stipulation, for a period of one year following the date of said deposit, subject to the provisions of paragraphs 5 and 7 of this stipulation.

3. That, regardless of any other provision of this stipulation, the deposit provided for in paragraph 1 of this stipulation shall be applied either:

(a) Against the amount ultimately determined to be just compensation for the taking of the Beidler tract, if the government elects to accept and pay said amount, or is required to do so; or

(b) Against any amount the government may ultimately be required to pay for possession of the Beidler tract (by judicial order or by settlement between the parties), if the government elects for any reason to abandon this proceeding ...

Thus, the parties agreed in the Stipulation that the deposit was to serve as a payment “on account” to Congaree, with the final sum owing to be determined in light of subsequent events. [Stipulation (filed February 23, 1978); Order (filed February 23, 1978).]

Paragraph 4 of the Stipulation provided as follows:

4. That the date of evaluation of the Beidler tract for the purposes of any trial in this action to determine the issue of just compensation for the taking of all or any part of the Beidler tract to which title is acquired, within the period provided for in this stipulation, shall be the date the government makes the deposit provided for in paragraph 1 of this stipulation.

In accordance with this provision, the parties tried before the Land Commission the issue of the fair market value of this property (the Large Tract) using a valuation date of February 23, 1978. [Stipulation (filed February 23, 1978); Report of Commission (filed March 10, 1982).]

With regard to the effect of the Stipulation on the usual process of determining just compensation, the parties agreed, in paragraph 10, as follows:

10. That nothing in this agreement shall be construed to alter or abrogate the determination of just compensation (including damages for delay in payment) under existing and/or applicable law save for the determination of the date of evaluation as provided for in paragraphs 4 and 8 of this stipulation. It is expressly understood that this agreement resolves only the questions of temporary possession and the date of evaluation and that defendant remains fully protected by the fifth amendment of the U.S. Constitution and other applicable laws.

[Stipulation (filed February 23, 1978).]

It is undisputed that pursuant to the Court’s Order of February 23,. 1978, approving the Stipulation, the government took and maintained possession of the subject property for a two-year period extending from February 23,1978 through February 22, 1980. On that latter date, the last day of government possession under the Stipulation and the last day the government could file a declaration of taking and maintain the valuation date provided for in the Stipulation, the government did indeed file a declaration of taking to acquire title to (and the concomitant right to continued possession of) the Large Tract. Along with said declaration, the government deposited in the Registry of this Court the sum of $30,558,000 “for the use and benefit of the persons entitled thereto.” [Plaintiff’s Response to Defendant’s First Request for Admissions, Response to Requested Admission No. 21 (filed April 3, 1984), as modified by this Court’s Order Regarding Discovery,, at 3 (filed October 11, 1984); Declaration of Taking (filed February 22, 1980).]

The Government’s Possession

The record demonstrates that during the period from February 23, 1978 through February 22, 1980, when the government was in possession of the Large Tract but had not yet acquired title, the government exercised significant dominion and control over the property. Documents in evidence show, inter alia, that (1) the government routinely patrolled the property; (2) among the purposes served by these patrols was the exclusion of trespassers, poachers, and illegal hunters; (3) the government enforced standards established in the Code of Federal Regulations on the property; (4) the government conducted numerous tours of the property for visitors and permitted filming and photographing of the property by non-government personnel; (5) the government undertook numerous and varied activities to preserve and maintain the property; (6) government agents and contractors entered upon the property on many occasions for the purpose of conducting studies relating to the property’s resources and the long-term management thereof; and (7) in one particular instance, the government vigorously acted to terminate alleged trespasses upon the Large Tract by one Frank Barron, claiming that he had “trespass[ed ] on Government land,” threatening him with a lawsuit, and requiring him to undertake corrective actions to ameliorate the conditions created by the alleged trespass. [Congaree Documents 17, 22 and 23].

The government’s possession during this two-year period prior to acquiring title was almost exclusive. The only actual possession exercised by the Landowner consisted primarily of the continued use of the property for hunting purposes by the Landowner’s lessee, as had been specifically provided for in the authorizing legislation. Agents of the Landowner also entered upon the property to conduct studies necessary to prepare for and try the issue of the property’s fair market value. However, it is undisputed that, even had the government had title to the property at that time, such access rights were available to the Landowner under Rule 34(a)(2) of the Federal Rules of Civil Procedure. It is also undisputed that during the period from February 23, 1978 through February 22, 1980, inclusive (the period of time during which the government had possession but had not acquired title), neither the Landowner nor anyone else acting pursuant to a contract from the Landowner for the sale of merchantable timber harvested any timber from the Large Tract. [Responses of Defendant Congaree Limited Partnership to Government’s First Request for Admissions, Responses to Requested Admissions No. 16-21 (filed July 9,1984); Responses of Defendant Congaree Limited Partnership to Government’s Third Request for Admissions, Responses to Requested Admissions No. 2 and 3 (filed November 7, 1984); Plaintiff’s Responses to Defendant’s First Request for Admissions, Response to Requested Admission No. 16 (filed April 3, 1984); Plaintiff’s Responses to Defendant’s Second Request for Admissions, Responses to Requested Admissions No. 18 and 19 (filed May 23, 1984).]

The Current Issue

As regards the issue now in dispute before this Court, the record reflects that for a period of approximately two years subsequent to the Stipulation and Order of February 23,1978, government representatives at least expressed no disagreement with the view that the obligation to pay interest ran from the date of entry into possession. Such views were expressed by the Chief, Land Acquisition Section, Land and Natural Resources Division, of DOJ (December 14, 1979), by the Deputy Director, of NPS, Department of the Interior (January 31, 1980), and by the Deputy Assistant Attorney General, Land and Natural Resources Division, of DOJ (February 8, 1980). [Congaree Documents 20, 13, and 14.] Particularly noteworthy is the first of the above-cited items, a legal memorandum, which stated:

Question Presented

Whether, in the [Congaree condemnation] case, where the United States has filed a complaint but no declaration of taking and has obtained an order of possession prior to trial of the issue of just compensation and satisfaction of judgment, the Government will be obligated to pay interest on the amount of compensation finally awarded from the time of possession until the time of payment of the award.

Conclusion

The federal law of just compensation obligates the United States in the circumstances of this case to pay interest on the amount of compensation finally awarded by the court from the time of possession until the time of payment of the award.

[Congaree Document 20, at 1 (emphasis added).]

In fact, the first recorded indication of government disagreement with the proposition that interest would commence to run from the date of entry into possession came on February 11, 1980, in internal correspondence within the National Park Service. [Government Document 133, at 4.] This NPS disagreement was communicated to the Department of Justice on April 11, 1980. [Government Document 141.] The asserted basis of the disagreement was that the Stipulation did not specifically state that interest would be owed from the time of possession and that, accordingly, under principles of government contract law and the case of Albrecht v. United States, 329 U.S. 599, 67 S.Ct. 606, 91 L.Ed. 532 (1947), no interest was owed.

The government’s current position was first made known to the Court in a memorandum filed December 16, 1983. [Memorandum of the Plaintiff United States: In Opposition to Defendant’s Motion for Approval of Procedure and for Adoption of Schedule for Further Proceedings, in Support of Plaintiff’s Motion for Approval of Procedure and for Adoption of Schedule for Further Proceedings, and Status Statement, at p. 5 (filed December 16, 1983).] That position is that the subject proceeding has involved two separate takings of the Large Tract—one of a temporary possessory estate by contract for the period February 23, 1978 to February 22, 1980, and the other of a fee simple estate by filing of a declaration of taking on February 22, 1980. The government thus argues now that interest is due only from February 22, 1980.

II. DISCUSSION AND LEGAL ANALYSIS

Prologue

So, against this broad panorama of almost a decade of legislation, negotiation, and litigation, the lingering issue of the commencement of the government’s interest obligation prompts this Court’s final expedition into the jurisprudential darkness of the Congaree Swamp. As landmarks for this perilous journey, the government provides its apparently novel “two takings” theory while the Landowner supplies the perhaps deceptively simple “possession-equals-taking” rule of United States v. Dow, 357 U.S. 17, 78 S.Ct. 1039, 2 L.Ed.2d 1109 (1958). Before departing, the Court must observe that, while neither position equips an adventurer with a bedrock footing, they thankfully also do not lay a disguised quicksand trap of confusion and terminal despair.

Fifth Amendment’s Interest Component

The trip begins safely enough with the Fifth Amendment’s admonition that “... nor shall private property be taken for public use, without just compensation.” United States Constitution Amendment V. As the U.S. Supreme Court has observed, “such compensation means the full and perfect equivalent in money of the property taken. The owner is to be put in as good a position pecuniarily as he would have occupied if his property had not been taken.” United States v. Miller, 317 U.S. 369, 373, 63 S.Ct. 276, 279, 87 L.Ed. 336 (1943). The practical application of this principle gave rise to the now well established rule that a proper rate of interest is to be paid “where the United States condemns and takes possession of land before ascertaining or paying compensation.” Seaboard Air Line Ry. Co. v. United States, 261 U.S. 299, 306, 43 S.Ct. 354, 356, 67 L.Ed. 664 (1923); accord United States v. Klamath & Moadoc Tribes, 304 U.S. 119, 58 S.Ct. 799, 82 L.Ed. 1219 (1938); United States v. Alcea Band of Tillamooks, 341 U.S. 48, 71 S.Ct. 552, 95 L.Ed. 738 (1951). It is equally well-established that the interest due as a component of just compensation is to begin accruing on the date of taking and continue until the date of payment. Albrecht v. United States, 329 U.S. 599, 602, 67 S.Ct. 606, 610, 91 L.Ed. 532 (1946) {See also cases cited therein in note 4). So, the sole issue which has prolonged this litigation for over two years can be condensed to the deceivingly short question: What is the constitutional “date of taking” which commences the government’s interest obligation?

The Dow, and this Court’s, Response

Actually, a cursory reader might conclude that this Court had inferred some undue reassurance from the brevity of its inquiry and had accordingly reached an equally short conclusion. Perhaps surprisingly, the Court’s express holding today is simply that, based on the rather broad but indistinguishable rule of United States v. Dow, the physical possession of the Large Tract acquired by the government on February 23, 1978 established the date of taking and commences its interest obligation, even though its declaration of taking and receipt of title did not ensue until February 22, 1980. This decision has not, however, been reached without exhaustive research and considerable thought. It is, similarly, not a legal question on which reasonable litigants cannot disagree nor one requiring less than thorough appellate review.

In Dow the Supreme Court was asked to determine the rightful claimant to a just compensation award for the governmental taking of a pipeline right-of-way in southern Texas. Under the authority of the Second War Powers Act, the government had filed, in March of 1943, a condemnation petition which was granted by the district court in ordering the government into immediate possession.of the easement. The government took possession and completed the laying of the pipeline within the same year. In 1945 the entire 617 acre tract which the pipeline transversed was conveyed by the condemnee-owner to respondent Dow with specific exception made for the right-of-way. Finally, in May, 1946, the government, after continuous use of the pipeline, filed a declaration of taking along with the requisite estimate of just compensation. See 40 U.S.C. §§ 257-258.

As might be expected, a dispute arose between Dow’s grantor, who owned the tract when the government took possession, and Dow himself, the subsequent but predeclaration-of-taking purchaser. When faced with this dispute, the district court granted summary judgment against Dow based on the Assignment of Claims Act, 31 U.S.C. § 302, but the Fifth Circuit reversed on the rationale that the compensation claim did not arise and vest until the filing of the declaration of taking and the corresponding passage of title. After granting certiorari, the Supreme Court, by Justice Harlan, again reversed with the reasoning that:

... [I]t is undisputed that ‘[since] compensation is due at the time of taking, the owner at that time, not the owner at an earlier or later date, receives the payment’____ [However], [t]he passage of title does not necessarily determine the date of ‘taking.’ The usual rule is that if the United States has entered into possession of the property prior to the acquisition of title, it is the former event which constitutes the act of taking. It is that event which gives rise to the claim for compensation ...

Dow, 357 U.S. at 20-22, 78 S.Ct. at 1043-44 (quoting Danforth v. United States, 308 U.S. 271, 284, 60 S.Ct. 231, 236, 84 L.Ed. 240 (1939)). Thus, the Court granted the compensation award to the owners in 1943, when the government had taken possession of the property. However, for the disposition of the subject case, the reasoning and analysis subsequent to that quoted above is eminently more probative. As noted, Justice Harlan stated that, under the “usual rule,” when the United States has entered into possession of property before acquiring title, the possession “constitutes the act of taking.” Id. at 22, 78 S.Ct. at 1044. He continued with the crucial pronouncement that such possession “fixes the date as of which ... the government’s obligation to pay interest accrues.” Id. (emphasis added). This as yet still prevailing rule is obviously strong precedent for the instant case. In fact, in reviewing the analysis employed in Dow, several instructive similarities soon become apparent.

For example, after citing authority for this “usual rule” which extends back to 1903, United States v. Lynah, 188 U.S. 445, 23 S.Ct. 349, 47 L.Ed. 539 (1903), the Court first noted that, but for the government’s subsequent filing of a declaration of taking, “there [was] no reason to believe that these ordinary rules would not have been applicable____” Dow 357 U.S. at 22, 78 S.Ct. at 1044. However, the subsequent declaration only necessitated more thorough consideration by the Court; the rule ultimately still applied. The subject case also presents possession prior to a declaration of taking with the only apparent “but for” impediment to simple application of Dow’s usual rule being this Court’s grant of “temporary possession” pursuant to a stipulation agreement between the parties. Stipulation (entered February 23, 1978), p. 6, ¶ 10. As will be seen, this apparent impediment is not a formidable bar to the precedent and arguments presented by the Landowners.

The Dow Court rejected the respondent’s argument that “although there was an entry into possession in 1943 which was an appropriation of the property sufficient to amount to a taking,” the subsequent declaration of taking “vitiated the earlier entry” and determined the time of taking. Dow at 22, 78 S.Ct. at 1044. Similarly, this Court declines to accept the government’s current contention that the Court-sanctioned Stipulation created only a temporary possessory estate which was followed by the actual “taking” by the filing of the official declaration. The government asserts that, since interest runs from the date of taking, it should accordingly only accrue since the creation of this later, the fee estate.

While, as in Dow, a “number of considerations” have led this Court to reject this “two takings” theory, the Court is considerably influenced by the almost prophetic criticism of such a theory by the Dow Court. Id. at 23, 78 S.Ct. at 1045. Justice Harlan, after reiterating that “in cases where there has been an entry into possession before the filing of a declaration of taking, such entry has been considered the time of ‘taking’ for purposes of ... fixing the date on which the government’s obligation to pay interest begins to run,” described as a “Hobson’s choice” the government’s precise position now, over twenty-five years later. Id. at 24, 78 S.Ct. at 1045. He explained that:

To rule that the date of ‘taking’ is the time of filing would confront us with a Hobson’s choice. On the one hand, it would certainly be bizarre to hold that there were two different ‘takings ’ of the same property, with some incidents of the taking determined as of one date and some as of the other.

On the other hand, to rule that for all purposes the time of taking is the time of filing would open the door to anomalous results. For example, if the value of the property changed between the time the Government took possession and the time of filing, payment as of the latter date would not be an accurate reflection of the value of what the property owner gave up and the Government acquired. In the graphic language of Chief Justice Shaw: ‘If a pie-powder court could be called on the instant and on the spot, the true rule of justice for the public would be, to pay the compensation with one hand, whilst they apply the axe with the other.’ Parks v. Boston, 15 Pick. (Mass.) 198, 308. Similarly, because interest for delay in payment would not begin to accrue until payment of compensation is due, the Government would be absolved of interest until it chose to file a declaration of taking, even though it had already been in possession, to the exclusion of the property owner, for some time.

Id. (citation omitted) (emphasis added).

The potential inequity of the first “anomalous result” above becomes particularly evident in the market manipulation scenario which was described by Justice Harlan and, interestingly, was sought to be avoided by the subject litigants in their Stipulation agreement. Harlan expressed the Dow Court’s concern that the “uncertainty [of] when, if ever, a declaration would be filed after the Government’s entry” could encourage manipulations which could disadvantage either party. Id. at 25, 78 S.Ct. at 1046. The Court deemed this “another reason why we cannot regard the time of filing as the time of the ‘taking’ in cases where the Government has already entered into possession.” Id.

The Congaree litigants obviously understood this same danger for they, in paragraph 8 of the Stipulation, expressly recognized the government’s control over filing a declaration and the Landowner’s corresponding concern that the government might abandon the Large Tract only to later acquire it during an unfavorable timberland market. They thus agreed that if governmental possession under the Stipulation ceased, the government would not later take “advantage of lower market conditions.” This Court’s adoption of the government’s view that only the filing of the declaration triggers its interest obligation would seem not only to ignore this policy rationale of Dow, but also to thwart the litigants’ explicit agreement and certainly to revive the possibility for such market manipulation in future condemnation proceedings. This Court shares fully in the view of Dow that no rule should be adopted “which would open the door to such obvious incongruities and undesireable possibilities.” Id.

Dow was based on other factors which are also equally pertinent to the subject case. For example, the Court addressed the laudable goal of establishing greater certainty in condemnation actions. Unlike either party here, Dow apparently had emphasized that setting the Declaration filing date as the taking would engender more certainty. However, this Court must agree with the Court in Dow that a “physical possession equals taking” rule provides sufficient certainty. Such possession is indeed “readily ascertainable whether or not the Government ... uses condemnation proceedings ... or ever files a declaration of taking.” Id. In fact, the alternative rule—ironically now urged by the government—creates its own “uncertainty” in the sense that the landowner, whose property rights may have already been restricted or infringed, cannot know whether the government will ever “take” his property or the extent of compensation he may expect for whatever property interest is later found to have been appropriated.

Finally, as Dow mentions, in balancing the impact upon the parties, neither proposed rule gives the government any greater flexibility than is already afforded it, nor imposes any obligation greater than already levied under Federal Rule of Civil Procedure 71A. See Dow at 26, 78 S.Ct. at 1046. However, the government’s proposed theory would impose upon the Landowner the uncertainty described above and the inequity discussed below.

Under Rule 71A, if the government decides it cannot afford to exercise its “option to buy the property at the adjudicated price” after a compensation trial, Kirby Forest Indus. v. United States, 467 U.S. 1, 104 S.Ct. 2187, 2191, 81 L.Ed.2d 1 (1984), or if it abandons its possession before any such determination, it is still obligated to compensate the landowner for any public use made of the property. See Fed. R.Civ.P. 71A(i)(3) and the cases cited in Dow 357 U.S. at 26, 78 S.Ct. at 1046. So, under a possession-equals-taking rule, the government could still acquire possession “to prevent the cutting of timber [while at the same time] availing itself of the ‘opportunity to determine whether the valuations leave the cost of completion with [its] resources.’ ” Plaintiff’s Brief in Support of Motion for an Order Determining that Interest Accrues from February 22,1980, and Not Before, p. 1, n. 1. [hereinafter referred to as “government’s Brief on the Merits”] (