Opposition Brief — Sacramento Municipal Utility District v. United States

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| | 24 2002

Nos. 01-1020, 01-1155, 01-1398 and 1-1 444R

In the Supreme Court of the United States’

SACRAMENTO MUNICIPAL UTILITY DISTRICT,

PETITIONER

U.

UNITED STATES OF AMERICA

MAINE YANKEE ATOMIC POWER COMPANY,

PETITIONER

U.

UNITEDSTATES OF AMERICA

OMAHA PUBLIC POWER DISTRICT, PETITIONER

Uv.

UNITED STATES OF AMERICA

COMMONWEALTH EDISON COMPANY, PETITIONER

Uv.

UNITED STATES OF AMERICA

ON PETITIONS FOR A WRIT OF CERTIORARI

TO THE UNITEDSTATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

THEODORE B. OLSON

Solicitor General

Counsel of Record

ROBERT D. MCCALLUM, JR.

Assistant Attorney General

DOUGLAS N. LETTER

MARK W. PENNAK

JAMES G. BRUEN, JR.

MATTHEW J. TROY

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

QUESTIONS PRESENTED

In order to provide some of the funds necessary to

decontaminate the Department of Energy’s uranium enrich-

ment facilities, Congress imposed a special assessment on

those domestic nuclear utilities that had purchased, either

from the Department of Energy directly or in the secondary

market, uranium that had been enriched at those facilities.

See 42 U.S.C. 2297; 42 U.S.C. 2297g-1 (1994 & Supp. V 1999).

The questions presented are:

1. Whether the special statutory decontamination assess-

‘ment constitutes an unlawful breach of the contracts for

uranium enrichment services between petitioners and the

Department of Energy.

2. Whether the special decontamination assessment

constitutes an impermissible taking of petitioners’ property

without just compensation.

3. Whether the special decontamination assessment is

unconstitutionally retroactive, in violation of petitioners’

substantive due process rights.

(I)

TABLE OF CONTENTS

Page

AEA 1

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TTT Acie idasidiabiebeccednchstipeeinsnemansehieduneteioiedneeesiroemmeins 3

Eaten Ee eee 10

I Saal ahead tcedsbehioveenbesactinmnteitsincubeete ema 27

TABLE OF AUTHORITIES

Cases:

Bowen v. Public Agencies Opposed to Soc. Sec. —

Entrapment, 477 U.S. 41 (1986) ...cccccsscssssesssessssessesseceeceses 13

Concrete Sales & Servs., Inc. v. Blue Bird Body Co.,

211 F.3d 1333 (11th Cir. 2000) ..........ceccessescssscessessessessecsecsess 23

Connolly v. Pension Benefit Guar. Corp., 475 U.S.

EES 18

Eastern Enters. v. Apfel, 524 U.S. 498 (1998) -.ccccccccce.. 8, 13, 14,

16, 17, 19, 25

First English Evangelical Lutheran Church v.

County of Los Angeles, 482 U.S. 304 (1987) cccccccccscsccssse. 14

John J. Kirlin, Inc. v. United States, 827 F.2d 1538

IS Le 1]

Keystone Bituminous Coal Ass’n v. DeBenedicitis,

ITT isc tialdacesceeociisinpmseeiiebtnteneinnmeiiesdeircenn 16

Kimberly Assocs. v. United States, 261 F.3d 864

Sta ta SNC 12

Loretto v. Teleprompter Manhattan CATV Corp.,

EE ee 16

Mississippi Power & Light Co. v. Mississippi, 487

i csauisbammsmiunnues 17

Mulholland v. United States, 361 U.S. 237 (Ct. Cl.

I aad iaaciaialnd tide stheentiniophtbenienes setittianaeillinicicotiliowenie 11

Penn Cent. Transp. Co. v. City of New York, 438

da iiesiaaibechinsabncintenshieeiniiosecs 16,17

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393

AEE EAL ee 16

(IIT)

IV

Cases—Continued: Page

Pension Benefit Guar. Corp. v. R.A. Gray & Co.,

I I i eneteenie acenes 20, 21

Phillips v. Washington Legal Found., 524 U.S. 156

1 REECE eer ae eR END Nc ney ON ED 15

RTC v. FSLIC, 25 F.3d 1493 (10th Cir. 1994) wu. 12

Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984) ........ 22

Tahoe-Sierra Preservation Council, Inc. v. Tahoe

Reg’l Planning Agency, No. 00-1167 (Apr. 23, 2002) ..... 16

United States v. Carlson, 512 U.S. 26 (1994) wo. 20

United States v. Hercules, Inc., 247 F.3d 706

(8th Cir.), cert. denied, 122 S. Ct. 665 (2001) ........ 18

United States v. Monsanto Corp., 858 F.2d 160

(4th Cir. 1988), cert. denied, 490 U.S. 1106

COITEED <snsichnicssiiieeeutiieebcuatapeiteanssiduiiadidialiuninissteninieanadaniailednobesbesion 24

United States v. Sperry Corp., 493 U.S. 52 (19839) ....... 14, 15

16, 26

APA rae Rare ADRES AM SOA eal Ciena oe 6, 12, 13

United States Fid. & Guar. Co. v. McKeithen,

226 F.3d 412 (5th Cir. 2000), cert. denied, 532 U.S.

| ROPERS SIERO NOES On SAO BT EL a NORD 19

Usery v. Turner Elkhorn Mining Co., 428 U.S. 1

URE: coe RRO ee R ARN 20, 21, 24, 27

Webb’s Fabulous Pharmacies, Inc. v. Beckwith,

a ED chcuisesieucicshasinsininhieaiitcnineichinirtiniteaistinslieiiinias 15

Yankee Atomic Elec. Co. v. United States, 112

F.3d 1569 (Fed. Cir. 1997), cert. denied, 524 U.S.

gt ERRRERERES Tear ec eee Te PURE DE DENIC SE ern passim

Constitution and statutes:

U.S. Const. Amend. V:

FOE CTI COIIG ircecrctcsteresctncsicrinestiittvnsantatmnnnsitin 13, 14

SO ar 20. 26

Act of Apr. 26, 1966, Pub. L. No. 104-134, Tit. ITI,

ch. 1, subch. A, § 3116(a)(1), 110 Stat. 1321-349 oo... 25

Statutes

Continued: Page

Comprehensive Environmental Response,

Compensation, and Liability Act of 1980,

GR UEC. GEE 06 CM ccctecccceecenicensitneiesceteceniniarmeniicectnscniivinne 10

42 U.S.C. 2201(v)(B)(iii) (1988) .......0.\ecccscsccsrerssoscereroers 21

SS UA, Be ceeeeteeniertttinanennn 25

42 U.S.C. 2296a-2 (1994 & Supp. V 1999) ......cecscceeeeees 25

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GB UBC. BIT IC. cccccnsnccnsicnctceninnnincensvcnsctevionmiionens 25

MO USE ice 4

42 U.S.C. 2297g-1 (1994 & Supp. V 1999) ......eeeeeees 4

42 U.S.C. 2297g-1(a) (1994 & Supp. V 1999) ......ceeeee 4

GU, FI cectesctrcecectercceesininevmninemistaninnies 4

GU Ba eetetciccisinrcntctenrnrnionernsenrnensenstaiinniin 4,5

GE UL, BD tesincesictstetcientercereenicnsienicentcnsnsenaitaiio 4

GTR, Fe sicsttecsecveitinvinincinsepennterveincrincsiie 5, 17, 24

Energy Policy Act, Pub. L. No. 102-486, 106

Da. GIG sccscsniscrsaisavisnsnninviessseiasianpineciiguaatiaminsieianannianesianiinn 3

GON, SOG Dhak. GOD ecstnccnsctcsscstttnestctnciivintemccineneneenistianniinn 25

Miscellaneous:

Comprehensive National Energy Policy Act:

Hearings on H.R. 776 Before the House Comm.

on Ways and Means, 102d Cong., 2d Sess. (1992) ........... 4

198 Cong. Ree. 32,078 (1GGZ) -.ccccsessceccccssonsevsosevesevsssvoversevesseees 4,21

H.R. Rep. No. 474, 102d Cong., 2d Sess. (1992):

FPR. 8 nccorsecoscessvensnnmeissoveserenettinnsmeeuimsemmannatantatntatses 3, 18, 21, 26

FP a. DD. sccssinenstecsetiannidcainaisniniasenionmnnsnaiimemainmmaiimmmeniaedal 4

Restatement (Second) of Torts (1965) .........c:ccccsesceesseeeeees 10, 23

Jn the Supreme Court of the Anited States

No. 01-1020

SACRAMENTO MUNICIPAL UTILITY DISTRICT,

PETITIONER

U.

UNITED STATES OF AMERICA

No. 01-1155

MAINE YANKEE ATOMIC POWER COMPANY,

PETITIONER.

UV.

UNITED STATES OF AMERICA

No. 01-1398

OMAHA PUBLIC POWER DISTRICT, PETITIONER

Vv.

UNITED STATES OF AMERICA

No. 01-1411

COMMONWEALTH EDISON COMPANY, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITIONS FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The decision of the en bane court of appeals in Com-

monwealth Edison (SMUD Pet. App. 17a-68a; Com Ed Pet.

(1)

App. la-52a)' is reported at 271 F.3d 1327. The decision of

the Court of Federal Claims in Commonwealth Edison (Com

Ed Pet. App. 85a-120a) is reported at 46 Fed. Cl. 29.

The consolidated decision of the panel of the court of

appeals in Sacramento Municipal, Maine Yankee, and

Omaha Power (SMUD Pet. App. la-16a) is reported at 271

F.3d 1357. The decision of the Court of Federal Claims in

Sacramento Municipal (SMUD Pet. App. 69a-9la) is

reported at 44 Fed. Cl. 395. The decision of the Court of

Federal Claims in Maine Yankee (MYAP Pet. App. 17a-39a)

is reported at 44 Fed. Cl. 372. The decision of the Court of

Federal Claims in Omaha Power (OPPD Pet. App. 17a-39a)

is reported at 44 Fed. Cl. 383.

JURISDICTION

The judgment of the en bane court of appeals in Com-

monwealth Edison was entered on November 20, 2001. On

February 12, 2002, the Chief Justice extended the time

within which to file a petition for a writ of certiorari in that

case to and including March 20, 2002, and the petition was

filed on that date.

The judgment of the panel of the court of appeals in

Sacramento Municipal, Maine Yankee, and Omaha Power

was entered on November 20, 2001. Sacramento Municipal

Utility District’s petition for a writ of certiorari in No. 01-

1020 was filed on January 10, 2002. Maine Yankee Atoniic

Power Company’s petition in No. 01-1155 was filed on

February 8, 2002. On February 13, 2002, the Chief Justice

extended the time for filing a certiorari petition for Omaha

Public Power District to and including March 20, 2002, and

the petition in No. 01-1398 was filed on that date.

1 References in this brief to “SMUD Pet.” are to the petition in No. 01-

1020; to “MYAP Pet.” are to the petition in No. 01-1155; to “OPPD Pet.”

are to the petition in No. 01-1398; and to “Com Ed Pet.” are to the petition

in No. 01-1411.

The jurisdiction of this Court in each case is invoked

under 28 U.S.C. 1254(1).

STATEMENT

1. In 1992, Congress enacted the Energy Policy Act

(EPACT), Pub. L. No. 102-486, 106 Stat. 2276, which was

intended to establish a “comprehensive national energy

policy” addressing, among other things, “solutions to our nu-

clear waste and uranium enrichment problems.” H.R. Rep.

No. 474, 102d Cong., 2d Sess. Pt. 1, at 132 (1992). Among

those problems was contamination at the Department of

Energy’s (DOF’s) uranium enrichment facilities. The gov-

ernment had conducted uranium enrichment at those facili-

ties since the 1940s, and since the 1960s had offered commer-

cial uranium enrichment services to utility companies for use

in power generation. See SMUD Pet. App. 20a.”

Typically, DOE offered uranium enrichment to utilities

under an arrangement by which the purchasers furnished

low-grade uranium to the Department, DOE processed the

uranium, and DOE then returned the enriched uranium to

the utilities. The enrichment services were measured in

terms of “separative work units” (SWUs). Utilities were

typically charged the product of the number of SWUs they

received, multiplied by the unit price in the contract. The

unit pricing varied somewhat from contract to contract, but

generally the unit price was established by reference to the

price in effect at the time the service was rendered, and in

some cases was also capped by contract at a maximum price.

SMUD Pet. App. 20a-21a.

2 Before the establishment of the Department of Energy, the govern-

ment’s uranium enrichment facilities were operated by the Atomic Energy

Commission and by the Energy Research and Development Admini-

stration. See SMUD Pet. App. 20a. For simplicity, we refer in this brief

to the governmental entity that conducted uranium enrichment as DOE or

the Department.

Before enacting EPACT, Congress extensively consid-

ered numerous options to finance the decontamination and

decommissioning of uranium enrichment facilities. Congress

considered past use of the plants, the causes of the con-

tamination, and estimates of clean-up costs. By 1992, esti-

mates of the cost of decontamination had risen to more than

$20 billion. During hearings, industry representatives, who

participated actively in the framing of EPACT, acknowl-

edged that the industry had benefited from the uranium

enrichment services, and expressed the industry’s willing-

ness to pay a fair share of the cost of decontaminating the

enrichment facilities. They urged Congress to adopt a

compromise that capped utilities’ contribution at $2.5 billion.

See Comprehensive National Energy Policy Act: Hearings

on H.R. 776 Before the House Comm. on Ways and Means,

102d Cong., 2d Sess. 171, 178-182 (1992); SMUD Pet. App.

26a-30a (reviewing legislative framing of EPACT).

After debating options and weighing facts surrounding

the use and contamination of the plarts, Congress concluded

that it was equitable for domestic utilities that had benefited _

from DOE’s uranium enrichment services to contribute a

portion of the cost of decontaminating the facilities where

that enrichment was conducted. See H.R. Rep. No. 474,

supra, Pt. 8, at 77-78; 188 Cong. Rec. 32,073 (1992) (remarks

of Rep. Sharp). Congress established the Uranium Enrich-

ment Decontamination and Decommissioning Fund (Fund)

to accumulate and disburse the funds necessary to decon-

taminate those facilities. See 42 U.S.C. 2297g; 42 U.S.C.

2297g-1 (1994 & Supp. V 1999). Congress provided that the

federal government would absorb the majority of the decon-

tamination costs through annual appropriations to the Fund

totaling $330 million (adjusted annually for inflation), or 68%

of the total amount to be deposited into the Fund over 15

years. See 42 U.S.C. 2297g-1(b)(2), (c) and (d); 42 U.S.C.

2297g-1(a) (1994 & Supp. V 1999).

a |

The remaining 32% (not to exceed $2.25 billion over 15

years) of the Fund’s financial base is collected in annual

installments (not to exceed $150 million per year, adjusted

annually for inflation) from domestic utilities that obtained

government-enriched uranium for the purpose of generating

electricity. See 42 U.S.C. 2297g-1(c). Whether a utility is

required to contribute to the Fund turns not on whether the

utility had entered into a contract to purchase uranium from

DOE, but whether the utility actually obtained the enriched

uranium, and thus had benefited from DOE’s enrichment

services. In particular, a utility that purchased enriched

uranium from DOE bvt resold that uranium to another

utility on the secondary market is not responsible to contri-

bute to the Fund for the amount of uranium that it resold

and did not use, whereas a utility that purchased uranium

from another utility but not from DOE for its own use in

power generation is responsible for contributing to the Fund

in an amount proportionate to the amount of uranium that it

used. See 42 U.S.C. 2297g-1(c); see also SMUD Pet. App.

25a. Utilities that are required to pay an assessment to the

Fund may in turn treat that assessment as a “necessary and

_ reasonable current cost of fuel” that is “fully recoverable in

rates * * * in the same manner as the utility’s other fuel

cost.” 42 U.S.C. 2297g-1(g).

2. After the enactment of EPACT, petitioners, as well as

several other utility companies, each filed suit in the Court of

Federal Claims challenging the EPACT assessments on

constitutional and contract-law grounds. In 1997, a panel of

the Federal Circuit, in a separate case, rejected the_utilities’

principal arguments based on contract law. Yankee Atomic

Elec. Co. v. United States, 112 F.3d 1569 (Fed. Cir. 1997),

cert. denied, 524 U.S. 951 (1998). The Yankee Atomic panel

first noted that the disputes did not even “appear to be

[cases] involving a breach of contract[,]” because,

“{tlypically, a contract breach occurs while the contract is

being performed, whereas the contracts in the present case

have been fully performed by both parties.” /d. at 1573 n.2.

The court also concluded, however, that the government was

not liable for breach of contract in any event based on

EPACT because of the sovereign-acts and unmistakability

doctrines. Jd. at 1574. In so concluding, the court carefully

examined and applied this Court’s decision in United States

v. Winstar Corp., 518 U.S. 839 (1996).

Applying the sovereign-acts doctrine, the Yankee Atomic

court ruled that passage of the EPACT assessment pro-

vision did not constitute a breach of the government’s con-

tract with the utilities because that provision was enacted

not “for the purpose of retroactively increasing the price of

its earlier contracts with [the utilities],” but rather “for the

purpose of solving the problem of decontamination and

decommissioning of uranium enrichment facilities (7.e., the

legislation was passed for the benefit of the public).” 112

F.3d at 1575. The court stressed that the EPACT assess-

ments fall not on the entities that contracted with DOE for

enrichment services, but rather on the utilities that eventu-

ally used the enriched uranium for power generation, even if

they purchased that uranium in the secondary market. Jd. at

1574-1575.

The Yankee Atomic court further concluded that, under

the unmistakability doctrine (under which “[{a] contract with

a sovereign government will not be read to include an

unstated term exempting the other contracting party from

the application of a subsequent sovereign act,” EPACT also

furnished no basis for government liability to the utilities.

See 112 F.3d at 1578 (quoting Winstar, 518 U.S. at 878

(opinion of Souter, J.)). The court noted that “application of

the unmistakability doctrine turns on whether enforcement

of the contractual obligation would effectively block the

exercise of a sovereign power of the Government,” and that

the utilities’ contracts with the government, although typi-

cally fixed-price contracts, contained no promise that “un-

mistakably precluded the Government from subsequently

exercising its sovereign power to assess a tax.” Jd. at 1579.”

The utility sought certiorari in Yankee Atomic, arguing that

EPACT breached its contract with DOE, but this Court

denied review, 524 U.S. 951 (1998).

3. Thereafter, these cases proceeded in the Court of

Federal Claims. Each case was dismissed by that court for

failure to state a claim. See SMUD Pet. App. 69a-91a;

MYAP Pet. App. 17a-39a; OPPD Pet. App. 17a-39a; Com Ed

Pet. App. 85a-124a.

Each petitioner appealed to the Federal Circuit. Oral

arguments in Sacramento Municipal, Maine Yankee, and

Omaha Power were separately conducted on the same day

before the same panel of the Federal Circuit. The separate

and later appeal in Commonwealth Edison proceeded before

a different panel of the Federal Circuit; after that panel

argument, the Federal Circuit swa sponte ordered that

Commonwealth Edison be heard en banc. SMUD Pet. App.

17a.

4. The en banc court affirmed the dismissal in Common-

wealth Edison. SMUD Pet. App. 17a-68a. On the basis of

the en banc court’s decision in Commonwealth Edison, the

panel hearing the appeals in the other three cases also

affirmed the dismissal of those cases. /d. at la-16a.

3 Judge Mayer dissented from the panel's decision in Yankee Atomic,

but he would not have ruled that EPACT constituted a breach of contract.

To the contrary, he agreed with the panel majority that “[o|nce a contract

is completed, the contractual relationship ends and there is no privity

between the parties,” and thus the utilities “cannot prevail on [the] claim

that the government breached the contracts at issue years after they were

finished.” 112 F.3d at 1582; see also id. at 1584 (“But this is not a breach of

contract case.”). Rather, Judge Mayer argued that the EPACT assess-

~ ments contravened substantive due process. See id. at 1585.

o2)

a. The en banc court first rejected the utilities’ argument

that the EPACT assessments constitute a taking of their

property without just compensation. The court noted that,

in Eastern Enterprises v. Apfel, 524 U.S. 498 (1998), five

Justices (Justice Kennedy concurring in the judgment, and

four dissenting Justices) concluded that “regulatory actions

requiring the payment of money are not takings” (SMUD

Pet. App. 36a)—a result in accord with the Federal Circuit’s

own pre-Eastern Enterprises precedent (id. at 36a-37a) as

well as decisions of other circuits rendered after Hastern

Enterprises (id. at 36a n.10). The court thus concluded that,

“while a taking may occur when a specific fund of money is

involved, the mere imposition of an obligation to pay money,

as here, does not give rise to a claim under the Takings

Clause of the Fifth Amendment.” Jd. at 37a.

b. The court also rejected the utilities’ breach of contract

claims, in reliance on its previous decision in Yankee Atomic,

supra. As in Yankee Atomic, the court ruled here that “the

imposition of the special assessments [under EPACT] was a

lawful exercise of Congress’s taxing power under the sover-

eign acts doctrine,” and that DOE’s contracts with the

utilities “did not include an unmistakable promise that pre-

cluded the Government from later imposing an assessment

upon all domestic utilities that employed the DOE’s uranium

enrichment services.” SMUD Pet. App. 38a.

©. Finally, the court addressed at length and rejected the

argument that the EPACT assessments violate substantive

due process. SMUD Pet. App. 39a-67a. The court initially

ebserved that, although the EPACT assessments are retro-

active, that point by itself does not render them unconstitu-

tional, for, as this Court has made clear, due process is

satisfied “simply by showing that the retroactive application

of the legislation is itself justified by a rational legislative

purpose.” Jd. at 40a (citation omitted). The court found that

standard satisfied in the case of EPACT, because the

assessments are based on “a congressional determination to

impose liability on companies that received a benefit [the

uranium enrichment services], the production of which bene-

fit contributed to a societal problem.” Jd. at 43a.

Summarizing this Court’s decisions (including Eastern

Enterprises), the court concluded that retroactive obliga-

tions to pay money satisfy substantive due process as long as

“(1) Congress reasonably concluded that the party subjected

to retroactive obligations benefited from activity that contri-

buted to a societal problem, and liability is not disproportion-

ately imposed on that party; and (2) the imposition of

retroactive liability would not be contrary to that party’s

reasonable expectations.” SMUD Pet. App. 47a. The court

found the first condition “easily” satisfied, as the utilities

“certainly benefited from the government’s provision of

enrichment services.” Jbid. As the court noted, the utilities

“could hardly have operated nuclear reactors without the

benefit of uranium enrichment services from the United

States government or some other approved source.” Jd. at

48a. Moreover, the processing of uranium for the utilities

contributed to a_societal problem by contributing “to in-

creased costs associated with” decontamination. Jbid. Nor,

the court ruled, were the remediation costs imposed on the

utilities severely disproportionate to the benefit they

received from the enrichment services; EPACT made the

utilities responsible for only a third of those costs (and each

utility was assessed only for the proportion of enriched

uranium that it actually used), even though Congress re-

ceived evidence that enriched uranium production at the

DOE facilities had been divided equally between the govern-

mental and commercial sectors. /d. at 49a.

The court further concluded that the EPACT assessments

do not violate any reasonable expectation on the part of the

utilities that, as a result of their contracts with DOE, they

were entitled-to immunity from any future liability for the

10

cost of decontamination of the DOE facilities. SMUD Pet.

App. 50a-67a. The court observed that the utilities operated

in a highly regulated industry where it was reasonable to

“expect liability for remediation costs” (id. at 52a), and that

the utilities were fully “aware of the hazardous nature of the

materials” and that there would be a need to decontaminate

the DOF facilities (¢d. at 53a).

The court also stressed that the regulatory environment

at the time that utilities submitted uranium to DOE for

processing placed the utilities on notice of the possible

imposition of retroactive remediation liability. The Compre-

hensive Environmental Response, Compensation, and Liabil-

ity Act of 1980 (CERCLA), 42 U.S.C. 9601 et seqg., made clear

that a party that arranges for the treatment or disposal of a

hazardous substance may be liable for environmental dam-

age caused by that substance, even if that party itself did not

perform that treatment or disposal. See SMUD Pet. App.

56a-57a. CERCLA, in turn, is consistent with principles of

common law nuisance liability and strict liability for handling

of ultrahazardous materials, id. at 60a-62a, especially the

principles set forth in the Restatement (Second) of Torts

§ 472b (1965), which made clear that “those arranging for

processing of hazardous materials could potentially have

been liable under the common law for environmental dam-

ages arising from the processing.” SMUD Pet. App. 6la.

Thus, the court concluded, the utilities “could not have rea-

sonably expected that Congress would not enact legislation

imposing remediation costs on the utilities submitting

uranium for processing.” Jd. at 62a.

ARGUMENT

The court of appeals correctly rejected petitioners’

contract-law and constitutional challenges to the special

decontamination assessments imposed by EPACT. That

decision also does not conflict with any decision of this Court

11

or any other court of appeals. Further review is therefore

not warranted.

1. Petitioners renew the argument rejected by the

Federal Circuit in Yankee Atomic, supra, that the EPACT

assessments breached their uranium enrichment contracts

with DOE by retroactively increasing the price of enrich-

ment services. This Court-denied review of the same conten-

tion in Yankee Atomic, see pp. 5-7, supra, and there is no

basis in this case for a different result. Moreover, the lower

courts properly rejected that contract claim.

a. First, as all members of the Yankee Atomic panel

observed, no claim for breach of contract may be brought

based on contracts that have already been fully performed.

See 112 F.3d at 1573 n.2; id. at 1582 (Mayer, J., dissenting);

see also John J. Kirlin, Inc. v. United States, 827 F.2d 1538,

1541 (Fed. Cir. 1987); Mulholland v. United States, 361 F.2d

237, 239-240 (Ct. Cl. 1966). Petitioners’ complaints allege

that, with the exception of one outstanding contract between

DOE and Commonwealth Edison, the contractual relation

between petitioners and the government had already ter-

minated.*

Because (with the one exception) the contractual relations

between the utilities and the government terminated before

these actions were brought, this case does not present an

appropriate occasion for the Court to examine further the

sovereign-acts and unmistakability doctrines. The bulk of

petitioners’ contract claims could have been rejected without

recourse to those doctrines, which are defenses available to

the government against attempts to require the government

to perform its contractual obligations, or to recover for the

government’s alleged breach of contractual obligations. See

4 See SMUD C.A. App. 24 (4 1); MYAP C.A. App. 35 (4 47), 36 (44 50-

51); OPPD C.A. App. 16 (4 44); Com Ed C.A. App. 521 (¥ 13), 534 (¥ 45),

535 (¥ 49).

12

Winstar, 518 U.S. at 870-871 (opinion of Souter, J.); id. at

920-921 (Scalia, J., concurring in the judgment).

For the same reason, there is no merit to petitioner

Omaha Power’s argument (OPPD Pet. 21-22) that the deci-

sion below conflicts with the courts’ application of the

sovereign-acts doctrine in Kimberly Associates v. United

States, 261 F.3d 864 (9th Cir. 2001), and RTC v. FSLIC, 25

F.3d 1493 (10th Cir. 1994). In each of those decisions, the

court made clear that the sovereign-acts doctrine “operates

to insulate the government from liability for certain inabil-

ities to perform contractual obligations.” See RTC, 25 F.3d

at 1501; see also Kimberly Assocs., 261 F.3d at 870 (char-

acterizing statute under consideration as “a partial repudia-

tion by Congress of its contractual obligation to perform”).

Here, however, there is no question of the government’s

failure to perform under its contracts with petitioners; DOE

has already performed its obligations to provide enrichment

services.

b. In any event, the court of appeals’ application of the

sovereign-acts and unmistakability doctrines was correct.

The EPACT special assessment legislation is a “sovereign

act.” The assessments fall on the utilities that actually used

the enriched uranium and thereby benefited from DOE’s

enrichment services, not the entities that directly purchased

the uranium from DOE. Thus, EPACT cannot be viewed as

a retroactive price increase of the contracts between DOE

and the purchasing utilities. Rather, it is legislation

designed to spread the costs of decontamination and decom-

missioning among the utilities that benefited from the pro-

gram that caused those problems. See SMUD Pet. App. 61a;

Yankee Atomic, 112 F.3d at 1580-1581.

Furthermore, because petitioners seek damages in the

entire amount of the assessments that they are required to

pay under EPACT, they effectively seek an exemption from,

or an injunction against, the operation of EPACT as applied

13

to them. Petitioners must therefore overcome the unmis-

takability doctrine in its strongest form. See Winstar, 518

U.S. at 881-882 (opinion of Souter, J.); id. at 916-917 (Breyer,

J., concurring); id. at 921 (Scalia, J., concurring in the judg-

ment). As the Federal Circuit explained in Yankee Atomic,

the contracts simply did not provide that the government

would forego any assessments in the future on the nuclear

power industry to address the cost of decontamination. See

112 F.3d at 1569. The contracts were therefore subject to

subsequent legislation passed by Congress. See Bowen v.

Public Agencies Opposed to Soc. Sec. Entrapment, 477 U.S.

41, 52 (1986).

Nor did the government agree to indemnify the utilities

against the costs of regulatory changes or legislative enact-

ments. In Winstar, by contrast, this Court ruled that the

United States, through guarantee clauses in contracts, had

undertaken to assume the risk of, and to indemnify the

acquiring thrifts for, future changes in regulatory policy.

See 518 U.S. at 868-869, 871, 881-883 (opinion of Souter, J.);

id. at 911, 918 (Breyer, J., concurring); cf. id. at 919-920, 923

(Scalia, J., concurring in the judgment). No such guarantee

clauses existed in petitioners’ contracts with DOE.

2. a. Petitioners argue that the financial impact of the

EPACT assessments on them constitutes a taking of their

property without just compensation. Petitioners’ taking

claim, however, must fail at threshold, for as five Justices of

| this Court made clear in Eastern Enterprises, a mere obli-

gation to pay an undifferentiated amount of money, not

| drawn from a specific identifiable fund, is not properly

analyzed as a taking at all. See Eastern Enterprises, 524

U.S. at 539-547 (Kennedy, J., concurring in the judgment and

dissenting in part); id. at 554-557 (Breyer, J., dissenting).

That point follows from the fact that, “[a]s its language

indicates, * * * [the Just Compensation Clause] does not

prohibit the taking of private property, but instead places a

———eEOw

14

condition on the exercise of that power.” First English

Evangelical Lutheran Church v. County of Los Angeles, 482

U.S. 304, 314 (1987).’

The concern of the Just Compensation Clause is therefore

not in preventing government action, but rather ensuring

that compensation is paid when the government appropri-

ates private property interests to serve the public good.

First English, 482 U.S. at 314. Petitioners, however, chal-

lenge the constitutional validity of Congress’s decision to

enact the EPACT special assessments. To make a taking

claim, petitioners would have to raise the highly contrived

contention that Congress had impermissibly failed to offer

them monetary compensation in the precise amount of the

special assessment that Congress had ordered them to pay.

The Court rejected a very similar contention in United

States v. Sperry Corp., 493 U.S. 52 (1989), where it concluded

that the government’s imposition of a service fee for use of

services in the U.S.-Lran Claims Tribunal, in the form of a

percentage deduction from monetary awards made by the

* The taking issue in this case is not distinguishable from Eastern

Enterprises (in which five Justices found a taking analysis inapplicable) on

the basis that Eastern Enterprises involved an obligation that one private

party pay money to another private party, whereas this case involves an

obligation to pay money to the government. Justice Kennedy expressly

rejected the relevance of that point in Eastern Enterprises: “The cireum-

stance that the statute does not take money for the Government but

instead makes it payable to third persons is not a factor I rely upon to

show the lack of a taking.” 524 U.S. at 543 (Kennedy, J., concurring in the

judgment and dissenting in part). The four other Justices who agreed that

no valid taking claim was raised in Eastern Enterprises did remark that

the case involved an obligation to pay money to a private party. See id. at

555 (Breyer, J., dissenting). They also observed, however, that one of the

reasons that it was wrong to conceptualize the monetary obligation in

Eastern Enterprises as a taking was that such a characterization might

well lead to the conclusion that all taxes could potentially be considered

takings. See id. at 556 (Breyer, J., dissenting).

15

Tribunal, was not a taking of property that required just

compensation. As the Court explained:

It is artificial to view deductions of a percentage of a

monetary award as physical appropriations of property.

Unlike real or personal property, money is fungible.

* * * If the deduction in this case were a physical

occupation requiring just compensation, so would be any

fee for services, including a filing fee that must be paid in

advance.

Id. at 62 n.9. The Court in Sperry also distinguished (id. at

62) cases such as Webb’s Fabulous Pharmacies, Inc. v. Beck-

with, 449 U.S. 155, 164-165 (1980), where the Court applied 4

taking analysis to interest generated from a specific res, a

separately identifiable fund of money.”

Perhaps recognizing the force of that point, petitioner

Commonwealth Edison stretches to find a specific property

interest that may have been taken, suggesting (Com Ed Pet.

13) that the requisite “property” is the “stream of income”

supposedly created by the passing on of the cost of the

assessments to consumers of electrical power. EPACT,

however, does not require the payment of the assessments

out of any such “stream of income” or indeed from any

particular identifiable source or fund of money. Rather, the

utilities are generally liable for EPACT assessments without

regard to whether the assessments are passed on to

6 Petitioner MYAP argues (MYAP Pet. 21) that cases such as Webb's

are not distinguishable from this case because Webb's involved a taking of

interest earned on a specific fund of money, not the fund itself. The Court

made clear in Webb's, however, that it decided that case based on the

common law rule that “any interest * * * follows the principal” and

becomes part of the fund itself. See Webb's, 449 U.S. at 162; see also — se

Phillips v. Washington Legal Found., 524 U.S. 156, 165-168 (1998) (using

same rule to analyze alleged taking of interest earned on attorney trust

accounts).

16

consumers and without reference to the source of the funds

used to pay the assessments. See Sperry, 493 U.S. at 62 n.9.

b. Even if a taking analysis were applicable to the

EPACT assessments, they would not be invalid. A taking by

regulation or legislation may occur if the government goes

“too far” in interfering with rights of property ownership.

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922).

Regulatory taking claims are generally subject to the three-

part analysis set forth in Penn Central Transportation Co.

v. City of New York, 438 U.S. 104, 124 (1978), which takes

into account (1) “the character of the governmental action,”

(2) “[t]he economic impact of the regulation on the claimant,”

and (3) “the extent to which the regulation has interfered

with distinct investment-backed expectations.” Those fac-

tors make clear that the EPACT assessments are not

takings.’

First, the nature of the government’s action is “critical” in

determining whether a taking occurred. Keystone Bitumi-

nous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 488 (1987).

EPACT assessments are “very similar to * * * a general

tax that falls proportionately on all utilities that benefited

from the DOEF’s uranium enrichment services.” Yankee

Atomic, 112 F.3d at 1576. This Court has stressed, however,

that taxes are exactly the kind of governmental action that

7 The EPACT assessments cannot properly be viewed as a physical

appropriation or occupation of property that this Court has characterized

as a per se taking. Cf. Loretto v. Teleprompter Manhattan CATV Corp.,

458 U.S. 419, 441 (1982). Even the four Justices who applied a taking

analysis to the legislatively imposed monetary obligation at issue in

Eastern Enterprises declined to characterize that liability as a per se

taking. See Eastern Enterprises, 524 U.S. at 522, 530 (opinion of

O'Connor, J.); see also Tahoe-Sierra Preservation Council, Inc. v. Tahoe

Reg'l Planning Agency, No. 00-1167 (Apr. 23, 2002), slip op. 17-28

(reaffirming limited reach of per se taking analysis to physical occupations

and appropriations of property). :

17

are least likely to be considered takings: “Government

hardly could go on if to some extent values incident to

property could not be diminished without paying for every

such change in the general law, and this Court has accord-

ingly recognized, in a wide variety of contexts, that govern-

ment may execute laws or programs that adversely affect

recognized economic values. Exercises of the taxing power

are one obvious example.” Penn Central, 438 U.S. at 124

(emphasis added; citations omitted).

Second, the economic impact of the assessments on

petitioners is proportionate to their prior experience with

the uranium enrichment services that are the object of the

legislation. EPACT specifically allocates liability in direct

proportion to the utilities’ previous use of enriched uranium.

See p. 5, supra. In addition, EPACT moderates the impact

of the assessments on petitioners by mandating that a utility

“shall” be allowed to fully recover the special assessments

from its ratepayers as a “necessary and reasonable current

cost of fuel.” 42 U.S.C. 2297g-1(g). Because the pass-

through mechanism is established by federal law, state

regulators are preempted from disregarding it. See, e.g.,

Mississippi Power & Light Co. v. Mississippi, 487 U.S. 354,

369-372 (1988). Thus, petitioners have a federal right to pass

through the impact of the EPACT assessments to their

customer base. Cf. Eastern Enterprises, 524 U.S. at 527, 531

(opinion of O’Connor, J.) (noting that regulated entity’s

ability to moderate impact of liability by passing on obliga-

tion is relevant to taking analysis, but finding no “right of

reimbursement” in that case).

Finally, the assessments do not contravene any reason-

able expectation on the part of petitioners that they would

be immune from future governmental assessments requiring

contributions to meet the costs of decontamination of the

enrichment facilities. As the court of appeals explained,

enriched uranium has long been known to be extremely

18

hazardous; it has long been understood that the enrichment

process would leave a need for decontamination; and the

nuclear power industry has always been strictly regulated.

See SMUD Pet. App. 52a-54a. EPACT was designed “to

implement solutions to our nuclear waste and uranium

enrichment problems,” H.R. Rep. No. 474, supra, Pt. 1, at

132, and a nuclear utility using enriched uranium could

hardly expect to be immune from contributing to such solu-

tions. “Those who do business in [a highly regulated field]

cannot object if the legislative scheme is buttressed by sub-

sequent amendments to achieve the legislative end.” Con-

nolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 227

(1986).

Nothing in the legislation or regulations governing the

nuclear power program could have created a reasonable

expectation that nuclear power companies would be exempt

from future assessments for decontamination of uranium

enrichment plants. To the contrary, the strict regulation of

the industry put them on notice that they could be liable in

the future for assessments like those at issue here. And as

the court of appeals also explained in Yankee Atomic, 112

F.3d at 1580-1581, petitioners’ contracts with DOE for

uranium enrichment services also created no contract-based

expectation that they would be immune from sharing in the

future cost of decontamination. |

ce. Petitioners erroneously suggest (Com Ed Pet. 16) that

the decision below, finding a taking analysis inapplicable, is

contrary to decisions of other circuits that have analyzed

monetary obligations to the government under the regula-

tory taking doctrine. In United States v. Hercules, Inc., 247

F.3d 706 (8th Cir.), cert. denied, 122 S. Ct. 665 (2001), the

court expressly declined to address the taking claim on the

ground that the extent of the challenged monetary liability

was uncertain. Although the court remarked that any taking

analysis would likely be “ad hoc and fact intensive,” id. at 722

19

(citing Eastern Enterprises, 524 U.S. at 523 (opinion of

O’Connor, J.)), it did not address the logically anterior

question whether the liability should be analyzed as a taking

at all. In United States Fidelity & Guaranty Co. v.

McKeithen, 226 F.3d 412 (5th Cir. 2000), cert. denied, 532

U.S. 922 (2001), the court ruled that a retroactive adjust-

ment to Louisiana’s workers’ compensation scheme was an

invalid taking, but the court stressed (after considering the

significance of Justice Kennedy’s separate opinion in Eastern

Enterprises) that the case before it involved the taking of

“an identifiable property interest or fund,” namely, a “spe-

cific fund of benefits.” Jd. at 420. That important point dis-

tinguishes that case from this one, which involves a general

liability that petitioners may and must meet out of any of

their assets.®

8. Petitioners contend that the EPACT assessment obli-

gation violates substantive due process because of its retro-

active effect. Petitioners make essentially three arguments

in support of that contention. First, they argue that they

had a reasonable expectation, based in their fixed-price con-

tracts with DOE, that the costs of decontaminating the

enrichment facilities would be entirely absorbed by the

government. Second, they contend that the extent of the

retroactivity, by itself, renders the assessments invalid.

Third, they argue that they cannot be deemed responsible

for the contamination because the facilities were already

contaminated by the government’s enrichment of uranium

8 In addition, the Louisiana scheme invalidated in United States

Fidelity & Guaranty is crucially different from the EPACT assessments

in that many of the workers’ compensation insurance companies affected

by the retroactive change in the law effectively had no way to pass on the

increased assessments to any customer base in the State, for they had left

the business of writing insurance in Louisiana. See 226 F.3d at 418. By

contrast, petitioners have a federal right to pass on the EPACT assess-

ments to their utility customers. See p. 17, supra.

20

for its own military needs before the government began

offering commercial enrichment services to nuclear utilities.

Each of those arguments is without merit.”

a. As this Court has made clear on numerous occasions,

retroactive economic legislation enjoys a presumption of

validity. See, e.g., Pension Benefit Guar. Corp. v. R.A. Gray

& Co., 467 U.S. 717, 729 (1984); Usery v. Turner Elkhorn

Mining Co., 428 U.S. 1, 15-16 (1976). That presumption of

validity is not overcome merely because the law upsets

“otherwise settled expectations” or imposes new liability

based on past acts. Jd. at 16. Of course, “[i]t does not follow

* * * that what Congress can legislate prospectively it can

legislate retrospectively,” and “(t]he retro[active] aspects of

legislation * * * [also] must meet the test of due process.”

Id. at 16-17. But “[pJrovided that the retroactive application

of a statute is supported by a legitimate legislative purpose

9 Petitioners also argue (SMUD Pet. 23-24; MYAP Pet. 17-19) that the

EPACT assessments require special scrutiny under the Due Process

Clause because (petitioners maintain) they operate as taxing provisions.

But as this Court explained in United States v. Carlton, 512 U.S. 26 (1994),

and as the court of appeals in this case observed (SMUD Pet. App. 41a),

the cases on which petitioners rely, subjecting retroactive taxes to

heightened scrutiny, “were decided during an era characterized by

exacting review of economic legislation under an approach that has long

since been discarded.” Carlton, 512 U.S. at 34 (internal quotation marks

omitted). Carlton made clear that the rational-basis due process test for

retroactive application of taxing statutes “is the same as that generally

applicable to retroactive economic legislation.” Jd. at 30. Moreover, the

tax cases on which petitioners rely all involved taxes for the purposes of

raising general revenues for the support of government. This case

involves an assessment for a dedicated purpose, namely, the decontamina-

tion and decommissioning of enrichment facilities from which petitioners

benefited. Thus, even if, as petitioners contend, a “wholly new tax” for the

purpose of raising general revenues could not be applied retroactively, see

MYAP Pet. 18, that point would not apply to an assessment, such as the

EPACT assessment, that is intended and necessary to implement a

specific regulatory scheme.

21

furthered by rational means, judgments about the wisdom of

such legislation remain within the exclusive province of the

legislative and executive branches.” R.A. Gray, 467 U.S. at

729.

It was legitimate and rational for Congress to require

utilities that obtained their enriched uranium ffom govern-

ment-vperated facilities to contribute to the cost of decon-

taminating those facilities. The substantial cost of deconta-

mination was not anticipated at the time the government

provided those enrichment services, and Congress was not

precluded from acting to spread the “actual, measurable cost

of [a] business” that the utilities were able to avoid in the

past. Turner Elkhorn, 428 U.S. at 19. “(T]he costs of large,

unrecognized sccietal problems are frequently spread among

those who benefited from the source of the problem,”

Yankee Atomic, 112 F.3d at 1576 n.6, and the EPACT

assessment is “the Government’s way of spreading the costs

of the later discovered decontamination and decommission-

ing problem on all utilities that benefited from the Govern-

ment’s service, whether or not those services were acquired

by contract from the Government,” id. at 1580.

Moreover, Congress understood that the utilities had

received two substantial benefits (beyond just receiving the

uranium itself) from the government’s enrichment services.

First, DOE was required to price the enrichment services on

a cost-recovery basis; the program was not intended as a

profit-making enterprise. See 42 U.S.C. 2201(v)(B)(iii)

(1988). Thus, the utilities received below-market pricing for

the services. Second, by obtaining the use of the govern-

ment’s enrichment facilities, utilities were able to avoid the

even greater costs of building enrichment plants of their own

and meeting their own decontamination costs. See 138 Cong.

Rec. at 32,073 (remarks of Rep. Sharp); H.R. Rep. No. 474,

supra, Pt. 1, at 144-145.

22

Petitioners in any event did not have a reasonable

expectation that they would be immune from legislation

requiring them to contribute to the cost of decontaminating

the facilities from which they obtained their enriched ura-

nium. Petitioners’ contracts with DOE set a price for ura-

nium enrichment services, but the contracts did not address

future assessments for decontamination and decommission-

ing at all—much less purport to foreclose any future liability

that might prove to be necessary to protect the public

health and safety. There accordingly was no settled expec-

tation to upset. See Yankee Atomic, 112 F.3d at 1575-1582;

ef. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005-1006,

1008-1010 (1984).

Nor did the legislative and regulatory environment at the

time the enrichment services were provided suggest that

petitioners could escape liability for decontamination costs.

To the contrary, as the court of appeals explained, based on

its comprehensive review of the law of liability for hazardous

substances (SMUD Pet. App. 54a-67a), it was entirely fore-

seeable, well before the enactment of EPACT, that the

utilities would have to contribute to the decontamination of

the enrichment facilities. First, CERCLA, which was en-

acted in 1980, and which itself operates retroactively as well

as prospectively, contains a principle that one who arranges

for the treatment or disposal of a hazardous substance may

be liable for remediation costs, even if that party did not

conduct the processing or disposal itself. See id. at 56a-57a."°

10 Petitioner Commonwealth Edison argues (Com Ed Pet. 21-22) that

CERCLA would not support arranger liability for one in its position. It

argues, for example (id. at 21), that only one who maintains ownership or

control over the hazardous substance may be subject to arranger liability.

But the arranger liability cases cited by the court of appeals (SMUD Pet.

App. 56a-57a) do not turn on which party maintained technical title to the

processed and disposed materials, and such an inquiry would make espe-

cially little sense in a situation like this one, where many of the customers

23

Second, even before CERCLA, principles of common law

liability, as summarized in the Restatement (Second) of

Torts § 427b (1965), made clear that “those arranging for

processing of hazardous materials could potentially have

been liable under the common law for environmental dam-

ages arising from the processing.” See SMUD Pet. App. 61a.

b. Petitioners lay great stress on the fact that EPACT

has a retroactive reach of up to 33 years, as the government

began offering commercial enrichment services in 1969. See

Com Ed Pet. 1-2, 8, 23-24. This Court’s due process decisions

make clear, however, that a statute’s retroactive reach is

less significant than the justification for imposing retroactive

liability. Indeed, the Court has upheld the retroactive

application of a statute that reached back much longer than

the EPACT assessments. In Turner Elkhorn, the Court

upheld the retroactive application of the black lung benefit

program, which, for benefit claims filed after July 1, 1973,

furnished the unenriched uranium to DOE for processing and then

received the enriched uranium afterwards. See Com Ed Pet. 2. The

enrichment services were plainly performed with the intent that the

utilities would receive the enriched uranium, even if DOE heid technical

title to the uranium during the enrichment process Com Ed also argues

(id. at 21 n.17) that recent cases have rejected CERCLA liability for

“mere purchases of products.” However, the case cited by Com Ed for

that proposition, Concrete Sales & Servs., Inc. v. Blue Bird Body Co., 211

F.3d 1333 (11th Cir. 2000), is quite different from this case. In that case,

the purchaser of services (electroplating services) furnished and received

a product that was not, either before or after the electroplating, a hazard-

ous substance. See id. at 1339. This case, however, involves processing of

uranium, which is the quintessential ultrahazardous substance. See

SMUD Pet. App. 62a. In any event, our point is not that EPACT follows

every aspect of CERCLA liability, but rather that CERCLA’s provision

for arranger liability for processing of hazardous substances put nuclear

utilities on notice that they could be required to contribute to the costs of

remedying contamination caused by enrichment services that they had

ordered.

24

made mine operators responsible for miners’ black-lung

benefits regardless of the date the miner left employment,

see 428 U.S. at 8-10—and indeed, benefits had been awarded

to miners who had left mine work as much as 50 years

earlier. See id. at 40 n.4 (Powell, J., concurring in part and

concurring in the judgment in part). Similarly, CERCLA

has an unlimited retrospective reach, but no court of appeals

has invalidated that statute on retroactivity grounds. See

United States v. Monsanto Co., 858 F.2d 160, 173-174 (4th

Cir. 1988), cert. denied, 490 U.S. 1106 (1989).

Rather than cut off the retroactive effect of EPACT at an

arbitrary date, Congress determined that each nuclear util-

ity’s liability for the special assessments should be propor-

tionate to the amount of enriched uranium it had actually

received and retained. That approach was a fair and rational

means of allocating the utilities’ responsibility to contribute

to decontamination costs, by which each utility’s liability is

correlated to the extent that it derived a benefit from the

enrichment services that caused the contamination problem.

The utilities are assessed only for decontamination and

decommissioning costs related to the uranium enrichment

program, from which they benefited, in direct proportion to

their use of enrichment services. They are not assessed for

unrelated costs, such as the cost of remedying general pollu-

tion."’ Moreover, contrary to petitioners’ assertion that

1! Petitioners argue (Com Ed Pet. 4, 17-18, 27 n.20) that Congress

improperly required them to contribute to the cost of cleaning up thorium

and uranium processing sites unrelated to the uranium enrichment ser-

vices that they purchased from DOE. That contention is incorrect. The

overall statutory scheme makes clear that Congress intended petitioners’

contributions to the Fund to be applied only to cleaning up DOE’s uranium

enrichment facilities. EPACT provides that the utilities’ special assess-

ments were intended for “decontamination and decommissioning of the

Department’s gaseous diffusion [uranium] enrichment facilities,” see 42

U.S.C. 2297g-1(g) (referring to utilities’ right to pass-through to con-

25

EPACT’s retroactive assessments are inconsistent with

Eastern Enterprises, the plurality opinion in that case

expressed no doubt that receipt of a benefit is a rational

basis for the imposition of retroactive liability to address a

societal problem associated with that benefit. See 524 U.S.

at 536 (opinion of O’Connor, J.) (noting that Congress could

legitimately have made miners’ former employers liable for

the miners’ employment-related health-care costs, given that

employers benefited from miners’ labor; citing Turner

Elkhorn).

c. At bottom, petitioners’ substantive due process chal-

lenge to the EPACT assessments can be reduced to their

contention that, because the DOE enrichment plants were

already contaminated from prior military uses before the

government began offering commercial enrichment services,

the government must bear all the cost of remediation—even

though petitioners also concede that enriching the utilities’

uranium caused the same kind of contamination as did

enrichment for military purposes (or would have caused the

same kind of contamination, had the facilities not already

been contaminated). See SMUD Pet. 22a & n.2. That

argument is unavailing.

sumers “{a]ny special assessment levied under this section * * * for

decontamination and decommissioning”), and the subchapter of EPACT

containing the special-assessment provision also defined the term

“decontamination and decommissioning” to mean activities “undertaken to

decontaminate and decommission inactive uranium enrichment facilities.”

See EPACT § 901, 106 Stat. 2923 (adding 42 U.S.C. 2297(6) (1994),

repealed by Act of Apr. 26, 1996, Pub. L. No. 104-134, Tit. III, ch. 1, subch.

A, § 3116(a)(1), 110 Stat. 1321-349). Although the Fund established by

EPACT is also the source of monies used to clean up thorium and uranium

processing sites, see 42 U.S.C. 2296a-2(b), the monies for cleaning up

thorium and uranium processing sites are to be drawn from the gov-

ernment’s contributions to the Fund, see 42 U.S.C. 2296a-1; 42 U.S.C.

2296a-2 (1994 & Supp. V 1999), and the utilities have not been assessed for

that purpose.

26

Nothing in the Due Process Clause required Congress to

assign financial responsibility for clean-up costs only to the

first user whose services contributed to the contamination of

an enrichment facility, when all subsequent users of the

facility received the same services that cause that kind of

contamination. Congress could perhaps have adopted a rule

that the first user of DOE’s enrichment services should pay

for the entire cost of decontamination, but it determined

instead that the costs should be borne collectively by all of

those entities whose uses of the enrichment services would

have contributed to the contamination of the enrichment

facilities, in proportion to the benefit the entity received

from those enrichment services. “It is surely proper for

Congress to legislate retrospectively to ensure that costs of

a program are borne by the entire class of persons that

Congress rationally believes should bear them.” Sperry, 493

U.S. at 65 (emphasis added).

Indeed, petitioners are arguably required to pay consid-

erably less than their fair share of the decontamination costs,

for responsibility for 68 percent of those costs is assigned by

EPACT to the government. As the court of appeals noted,

“these utilities are obligated to pay only about a third of the

remediation costs, even though evidence was presented [to

Congress] that the ‘production from these plants ha[d] been

divided almost evenly between the government and com-

mercial sectors.’” SMUD Pet. App. 49a (quoting H.R. Rep.

No. 474, supra, Pt. 1, at 144).”

12 Petitioner MYAP argues (MYAP Pet. 25 n.17) that the government

has not in fact contributed its allocated share to EPACT, since annual

appropriations to the Fund in some years have been somewhat less than

the amounts authorized by EPACT. In fact, we have been informed by

DOE that the government’s total contributions to the Fund through Fiscal

Year 2001 amount to approximately $2.684 billion, whereas amounts con-

tributed by the utilities pursuant to the EPACT assessments amount to

approximately $1.482 billion. Thus, the government has contributed

27

Where the cost allocation scheme chosen by Congress is

rational, courts are not empowered to engage in an eviden-

tiary fact-finding inquiry, as demanded by petitioners, to

determine whether the allocation of costs should or could be

different. Whether some other approach would have been

wiser is not a question of constitutional dimension, but is

rather a policy question for Congress, not the courts. See

Turner Elkhorn, 428 U.S. at 19 (“It is enough to say that the

Act approaches the problem of cost spreading rationally;

whether a broader cost-spreading scheme would have been

wiser or more practical under the circumstances is not a

question of constitutional dimension.”).

CONCLUSION

The petitions for a writ of certiorari should be denied.

Respectfully submitted.

THEODORE B. OLSON

Solicitor General

ROBERT D. MCCALLUM, JR.

Assistant Attorney General

DOUGLAS N. LETTER

MARK W. PENNAK

JAMES G. BRUEN, JR.

MATTHEW J. TROY

Attorneys

APRIL 2002

considerably more than half of the amount in the Fund, even though Con-

gress understood that about half of DOE’s enrichment services were

attributable to the commercial sector.