B-248313 April 10, 1992

B-248313 April 10, 1992

Claims Group is advised not to certify payment from the Judgment Fund, 31 U.S.C. Sec. 1304 (1988), of an amount owed under a settlement agreement to dispose of a case in which the court had ordered the government to reimburse the State of Illinois for repairs it made to bridges which the court found the government was responsible for repairing, in perpetuity, as part of the "just compensation" ordered under an 1896 condemnation decree. Since Justice Department settlements are to be paid in the same manner as judgments in like causes and a judgment on the same claim would not be payable from the Judgment Fund (because condemnation judgments are payable from agency appropriations), this settlement is not payable under 31 U.S.C. Sec. 1304.

Memorandum

DATE: April 10, 1992

TO: Judgment Group Manager - Ken Schutt

FROM: Senior Attorney - Neill Martin-Rolsky

SUBJECT: Illinois v. United States, Z-61(28) (B-248313)

The captioned matter involves a request submitted by the Justice Department on behalf of the Army Corp of Engineers (COE) for the payment of $4.75 million from the Judgment Fund, 31 U.S.C. Sec. 1304 (1988), pursuant to a settlement agreement negotiated in the captioned litigation. Your staff doubted whether payment of this settlement should come from the Judgment Fund. As explained below, I recommend against certification of this matter for payment from the Judgment Fund because the claims being settled derive from a land condemnation. As such, their payment is "otherwise provided for," within the meaning of section 1304(a)(1).

The litigation being settled here arose from the government's failure to comply with the terms of an 1896 condemnation decree. Under that decree, and in accordance with a statutory mandate to do so, the United States acquired some land in Illinois which was to be used to build a canal. At that time, in payment for the land taken, the government agreed to (a) pay $1 per lot, and (b) build and maintain, in perpetuity, bridges over the canal. The canal and bridges were built as contemplated, but from 1945 through 1970, the government failed to maintain the bridges. /1/ A group of Illinois county highway commissioners brought suit to compel the government to repair and maintain the bridges. Since some of the bridges had become particularly dangerous, the State of Illinois repaired the worst 39 bridges itself, in order to preclude harm to its citizens while the litigation was pending.

The courts have now ruled that the government's obligation to maintian the bridges constituted part of the just compensation owed under the original condemnation decrees and that the government's failure to fulfill that obligation from 1945-1970 deprived the state of its property without just compensation. Given this conclusion, the courts have ordered the government to reimburse the state for its expenses in repairing the 39 worst bridges, and to pay the county highway commissioners a separate amount intended to allow the counties to repair and restore the remaining bridges to the condition they would have been in, had the government met its obligations under the 1896 condemnation decrees. /2/ While Justice and COE think the courts were wrong to require these payments, they chose to settle these cases, rather than appeal.

Pursuant to the express orders of the district court, COE has already used its own appropriations to pay the amount owed to the county highway commissioners. However, Justice and COE have asked GAO to certify payment from the Justice Fund of $4.75 million to reimburse the State of Illinios. As you know, the general rule is that a Justice Department compromise settlement may be paid from the Justice Fund, if a judgment against the United States on a similar claim would be payable from the fund. 24 U.S.C. Sec. 2414 (1988). The settlement before us cannot pass this test.

The claims being settled in this case clearly seek the payment of just compensation owed on account of the government's exercise of eminent domain, i.e., the deliberate acquisition of land through condemnation. That is the legal theory pursued by the state (and county highway commissioners), and it is the legal theory upon which the Claims Court has twice found the government liable to the state. See 19 Cl.Ct. at 183, 185-85; 15 Cl.Ct. at 403, 405-06. Judgments on claims of this nature must be paid from the acquiring agency's appropriations, not from the Judgment Fund. E.q., 66 Comp.Gen. 157, 160 (1986). Consequently, a Justice Department settlement of a such a claim may not be paid from the Judgment Fund either.

I have discussed this matter extensively with Terry Hartman (514-4325) and Jim Brookshire (272-6659) of Justive, as well as Martin Cohen and Rupert Jennins of COE's Office of Chief Counsel (272-0027). The Justice staff agrees with my assessment of case. The COE staff plans to study the matter further and will consider whether to formally appeal this disposition at a later time.

Your Z file is returned as an attachment to this memorandum. Please expedite your processing of this matter so that COE may promptly explore other payment arrangements.

cc: Mr. Armstrong

Attachment

1. In 1970, the federal government returned the canal land and bridges to the state for conversion into a state park.

2. For detailed information on the facts and legal theories underlying the state's claims, and the courts' views of them, see 19 Ct.Cl. 180 (1989), and 15 Ct.Cl. 399 (1988).