Statement on Signing the Bill Amending the Declaration of Taking Act

November 14, 1986

I am signing today H.R. 5363, a bill to amend the interest provisions of the Declaration of Taking Act. This legislation amends the interest provisions of the Declaration of Taking Act by substituting for the 6 percent per annum simple interest provided therein, a rate of interest based on the yield rates of 1-year Treasury bills, compounded annually. The bill, which authorizes Federal acquisition of real property for public use, provides for payment of interest by the United States when there has been a delay between acquisition and payment of just compensation.

This administration proposed this amendment to remedy a number of problems flowing from the courts' perception in recent years that the 6-percent simple interest rate was not a fair and appropriate rate. The courts have come to interpret the 6-percent rate as a floor, but there has not been agreement as to what is an appropriate interest rate or what securities should be examined to determine the interest rate. Consequently, these issues are being litigated on a case-by-case, court-by-court, basis -- with considerable disparity in result. The interest rate established by this amendment is a fair and reasonable one. Unlike the 6-percent rate, which remained fixed, notwithstanding fluctuations in market interest rates, the rate established by the amendment is a fluctuating rate reflecting the upward and downward movement of interest rates generally. And the interest is compounded annually. In addition, establishment of this uniform rate applicable in all courts in all cases covered by the bill will avoid discrimination among property owners and will benefit the parties and the courts by eliminating the need to litigate in order to secure a fair and appropriate rate of interest.

In signing this legislation, I wish to express the following views concerning its interpretation. Although I am signing this bill, I am very troubled by the inclusion of an unrelated, last-minute amendment to the Bankruptcy Code. The Congress' decision to link such provisions to otherwise desirable and useful legislation is but one example of the highly objectionable practice of combining unrelated legislation in a single bill. This practice, at a minimum, violates the spirit of the Constitution by restricting the President's veto power. Under the Constitution, the Congress is authorized to establish ``uniform Laws on the subject of Bankruptcies throughout the United States'' (U.S.C. Const. art. I, sec. 8, cl. 4). Section 2 of the bill requires that bankruptcy trustees in specified cases continue to pay certain benefits to retired former employees, and subsection (b)(3) identifies such a case by reference to the circumstances of its bankruptcy proceedings. This amounts to a private bankruptcy law, which is beyond the Congress' constitutional authority to enact, and the provision is accordingly without force or effect. I am advised by the Attorney General that, because of the unconstitutional nature of this provision, it should not be defended.

Note: H. R. 5363, approved November 14, was assigned Public Law No. 99 - 656.