Amicus Curiae Brief — Huffman v. Western Nuclear, Inc.

IN THE

Supreme Court of the Wuited States

OCTOBER TERM, 1987

F. CLARK HUFFMAN, et a/.,

Petitioners,

Vv.

WESTERN NUCLEAR, INC., et a/.,

Respondents.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Tenth Circuit

BRIEF OF ELECTRIC UTILITY COMPANIES AS

AMICI CURIAE IN SUPPORT OF PETITIONERS

Harry H. Votcr *

MINDY A. BUREN

PAUL H. FALON

LeBoeur, LAMB, Lerpy & MacRAkgE

1533 New Hampshire Ave., N.W.

Suite 1100

Washington, D.C. 20036

(202) 457-7500

Attorneys for Amici Curiae

Electric Utility Companies

* Counsel of Record

February 1988

Witson - Eres Printing Co.. Inc. - 789-0096 - Waswincron, D.C 20001

TABLE OF CONTENTS

TABLE OF AUTHORITIES ......... cactiiciiilansitapnanitaaseel

INTRODUCTION ............. seeiaiainnssainsinddesiuiicnsicigiiaiadibiintin

INTEREST OF THE AMICI CURIAE ELECTRIC

Ee GIT OEIIED crcecenezsnssecunsccsceseresssersecmnmennrenmm

SUMMARY OF ARGUMENT ..........................................

ARGUMENT ................... 3

I. DOE’S AUTHORITY TO RESTRICT EN-

RICHMENT OF FOREIGN URANIUM IS

DISCRETIONARY UNDER THE PLAIN

MEANING OF SECTION 2201(v)

A. The Discretionary Language Used In Sec-

tion 2201(v) Is Consistent With The Lan-

guage Used Throughout Section 2201

B. The Language Used In Section 2201(v)

Plainly Authorizes DOE Not To Impose En-

richment Restrictions That Would Not, In

DOE’s Opinion, Assure Or Maintain A Via-

ble Domestic Uranium Industry

Il. DOE’S INTERPRETATION OF ITS AU-

THORITY UNDER SECTION 2201(v) IS

REASONABLE AND IS ENTITLED TO DEF-

ERENCE

A. DOE’s Interpretation Of Its Authority Is

Supported By The Legislative History Of

Section 2201(v) And By Congress’s Subse-

quent Decision Not To Alter The Enrich-

ment Restriction Guidelines Of Section

2201 iv)

B. DOE's Interpretation Of Its Authority Is

Supported By The Department's Detailed

Consideration Of The Regulatory Scheme It

Administers And The Competing Interests

Of The Utilities And The Uranium Indus-

try

ll

11

11

15

19

19

ii iii

TABLE OF CONTENTS—Continued TABLE OF AUTHORITIES

Page CASES: Page

Ill. “HE DISTRICT COURT'S INJUNCTION, AF- American Paper Institute v. American Electric

FIRMED BY THE TENTH CIRCUIT, REPRE- Power Service, 461 U.S. 402 (1983). 24

SENTS AN IMPROPER JUDICIAL INTRU- Batterton v. Francis, 432 U.S. 416 (1977) 27

SION INTO DOE’S RULEMAKING... yw. 27 Baylor University Medical Center v. Heckler, 758

P.2a 1062 (5th Cir. 1985) _................... 18

CONCLUSION ; a 29 Burlington Northern Inc. v. United States, 459

Cee esmeeneecms 27

Chevron U.S.A. v. Natvral Resources Defense

Council, 467 U.S. 837 (1984)... «5 10, 23, 24, 26

Colorado Public Interest Research Group v. Hills,

420 F. Supp. 582 (D. Colo. 1976) ___ ae 28

Commissioner v. Brown, 380 U.S. 563 (1965) . 17

Conrail v. National Association of = In-

dustries, 449 U.S. 609 (1981). aleaus 28

FPC v. Hope Natural Gas Co. 320 US. 591

ES 25

Independent Banhere Ascociation v. Heimann, 627

F.2d 486 (D.C. Cir. 1980) 18

INS v. Cardoza-Fonseca, —— U.S. ——, 107 S. Ct.

1207 (1987)... .... _ 17,19

Nader v. NRC, 513 F.2d 1045 (D.C. Cir. 1975) . 18

NLRB v. Bell Aerospace Co., 416 U.S. 267 (1974). 23

NLRB v. United Food & Commercial Workers

Union, US. , 108 S. Ct. 413 (1987)_. 24

Power Reactor Develonment Co. v. International

Union of Electrical Workers, 367 U.S. 396

ces 24

Puerto Rico Maritime Shipping Authority v.

FMC, 678 F.2d 327 (D.C. Cir.), cert. denied, 459

U.S. 906 (1982) nT ae . 25

Ricci v. Chicago Mercantile Exchange, 409 US.

289 (1973) : 28

Small Refiner Lead Phase- Down Task Force v.

EPA, 705 F.2d 506 (D.C. Cir. 1983) _ 27

Udall v. Tallman, 380 U.S. 1 (1965) aa 24

United States v. Riverside Bayview Homes, 474

U.S. 121 (1985) _. | er 27

iv

TABLE OF AUTHORITIES—Continued

Page

Vermont Yankee Nuclear Power Corp. v. Natural

Resources Defense Council, 4385 U.S. 519

Te aa eS A ee eee 28

Western Nuclear, Inc. v. Huffman, 825 F.2d 1430

(10th Cir. 1987), cert. granted, U.S. —,

ee es Cn scuseinmeteianianeds 5, 8,18

Young v. Community Nutrition Institute, U.S.

% | 4 & #f a_i 16, 17, 23

FEDERAL STATUTES:

Administrative Procedure Act, 5 U.S.C. $§ 551-5: 39

eae ae 10

Atomic Energy Act of 1954, 42 U.S.C. §§ 2011-

2296 (1982 & Supp. III 1985) :

I 19

ee ED detittesiccincnsinrecscin binanieiie Sess ' 9

ESE ee eee a Ee . 11,15

I ae 12

ESE ER ERS re eR Cee, 12

42 U.S.C. § 2201 (i) ......... SELDEN WN oee WE Jromn tm BD 11,15

42 U.S.C. § 2201(m) _.. doiieeintiaieitiosibtiliaakiseibicetieat 12

48 USC. § S301 (@) ...................... veveeeeey 22, 16, 16

42 U.S.C. § 2201 (s)................... aiitianaenamn 12,15

42 U.S.C. § 2201(u) —..... aa 11

43 U.S.C. § 3301 (¥v) .................... sc atiieiichaniiie passim

42 U.S.C. § 2210b . . adiaadaiesaaane 3

42 U.S.C. § 2210b(a) ee EME Soak 22

42 U.S.C. § 2210b(c) 22

a cenanaatiiedieen 22

12 U.S.C. § 2210b(e) ...... ts 23

Federal Food, Drug and Cosmetic Act, 21 U.S.C.

$§ 301-392 (1982 & Supp. IV 1986):

21 US.C. § 346 ..... sii saadaaa 16

Private Ownership of Special Nuclear Materials

Act, Pub. L. No. 88-489, 78 Stat. 602 (1964)

Trade Act of 1974, 19 U.S.C. §$§ 2101-2495 (1982

& Supp. IV 1986) :

i I I a ee

wv

Vv

TABLE OF AUTHORITIES—Continued

Page

Trade Expansion Act of 1962, 19 U.S.C. §§ 1801-

2081 (1982 & Supp. IV 1986) :

RAE NIE Se RENE nn 4, 23

FEDERAL REGULATIONS:

10 C.F.R. Pt. 761 (1987) .................... sieicisaiensinatedionentibide o 24

38 Ped. Rew. 32,506 (1078) .................................. saad 3

39 Fed. Reg. 38,016 (1974)... 8,18

48 Fed. Rew. 45,716 (1983) (codified at 10 C. FR.

8a Sate a a 25

51 Fed. Reg. 3624 (1986) LAY

Si Ped. Rew. 16,608 (1606) ......................................... EB

51 Ped. Reg. 27,182 (1966) .................................1, 18, 24, 26

CONGRESSIONAL MATERIALS:

128 Cong. Rec. $2966 (daily ed. Mar. 30, 1982). 21

128 Cong. Rec. $13,053 (daily ed. Oct.1, 1982)... 22

128 Cong. Rec. H&8802 (daily ed. Dec. 2, 1982) .... 10, 22

128 Cong. Rec. $15,316 (daily ed. Dec. 16, 1982) 22

S. Rep. No. 1325, 88th Cong., 2d Sess., reprinted

in 1964 U.S. Code Cong. & Admin. News 3105. passim

H.R. Rep. No. 884, 97th Cong., 2d Sess. (1982) 5, 21, 22

Status of the Domestic Uranium Mining and Mill-

ing Industry: The Effects of Imports: Hearing

Before the Subcomm. on Eneray Research and

Development of the Senate Comm. on Energy

and Natural Resources, 97th Cong., 1st Sess.

RRR ae moe 21

MISCELLANEOUS:

Affidavit of Loring E. Mills, Western Nuclear,

Inc. v. Huffman, 825 F.2d 1430 (10th Cir.

1987) (No. 86-1942), cert. granted, U.S.

——, 108 S. Ct. 692 (1988), reprinted as Ap-

pendix A to Brief Of Electric Utility Compa-

nies As Amici Curiae In Support Of Petition

For A Writ Of Certiorari, Huj?man v. Western

Nuclear, Inc. (No. 87-645) 000000... Cen eae — Gee

vi

TABLE OF AUTHORITIES—Continued

Page

Declaration of Sherry E. Peske, Appellants’ App.

To Motion For Stay 80, Western Nuclear, Inc.

v. Huffman, 825 F.2d 1430 (10th Cir. 1987)

(No. 86-1942), cert. granted, —— US. ——,

na caeeiieeeinnsiiisines 6,8

Energy Information Adm., DOE, Domestic Ura-

nium Mining and Miliing Industry: 1983 Via-

bility Assessment (1981)... take 4

Energy Information Adm., DOE, Domestic Ura-

nium Mining and Milling Industry: 1984 Via-

I 24

Letter from DOE Secretary John S. Herrington

to U.S. Trade Representative Clayton Yeutter

RRP A Se GREE 4, 25

Letter from DOE Secretary Donald Paul Hodel to

George Bush, President of the Senate (Dec. 31,

1984) ...... AR A aR Hae Dn 2 vO PR a 4, 25

Letter from U.S. Trade Representative Clayton

Yeutter to DOE Secretary John S. Herrington

I a aanseeenaneagaeiaianine 4, 25

Memorandum for The President from DOE Secre-

tary John S. Herrington (Sept. 26, 1985) ..2, 3, 4, 24, 25

Petition For A Writ Of Certiorari To The United

States Court Of Appeals For The Tenth Circuit,

Huffman v. Western Nuclear, Inc. (No. 87-

645) eEeneecentecesescosenneseussebaeneessesenscesnenseenessoseccees sed 4, 5, 6, 19

Respondents’ ‘Brief In Opposi tion, Huffman v.

Western Nuclear, Inc. (No. 87-645) ; _ 18,19

IN THE

Suprenv Court of the United States

OCTOBER TERM, 1987

No. 87-645

F. CLARK HUFFMAN, et al.,

2. Petitioners,

WESTERN NUCLEAR, INC., et al.,

Respondents.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Tenth Circuit

BRIEF OF ELECTRIC UTILITY COMPANIES AS

AMICI CURIAE IN SUPPORT OF PETITIONERS

In accordance with this Court’s Rule 36, the domestic

electric utility companies listed below' (the “Utilities”)

1 The Utilities include:

Alabama Power Company

Arkansas Power and Light Company

Baltimore Gas and Electric Company

Cleveland Electric Illuminating Company

Connecticut Light and Power Company

Duke Power Company

Georgia Power Company

Iowa Electric Light and Power Company

Kansas City Power and Light Company

Kansas Electric Power Cooperative, Incorporated

Kansas Gas and Electric Company

Louisiana Power and Light Company

MSU System Services, Incorporated

[ Continued ]

have received the written consent of the parties to file

this brief as amici curiae in support of the position of

petitioners F. Clark Huffman, et a/. Copies of the letters

of consent have been filed with the Clerk.

INTRODUCTION

In this case, the Court is called upon to decide whether

the Department of Energy (“DOE” or the “Depart-

ment”) correctly interpreted its responsibilities under

section 16lv of the Atomic Energy Act of 1954, 42

U.S.C. § 2201/v) (1982) (“section 2201(v)”). At issue

is the meaning of the second proviso of section 2201(v),

which states that DOE:

to the extent necessary to assure the maintenance

of a viable domestic uranium industry, shall not of-

fer {uranium enrichment}] services for source or

special nuclear materials of foreign origin intended

for use in a utilization facility within or under the

jurisdiction of the United States.

(Emphasis added.) On September 26, 1985, the Secre-

tary of DOE issued a determination that the domestic

uranium industry was not viable in calendar year 1984.

Memorandum for The President from DOE Secretary

John S. Herrington (Sept. 26, 1985) (“Herrington

1 | Continued |}

Ohio Edison Company

Pennsylvania Power and Light Company

Power Authority of the State.of New York

Public Service Electric and Gas Company

Southern California Edison Company

System Energy Resources, Incorporated

Texas Utilities Electric Company

The Toledo Edison Company

Union Electric Company

Virginia Electric and Power Company

Western Massachusetts Electric Company

Wisconsin Electric Power Company

Wolf Creek Nuclear Operating Corporation

Memo.”). Nevertheless, DOE did not impose enrichment

restrictions on foreign-origin uranium under section

2201(v), because it concluded that such restrictions would

not assure the viability of the domestic industry, and, in

that circumstance, enrichment restrictions were not re-

quired by statute. Id.; see also 51 Fed. Reg. 3624, 3627

(1986).

Enacted in 1964 as section 16 of the Private Owner-

ship of Special Nuclear Materials Act, Pub. L. No. 88-

483, 78 Stat. 602 (1964) (“Private Ownership Act”),

section 2201(v) generally authorized DOE to enter into

contracts to enrich privately-owned uranium. It required

DOE to establish written criteria setting forth the terms

and conditions under which its enrichment services would

be offered—including the extent to which such services

would be made available for foreign uranium intended

for use in the United States—and it made the criteria

subject to prior Congressional review.

Congress did not disapprove the criteria proposed in

1973 by DOE’s predecessor, the Atomic Energy Commis-

sion, to phase out by 1984 all restrictions on the enrich-

ment of foreign uranium intended for use in this coun-

try. See 39 Fed. Reg. 38.016, 38,017 (1974) (modifica-

tion of restrictions on enrichment) ; 38 Fed. Reg. 32,595,

32,596 (1973) (notice of proposed modification). Simi-

larly, in 1983, as an alternative to proposed legislation

requiring DOE to reimpose enrichment restrictions on

foreign uranium in certain circumstances, see H.R. Rep.

No. 884, 97th Cong., 2d Sess. 17, 52 (1982), Congress

enacted section 170B of the Atomic Energy Act, 42

U.S.C. § 2210b (1982! (“section 2210b”). Section 2210b

requires DOE to issue an annual report for the years

1983 to 1992 on the viability of the domestic uranium

industry and, depending upon the Department's findings,

to request the initiation of specific U.S. international

trade law investigations with respect to uranium im-

>

4

ports. See 19 U.S.C. $$ 1862, 2251 (1982 & Supp. IV

1986) (investigations authorized).

In its first annual report, issued in December 1984,

DOE determined that the domestic uranium industry had

been viable in 1983. Letter from DOE Secretary Donald

Paul Hodel to George Bush, President of the Senate

(Dec. 31, 1984) (“Hodel Letter”); Energy Information

Adm., DOE, Domestic Uranium Mining and Milling In-

dustry: 1983 Viability Assessment (1984). Also in De-

cember 1984, the respondent domestic uranium mining

and milling companies initiated this lawsuit. Respond-

ents alleged, among other things, that DOE’s failure to

impose enrichment restrictions on foreign uranium was

unlawful, and they sought an order compelling the De-

partment to begin a rulemaking to determine the appro-

priate level of enrichment restrictions. Petition For Cer-

tiorari at 13. Subsequently, respondents asked the dis-

trict court for an order imposing judicially-mandated re-

striction levels. Jd.

In September 1985, the Secretary of DOE issued his

determination that the uranium industry had not been

viable in 1984 but that enrichment restrictions would not

help the industry. Herrington Memo. At the same time,

he requested the assistance of the United States Trade

Representative in assessing whether the Department’s

findings of fact about the domestic industry would pro-

vide the basis for successful investigations under the

U.S. trade laws. Letter from DOE Secretary John S.

Herrington to U.S. Trade Representative Clayton Yeutter

(Sept. 26, 1985) (“Letter to Yeutter”!. In December

1985, the Trade Representative advised the Secretary

that successful trade investigations could not be brought

and, further that any import relief “would not be suffi-

cient to make the domestic industry viable|.|"” Letter

from U.S. Trade Representative Clayton Yeutter to DOE

Secretary John S. Herrington ‘Dec. 26, 1985) (“Yeutter

Response”).

In January 1986, DOE began a rulemaking to revise

its enrichment criteria in response to market changes

and the depressed condition of the domestic industry. 51

Fed. Reg. at 3625 (notice of proposed rulemaking).

Throughout the course of the rulemaking, however. the

Department reiterated its prior conclusion that to reim-

restrictions on the enrichment of foreign uranium

“eould further damage the U.S. mining industry,” id. at

3627, and thus would be “counterproductive.” 51 Fed.

Reg. 15,632 (1986) (notice of additional comment pe-

riod).

Nevertheless, respondents insist that section 2201/v)

requires DOE to impose restrictions automatically upon

a finding that the domestic industry is not viable. The

district court below agreed, and issued an injunction that

would require DOE as of January 1, 1987 to refuse to

enrich any foreign uranium for domestic use. Petition

For Certiorari at 23a. On appeal, the Tenth Circuit up-

held the district court’s injunction. Western Nuclear,

Inc. v. Huffman, 825 F.2d 1430, 1440 (10th Cir. 1987),

cert. granted, US. ——, 108 S. Ct. 692 (1988).

INTEREST OF THE AMICI CURIAE

ELECTRIC UTILITY COMPANIES

The Utilities filing this brief as amici curiae will be

vitally affected by the injunction. Each of the Utilities

is licensed by the Nuclear Regulatory Commission to con-

struct, own, or operate one or more nuclear reactors.

In order to operate their nuclear reactors, the Utilities

depend on sufficient, timely, and economical supplies of

enriched uranium. Fach of the Utilities currently has

one or more contracts or options to supply DOE with

natural uranium for the Department to enrich into us-

able reactor fuel. These contracts with DOF contain no

restrictions on enrichment of foreign-origin uranium, and

the Utilities have relied on them to purchase, or contract

for the purchase of, significant quantities of uranium

from abroad. As of January 1, 1985, U.S. utility com-

panies were estimated to hold contracts or options for

natural uranium from foreign sources in 1985-1990 to-

taling 30.6 million pounds of U,O.,—with a value of ap-

proximately $780 million dollars. See Affidavit of Loring

E. Mills 3, Western Nuclear, Inc. v. Huffman, 825

F.2d 1430 (10th Cir. 1987) (No. 86-1942), cert. granted,

— US. , 108 S. Ct. 692 (1988) (“Mills Aff.”),

reprinted as Appendix A to the Utilities’ Brief In Sup-

port Of Petition For Certiorari; Petition For Certiorari

at 24 n.18.

As Congress recognized in enacting section 2201(v),

“it is essential that utility companies and the atomic

energy industry be able to plan on a long-term basis in

the context of normal economic conditions. This is 4

cially true with respect to commitments for f S.

Rep. No. 1325, 88th Cong., 2d Sess., reprinted in 1964

U.S. Code Cong. & Admin. News 3105, 3113. The Utili-

ties’ need for stable, long-term fuel supply and enrich-

ment contracts is as great today as it was in 1964. Yet

unless this Court reverses the decision below, the in-

junction wi!l abruptly frustrate the Utilities’ fuel sup-

ply and enrichment expectations. |

Under the injunction, the Utilities wil! be unable to

have the uranium they purchased or contracted to pur-

chase abroad enriched pursuant to their contracts with

DOE. The Utilities’ obligations to provide their cus-

tomers with a reliable supply of electricity at a reason-

able cost, however, will require them to take all neces-

sary steps to obtain sufficient, economical supplies of en-

riched uranium to support continued operation of their

nuclear plants. Mills Aff. ©6. Utilities with foreign

uranium under contract may be forced to shift their

demand for enrichment services overseas and away from

DOE.” The increased demand will drive up the price of

2 See Declaration of Sherry E. Peske ©* 8-11, Appellants’ App. To

Motion For Stay 80, 83-85, Western Nuclear, Inc. v. Huffman, 825

F.2d 1430 (10th Cir. 1987) (No. 86-1942), cert. granted, -— US.

-———, 108 8S. Ct. 692 (1988) (“Peske Decl.”).

7

foreign enrichment services. Moreover, as fewer utility

companies bring uranium to DOE for enrichment, DOF

will have to raise the price of enrichment services to its

remaining customers in order to comply with its statu-

tory requirement to recover its costs. Jd. {6\a); see 42

U.S.C. $2201/v). Utilities with foreign uranium al-

ready on hand may attempt to purchase stockpiled do-

mestic uranium from other domestic utility companies

to enrich under their contracts with DOE. Such ura-

nium will be hard to obtain as the other companies hoard

their own supplies for the future, and it will command

a premium when it is available. Mills Aff. 6'b). Fi-

nally, some utility companies may seek to purchase cur-

rent production from domestic uranium suppliers. If none

of the other alternatives are feasible and all of the do-

mestic utility companies must obtain their uranium re-

quirements in this country, the domestic uranium indus-

try will be unable to produce economically the amount of

uranium required. In fact, domestic producers are al-

ready importing foreign uranium for resale to U.S. utili-

ties, because it is more profitable for them than mining

and milling additional quantities from their own domes-

tie resources. See 51 Fed. Reg. 27,132, 27,135 (1986).

The mining industry wil! certainly raise the price of any

additional uranium it does produce in order to cover its

higher marginal costs—and to take advantage of the

surge in demand created by the injunction. See Mills

Aff. © Gi).

Thus, it is inevitable that the Utilities, pursuing any

of the options available to them if the injunction takes

effect, will end up with “duplicative, overlapping, or con-

flicting contracts for uranium supplies or enrichment

services or both.” Jd. © 10. Lengthy and expensive liti-

‘gation over a host of contractual issues is sure to follow.

See id. “Under traditional principles of electricity rate

regulation, the increased uranium costs, the increased

prices for enrichment services, and the costs of abrogat-

ing existing contracts will all be incorporated in electric-

rates and ultimately would be borne by the consumers of

slectricity.” Jd." 12.

These increased costs to the Utilities and their cus-

tomers throughout the country are wholly unnecessary.

Moreover, there is no assurance whatsoever that the

injunction will result in increased domestic production of

uranium. It is far more likely that there will be no sig-

nificant change in domestic production. Rather, DOE

will lose enrichment sales to its overseas competitors, and

domestic utility companies will increase their reliance on

foreign enrichment services and maintain or increase

their reliance on foreign uranium. The nonviability of

the domestic uranium industry is not attributable to

uranium imports, but to the unanticipated decline in the

demand for nuclear power, the cancellation of power

plants, the failure of domestic mining and milling com-

panies to decrease uranium production in response to the

decrease in consumption, the build-up of utility inven-

tories of natural and enriched uranium, and the emer-

gence of secondary and foreign markets for both natural

and enriched uranium. See Peske Decl. © 4. An injunc-

tion barring DOE enrichment of foreign uranium there-

fore would not redress the injuries alleged by respondents.

SUMMARY OF ARGUMENT

The court below construed section 2201/v) to require

DOE to ignore its own findings about the state of the

domestic uranium industry. The court ordered DOE not

to enrich foreign uranium because DOE had concluded

that the domestic industry is not viable, even though the

Department also found that enrichment restrictions

would not “assure the maintenance of” a viable domestic

industry. See Western Nuclear, Inc. v. Huffman, 825

F.2d at 1440. The holding of the court below should be

reversed because the plain meaning of section 2201iv)

grants DOE the discretion to determine whether enrich-

ment restrictions are “necessary to assure the mainte-

nance of” a viable domestic industry (emphasis added),

and because the Department’s decision not to impose

such restrictions was a reasonable administrative inter-

pretation to which a reviewing court should defer.

Section 2201 contains 24 subsections setting forth

numerous duties of DOE and the Nuclear Regulatory

Commission. 42 U.S.C. § 2201 (1982). Where Congress

wanted to require a specific action to follow a particular

agency finding, it did so—but not in section 2201(v).

See id. § 2201\q). Where Congress wanted to scrutinize

DOE’s judgment about enriching or not enriching for-_

eign uranium, it did so—in the third proviso of section

2201\v), which requires the Department to submit its

proposed enrichment criteria to Congress for a 45-day

review. In the second proviso of section 2201/v)—the

actual words at issue in this litigation—-Congress sim-

ply instructed DOE to restrict enrichment services for

foreign uranium intended for use in the United States

“to the extent necessary” to assure the maintenance of

a viable domestic uranium industry. That language is

the same language used elsewhere in section 2201 to

signify that a specific action has been left to the agency's

discretion. Thus, the plain meaning of the second proviso

of section 2201\v) is that DOE shall restrict enrichment

services for foreign uranium to the extent that DOE,

exercising the discretion clearly granted by the statute,

deems such restrictions necessary to assure thé domestic

industry's viability. If DOE determines that the domes-

tic industry cannot be made viable by enrichment restric-

tions, the Department is authorized under section

2201/v) not to impose them.

Section 2201/v! was added to the Atomic Energy Act

in 1964, along with other provisions, to establish more

market-oriented economic conditions for an atomic en-

ergy industry converting to peacetime applications. Vir-

tually the only commercial application Congress contem-

plated was the use of nuclear power to generate elec-

10

tricity, and the legislative history of the Private Owner-

ship Act recognized the need of electric utility com-

panies to rely on long-term fuel supply contracts. See

S. Rep. No. 1325 at 3113. Despite its concern for the

viability of the domestic uranium industry, in section

2201/v' Congress made DOE's duty to impose enrich-

ment restrictions on foreign uranium “flexible both as

to the duration and degree,” id. at 3135, leaving DOE

free to impose no degree of restrictions if it found they

would not assure the industry's viability. Further, Con-

gress expressly rejected a proposal in 1982 requiring

DOE to reimpose enrichment restrictions automatically

when uranium imports exceeded a specified percentage

of domestic requirements. See 128 Cong. Rec. H&802-

8809 ‘daily ed. Dee. 2, 1982).

In deciding not to impose enrichment restrictions

under section 2201/v', DOE properly balanced its find-

ing that restrictions would not return the uranium in-

dustry to viability with the costs such restrictions would

have for other sectors of the atomic energy industry.

including the nation’s electric utilities and their cus-

tomers. Its decision is entitled to deference under the

principles this Court articulated in Cherron U.S.A. +.

Natural Resources Defense Council, 467 U.S. 837 (1984).

Even if the court below was correct in ruling that

DOE misinterpreted its responsibilities under the stat-

ute, however, the court's remedy—an injunction imme-

diately and indefinitely suspending all enrichment serv-

ices for foreign uranium—ousts the Department of its

primary jurisdiction over the promulgation of enrich-

ment criteria end deprives Congress of its role in seruti-

nizing the criteria. As such, the injunction undermines

the division of power inherent in the Constitution and

the Administrative Procedure Act, 5 U.S.C. ££ 551-559

(1982).

11

ARGUMENT

I. DOE’S AUTHORITY TO RESTRICT ENRICHMENT

OF FOREIGN URANIUM IS DISCRETIONARY UN-

DER THE PLAIN MEANING OF SECTION 2201(v).

A. The Discretionary Language Used In Section

2201(v) Is Consistent With The Language Used

Throughout Section 2201.

Section 2201 sets forth the general duties of the

Atomic Energy Commission (now divided between the

Nuclear Regulatory Commission and the DOE). Some

of the duties are set forth broadly, and the Commission

is left free to discharge them without further statutory

restrictions. For example, the Commission is authorized

to establish “such standards and instructions to govern

the possession and use of special nuclear material, source

material, and byproduct material as [it] may deem nec-

essary or desirable to promote the common defense and

security or to protect health or to minimize danger to

life or property.” Id. § 2201(b) (emphasis added). Sim-

ilarly, the Commission is authorized to “prescribe such

regulations or orders as it may deem necessary” to guard

against the loss or diversion of certain special nuclear

materials or to prevent “any use or disposition thereof

which the Commission may determine to be inimical to

the common defense and security|.}"" Jd. § 2201(i) (em-

phasis added).

Other duties set forth in section 2201 are made sub-

ject to requirements or provisos that the Commission

abide by certain standards, guidelines, or criteria. Thus,

the Commission is authorized to enter into contracts for

the purchase or acquisition of supplies, equipment, ma-

terials, or services whenever it determines that to do so

is justified by certain guiding cost benefit principles

enumerated in the statute. Jd. § 2201(u)(2)(A).(B).

Likewise, the Commission is authorized to enter into

various production-related activities with specified li-

12

censees and to make certain nuclear materials available,

in some cases for sale, to such licensees, provided that

it “shall establish prices to be paid by licensees for ma-

terial or services to be furnished by the Commission pur-

suant to this subsection, which prices shall be established

on such a nondiscriminatory basis as, in the opinion of

the Commission, will provide reasonable compensation to

the Government for such materia! or services and will

not discourage the development of sources of supply in-

dependent of the Commission.” Jd. § 2201(m) (empha-

sis added). These and similar requirements, however,

do not dictate the precise content or outcome of the

Commission’s acts. See also id. § 2201(d) (authority to

set salary rates); § 2201(e) (authority to grant permits

to operate commercial businesses at project sites). That

is still left to the Commission to decide.

Only a few of the duties set forth in section 2201 are

subject to requirements or provisos that mandate the

precise content or outcome of the Commission’s acts, and

these are narrowly drawn. Section 2201(s) authorizes

the Commission to establish a plan for a succession of

authority to assure the continuity of operations in the

event of a national disaster due to enemy activity, “Pro-

vided, That any such succession to authority, and vest-

ing of authority shall be effective only in the event and

as long as a quorum of three or more members of the

Commission is unable to convene and exercise direction

during the disaster period|.|” Jd. § 2201(s). Section

2201(q) authorizes the Commission to grant certain

rights-of-way over land under its jurisdiction and con-

trol, “Provided, That such rights-of-way shall be granted

only upon a finding by the Commission that the same

will not be incompatible with the public interest{.|”

Id. § 2201(q).

It was to this statutory framework that section

2201(v) was added in 1964 by the Private Ownership

Act. Section 2201(v) authorizes DOE to enter into cer-

13

tain contracts for the production or enrichment of spe-

cial nuclear material, subject to two provisos, of which

the second is at issue in this litigation. Further, section

2201(v) directs DOE to establish criteria setting forth

the terms and conditions under which such production

and enrichment services generally shall be made avail-

able, and that authorization is subject to a third pro-

viso. In full, section 2201(v) authorizes DOE, in the

performance of its functions, to:

(A) enter into contracts with persons licensed

under sections 2073, 2093, 2133 or 2134 of this title

for such periods of time as the [Department] may

deem necessary or desirable to provide, after De-

cember 31, 1968, for the producing or enriching of

special nuclear material in facilities owned by the

| Department} ; and

(B) enter into contracts to provide, after De-

cember 31, 1968, for the producing or enriching of

special nuclear material in facilities owned by the

[Department] in accordance with and within the

period of an agreement for cooperation arranged

pursuant to section 2153 of this title while compar-

able services are made available pursuant to para-

graph (A) of this subsection:

Provided, That (i) prices for services under para-

graph (A) of this subsection shall be established on

a nondiscriminatory basis; (ii) prices for services

under paragraph (B) of this subsection shall be no

less than prices under paragraph (A) of this sub-

section; and (iii) any prices established under this

subsection shall be on a basis of recovery of the

Government’s costs over a reasonable period of time:

And provided further, That the [Department], to

the extent necessary to assure the maintenance of a

viable domestic uranium industry, shall not offer

such services for source or special nuclear materials

of foreign origin intended for use in a utilization

facility within or under the jurisdiction of the United

States. The [Department] shall establish criteria in

14

writing setting forth the terms and conditions under

which services provided under this subsection shall

be made available including the extent to which such

services will be made available for source or special

nuclear material of foreign origin intended for use

in a utilization facility within or under the juris-

diction of the United States: Provided, That before

the [Department] establishes such criteria, the pro-

posed criteria shall be submitted to the Joint Com-

mittee, and a period of forty-five days shall elapse

while Congress is in session ‘in computing the forty-

five days there shall be excluded the days in which

either House is not in session because of adjourn-

ment for more than three days) unless the Joint

Committee by resolution in writing waives the con-

ditions of, or all or any portion of, such forty-five

day period.

DOE’s primary responsibility under section 2201 (Vv),

to enter into production or enrichment contracts, is set

forth initially with language of broad authorization: the

Department may enter into such contracts “for such pe-

riods of time as [it] may deem necessary or desirable”

to provide for such services. Under the first proviso of

section 2201(v), however, DOE must comply with sev-

eral standards. It must establish prices on a nondis-

criminatory basis. It may not establish prices for the

services under paragraph (B) (production or enrich-

ment services under international arrangements) which

are less than the prices established for services under

paragraph (A) (production or enrichment services for

domestic licensees). It must establish prices on a basis

to recover the government’s costs over a reasonable pe-

riod of time.

Then comes the second proviso: “That the | Depart-

ment], fo the extent necessary to assure the maintenance

of a viable domestic uranium industry, shall not offer

such services for source or special nuclear materials of

foreign origin intended for use in a utilization facility

15

within or under the jurisdiction of the United States.”

(Emphasis added.) The key language in this proviso—

“to the extent necessary”—is the same language used

throughout section 2201 (including the opening clause of

section 2201(v)) to signify that a matter has been left

by the statute to the Department’s discretion. See, e.9.,

id. §2201(b), 2201(i); see also id, § 2201(q) (“Pro-

vided further, That such rights-of-way shall not include

any more land than is reasonably necessary for the pur-

pose for which granted”). Congress used very different

language elsewhere in section 2201 when it wanted to

dictate, either generally or upon the occurrence of a par-

ticular contingency, the exact content or outcome of

DOE’s acts. See id. § 2201(q), 2201(s). The second

proviso in section 2201(v) does not contain such lan-

guage. It does not even contain language closely circum-

scribing DOE’s discretion in the manner of the first

proviso in section 2201(v).

B. The Language Used In Section 2201(v) Plainly Au-

thorizes DOE Not To Impose Enrichment Restric-

tions That Would Not, In DOE’s Opinion, Assure

Or Maintain A Viable Domestic Uranum Industry.

The plain meaning of section 220liv) is that DOE

shall not offer enrichment services for foreign uranium

intended for use in this country to the extent that DOE,

exercising the discretion clearly granted it by the stat-

ute, deems enrichment restrictions necessary to assure

the maintenance of a viable domestic uranium industry.

To the extent that DOE determines that the domestic

industry cannot be made viable by enrichment restric-

tions, the Department is authorized under section

2201(v) not to impose them. If Congress wanted to

trigger enrichment restrictions automatically upon a

finding by DOE that the domestic uranium industry is

not viable. it would have used language to indicate that

intention—as it did in section 2201(q), where the stat-

ute expressly provides that rights-of-way “shall be

16

granted only upon a finding by the [Department] that

the same will not be incompatible with the public in-

terest|.]” Jd. §2201(q) ‘emphasis added). Moreover,

where Congress wanted to oversee DOE’s judgment about

the advisability of making enrichment services available

for foreign uranium, it did so plainly—in the third pro-

viso of section 2201(v). There, Congress required DOE

to submit its proposed enrichment criteria for a 45-day

review, during which period Congress could disapprove

them. The second proviso of section 2201(v), however,

simply authorizes DOE to decide whether enrichment re-

strictions are “necessary to assure the maintenance of a

viable domestic uranium industry.” That is, Congress

left the imposition of restrictions to DOE’s discretion.

This Court recently construed similar statutory lan-

guage in Young v. Community Nutrition Institute,

U.S. ——. 106 S. Ct. 2360 (1986). In that case, the

statute in question provided that when certain poison-

ous or deleterious food additives are required or un-

avoidably present, “the Secretary [of Health and Human

Services} shall promulgate regulations limiting the quan-

tity therein or thereon to such extent as he finds neces-

sary for the protection of public health ... .” /d. at

2362, quoting 21 U.S.C. § 346 (1982) (emphasis added).

The Court found that this language was ambiguous be-

cause its syntax did not clearly indicate whether “to

such extent” modified “shall” or “the quantity therein

or thereon.”

A Congress more precise or more prescient than the

one that enacted § 346 might, if it wished petition-

er’s position to prevail, have placed “to such extent

as he finds necessary for the protection of public

health” as an appositive phrase immediately after

“shall” rather than as a free-floating phrase after

“the quantity therein or thereon.”

106 S. Ct. at 2364. Nevertheless, the Court upheld, as a

reasonable construction of the statute, the interpretation

17

of the petitioner, the Commissioner of the Food and Drug

Administration, that whether regulations are necessary

to protect the public health is a determination to be made

by the FDA. /d. at 2265.

In contrast to the statutory provision construed in

Young, there is no ambiguity in the second proviso of

section 2201‘v'. DOE is directed to limit its enrich-

ment of foreign-origin uranium “to the extent necessary

to assure the maintenance of a viable domestic uranium

industry.” By its location, the adverbial phrase “to the

extent necessary” clearly modifies the action contained

in the verb phrase “shall not offer.” Moreover, as this

Court recognized in Young, the words “to such extent”

may encompass “to no extent.” if the agency charged

with applying the statutory language so determines. See

id. at 2364-2366. The words used in section 2201/v),

“to the extent,” clearly permit DOE to interpret them

in the same way. In short, the terminology and the

phrasing of section 2201/v'!—as well as its relation-

ship to the rest of the statutory section of which it

was made part—all suggest that section 2201‘v! au-

thorizes DOE not to impose enrichment restrictions

where it concludes that they would not assure or main-

tain the viability of the domestic industry. Accordingly,

“if the language of a statute is clear, that language

must be given effect—at least in the absence of a patent

absurdity.” INS v. Cardoza-Fonseca, —— US. ——,

107 S. Ct. 1207, 1224 (1987) (Sealia, J.. concurring)

(citations omitted): see also Commissioner rv. Brown,

380 U.S. 563. 571 (1965) (literal meaning should be

followed unless it “would lead to absurd results .. . or

would thwart the obvious purpose of the statute”).

The interpretation given to section 2201/v) by the

courts below would reauire DOE to impose enrichment

restrictions automatically upen a finding that the do-

mestic industry is not viable and to keep them in place

indefinitely until the industry becomes viable. See West-

18

ern Nuclear, Inc. v. Huffman, 825 F.2d at 1440. The

language of the statute, however, only requires DOE to

consider whether enrichment restrictions are necessary

“to assure the maintenance of” a viable industry. If, as

DOE has concluded, see 51 Fed. Reg. at 27.155, the do-

mestic industry is not viable and enrichment restrictions

would not revive it, then a viable industry cannot be

“maintained” by any action the Department might take.’

Further, as petitioners have illustrated, the courts

below have construed section 2201/v) to require the im-

position of enrichment restrictions without any logical

or practical limitation:

If for example, the Secretary had found that the

domestic uranium industry was not viable because

all American uranium reserves had been exhausted,

the interpretation adopted by the court of appeals

would nevertheless require DOE to cease all enrich-

ment of foreign uranium. But if there were no do-

mestic uranium to enrich, and DOE was barred

from enriching foreign uranium, the DOE would

have no choice but to close its doors. Presumably,

the fuel needs of American nuclear power plants

would then have to be satisfied by importing foreign

uranium enriched elsewhere—in Europe or the 5So-

3 Respondents allege that DOE should have imposed enrichment

restrictions beginning in 1981 in order to maintain the viability of

the domestic uranium industry. Brief In Opp. at 4-5, 14-15. DOE's

policy concerning enrichment restrictions prior to its finding im

September 1985 that the domestic industry was no longer viable

is not at issue here. By the time respondents initiated this law-

suit, the Department's existing criteria had already phased out all

restrictions on DOE enrichment of foreign uranium as of January 1,

1984. See 29 Fed. Reg. at 28.917. Moreover, DOE had announced

its intention to phase out all restrictions during its rulemaking in

1974. See id. Respondents failed to seek judicial review of the

criteria when they were adopted. They may not do so now collaterally

by seeking an injunction to prevent the enrichment of foreign

uranium. See Pawlor University Medical Center v. Heckler, 758

F.2d 1052, 1058 (5th Cir. 1985); Independent Bankers Association

v. Heimann, G27 F 2d 486, 488 (DC. Cir. 1980); Nader v. NRC,

513 F.2d 1045, 1054-55 (DC. Cir. 1975).

= Union—while DOE’s enrichment facilities stood

Petition For Certiorari at 19 ‘emphasis in original).

Respondents criticize this hypothetical “because Congress

never conte.aplated such a fanciful situation, and would

surely enact ‘appropriate legislation’ if domestic reserves

were in fact ever exhausted.” Brief In Opp. at 13 n.17,

citing 42 USC. $2013'f) (1982). Nevertheless,

“{jludges interpret laws rather than reconstruct legisla-

tors’ intentions.” /NS v. Cardoza-Fonseca, 107 8. Ct. at

1224 ‘Sealia, J., concurring). “Where the language of

those laws is clear”—as it is in the case of section

2201/vi—the courts “are not free to replace it with an

unenacted legislative intent.” /d.

Il. DOE'S INTERPRETATION OF ITS AUTHORITY

UNDER SECTION 2201(v) IS REASONABLE AND

IS ENTITLED TO DEFERENCE.

A. DOE's Interpretation Of Its Authority Is Supported

By The Legislative History Of Section 2201(v) And

By Congress's Subsequent Decision Not To Alter

ST rare Oa rT ee eee

(v¥).

The discretionary nature of DOF’s responsibilities

under section 2201/v) is supported by the legislative his-

tory of the Private Ownership Act. In that Act, Con-

gress sought to bring the atomic energy industry into the

post-war era in which the predom'nant uses of nuclear

power would be civilian, not military ones. 8. Rep. No.

1325 at 3109-3115. In order to create a “more normal

commercial market for natural uranium,” the Act termi-

nated the government's monopoly on the ownership of

special nuclear materia! and, with it, the domestic ura-

nium mining and milling industry's exclusive reliance

on the government for its market. Jd. Section 2201/\v),

added by section 16 of the Act, granted private parties

access to enrichment facilities so that the uranium in-

dustry could deal directly with its ultimate customer,

the utility industry. /d. at 3114. Further, section

2201(v) provided that, subject to Congressional ap-

proval, enrichment services would be made available for

foreign uranium intended for use in the United States.

Id. at 3120. Congress recognized, however, that by thus

exposing the atomic energy industry to the play of pri-

vate market forces, “this bill might have adverse effects

on segments of the nuclear industry,” and it sought to

ameliorate such effects whenever possible. Jd. at 3115.

Despite the acknowledged importance of a viable do-

mestic uranium industry to the United States, Congress

left the decision whether, in particular situations, to im-

pose enrichment restrictions on foreign uranium intended

for use in this country up to DOE:

the language of the bill will permit the [Depart-

ment} to survey periodically the condition of the

domestic and world uranium markets and to offer

or refuce to offer its enrichment services on a basis

which will assure, in ifs opinion, the maintenance

of a viable domestic uranium industry.

Id. at 3135 (emphasis added). The Department’s disere-

tion was made “flexible both as to the duration and de-

gree of the restriction.” /d. Consistent with this delega-

tien of authority, therefore, DOE could elect to impose

no degree of enrichment restrictions if, in its opinion,

restrictions were not “necessary to assure the mainte-

nance of «a viable dometic uranium industry.” /d, at

3134: see also id, at 3120 \same).

As in the text of section 2201/v) itself, the legislative

history clearly distinguishes between the imposition of

enrichment restrictions, which is discretionary, and the

submission to Congress of DOE's proposed enrichment

criteria (and proposed revisions and amendments to cri-

teria previously approved), which is mandatory. See id.

at 3135-31236. Congress recognized that it could not, in

21

1964, “predict, with any degree of certainty, the condi-

tion of the domestic uranium industry a decade hence|,|”

id. at 3135, much less two-and-a-half decades. Accord-

ingly, Congress chose not to substitute, a priori, its judg-

ment for the Department's as to whether, and when, en-

richment restrictions would be necessary to assure the

maintenance of a viable domestic uranium industry.

In arriving at this balance between the discretionary

and the mandatory, Congress noted that it had rejected

the idea of placing “an embargo or other statutory re-

striction on the importation of foreign uranium|.|]” Jd.

at 3121.‘ Congress rejected a similar proposal in 1982

when, in enacting section 2210b, it linked DOR’s findings

on the domestic uranium industry’s viability to the initi-

ation of import-related investigations under U.S. trade

law. During the previous year Congress had held hear-

ings on the subject of DOE's enrichment policies. See

Status of the Domestic Uranium Mining and Milling

Industry: The Effects of Imports: Hearing before the

Subcomm. on Energy Research and Development of the

Senate Comm. on Energy and Natural Resources, 97th

Cong., Ist Sess. (1981). In response, the Senate pro-

posed to limit imports of both natural and enriched ura-

nium to no more than 20 percent of domestic fuel needs.

See 128 Cong. Rec. 82966-2970 ‘daily ed. Mar. 30,

1982). The Conference Committee rejected that pro-

posal. See H.R. Rep. No. 884 at 50-52. Instead, it

drafted new language requiring DOE, whenever im-

ported uranium exceeded 37'. percent of domestic re-

* Congress understood that the concern over the importation of

foreign uranium was a concern over “imports of foreign uranium

for enrichment and sale on the domestic market!,)” id. at 3120,

and it understood that restrictions on the enrichment of foreign

uranium were de facto restrictions on the importation of foreign

uranium, since uranium in its natural state would be valueless to

a United States importer who could not have that uranium enriched

in this country.

quirements in any consecutive two-year period, to revise

its enrichment criteria immediately “to enhance the use

of source material of domestic origin . .. .” Id. at 17°

see also 128 Cong. Ree, $13,053-13,055 (daily ed. Oct. 1,

1982). The House of Representatives rejected that ver-

sion, too, See 128 Cong. Rec. at H8802-8809; 128 Cong.

Rec. $15,316-15,317 (daily ed. Dee. 16, 1982).

As enacted, section 2210b requires DOE to issue an

annual report on the viability of the domestic uranium

industry and to establish specific criteria—including cer-

tain criteria enumerated by Congress—to be assessed in

the annual reports. 42 U.S.C. § 2210b‘a), 2210bic¢).

Section 2210b also authorizes the Secretary of DOF to

determine, on the basis of the factual findings contained

in such reports, whether imports of foreign uranium sat-

isfy the statutory threshold for a successful “escape

clause” action under existing trade laws—namely,

whether imports are a “substantial cause of serious in-

jury, or threat thereof,” to the domestic industry. /¢.

¢2210bid). If the Secretary so determines, the United

States Trade Representative is required to initiate an

escape clause action, which could result in the imposition

of quotas, higher tariffs, adjustment assistance to help

workers in the industry find new employment, or other

relief measures. /d.; see also 19 U.S.C. § 2251 ‘escape

5“These modifications should provide for the greater use of

uranium in the enrichment process and the increased increment of

uranium should be restricted to uranium of domestic origin.” H.R.

Rep. No, 884 at 52.

«The Committee had also proposed to bar all contracting for

foreign uranium (i) during the pendency of certain import-related

trade law investigations (ii) triggered by a nonviability finding in

(iii) any annual report DOE would be required to conduct on the

state of the domestic uranium industry. H.R. Rep. No. 884 at 50-52.

This series of contingent events lead. ug to the automatic imposition

ef restrictions on contracting for uranium imports was equally

objectionable to the House of Representatives. See 128 Cong. Ree.

at H&802-8809.

clause investigation). Further, section 2210b fies

that whenever the Secretary determines that pe. over

or options involving source material or special nuclear

material from foreign sources account for more than

37'» percent of domestic requirements for two consecu-

tive years, or threaten to impair national security, he is

required to request the Secretary of Commerce to initi-

ate a “national security” investigation under existing

trade laws, which also could culminate in the adjustment

of import levels. 42 U.S.C. § 2210b/e): see also 19 U.S.C.

§ 1862 (national security investigation).

In short, after extensively consideri

amend the statutory -smeorace under which DOE mabe

enrichment services available for uranium imported from

foreign countries, Congress left that framework— along

with DOE's interpretation of its duties within that

framework— intact. “This failure to change the scheme

under which the |agency! operate|s} is significant, for a

congressional failure to revise or repeal the agency's

interpretation is persuasive evidence that the interpre-

tation is the one intended by Congress.’ Youn v. Com-

munity Nutrition Institute, 106 S. Ct. at 2366. quoting

NLRB +. Bell Aerospace Co., 416 U.S. 267, 275 (1974).

BK. DOE's Interpretation Of Its Authority Is Supported

By The Department's Detailed Consideration Of The

Regulatory Scheme It Administers And The Com-

peting Interests Of The Utilities And The Uraniam

Even if this Court should determine that

persuasive legislative history supporting oer ~Arore

ing of section 2210/v), there is no “unambiguously ex-

pressed intent of Congress,” Cherron U.S.A. v. Natural

Resources Defense Council, 467 US. at 843. DOF’s in-

terpretation of its statutory responsibilities—and its de-

cision not to impose enrichment restrictions because they

would not “assure the maintenance of a viable domestic

uranium industry”—should be given effect as a “reason-

24

able interpretation made by the administrator of an

agency.” Id. at 844. Accord American Paper Institute

». American Electric Power Service, 461 U.S. 402, 423

(1983): Udall v. Tallman, 380 U.S. 1, 16 (1965); Power

Reactor Development Co. v. International Union of Elec-

trical Workers, 367 U.S. 396, 408 (1961). See also

NLRB v. United Food & Commercial Workers Union,

U.S. ——, 108 S. Ct. 413, 419-420 (1987) ‘dem-

onstrating “the continuing and unchanged validity of the

test for judicial review of agency determinations of law

set forth in Chevron”) (Scalia, J., concurring).

In judging whether an agency's interpretation is rea-

mathe end tinal to deference, this Court has consid-

ered whether “the regulatory scheme is technical and

complex, the agency considered the matter in a detailed

and reasoned fashion, and [its] decision involve(d]

reconciling conflicting policies.” Chevron U.S.A. v. Nat-

ural Resources Defense Council, 467 U.S. at 865 (cita-

tions omitted). Clearly, the regulatory scheme DOE ad-

ministers pursuant to section 2201 and related sections

of the Atomie Energy Act, as amended, is technical and

complex. See, eg. 10 C.F.R. Pt. 761 (1987) ‘eriteria

for determining viability of the domestic uranium in-

dustry’.

It is equally clear that DOE has considered the matter

of enrichment restrictions, and their effect on the viabil-

ity of the domestic uranium industry, in a detailed and

reasoned fashion. See, eg. Energy Information Adm.,

DOE. Domestic Uranium Mining and Milling Industry:

1984 Viability Assessment (1985); Herrington Memo.;

51 Fed. Reg. at 3624; 51 Fed. Reg. at 27,132. As the

Department most recently articulated the rationale for

its determination under section 2201 /v):

The plain language of the statute makes clear the

restrictions are not to be impesed for their own sake.

Rather, DOE has a duty to determine whether their

imposition would achieve the statutory objective of

assuring the viability of the domestic industry. And,

when E determines imposition would have a

or counterproductive effect on this ob-

jective, DOE should not, and indeed, cannot impose

restrictions.

51 Fed. Reg. at 15,632.

Moreover, in reaching its determination, DOE fully

complied with the very procedures Congress established

in 1982 as alternatives to revising the enrichment re-

striction guidelines of section 2201/v). Pursuant to see-

tion 2210bia!, the Department issued criteria—based on

the factors enumerated by Congress—for determining

the viability of the domestic uranium industry. 48 Fed.

Reg. 45,746 (1983) (codified at 10 C.F.R. Pt. 761). Apply-

ing these criteria, DOE concluded that the domestic in-

dustry had been viable in 1983. Hodel Letter. In Sep-

tember 1985, however, the Department concluded that

the industry had not been viable in 1984 and that the

imposition of enrichment restrictions would not restore

the industry to viability. Herrington Memo. Promptly

thereafter, pursuant to his resporsibilities under section

2210b(d), the Secretary of DOE requested the assistance

of the United States Trade Representative in assessing

whether the Department’s findings of fact in its 1984

report would satisfy the statutory threshold for a sue-

cessful “escape clause” action with respect to uranium

imports. Letter to Yeutter. The Trade Representative

advised the Secretary that they would not, based on his

independent conclusion that the economic difficulties ex-

perienced by the domestic industry were the result of

long-term market forces and could not be alleviated by

preventing DOF from enriching foreign uranium. Yeut-

ter Response.”

™The Trade Representative’s conclusion was the product of ex-

pert judgment which carries a presumption of validity. Cf. FPC

v. Hope Natural Gas Co., 320 U.S. 591, 602 (1944); Puerto Rico

Maritime Shipping Authority v. FMC, 678 F.2d 327, 225 (D.C.

Cir.), cert. denied, 459 U.S. 906 (1982).

26

Finally, it is clear that DOE’s decision not to impose

enrichment restrictions involved reconciling manifestly

competing interests. It should not be forgotten in the

context of this litigation that a primary goal of the Pri-

vate Ownership Act was to help restructure the atomic

energy industry so that nuclear power could become “a

major source of energy to meet our growing require-

ments for electricity.” S. Rep. No. 1325 at 3115. In-

deed, the very first reason given in the Senate report on

the bill for enacting the legislation was to achieve nor-

mal economie conditions in the commercial uranium mar-

ket so that domestic utilities could make and implement

long-term plans—including fuel procurement commit-

ments—to develop nuclear power as an alternative source

of energy. //. Thus, Congress intended to accommodate

the electric utility industry’s need for stable, long-range

planning as well as the uranium industry's need for pro-

tection from substantial imports of foreign uranium for

enrichment and sale on the domestic market, particularly

during a period of limited demand for its product. See

id. at 3120-3121. In 1964, however, the future demand

for commercial applications of nuclear power looked

promising. Indeed, Congress assumed that the civilian

power industry and the uranium-producing industry

shared common interests that the Private Ownership Act

would help to promote. Jd, at 3114-3115. More than two

decades later, those interests have grown divergent, yet

DOE remains the agency “charged with the administra-

tion of the statute in light of everyday realities.” Chevron

U.S.A. v. Natural Resources Defense Council, 467 U.S.

at 866. As such, DOF determined that where enrichment

restrictions would not confer on the uranium industry

the benefit sought by Congress—a state of viability—it

would not impose those restrictions because of their cost

to the nation’s electric utility companies and their cus-

tomers. See 51 Fed. Reg. at 27,134-27,135. The Depart-

ment’s decision was “a reasonable policy choice for the

agency to make,” Chevron U.S.A. v. Natural Resources

Defense Couwncil, 467 U.S. at 845, to which this Court

27

should defer. See United States v. Riverside Bayview

Homes, 474 U.S. 121, 131 (1985); Batterton v. Francis,

432 U.S. 416, 426 (1977).

I. THE DISTRICT COURT'S INJUNCTION, AF-

FIRMED BY THE TENTH CIRCUIT, REPRE-

SENTS AN IMPROPER JUDICIAL INTRUSION

INTO DOE’S RULEMAKING.

Section 2201\v) requires DOE to establish written

criteria setting forth the extent to which the Depart-

ment'’s enrichment services will be made available for

imported uranium. Further, it requires DOE to submit

its proposed criteria to Congress for a 45-day review

period before they can take effect. Thus, even if a court

ruled that DOE interpreted its responsibilities under sec-

tion 2201(v) incorrectly, the only proper remedy would

be for that court to order the Department to issue cri-

teria specifying the extent to which new restrictions on

enrichment of foreign uranium would apply. Cf. Bur-

lington Northern Inc. v. United States, 459 U.S. 131, 141

(1982) (“federal-court authority to reject {Interstate

Commerce] Commission rate orders for whatever reason

extends to the orders alone, and not to the rates them-

selves”) ; Small Refiner Lead Phase-Down Task Force v.

EPA, 705 F.2d 506, 545 (D.C. Cir. 1983) (vacating new

rules without reinstating old rule “avoids any problem

of [appellate] court overstepping its authority, and

leaves it to the agency to craft the best replacement for

its own rule”). Instead, by enjoining DOE to impose

specific limits on its enrichment of foreign uranium, the

courts below not only have ousted the Department of its

primary jurisdiction over the promulgation of enrich-

ment criteria, but they also have deprived Congress of

its role in serutinizing and approving the criteria.

The district court’s willingress to issue such an in-

junction and the Tenth Circuit's willingness to affirm it

represent improper judicial encroachments into adminis-

trative rulemaking. The injunction effectively substitutes

the judiciary’s own enrichment criteria for those law-

fully issued by DOE. “Such usurpation of administra-

tive power . . . ill serve{s] the orderly operation of the

federal government. Nor {does| such action pay proper

respect to the division of power inherent in the Constitu-

tion and the Administrative Procedure Act, ... .” Colo-

rado Public Interest Research Group v. Hills, 420 F.

Supp. 582, 586 (D. Colo. 1976). Cf. Vermont Yankee

Nuclear Power Corp. v. Natural Resources Defense

Council, 435 U.S. 519, 557 (1978).

For the same reason, the injunction deprives the De-

partment of its primary jurisdiction over the issuance

of enrichment criteria, even where the courts found fault

with the absence of new criteria restricting enrichment

of foreign uranium. The courts, while retaining the

final authority to expound a statute, are required to avail

themselves of the aid implicit in the agency’s superior

expertise concerning the subject matter in question. Ricci

v. Chicago Mercantile Exchange, 409 U.S. 289, 305-306

(1973); see also Conrail v. National Association of Re-

cycling Industries, 449 U.S, 609, 612 (1981). The au-

thority to promulgate uranium enrichment services cri-

teria was delegated by Congress, with good reason, to

DOE, not to a federal court.

Section 2201/v) contains the 45-day review period re-

quirement to ensure that any uranium enrichment cri-

teria proposed by DOE become “subject to Congressional

scrutiny.” S. Rep. No. 1325 at 3120. By changing the

effective enrichment criteria immediately, the injunction

would circumvent the process of serutiny and approval

that Congress expressly reserved for itself.

D>

CONCLUSION

For the foregoing reasons, the opinion of the

appeals should be reversed. cng

Respectfully submitted,

Harry H. Vorct *

MINDY A. BUREN

PAUL H. FALON

LeBoeur, Lams, Letpy & MACRAE

1333 New Hampshire Ave., N.W.

Suite 1100

Washington, D.C. 20036

(202) 457-7500

Attorneys for Amici Curiae

Electric Utility Companies

* Counsel of Record

February 1988