Petition for Writ of Certiorari — Sacramento Municipal Utility District v. United States
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— Supreme Cour. us
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No.01-_ 0} yy 55 FEB — 8 2002
IN THE ana iam
Supreme Court of the United States
MAINE YANKEE ATOMIC POWER COMPANY,
Petitioner.
V.
UNITED STATES OF AMERICA,
Respondent.
Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Federal Circuit
PETITION FOR A WRIT OF CERTIORARI
JERRY STOUCK *
REBECCA A. WOMELDORF
MICHAEL R. MINER
SPRIGGS & HOLLINGSWORTH
1350 I Street, N.W.
Ninth Floor
Washington, D.C. 20005
(202) 898-5800
Attorneys for Petitioner,
* Counsel of Record Maine Yankee Atomic Power
Company
February 6, 2002
WILSON-EPES PRINTING CO., INC. — (202) 789-0096 -— WASHINGTON, D.C. 20001
2°"
QUESTIONS PRESENTED
|. Whether the federal government, having sold certain
products or services pursuant to fixed-price contracts, may
subsequently enact legislation that imposes an additional per-
unit charge directly and predominantly on the purchasers
under the fixed-price contracts?
2. Whether a statutory obligation to pay money to the
government, such as a tax, can ever be a taking?
3. Whether the monetary “special assessment” that the
Energy Policy Act of 1992 imposes on companies based on
their purchases of government products as much as 30 years
earlier constitutes a taking or a due process violation?
(i)
il
PARTIES TO THE PROCEEDING BELOW
The only parties to this case are Maine Yankee Atomic
Power Company and the United States of America. How-
ever, similar cases were decided by the court of appeals on
the same day involving as plaintiffs Omaha Public Power
District, Commonwealth Edison Co. and Sacramento Munic-
ipal Utility District. The latter has filed a petition for certio-
rari in its case (No. 01-1020).
iil
RULE 29.6 STATEMENT
The parent companies and publicly-held corporations that
own 10% or more of the stock of Maine Yankee Atomic
Power Company are:
a. Three wholly-owned subsidiaries of Northeast
Utilities are stockholders of Maine Yankee, with the
following ownership percentages: The Connecticut
Light & Power Company—12%; Public Service of
New Hampshire—S%; and Western Massachusetts
Electric Company—3%.
b. National Grid Group PLC (Holding company for
New England Power Co., which owns 24% of Maine
Yankee’s stock).
c. Energy East Corporation (Holding company for
Central Maine Power Co., which owns 38% of Maine
Yankee’s stock).
TABLE OF CONTENTS
Page
COU FEIE Ty PDIa FRE BP cccccrccessessccsracssncncsecsensactaconse i
PARTIES TO THE PROCEEDING BELOW................ il
Te Be Pa MING enssscticenitinniiecunasabeiiinssinnnesiinnns ill
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FR BIEN tnesnsntaicsssassninhansccnecinsientiabenieiansaiaiaioniads 2
CONSTITUTIONAL AND STATUTORY PROVI-
IU BE ile UMEED nistnresinnntnninnsnssncquuacansstneonininniditinns 2
Ea FIG W iisctnctsnansthasnusacntiandcsnspndpalaeasiaiabaaapaiiaaaids 2
Pr, TRIE seshstsssicerinctininensncnianninitucieiithtaadehiaaiaina 3
B. Proceedings In This And Related Cases Below... 7
REASONS FOR GRANTING THE PETITION............ 10
I. THE FEDERAL CIRCUIT IMPROPERLY
APPROVED THE GOVERNMENT’S LEG-
ISLATIVE INFRINGEMENT OF MAINE
YANKEE’S FIXED-PRICE CONTRACT
RIE 8 ob vincnsdddingppaniiicossinatebansaanissnininitiedscninaninents 13
Il. THE FEDERAL CIRCUIT’S CONCLUSION
THAT THE WHOLLY NEW, 30-YEAR
RETROACTIVE TAX IMPOSED BY THE
ENERGY POLICY ACT OF 1992 IS VALID
UNDER THE TAKINGS AND DUE
PROCESS CLAUSES CONFLICTS WITH
PRECEDENT OF THIS COURT..............000007 17
CEN ee sieviseccintninnniisiinsniuisiticinnentnniannissniesiisitinannatiia 27
(v)
vi
TABLE OF CONTENTS—Continued
APPENDICES
Appendix A—Opinion of the Court of Appeals for the
Federal Circuit in Maine Yankee Atomic Power Co.
Ve CRAIG TRADI ccarceceacrneseescesressnessiniiananinnapaiinatingiiatin
Separate Opinion of Chief Judge Mayer and Senior
FORD FURR sceinscscssessisccvctsessintgpiiminiaiiainaaiiiiaiais
Appendix B—Opinion of the Court of Federal Claims
in Maine Yankee Atomic Power Co. v. United States
Appendix C—Opinion of the Court of Appeals for the
Federal Circuit en banc in Commonwealth Edison
Cee, i Se a eccictninctncnsntntiectinatinilideiiseetianani
Dissenting Opinion of Chief page Mayer and
Judges Newman and Rader ...........c.cccoczeccccsescsssocssseee
Appendix D—Opinion of the Court of Appeals for the
Federal Circuit in Yankee Atomic Electric Co. v.
CRIES GRIND snccccsnctanistiniienistsianiinnsiabitansianeiaminontiinnann
Dissenting Opinion of Judge Mayer ....................:000+
Appendix E—Order Denying Certiorari in Yankee
Atomic Electric Co. v. United States ........cccccccccccsseeees
Appendix F—Judgment of the Court of Appeals in
Commonwealth Edison Co. v. United States .............
Appendix G—Statutory Provisions ..................csceseeee
A. Pertinent Provisions of EPACT as Enacted.........
B. Current State of Certain Provisions of Titles X
enn SEE OE GP © vincemsientinnieiaaniaines
C. Pertinent Provisions of USEC Privatization Act,
PRS CAP Fe wkeccciininckcaneasmnianeien
vii
TABLE OF AUTHORITIES
CASES Page
Anker Energy Corp. v. Consolidation Coal Co.,
177 F.3d 161, 170 (3d Cir. 1999).........cc..scccccceee 27
Association of Bituminous Contractors, Inc. v.
Apfel, 156 F.3d 1246 (D.C. Cir. 1998)............... 27
Barseback Kraft AB v. United States, 121 F.3d
oe Re Reece 21
Blodgett v. Holden, 275 U.S. 142 (1927)........... 11, 17-19
Branch v. United States, 69 F.3d 1571 (Fed. Cir.
Pa iiastchiitisinnnerininseicnsintieiinhipneheisttinbinientabininionioneiiinienationn 24
Commonwealth Edison Co. v. United States, 271
erg Le | ee passim
Consolidated Edison Co. v. United States, 247
F.3d 1378 (Fed. Cir.), cert. denied, 122 S. Ct.
| IL Re a EE 12
Eastern Enterprises v. Apfel, 524 U.S. 498
Ga veisiisninsa icscisttesennsiepsiieiiatccansnniisidasianmnssicilitianiaiintes passim
Franklin County Convention Facilities Auth. v.
American Premier Underwriters, Inc., 240
P36 S56, SSS CG Cat. BEGE) ccccccacscccescessscsesesese 27
Lynch v. United States, 292 U.S. 571 (1934)......... 14
Milliken v. United States, 283 U.S. 15 (1931)........ 18, 19
Murray v. Charleston, 96 U.S. 432 (1978)............ 22
Nichols v. Coolidge, 274 U.S. 531 (1927)......... 11, 17-19
Norman v. Baltimore & O.R. Co., 294 U.S. 240
SEI sipihisillcsseitsesiocsniaatilectemnrncneciiisatenleiiipiscbiomiaisantestin 23
Perry v. United States, 294 U.S. 330 (1935) ......... 14, 23
Phillips v. Washington Legal Found., 524 U.S.
is iianteanpesinnctuinicenasininisitacnandeieminiinsiannianinte y :
Puerto Rico v. Russell & Co., 315 U.S. 610
SEU siiereunansesinaiseiasesiininteibnansieteetisbiuniimninulinmnsiesnake 22
Spearin v. United States, 248 U.S. 132 (1918)...... 13
Student Loan Mktg., Ass'n v. Riley, 104 F.3d 397
Geiss Magee I icuniiisinnnicnistenennaidcsndeneipnnicnaisabncnnias 23-24
Vili
TABLE OF AUTHORITIES—Continued
Page
United States v. Carlton, 512 U.S. 26 (1994)........ 18-19
United States v. DICO, Inc., 266 F.3d 864, 880
Re) Enero eenee er a 27
United States v. Sperry Corp., 493 U.S. 52
SEITE isinsetiehknsei-semneicceihabciNeleiellaidateibiaalieniotatieadicions 21
United States v. Winstar Corp., 518 U.S. 839
RTT aeinissipsteeccicaashasiainiedieliadscagpilicntenadianaclablideabiieiaeit passim
Unity Real Estate Co. v. Hudson, 178 F.3d 649
(3d Cir.), cert. denied, 528 U.S. 963 (1999)...... 27
Untermyer v. Anderson, 276 U.S. 440 (1928) ... 11, 17-19
Usery v. Turner Elkhorn Mining Co., 428 U.S. 1
SSPanaT nD a hiccatchiseaienistteiiesinitaciebcalbiipdiesaiibidisliatianiadiasnn 23-24
Washington Legal Found. v. Legal Found. of
Washington, 271 F.3d 835 (9th Cir. 2001) (en
IIIT -o:icasnssedaidipasidandbeiniedeniechasieeibanasaapiiibiaadtiantadedbiniciian 22
Washington Legal Found. v. Texas Equal Access
to Justice Found., 270 F.3d 180 (Sth Cir.
| Ce aan ee ae aE 22
Webb’s Fabulous Pharmacies, Inc. v. Beckworth,
I ichiichcndatichaiecciuanineniinlocemaleniie 11,21
Welch v. Henry, 305 U.S. 134 (1938)...........cccceeeee 19
Yankee Atomic Elec. Co. v. United States, 112
F.3d 1569 (Fed. Cir. 1997), cert. denied, 524
a Me scscschscne esetbicniiashtesindedabiiiiciesinianinataien passim
Yankee Atomic Elec. Co. v. United States, 33
eae: UNI sissehlischcasshaliiannlgs Aenciblalinninsiocmsiniteun 7
STATUTES AND REGULATIONS
ae as Oe ID cnitisiditihintincssisitetscacimnianiaions 14
Se ees Oe ER niiccntintenctsssnsnesnccitiinsiinaieds 14
Be Oi ae DI i ascthiniciiinestnisiiiicictinaniesdlibiniiblen 14
Be ies hCG eicsinsinienitcinnncihecniblinnhentiicndaiitiaiied 2
ix
TABLE OF AUTHORITIES—Continued
Page
Energy Policy Act of 1992, Pub. L. No. 102-486,
ke 2 | Sn Oe iamusans passim
a icici cncasiatiacddincceesnantneanebonsannia 5
Oe ee i iidiiad eknnnnncctanecinecdnmmnnncassans 5
Oe ioe a I i siairuniciideennanseeenndianiasinncinnnses 5,9
cae a eiscicacdanlisesencttisteavaiccecsonsanans 6
is ae ie cdidestnakinensnsnincsorcxemcncinnssences 4
Oe ee IE cia taniresidnscientanenmineiinnecndss 6
er Oe ea sattnniescsdtendacaxeievvomnnntoniis 16
ee le ie atisnnnnsinneseretensactotarinscsnncines 6, 16
Oa ia ais ds aneacdastenshanannebnntons 5
ee ee iidtiecditeriestnrrrntiincinnarinses 5
es Oe I caihatannrsesncinsecconnsnncsonnsies 5
ME ULE. © Ze Fe ED ccsconscdactanstsesnssarsnniane 5
ik Fadl ys; + | Feat narOreED 5
OE 0 Be cites snsoniscnestnnndiniicresonenane 5
en OF sitresnnnsocncscasecsctascsincasensens 5
ee ee cithicectincieictcdnainnsrntsasotecons 6
Oe es ie NE eicieeninntannternsapticinacsisitoinnnes 6
Pub. L. No. 104-134, Title III, § 3116(a)(1), 110
Stat. 1321-349 (1996) (repealing various
sections of Energy Policy Act of 1992)............. 4,6
Pe ee Oe Pl scsenthidapinsinenioeitnnienesinnsinanbsenioniin 5
IN THE
Supreme Court of the United States
No. O1-___
MAINE YANKEE ATOMIC POWER COMPANY,
Petitioner,
V.
UNITED STATES OF AMERICA,
Respondent.
Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Federal Circuit
PETITION FOR A WRIT OF CERTIORARI
Maine Yankee Atomic Power Company respectfully petitions
for a writ of certiorari to review the judgment of the United
States Court of Appeals for the Federal Circuit in this case.
OPINIONS BELOW
The opinion of the court of appeals (App. la-16a) is
reported at 271 F.3d 1357. The court’s opinion and judgment
were entered by the panel expressly under the constraint of an
en banc opinion issued the same day in Commonwealth
Edison Co. v. United States (App. 40a-91a), which is reported
at 271 F.3d 1327. The latter opinion and the dissent in that
case explicitly rely, respectively, upon the panel majority and
dissenting opinions in Yankee Atomic Elec. Co. v. United
2
States (App. 92a-121a), which are reported at 112 F.3d 1569.
The opinion of the Court of Federal Claims in this case (App.
17a-39a) is reported at 44 Fed. Cl. 372.
JURISDICTION
The opinion and judgment of the court of appeals were
entered on November 20, 2001. The Supreme Court has
jurisdiction under 28 U.S.C. § 1254(1).
CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED
The Fifth Amendment to the Constitution of the United States
provides: “[NJor shall any person . . . be deprived of life,
liberty, or property, without due process of law; nor shall private
property be taken for public use, without just compensation.”
The relevant provisions of the Energy Policy Act of 1992,
Pub. L. No. 102-486, 106 Stat. 2776 (1992), are set forth in
the Appendix to this Petition. App. 124a-140a.
STATEMENT
Under the Energy Policy Act of 1992 (“EPACT”), Congress
imposed a retroactive, per-unit monetary assessment directly
and predominantly on nuclear utility companies that had
purchased enriched uranium from the government under fixed-
price contracts as long ago as the 1960s. Pursuant to EPACT,
the government uses the proceeds to pay for cleanup of the
uranium enrichment plants it owned and operated and for
cleanup of privately-owned uranium and thorium facilities that
have no relation to the government’s enrichment program.
EPACT thus requires Petitioner Maine Yankee Atomic
Power Company (“Maine Yankee”) to pay the government
more than $25 million in addition to. the fixed contractual
prices it previously paid the government for enriched
uranium, even though Maine Yankee never had responsibility
for conditions at the plants that are being cleaned up with the
3
proceeds of the retroactive assessment. In the aggregate, over
a 15-year period, EPACT requires Maine Yankee and other
nuclear utilities to make special assessment payments of more
than $2 billion.
In a series of recent decisions, the Federal Circuit has
divided sharply over the question whether the government’s
collection of this substantial retroactive monetary assess-
ment violates the Takings and/or Due Process Clauses. The
majority of a divided en banc Federal Circuit, viewing the
EPACT assessment simply as a “legislative Act[] adjusting
the burdens and benefits of economic life,” Commonwealth
Edison, App. 62a, rejected the constitutional challenges.
Other Federal Circuit judges believed it was significant that
this Court’s retroactivity precedents typically “dealt with the
relationships, financial and otherwise, among private parties
[where] the government’s role was only the regulation of
those relationships.” Maine Yankee, App. 13a (Friedman, J.,
concurring). Those judges would have found the retroactive
EPACT assessment unconstitutional, because here “the
statute deals with the relationship between the government
and private parties; it seeks to transfer to those parties a
substantial portion of the government’s costs of rectifying the
contamination of its plants.” App. 13a-14a. Several Federal
Circuit judges also concluded that “where, as here, the impact
of the tax falls so substantially and directly on . . . the
government’s . . . contracting partners, it amounts to a
retroactive price increase, which cannot stand.” Yankee
Atomic, App. 120a-121a (Mayer, J., dissenting).
A. Background
1. During World War II, the government constructed three
uranium enrichment plants to support various national
defense projects. Over a long period of military use (pri-
marily for weapons production), the plants became con-
taminated with radioactive and other hazardous materials.
4
J.A. 27-28.' Subsequently, the government began using its
contaminated plants to enrich uranium for sale to private
utilities. J.A. 29.7
From 1970 to 1986, the government sdld enriched uranium
to Maine Yankee—pursuant to two fixed-price contracts—for
use in Maine Yankee’s nuclear generating plant. J.A. 31-36.
By the time Maine Yankee made its first purchase in 1970,
the government’s enrichment facilities were fully contam-
inated. J.A. 28, 36. A 1992 study found that “the level of
decontamination effort required for [the enrichment facilities]
is no greater now than the effort that would have been
required in 1965 if all the facilities had been required to have
been decommissioned at that time.” J.A. 60-63. At least
some of the plant contamination resulted from government
negligence or recklessness. See, e.g., J.A. 58-59.°
2. As a result of increased competition and declining sales,
by the 1980s Congress recognized the need to restructure and
privatize the government’s enrichment business. J.A. 36,
402-403. One of the issues\Congress faced in doing so was
how to address the costs of decontaminating and decom-
missioning the government’s enrichment plants. In EPACT,
Congress (1) created the United States Enrichment Corpo-
ration (“USEC”) to take over and privatize the government’s
enrichment business, 42 U.S.C. § 2297b, repealed effective
July 28, 1998 by Pub. L. No. 104-134, Title III, § 3116(a)(1),
110 Stat. 1321-349 (1996) (hereinafter “USEC Privatization
Act”), App. 126a; and (2) established a separate Uranium
'«J_A.” refers to the Joint Appendix in the court of appeals.
? The sales were made by a succession of federal entities, including the
Atomic Energy Commission (“AEC”) and the Department of Energy
(“DOE”).
> The government’s enrichment plants, which have always been owned
by the government, also were operated solely by the government and/or
its contractors at all times prior to the enactment of EPACT in 1992.
J.A. 31-32.
5
Enrichment Decontamination and Decommissioning Fund
(the “D&D Fund”) to pay, among other things, the costs of
cleaning up the government’s enrichment plants. 42 U.S.C.
§ 2297g (1994), App. 135a. Congress also earmarked D&D
Fund monies for cleanup of privately-owned uranium and
thorium production facilities unrelated to the government’s
enrichment of uranium for utilities. 42 U.S.C. §§ 2296a, a-1,
a-2 (1994 & Supp. 2001), App. 131a-134a. To finance the
D&D Fund, Congress provided for annual deposits of
$483 million per year (adjusted for inflation). 42 U.S.C.
§ 2297g-1(a) (1994 & Supp. 2001), App. 136a, 138a-139a.
Up to $150 million per year is funded by a “special
assessment” imposed upon certain “domestic utilities,” in-
cluding Maine Yankee. The assessment is payable annually
over fifteen years, for a total of approximately $2.25 billion,
and is based specifically upon the total amount of separative
work units (“SWUs”) of enrichment each domestic utility
“purchased” from the DOE before October 24, 1992. 42
U.S.C. § 2297g-1(c)-(e) (1994), App. 136a-140a.* In appar-
ent recognition of the small “secondary market” in which
purchasing utilities occasionally sold government-produced
SWUs to others, Congress provided that “(1) a utility is
considered to have purchased a separative work unit if it was
produced by the government but purchased by the utility from
another entity, and (2) a utility is not considered to have
purchased a government-produced separative work unit if it
was initially purchased by that utility but subsequently
resold.” 42 U.S.C. § 2297g-1(c)(1) & (2) (1994), App. 136a.
The government has conceded that at least 85% of the special
assessment falls on enrichment units purchased directly under
government contracts, as opposed to secondary market
SWUs. App 118a.°
4 The “SWU” is “the common measure by which uranium enrichment
services are sold.” 10 C.F.R. § 766.3 (2002).
5 Maine Yankee believes discovery will reveal that all secondary
|
6
In enacting EPACT, Congress sought “(1) To operate
[USEC] as a business enterprise on a profitable and efficient
basis,” and “(2) To maximize the long-term value of the
Corporation to the Treasury of the United States.” 42 U.S.C.
§ 2297a, repealed effective July 28, 1998 by USEC Priva-
tization Act, App. 124a. Accordingly, EPACT (and sub-
sequent privatization legislation) exempted USEC from pre-
privatization liabilities, including liability for cleaning up the
government’s enrichment plants, even though after EPACT’s
enactment—and up through the present time—USEC has
continued to use those same contaminated plants to enrich
uranium for sale to its customers. 42 U.S.C. §§ 2297c-2(d),
2297c-5, repealed effective July 28, 1998 by USEC Priva-
tization Act, App. 126a, 128a-129a; 42 U.S.C. §§ 2297h-5(d),
2297h-7, App. 141a-143a. The government sold USEC to
private investors in 1998, reaping $1.9 billion.
3. From 1970 to 1983, Maine Yankee purchased more
than 1 million SWUs directly from the government, paying
contractual prices ranging from $28.70 to $127.50 per SWU.
J.A. 35. Beginning in 1981, Maine Yankee also purchased a
comparatively small amount of secondary market SWUs.
Maine Yankee purchased no government-produced SWUs
after 1986, six years prior to EPACT. Maine Yankee per-
manently shut down its only nuclear power plant in 1996.
J.A. 36. Thus far, Maine Yankee has paid into the D&D Fund ,
(to avoid penalties, and while expressly reserving its rights) |
approximately $17.2 million of its total special assessment
liability of more than $25 million. That amount is above and
beyond the $84.6 million that Maine Yankee paid the ;
government for enriched uranium years ago, amounting to an |
additional retroactive surcharge of more than $17.00 per SWU. :
market purchasers subject to the EPACT assessment are utilities that also
had direct purchase contracts with the government. If true, the EPACT
assessment would thus fall entirely upon this discrete group of the
government’s contracting partners.
7
B. Proceedings In This And Related Cases Below
A complete understanding of the basis for the judgment
below in this case requires discussion of decisions in two
additional Federal Circuit cases—Commonwealth Edison and
Yankee Atomic. Both cases involved legal challenges to the
EPACT assessment, and opinions issued in those cases were
relied upon expressly by panel members in this case.
Maine Yankee’s initial complaint asserted that the EPACT
assessment was a retroactive price increase that violated
Maine Yankee’s fixed-price contract rights. The trial court
had previously upheld such a claim in Yankee Atomic,
declaring the EPACT assessment “an impermissible exercise
of sovereign power” because it was “[l]egislation so plainly
directed at undoing a contract liability previously assumed by
the Government.” Yankee Atomic Elec. Co. v. United States,
33 Fed. Cl. 580, 585 (1995).
A split panel of the Federal Circuit reversed that decision.
The Yankee Atomic panel majority held that the EPACT
assessment “constitutes a general exercise of Congress’s
taxing power . . . rather than an act that retroactively increases
the price charged to contracting parties.” App. 105a. It based
that conclusion on the view that, given the provision
addressing secondary market purchases, “the scope of the Act
is not coincident with those domestic utilities that had
previously entered into contracts with the DOE.” App. 101a.
Thus, because the assessment did not fall exclusively on the
government’s contracting partners, the court determined it
was a “public and general” sovereign act that did not violate
the utilities’ fixed-price contract rights. See App. 101a-103a.
Judge Mayer dissented in Yankee Atomic. App. 115a. Given
that at least 85% of the special assessment falls on SWUs
purchased directly under government contracts, Judge Mayer
concluded that the sovereign acts doctrine did “not insulate
8
the government from liability because the impact of the
special assessment falls so substantially and directly on
Yankee and the government’s other contractors.” App. 1 19a.
Thereafter, and following this Court’s decision in Eastern
Enterprises v. Apfel, 524 U.S. 498 (1998), Maine Yankee
amended its complaint to add claims not addressed in Yankee
Atomic, namely that the EPACT assessment “tax” is severely
and unjustifiably retroactive, in violation of the Takings
and Due Process Clauses. The trial court recognized that
“Eastern Enterprises—issued after the Yankee Atomic deci-
sion—adds a new perspective.” App. 23a. Nevertheless,
analyzing Maine Yankee’s constitutional claims “independent
of any contract right,” App. 25a, the trial court dismissed
those claims. A Federal Circuit panel affirmed, App. la, but
only on the express ground that it was bound by that court’s
en banc decision in Commonwealth Edison, App. 40a, issued
the same day. But for that en banc decision, a majority of the
panel in this case would have reversed the dismissal of Maine
Yankee’s complaint, for the reasons stated in their separate
concurring opinion here. App. 4a-16a.
The en banc opinion in Commonwealth Edison rests
analytically on the notion that the retroactive EPACT
assessment is simply “legislation imposing [a] regulatory
burden{]}.” App. 56a. Noting the “deferential standard”
applicable to such laws, id., the en banc majority—although
acknowledging that the EPACT assessment is “severely
retroactive and costly,” App. 70a—nevertheless rejected the
utilities’ taking, contract-based and due process claims. The
majority first held that “the mere imposition of an obligation
to pay money . . . does not give rise to a claim under the
Takings Clause.” App. 60a. The Commonwealth Edison
majority then held, without significant discussion, that
Yankee Atomic barred the utilities’ contract-based claims.
App. 60a-6la. Finally, in rejecting the utilities’ due process
claim, the en banc majority fashioned a two-part test under
which laws imposing retroactive liability will be upheld if (1)
9
“the party subjected to retroactive obligations benefited from
activity that contributed to a societal problem, and liability is
not disproportionately imposed on that party,” and (2) “the
imposition of retroactive liability would not be contrary to
that party’s reasonable expectations.” App. 70a. The en banc
majority concluded that EPACT satisfied this test, based on
the “benefits” and “expectations” it perceived to arise from
the utilities’ historical dealings with the government. See
App. 70a-90a.
Notably, the government’s commercial self-interest in
imposing the EPACT assessment on its past customers, rather
than on USEC’s future customers, did not figure at all in the
en banc majority’s analysis of the utilities’ taking, contract or
due process claims. The Commonwealth Edison majority
also casually dismissed as “de minimus” the diversion of
D&D Fund monies te clean up privately-owned uranium and
thorium plants, but the majority improperly focused on the
$75 million that “has been used” for that purpose, App. 72a
n.19, rather than the $490 million (nearly one-quarter of the
$2.25 billion assessed against domestic utilities) that is
authorized for private plant clean up.°
For reasons set forth in Senior Judge Friedman’s con-
curring opinion in this case, three judges dissented from the
en banc decision in Commonwealth Edison. App. 91a. Judge
Friedman concluded that the retroactive EPACT assessment
violated due process for two basic reasons. First, “the
Utilities did not cause or contribute to the contamination of
the government’s plants.” App. Ila. Second, “when the
Utilities entered into the purchase contracts at a fixed price,
they had no reason to believe, or even suspect, that years later
the government would seek to make them pay for a sub-
* Congress originally authorized use of $310 million from the D&D
Fund for cleanup of the privately-owned plants, and subsequently
increased the amount to $490 million. See 42 U.S.C. § 2296a-2 (1994 &
Supp. 2001), App. 138a, 13 1a-134a.
10
stantial portion of its cleanup cost.” /d. Rather, “they reason-
ably would have believed that the charges the government
made for the enriched uranium included the cleanup cost.”
Id. Judge Friedman also observed that this Court’s prior
retroactivity cases “deal[ing] with the relationships, financial
and otherwise, among private parties,” could not be
“automatically and uncritically applied to the significantly
different situation” presented by EPACT, namely, a “statute
[that] deals with the relationship between the government and
private parties.” App. 13a-l14a. The en banc dissenters in
Commonwealth Edison, in addition to adopting Judge
Friedman’s due process conclusions, also would have
overruled Yankee Atomic and found that the EPACT
assessment works a taking for reasons articulated by the
dissent in that case. App. 91a.’
REASONS FOR GRANTING THE PETITION
This case presents important questions about the power of the
federal government to retroactively reorder its comer-
cial relationships with private parties. EPACT is quite unlike
the laws addressed in this Court’s prior retroactivity cases,
which typically reordered only the financial affairs of private
parties. Here, the retroactive EPACT assessment reorders the
financial terms of the government’s own prior contractual
dealings. This monetary assessment thus upsets expectations of
Maine Yankee (and of other utilities) that the government itself
had previously created, and it does so long after the utilities
purchased uranium at contractually-fixed prices and thereby
changed their position in reliance on the absence of the
assessment. The EPACT assessment also dramatically im-
proved the government’s ability to profit from the privatization
of USEC, by allowing greater future USEC profits due to its
exemption from enrichment plant cleanup expense.
” Judge Friedman, as a senior judge, did not sit on the en banc court in
Commonwealth Edison.
This Court has never sanctioned the imposition of
retroactive liability in these circumstances. To the contrary,
the Court has made clear that the government may not use its
legislative powers to alter or evade its contract obligations
and thereby advance its own commercial interests. United
States v. Winstar Corp., 518 U.S. 839 (1996). Even with
respect to retroactive laws that only reorder private rights, the
Court has recognized constitutional limits—as where retro-
active liability has been imposed for reasons “unrelated to
any commitment that the [burdened parties] made or to any
injury they caused.” Eastern Enterprises v. Apfel, 524 U.S.
498, 537 (1998). The EPACT assessment was imposed on
Maine Yankee for reasons meeting that description, and thus
would not survive constitutional scrutiny even if its legiti-
macy were not further undermined by the extent to which it
retroactively reorders the government’s own financial affairs.
Prior retroactive tax cases also have not involved, as this
case does, taxes that fall substantially on the government’s
contracting partners. But even without regard to that factor,
the Court has struck down retroactive, “wholly new” taxes.
Untermyer v. Anderson, 276 U.S. 440 (1928); see Blodgett v.
Holden, 275 U.S. 142 (1927); Nichols v. Coolidge, 274 U.S.
531 (1927). The Court also has held that a second statutory
fee for the same government services paid for previously
constitutes a taking. See Webb’s Fabulous Pharmacies, Inc.
v. Beckworth, 449 U.S. 155 (1980).
In the present case, the court of appeals has thus sanctioned
the imposition of retroactive liability in circumstances where
this Court, for several distinct reasons, has not sanctioned it.
The resulting legal issues have both particular and general
importance. Most directly, EPACT requires Petitioner and
other utilities to pay up to $150 million annually for a 15-year
period, a total in excess of $2 billion. More generally, the
Federal Circuit’s holdings have a potential effect on any
government contractor where the government subsequently
12
decides that it has paid too much or charged too little, and on
any user of a government product or service where the
government subsequently decides that fees should have been
charged or that the fees that the government did charge were
too low. According to the court of appeals, in such cases: (1)
subsequent legislation that falls substantially, but not exclu-
sively, on the government’s contracting partners will not
violate the contractual or constitutional rights of those
contracting partners, App. 10la-105a; (2) the government’s
collection of a retroactive tax from prior users of its products
or services can never be a taking, App. 57a-60a; and (3) the
imposition of such a retroactive tax will not violate due
process, even where the tax has been imposed for reasons
unrelated to any commitment the assessed parties made or to
any injury they caused. App. 62a-90a.
These striking holdings represent a significant departure
from this Court’s decisions restricting the federal govern-
ment’s power to impose retroactive taxes, and retroactive
liability more generally—particularly upon the government’s
own contracting partners. Moreover, absent review here no
other court will consider the validity of the retroactive
EPACT assessment, because the Federal Circuit has also held
that only the Court of Federal Claims (and thus the Federal
Circuit on appeal) has jurisdiction over the claims involved
here. Consolidated Edison Co. v. United States, 247 F.3d
1378 (Fed. Cir.), cert. denied, 122 S. Ct. 644 (2001). Further
review is therefore warranted.
13
I. THE FEDERAL CIRCUIT IMPROPERLY AP-
PROVED THE GOVERNMENT’S LEGISLA-
TIVE INFRINGEMENT OF MAINE YANKEE’S
FIXED-PRICE CONTRACT RIGHTS.
“({F]or centuries our law has harbored a singular distrust of
retroactive statutes.” Eastern Enterprises, 524 U.S. at 547
(Kennedy, J., concurring) (citing plurality opinion). That
distrust should apply with even greater force in the present
context, where the law in question falls primarily on the
government’s contracting partners. Otherwise, the govern-
ment could retroactively evade its contractual obligations in a
way that no private citizen can, contrary to the settled
principle that “‘[w]hen the United States enters into contract
relations, its rights and duties therein are governed generally
by the law applicable to contracts between private
individuals.’” Winstar, 518 U.S. at 895 (quoting Lynch v.
United States, 292 U.S. 571, 579 (1934)).
In analyzing the retroactive EPACT assessment, the
Federal Circuit went fundamentally off track in Yankee
Atomic. There was no dispute there (and is none here) that
the government would be barred by traditional principles of
contract law from simply demanding that its contracting
partners pay more for the enriched uranium it previously sold
under fixed-price contracts. See Spearin v. United States, 248
U.S. 132, 136 (1918) (“Where one agrees to do, for a fixed
price, a thing possible to be performed, he will not be excused
or become entitled to additional compensation, because
unforeseen difficulties are encountered.”). Rather, the panel
majority in Yankee Atomic found it “[i]mportant[]” that the
EPACT assessment, while falling predominantly on the
government’s contracting partners, did not fall exclusively on
them. App. 10la. The court thus held that the law was not a
violation of any contract rights, but merely a “general tax.” /d.
That analysis wholly distorts the standards for determining
whether later government actions improperly interfere with
14
prior government contracts. The statute in Winstar did not
apply only to the government’s contracting partners; it re-
quired deduction of “goodwill” from the regulatory capital of
all thrifts, whether or not they had a contract with the -
government. 12 U.S.C. § 1464(t)(1)(A), (9)(A) and (C); see
518 U.S. at 934 (Rehnquist, C.J., dissenting); see also App.
118a. That broad statute was nevertheless held to breach
contracts the government had entered with some thrifts
assuring them continued regulatory capital treatment for
goodwill. See also Perry v. United States, 294 U.S. 330, 349
(1935) (offending statute voided gold payment clauses in
“every obligation,” public and private); Lynch v. United
States, 292 U.S. 571, 575 (1934) (offending statute was a
sweeping repeal of “all laws granting or pertaining to”
renewa"'e term insurance).
In the principal opinion in Winstar, Justice Souter ex-
plained that the key factor in determining whether a govern-
mental act that allegedly infringes contract rights is “public
and general” for purposes of the “sovereign acts” defense is
whether “a substantial part of the impact of the Govern-
ment’s action . . . falls on its own contractual obligations.”
Winstar, 518 U.S.. at 898 (plurality opinion) (emphasis
added); see also id. at 899 (“the Government’s capacities
must be treated as fused when the Government acts in a
nongeneral way”). Justice Souter further observed that “[t]he
greater the Government’s self-interest, . . . the more suspect
becomes the claim that its private contracting partners ought
to bear the financial burden of the Government’s own
improvidence.” Jd. at 898. Consistent with those views,
Justice Scalia’s opinion in Winstar described the laws that
do not offend government contract rights as those “multi-
farious sovereign acts” which “incidentally disable” perform-
ance. Jd. at 921 (Scalia, J., concurring in the judgment)
(emphasis added).
When a statute, like the EPACT provision involved here,
falls predominantly (at least 85%) on the government’s
15
contracting partners, a “substantial part of [its] impact” is
plainly upon the government’s contractual obligations.
EPACT also reflects the kind of governmental “self-interest”
that Justice Souter described. Such a targeted statute,
moreover, cannot be said to “incidentally” impair contract
performance. Nor does the possibility that the EPACT
assessment may not fall exciusively on the government’s
contracting partners lessen the impact of the statute on those
contracting utilities who are required to pay again based on
the same enriched uranium they purchased under fixed-price
contracts long ago. As to those utilities, the Yankee Atomic
dissent is surely correct that “the government retroactively
abrogated the essence of the contracts at issue.” App. 117a.
That conclusion also accords with the common-sense expec-
tations of those contracting with the government: namely that
the government, while not contracting away its sovereign
powers, is nevertheless bound not to legislate in a targeted
way to shift the very risks it assumed under the contract back
onto the other party.
The contrary conclusion now adopted by a majority of the
en banc Federal Circuit seriously alters the proper balance
between the obligation of the federal government to respect
the terms of its own contracts and the power of the federal
government as sovereign to legislate for the public good. In
fact, the Yankee Atomic rationale actually invites Congress to
enact legislation that directly and deliberately impairs the
rights of a majority of the government’s contracting partners,
so long as the law is structured in a manner that does not fall
entirely on those contracting partners. Cf Winstar, 518 U.S.
at 902-03 (plurality opinion) (“Legislation can almost always
be written in a formally general way, and the want of an
identified target is not much security when a measure’s
impact nonetheless falls substantially upon the Government’s
contracting partners.”). That appears to be essentially what
happened here. Congress imposed a substantial part of the
government’s cleanup cost on its prior contracting partners
16
in order to shift those costs away from USEC’s future
customers, thereby increasing USEC’s profitability and value
to the government in a privatization transaction. The
government’s self-interest is explicit on the face of the
statute. See, e.g., 42 U.S.C. §§ 2297c-3, 2297c-5, repealed
effective July 28, 1998 by USEC Privatization Act. App.
127a-129a.°
Allowing the government to retroactively reorder in this
deliberate manner the commercial consequences of its sales
of enriched uranium pursuant to fixed-price contracts, simply
because the EPACT assessment does not fall exclusively on
the government’s contracting partners, represents a signifi-
cant step backward from the principles recently reaffirmed in
Winstar. The Federal Circuit has allowed the government to
do what no private contracting party could ever do—
retroactively shift back onto the other party the very risks the
government assumed under the contract. Although drawing
the proper line between the government’s sovereign authority
and its contractual obligations is often complex and difficult,
in the circumstances of this case the task is straightforward,
and the Federal Circuit has patently drawn the wrong-_line. A
statute that targets and hits the overwhelming majority of the
government’s contracting partners is not a “public and gen-
eral” act. The Federal Circuit’s contrary holding dramatically
expands the government’s ability to evade its contract
obligations through subsequent legislation and conflicts with
precedents of this Court.
* Contrary to the Federal Circuit’s suggestions in Commonwealth
Edison, see App. 49a-52a, what industry members may have said in the
halls of Congress, in an effort to avoid legislation even worse than what
ultimately passed, has no bearing on the judiciary’s review of the validity
of a statute.
17
Il. THE FEDERAL CIRCUIT’S CONCLUSION
THAT THE WHOLLY NEW, 30-YEAR RETRO-
ACTIVE TAX IMPOSED BY THE ENERGY
POLICY ACT OF 1992 IS VALID UNDER THE
TAKINGS AND DUE PROCESS CLAUSES
CONFLICTS WITH PRECEDENT OF THIS
COURT.
Having wrongly concluded in Yankee Atomic that the
EPACT assessment is a “general” tax, the Federal Circuit
compounded the error in Commonwealth Edison by failing to
appreciate the constitutional problems presented by the fact
that it is a “tax”—and a severely retroactive one at that.
Since enacting EPACT in 1992, the government has been
collecting more than $2 billion directly from utilities, based
explicitly on commercial transactions concluded as long ago
as the 1960s. The government uses the proceeds of this tax to
clean up contamination—at its own plants and at plants
owned by third parties—arising from conditions over which
the taxpaying utilities had no control. Even apart from Maine
Yankee’s contract-based claims, the Federal Circuit’s rejec-
tion in these circumstances of Maine Yankee’s constitutional
challenges to the retroactive EPACT assessment is a decision
warranting further review.
1. The Court long ago held that wholly new retroactive
taxes violate due process. Untermyer v. Anderson, 276 U.S.
440 (1928) (retroactive application of new gift tax uncon-
stitutional); see Blodgett v. Holden, 275 U.S. 142 (1927) (per
curiam) (same); Nichols v. Coolidge, 274 U.S. 531 (1927)
(imposition of new estate tax rule on transaction con-
summated twelve years earlier unconstitutional).? These
decisions reflect the inherently unfair and arbitrary quality of
° The Untermyer holding reflected a fifth vote for the conclusions
expressed for four Justices in the per curiam opinion in Blodgett, namely
that the same new gift tax statute reached pre-enactment gifts and thus
was unconstitutional. Untermyer, 276 U.S. at 445.
18
legislative acts, like the EPACT assessment, that change the
legal cost of transactions already completed. As Justice
O’Connor has explained:
Because the tax consequences of commercial transac-
tions are a relevant, and sometimes dispositive, consid-
eration in a taxpayer’s decisions regarding the use of his
capital, it is arbitrary to tax transactions that were not
subject to taxation at the time the taxpayer entered
into them.
United States v. Carlton, 512 U.S. 26, 38 (1994) (O’Connor,
J., concurring) (emphasis added) (citing Welch v. Henry, 305
U.S. 134, 147 (1938))."°
The Federal Circuit en banc majority in Commonwealth
Edison questioned the current vitality of Blodgett, Nichols
and Untermyer, App. 64a; see id. n.13 (addressing Unter-
myer), and also viewed those decisions as “limited to
situations involving ‘a wholly new tax.’” Although this Court
voiced similar questions in Carlton, it seemingly approved
the continuing application of Untermyer and Blodgett to “‘the
creation of a wholly new tax’” as opposed to “‘assessing the
constitutionality of subsequent amendments’” to existing
tax laws. 512 U.S. at 34 (quoting United States v. Hemme,
476 U.S. 558, 568 (1980)).'' The Federal Circuit en banc
majority did not dispute that the EPACT assessment was a
999
'° Carlton upheld not a new tax, but an amendment to correct a
“mistake” in a recently promulgated tax deduction provision. 512 U.S. at
26. See also Milliken v. United States, 283 U.S. 15, 23-24 (1931) (up-
holding retroactively imposed “increased rate of tax”). Moreover, in
Carlton—unlike here—there was “no plausible contention that Congress
acted with an improper motive, as by targeting estate representatives such
as Carlton after deliberately inducing them to engage in ESOP
transactions.” 512 U.S. at 32.
'' As noted in Carlton, 512 U.S. at 34, the tax in Nichols was not
strictly “new.” However, the tax there operated similarly, because “[a]n
excise [wa]s prescribed, but the amount of it [wa]s made to depend upon
past lawful transactions, . .. beyond recall.” Nichols, 274 U.S. at 592.
19
wholly new tax. Nevertheless, and ironically in light of
Yankee Atomic, the en banc majority sought to distinguish
Blodgett and Nichols (and presumably Untermyer, see supra
n. 9) on the ground that “EPACT, unlike the statutes at issue
in those [] cases, is not a mere revenue-raising measure.
Rather, it represents an assessment on particular existing
domestic utilities ....” App. 64a. (emphasis added).
In other words, the court below recognized that the EPACT
assessment is not a general tax. Precisely for that reason,
however—and putting aside the patent inconsistency with
Yankee Atomic—any remaining question about the constitu-
tional validity of the wholly new, retroactive EPACT tax
should have been, and should be, resolved against the govern-
ment. The taxes in Untermyer, Blodgett and Nichols also
targeted prior transactions—gifts and testamentary disposi-
tions, respectively. Indeed, the basis for decision in those
cases was not simply that the taxes were new, as EPACT
clearly is, but that being new, the taxes fell on taxpayers who
had previously engaged in discrete transactions in reliance on
the absence of a tax, as EPACT clearly does with respect to
all assessed utilities, even those that purchased on the
secondary market. See, e.g., Welch v. Henry, 305 U.S. 134,
137 (1938) (decision in cases like Untermyer, Nichols and
Blodgett “rested on the ground that the nature or amount of
the tax could not reasonably have been anticipated by the
taxpayer at the time of the particular voluntary act which the
statute later made the taxable event”); Milliken v. United
States, 283 U.S. 15, 21 (1931) (same characterization). Here,
for example, Maine Yankee likely would not have purchased
the same amount of government SWUs if it knew, at the time
of purchase, that each unit would cost $17 dollars more than
the price then stated-—as each unit now does.'”
'2 Even in cases upholding retroactive tax law amendments, the period
of retroactivity has been very limited. See Carlton, 512 U.S. at 38
(O’Connor, J., concurring) (“In every case in which we have upheld a
20
Once again, by upholding the retroactive EPACT assess-
ment the Federal Circuit has extended an invitation to Con-
gress, this time to impose similar new taxes on other
long-concluded commercial transactions. That this Court has
rarely reviewed such taxes presumably reflects legislative
recognition, not observed here, that constitutional limits do
exist on the federal government’s power to impose retroactive
taxes. The Court should now reaffirm those limits in this case.
2. The Federal Circuit’s conclusion in Commonwealth
Edison that “an obligation to pay money” cannot be a taking,
even where the government has directly appropriated the
money for its own use, is even more striking. That conclu-
sion rested on the en banc court’s view that a majority of this
Court had reached the same conclusion in Eastern Enter-
prises. App. 57a-59a. But Eastern Enterprises did not
involve the government’s direct appropriation of money;
rather, the payments mandated by statute in that case were
“paid to the privately operated Combined Fund.” 524 US. at
521. Even in that context—the retroactive adjustment of
private financial affairs—-four Justices found a taking and
Justice Kennedy, concurring on due process grounds, indi-
cated the Takings Clause might be implicated if the Coal Act
was “applicabie to or measured by a property interest.” /d. at
540 (Kennedy, J., concurring). Here, the previously pur-
chased enriched uranium by which the EPACT assessment is
measured represents just such a property interest. Clearly a
taking would result if Congress legislated return of a por-
tion of the enriched uranium purchased by Maine Yankee.
EPACT’s imposition of a retroactive surcharge for that
uranium, on top of the contractual fixed-price Maine Yankee
previously paid, is no less confiscatory.
retroactive federal tax statute against due process challenge . . . the
t law applied retroactively for only a relatively short period prior oy
enactment.”) (citing cases).
21
The Federal Circuit acknowledged that “‘a fund of money can
be property protected under the Takings Clause.” App. 57a
(citing Webb's Fabulous Pharmacies, Inc. v. Beckworth, 449
U.S. 155 (1980) and Phillips v. Washington Legal Found., 524
U.S. 156 (1998)). In those cases, however, the fund was not the
subject of the taking claims. Rather, the State had legislatively
appropriated interest earned on the fund. Because money is
fungible, it is difficult to see how the distinction between a
“fund,” “interest” and “tax payments” should matter. More
fundamentally, Webb's heid that where the State had already
collected one service charge, a subsequently-imposed charge for
the same services was an unconstitutional taking: “‘{iJt is
obvious that the [second charge] was not a fee for services, for
any services obligation to the county was paid for and satisfied
by the [first] fee . . . . Rather, the [second] exaction is a forced
contribution to general governmental revenues... .” 449 U.S.
at 162-63. The same analysis and conclusion apply here. See
also Barseback Kraft AB v. United States, 121 F.3d 1475, 1483
(Fed. Cir. 1997) (“DOE’s cost-recovery based pricing policy
{and thus DOE’s enriched uranium contract prices] included a
D&D component.”).'?
The Takings Clause protects “property,” and money un-
questionably fits that description. The Federal Circuit's
holding on the facts here that the EPACT assessment is not a
taking, and indeed that such a monetary exaction can never be
a taking, is a significant departure from the Court’s takings
'S In United States v. Sperry Corp., 493 U.S. 52, 59-64 (1989), the Court
upheld a statutory fee against a takings (as well as a due process) challenge,
finding the fee reasonable in the circumstances of that case. Sperry,
however, involved no prior payment by the burdened party to, and no prior
fixed-price contracts or other transactions with, the government Sul, the
Court indicated that an “excessive” fee could be a taking. /d. ai 61.
22
jurisprudence and one that will create significant mischief,
thus warranting further review."
3. Because the EPACT assessment involves money (albeit
money paid directly to the government), the en banc majority
in Commonwealth Edison addressed the constitutional valid-
ity of its retroactive reach solely as a due process issue. In
fashioning its two-part test for judging the validity of
retroactive laws, see supra pp. 8-9, and in upholding the
EPACT assessment under that test, the en banc majority took
guidance only from retroactivity decisions of this Court not
involving prior contracts or commercial dealings with the
government, see App. 67a-69a; it did not cite or discuss,
much less apply, Winstar, Lynch, Perry and other similar
cases.'° Indeed, in rejecting the due process claim, the en
banc majority explicitly reaffirmed its view that rights and
expectations arising from the utilities’ fixed-price contracts
have no bearing on that claim, citing Yankee Atomic. App.
86a-87a. Yet again, therefore, the court improperly over-
looked the most important feature of this case—the EPACT
assessment’s substantial impact on the government’s con-
tracting partners. Compare Eastern Enterprises, 524 U.S. at
528 (plurality opinion) (“Our opinions in Turner Elkhorn,
'* On remand from this Court in Phillips, the Fifth Circuit held
confiscation of the interest to be a taking under a “per se” analysis,
Washington Legal Found. v. Texas Equal Access to Justice Found., 270
F.3d 180 (Sth Cir. 2001), whereas the Ninth Circuit rejected the taking
claim in another identical case under a “Penn Central’ analysis.
Washington Legal Found. v. Legal Found. of Washington, 271 F.3d 835
(9th Cir. 2001) (en banc). The availability of the latter legal approach
(involving “ad hoc” and “fact intensive” inquiries), together with the
limiting facts of this case, should dispel any concern that finding the
EPACT assessment to be a taking would render every tax a taking.
'S See e.g., Puerto Rico v. Russell & Co., 315 U.S. 610, 619 (1942)
(invalidating statutory assessment imposed on Commonwealth’s con-
tractors as “a clear violation of the obligation of the contracts”); Murray v.
Charleston, 96 U.S. 432 (1978) (invalidating municipal taxation of
interest paid on the city’s own debt).
23.
Connolly and Concrete Pipe make clear that Congress has
considerable leeway to fashion economic legislation, includ-
ing the power to affect contractual commitments between
private parties.”) (emphasis added) with Perry v. United
States, 294 U.S. 330, 350-51 (1935) (“There is a clear
distinction between the power of the Congress to control or
interdict the contracts of private parties . . . and the power of
the Congress to alter or repudiate the substance of its own
engagements ....”). See also Norman v. Baltimore & O.R.
Co., 294 U.S. 240 (1935) (upholding application to private
bonds of same law that Perry held to abrogate terms of
government bonds).
Moreover, the Court has allowed retroactive cost spreading
only to parties whose conduct makes them “responsible” for
the conditions that prompted enactment of the remedial
legislation. See, e.g., Usery v. Turner Elkhorn Mining Co., 428
U.S. 1, 24 (1976). The en banc majority in Common-
wealth Edison purported to accept that premise. It asserted that
EPACT “represents an assessment on particular . . . utilities
. . which Congress . . . concluded were themselves partially
responsible for the problem the statute seeks to remedy.” App.
64a-65a (emphasis added). But the only “evidence” of this
“responsibility” cited by the court was the “benefits” the
utilities obtained from their historical enriched uranium
_ purchases: “Congress[] determin[ed] to impose liability on
companies that received a benefit, the production of which
benefit contributed to a societal problem.” App. 66a.
Neither logic nor precedent correlates historical benefits
received with responsibility for a problem like the enrichment
plant contamination.'® Historical benefits were present in
'© The D.C. Circuit, in Student Loan Mktg. Ass'n v. Riley, 104 F.3d
397, 403-04 (D.C. Cir. 1997), recognized that a new government fee
cannot be justified by benefits received from historical transactions with
the government, but the court upheld the fee in that case because of its
“solely prospective application’—a circumstance that, unlike here,
24
many retroactivity cases, but have not been deemed impor-
tant. For example, the mining companies in both 7urner
Elkhorn and Eastern Enterprises “benefited” (in some sense)
from the work of the miners they historically employed, but a
later law imposing liability based on the employment
relationship (in some sense) was struck down in the former
case and upheld in the latter. The difference, as Judge
Friedman’s opinion below in this case explained, was that in
Turner Elkhorn the problem addressed by the retroactive
law-—Black Lung disease—“was caused by conditions that
existed when [the miners] were working for the company, for
which it was responsible.” App. 13a (emphasis added). In
Eastern Enterprises, the burdened party was not responsible
for the conditions requiring the remedial legislation, and the
same is true here, where the underlying conditions leading to
contamination of the government’s enrichment plants were at
all times within the government’s sole control. Moreover, the
government also had exclusive control here over both the
costs of cleaning up its enrichment plants and the contract
prices it historically charged the utilities.
For similar reasons, the “polluter pays” premise that under-
lies the “expectations” analysis of the en banc majority below
does not support a retroactive assessment on the utilities. In
this case, the utilities are not the polluters. The government,
not the utilities, is responsible for the contamination at the
enrichment plants that it alone owned and operated—con-
tamination that resulted at least in part from government
malfeasance. See, e.g., J.A. 58-89. Indeed, the government’s
allowed the burdened parties “to protect themselves against, or at least
mitigate, the otherwise resulting loss.” See also Branch v. United States,
69 F.3d 1571 (Fed. Cir. 1995) (Federal Circuit panei decision relying on
burdened party’s prospective ability to change position, i.e., exercise of
“some measure of control,” in upholding constitutionality of new statutory
liability).
25
plants were fully contaminated from their early military use;
later commercial use did not increase the overall cleanup cost.
See supra p. 4.
Even more significantly in this case, however, the Federal
Circuit majority explicitly set aside, and did not consider, the
most important and contemporaneous determinant of the
utilities’ expectations—their fixed-price contracts with the
government. As Judge Friedman explained: “[{W]hen the
Utilities entered into the purchase contracts at a fixed price,
they had no reason to believe, or even suspect, that years later
the government would seek to make them pay for a
substantial portion of its cleanup costs.” App. lla. In con-
trast to that common-sense commercial reality, the “expecta-
tions” attributed to the utilities by the en banc majority in
Commonwealth Edison (based not on the government’s direct
contract promises to the utilities, but supposedly on envir-
onmental liability laws enacted by the government in its role
of regulating the affairs of private parties) are entirely
hypothetical. See, e.g., App. 81a (“Edison could have reason-
ably expected that the enrichment of its uranium . . . could
result in the passage of legislation retroactively imposing
liability for a portion of the remediation costs ... .”)
(emphasis added).'’
'’ The en banc majority’s finding of proportionality, i.e., “the utilities’
share [of cleanup liability] was limited to 32%,” App. 49a, is also
misguided. Unlike the utilities’ contribution to the D&D Fund, which is
statutorily-fixed and mandatory, actual federai appropriations to the Fund
since 1992 have been nearly $700 million less than authorized by EPACT.
J.A. 68-69. At the same time, the government’s original estimate of $21
billion for all work to be paid for by the Fund has been reduced to $10.27
billion, and the estimate just for D&D of the government’s enrichment
plants has dropped from $9.22 billion to $3.28 billion as of 1998. J.A. 70-
76. Yet there has been no reduction in the assessment on utilities, which
still totals $2.25 billion, or more than two-thirds of the recent $3.28 billion
cleanup estimate.
26
By allowing the government to impose substantial
retroactive liability on the basis of historical benefits and
hypothesized expectations, without regard to the express
terms of the government’s own prior fixed-price contracts,
the Federal Circuit has given the government far too much
leeway to retroactively reorder its own financial affairs. The
court of appeals was wrong to automatically and uncritically
apply in this case constitutional standards developed in cases ~
where the government had retroactively regulated only rights
and interests among private parties. The court’s assertion
that “the government extensively regulated these reactors,”
App. 42a, is irrelevant in this case. The only thing EPACT
regulates is Maine Yankee’s bank account, and it does so in a
severely retroactive manner, contrary to the utilities’ actual
commercial expectations, and with the purpose and effect of
enriching the government.
* * *
The implications of the Federal Circuit’s conclusions are
clear and alarming, particularly given that court’s primary
role in adjudicating contract, taking and other commercially-
oriented monetary disputes with the federal government.
Although this Court ultimately denied certiorari in Yankee
Atomic, App. 122a, the Court held the petition in that case
until the last day of the Term, after deciding Eastern
Enterprises the previous day with no majority opinion.
Moreover, the Solicitor General argued in opposing certiorari
that Yankee Atomic had not raised the due process retro-
activity issues below. See Brief for the United States in
Opposition to Certiorari at 11, Yankee Atomic Elec. Co. v.
United States, No. 97-801. Now that the Federa’ Circuit en
banc has had the opportunity to reconsider Yankee Atomic in
light of Eastern Enterprises, and to squarely address Maine
Yankee’s separate constitutional claims, review by this Court
is not only ripe, but necessary, to clarify application of the
constitutional prohibition of retroactive legislation reaffirmed
27
by the result in Eastern Enterprises, but articulated there in
splintered rationales with which the lower courts have
struggled to discern a clear rule of law.'® At least in a case of
obvious government self-dealing, like the present case,
the Court should readily be able to provide not only
that needed clarification, but also reaffirmation of Winstar’s
core principle.
CONCLUSION
For all these reasons, the petition for a writ of certiorari '
should be granted. .
Respectfully submitted,
JERRY STOUCK *
REBECCA A. WOMELDORF
MICHAEL R. MINER
SPRIGGS & HOLLINGSWORTH
1350 I Street, N.W.
Ninth Floor
Washington, D.C. 20005
(202) 898-5800
Attorneys for Petitioner,
* Counsel of Record Maine Yankee Atomic Power
Company
February 6, 2002 '
'§ See Association of Bituminous Contractors, Inc. v. Apfel, 156 F.3d
1246, 1255 (D.C. Cir. 1998) (“the only binding aspect of Eastern
Enterprises is its specific result—holding the Coal Act unconstitutional as
applied to Eastern Enterprises”), Anker Energy Corp. v. Consolidation
Coal Co., 177 F.3d 161, 170 (3d Cir. 1999) (same); Franklin County
Convention Facilities Auth. v. American Premier Underwriters, Inc., 240
F.3d 534, 552 (6th Cir. 2001) (“Eastern Enterprises has no precedential
effect on this case because no single rationale was agreed upon by the
Court”); United States v. DICO, Inc., 266 F.3d 864, 880 (8th Cir. 2001)
(refusing to apply Eastern Enterprises because “no single Fifth Amendment
rationale commanded a majority of the Court's votes in Eastern”); see also
Unity Real Estate Co. v. Hudson, 178 F.3d 649, 658-59 (3d Cir.) (“The
splintered nature of the Court makes it difficult to distill a guiding principle
from Eastern.”’), cert. denied, 528 U.S. 963 (1999).
APPENDICES
la
APPENDIX A
UNITED STATES COURT OF APPEALS
FEDERAL CIRCUIT
Nos. 99-5156, 99-5158 and 99-5160.
MAINE YANKEE ATOMIC POWER COMPANY,
Plaintiff-Appellant,
Vv.
UNITED STATES,
Defendant-Appellee,
SACRAMENTO MUNICIPAL UTILITY DISTRICT,
Plaintiff-Appellant,
V.
UNITED STATES,
Defendant-Appellee,
OMAHA PUBLIC POWER DISTRICT,
Plaintiff-Appellant,
Vv.
UNITED STATES,
Defendant-Appellee.
Nov. 20, 2001
Before MAYER, Chief Judge, FRIEDMAN, Senior Circuit
Judge, and GAJARSA, Circuit Judge.
PER CURIAM.
In the Energy Policy Act of 1992, Congress imposed
liability upon nuclear electric power companies that had
purchased enriched uranium from the United States—the
2a
purchases having been made as far back as 1969—for a
substantial portion of the government’s costs of decon-
taminating the plants in which it had enriched the uranium.
The three appellants—electric utilities that had purchased
enriched uranium from the government for their nuclear
power plants and who were subject to, and had paid part of,
the statutory liability—sued the United States in the Court of
Federal Claims, challenging the assessments as a taking of
their property for which they sought just compensation and as
an unconstitutional retroactive statutory application that
denied them due process and equal protection. On the
government’s motion, the Court of Federal Claims dismissed
the complaints, holding that they did not set forth valid
constitutional claims.
In Commonwealth Edison Co. v. United States, No.
00-5069, also decided today, this court en banc has upheld the
constitutionality of that statutory assessment against similar
challenges, namely that it takes the property of another utility
and denies that utility due process. That decision binds this
panel, and requires us to reject the utilities’ taking and due
process arguments in the instant case.
Two of the utilities in this case, Maine Yankee Atomic
Power Company and Sacramento Municipal Utility District,
also argue that the statute denies them equal protection—a
contention not made in Commonwealth Edison. As the Court
of Federal Claims stated, the utilities argued that “the fact that
foreign utilities were exempted from the assessment imper-
missibly differentiates between similarly—situated entities—
i.e., all those that had consumed government-enriched ura-
nium. In addition, plaintiffs contend, the Act draws an
illegitimate distinction between purchasers who resold the
uranium, and those who kept it for their own purposes, as
well as between pre 1992 consumers (who are subject to
the fee) and post 1992 consumers (who are exempt).” Maine
Yankee Atomic Power Co. v. United States, 44 Fed.Cl. 372,
383 (1999). /
3a
The Court of Federal Claims correctly rejected those
contentions. We rely upon and accept that court’s reasoning:
With regard to Congress’s decision to exempt foreign
utilities from liability, we refer to the Supreme Court’s
observation in Barclay & Co. v. Edwards, 267 U.S. 442,
451, 45 S.Ct. 348, 69 L.Ed. 703 (1924) that “[c]on-
siderations of policy toward foreign countries may very
well justify an exemption of the foreign corporations
from taxes that might legitimately be imposed on them,
but which Congress does not think it wise to exact.” In
addition, we think it significant that, as defendant points
out in its motion to dismiss, the exclusion of foreign
utilities from the liability equation in no way increases
or otherwise affects plaintiffs’ portion of domestic
utility usage.
Similarly, legislatures need not burden the most respons-
ible party to survive rational basis review. Association
of Bituminous Contractors, Inc. v. Apfel, 156 F.3d 1246,
1255-56 (D.C.Cir.1998). While the original purchasers
of uranium (those who resold it and were therefore
exempt from assessment) may seem, to plaintiffs,
equally to have benefited from the enrichment services,
we cannot conclude that Congress’s decision to target
end-users was without rational basis. And although
plaintiffs may have preferred a system under which
USEC’s post 1992 customers likewise picked up the
tab, Congress’s assignment of liability for a past prob-
lem to past consumers does not stretch the limits of
the reasonable.
Id.
The judgments of the Court of Federal Claims dismissing
the complaints are
AFFIRMED.
4a
*x* *£ * * *& *
Concurring opinion of FRIEDMAN, Senior Circuit Judge,
in which MAYER, Chief Judge, joins.
Since I agree that we are bound by Commonwealth Edison
and also agree with the court’s rejection of the equal
protection contention, I join in the opinion and judgment of
the court. If I were not bound by Commonwealth Edison,
however, I would hold that the retroactive assessment denies
the appellants due process. My reasons for that conclusion
- follow.
I
A. During World War II, the United States began enriching
uranium, first for military purposes and, starting in the mid
1960s, as nuclear fuel for commercial generation of
electricity, which it sold to domestic and foreign utilities.
Maine Yankee Atomic Power Co. v. United States, 44 Fed.Cl.
372, 374 (1999). The government sold the enriched uranium
under fixed price contracts, which did not authorize the
government to collect any additional amounts. /d. The
decontamination and decommissioning of these polluted
facilities is expected to take 40 years and to cost up to
$20 billion. Yankee Atomic Elec. Co. v. United States, 112
F.3d 1569, 1572 (Fed.Cir.1997).
Congress dealt with this problem in the Energy Policy Act
of 1992 (“the Act” or “the Energy Act”). See generally id.
That was comprehensive legislation designed to implement a
“national energy policy,” a reaction, at least in part, to the
adverse economic effects of an oil embargo associated with
the military conflict in the Persian Gulf. H.R.Rep. No.
102-474(I), at 132 (1992), reprinted in 1992 U.S.C.C.A.N.
1953, 1955.
In this legislation, Congress sought to “reform the current
uranium enrichment program of the [government] so that
it will be operated in a more business-like fashion.”
5a
H.R.Rep. No. 102-474(1), at 142 (1992), reprinted in 1992
U.S.C.C.A.N. 1953, 1965. The Act established the United
States Enrichment Corporation (“Enrichment Corporation”)
as a government corporation to assume the operation of the
government’s uranium enrichment services, 42 U.S.C.
§ 2297, and “which eventually could be sold to the pri-
vate sector.” H.R.Rep. No. 102-474(I), at 142-43 (1992),
reprinted in 1992 U.S.C.C.A.N. 1953, 1965-66. The Act
required that the Enrichment Corporation “[w]ithin 2 years
prepare a strategic plan for transferring ownership of the
Corporation to private investors.” 42 U.S.C. § 2297d(a). The
“key purposes of the Corporation includ[ed] providing
enrichment services in a business-like fashion, maximizing
the economic return to the [government].” H.R.Rep. No.
102-474(1), at 198 (1992), reprinted in 1992 U.S.C.C.A.N.
1953, 2021.
The Act provided that the Enrichment Corporation would
not be liable for the costs of cleaning up and closing
the government’s uranium enrichment facilities. 42 U.S.C.
§ 2297c-2(d). Instead, the Act established the Uranium
Enrichment Decontamination and Decommissioning Fund
(“Fund”) for that purpose. § 2297g. The Fund is financed
through both Congressional appropriations and an assessment
on those domestic utilities that purchased and used
government enriched uranium. § 2297g-1(b).
The Fund is instructed to obtain up to $480 million per year
(to be adjusted annually for inflation), with at most $150
million from a special assessment on the domestic utilities.
§ 2297g-1(a), (c). That assessment is based on each utility’s
share of the government’s enriched uranium sales (whether
purchased directly from the government or from another
source), which were made prior to October 24, 1992 and that
it did not resell. § 2297g l(c). The special assessment
terminates after 15 years or after $2.25 billion has been
collected. § 2297g-1(e).
6a
The Act also provided that the special assessments “shall
be deemed a necessary and reasonable current cost of fuel and
shall be fully recoverable in rates in all jurisdictions in the
same manner as the utility’s other fuel cost.” 42 U.S.C.
§ 2297g-1(g).
B. The three appellants filed separate complaints in the
Court of Federal Claims, as did a number of other sim-
ilarly-situated electric utilities. They contend that the special
assessment constituted a breach of the fixed-price contract
under which they had purchased enriched uranium from the
government. The complaints included the following factual
allegations, which we accept for purposes of the govern-
ment’s motions to dismiss. Highland Falls-Fort Montgomery
Cent. Sch. Dist. v. United States, 48 F.3d 1166, 1169-70
(Fed.Cir.1995) (“[W]e assume that all well-pled factual
allegations are true and indulge in all reasonable inferences in
favor of the movant.”).
The appellants—Maine Yankee Atomic Power Company
(“Maine Yankee”), Sacramento Municipal Utility District
(“Sacramento District’), and Omaha Public Power District
(“Omaha District”) (collectively “the Utilities”)—all operated
nuclear power plants and purchased government-produced
enriched uranium before 1992. Thus, as domestic utilities
that purchased and used government provided enriched
uranium, each is liable for a portion of the Act’s special
assessment, and each has paid millions of dollars.
The Utilities also allege that the government completely
contaminated its enrichment facilities (buildings, equipment,
property, and surrounding property) prior to 1969, at a time
when they were used almost exclusively for defense purposes.
Little, if any, additional contamination occurred after 1969,
when these facilities were used to enrich uranium for sale to
commercial utilities.
Ta
Maine Yankee is a domestic utility that operated a single
nuclear power plant, which was permanently closed in 1996.
It purchased enriched uranium from the government from
1970 to 1986 under two contracts, one executed on October 2,
1970 and the other on November 4, 1982. On its purchases of
government enriched uranium, Maine Yankee is subject to a
$25 million special assessment, of which it has paid more
than $9.8 million.
Sacramento District is a municipal utility district in
California that generates electricity and operated a nuclear
generating facility, which it closed in 1989. During the
operation of that facility, the Sacramento District purchased
enriched uranium from the government, beginning in 1969
and ending in 1981. In 1990, the Sacramento District
terminated its contract for purchasing enriched uranium.
Because of those purchases, Sacramento District has paid
$5.8 million in special assessments and expects its total
liability to reach $8 million.
Omaha District is a domestic utility that generates and
supplies electricity in Nebraska. It purchased enriched ura-
nium from the government between 1969 and 1992 under two
contracts. Omaha District has paid special assessments of
more than $7.4 million, and estimates its total liability to be
nearly $20 million.
One of the other utilities that filed such a suit in the Court
of Federal Claims was Yankee Atomic Electric Company.
That court, granted Yankee Atomic summary judgment,
holding that “the assessment imposed upon Yankee Atomic to
fund clean-up costs constitutes an unlawful exaction because
it violates the Government's earlier contractual agreements to
supply enriched uranium at fixed prices.” Yankee Atomic
Elec. Co. v. United States, 112 F.3d 1569, 1571 (Fed.
Cir.1997). On the government’s appeal, we reversed. Jd. We
held that the special assessment did not constitute a
retroactive increase of the contract price, id. at 1575, but
8a
instead “constitutes a general exercise of Congress’s taxing
power for the purpose of addressing a societal problem rather
than an act that retroactively increases the price charged
to contracting parties for uranium enrichment services,”
id. at 1577.
After our decision in Yankee Atomic, the Utilities amended
their complaints to assert claims not addressed in Yankee
Atomic; namely, that the assessment was a taking of their
property and denied them due process in violation of the Fifth
Amendment. Maine Yankee and the Sacramento District also
asserted that the assessment denied them equal protection.
On the government’s motion, the Court of Federal Claims
granted summary judgment dismissing the complaints for
failure to state a claim upon which relief could be granted.
Maine Yankee Atomic Power Co. v. United States, 44 Fed. Cl.
372 (1999); Omaha Pub. Power Dist. v. United States, 44
Fed. Cl. 383 (1999); Sacramento Mun. Util. Dist., 44 Fed.Cl.
395 (1999).
In an opinion dealing with the three cases (but issued
separately for each case), the court first held that Yankee
Atomic was not stare decisis on the constitutional issues the
Utilities raised. Maine Yankee, 44 Fed.Cl. at 376-77. In
holding that the complaints did not state a valid takings claim,
the court concluded that none of the factors in “a traditional
takings analysis . . .—the economic impact of the legislation,
the reasonableness of plaintiffs’ investment-backed expec-
tations and the character of the government action—support
the finding of a taking of property.” /d. at 381. The court
rejected the Utilities’ due process claim based on the
retroactivity of the assessment. /d. at 379-80. The court
concluded its discussion of these issues with the following
statement:
Whether we analyze the assessment under the Due
Process Clause, under the Takings Clause, or under some
amalgam of the two, we are, in the end, faced with a
9a
single, basic question: Is it inherently unfair, unjust, or
irrational for Congress, when faced with costs resulting
from the enrichment of uranium, to ask those parties
who received the uranium to contribute to the solution?
The answer, quite clearly, is no. Plaintiffs’ assessments
are directly proportional to their usage of uranium
enrichment services the very services which created the
contamination. Congress itself took responsibility for
more than two thirds of the clean-up costs and assigned
the rest, as a general tax, to the rate-payers in districts
which had previously benefited from nuclear power.
Such a scheme can hardly be construed as beyond the
reach of fairness or rationality.
Id. at 382-83.
Finally, the court rejected the claim that the special
assessment denied Maine Yankee and the Omaha District
equal protection because it did not cover (1) foreign utilities
or (2) utilities that purchased but resold government-enriched
uranium. The court denied this claim since “legislatures need
not burden the most responsible party to survive rational basis
review.” /d. at 383 (citing Ass'n of Bituminous Contractors,
Inc. v. Apfel, 156 F.3d 1246, 1255-56 (D.C.Cir.1998)).
A. The Supreme Court has noted that “the presumption
against retroactive legislation is deeply rooted in our juris-
prudence, and embodies a legal doctrine centuries older than
our Republic. Elementary considerations of fairness dictate
that individuals should have an opportunity to know what the
law is and to conform their conduct accordingly; settled
expectations should not be lightly disrupted.” Landgraf v.
USI Film Prods., 511 U.S. 244, 265, 114 S.Ct. 1483, 128
L.Ed.2d 229 (1994) (footnotes omitted). When the retro-
activity is severe, the legislation may violate the Due Process
Clause. See United States v. Carlton, 512 U.S. 26, 32, 114
10a
S.Ct. 2018, 129 L.Ed.2d 22 (1994) (concluding that the
application of a 1987 federal tax statute to a 1986 transaction
did not violate due process in part because “Congress acted
promptly and established only a modest period of retro-
activity.”); see also id. at 38, 114 S.Ct. 2018 (O’Connor, J.,
concurring) (“A period of retroactivity longer than the year
preceding the legislative session in which the law was enacted
would raise, in my view, serious constitutional questions.”).
In exceptional circumstances not involving tax law, however,
longer retroactivity has been held not to deny due process.
See Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 96 S.Ct.
2882, 49 L.Ed.2d 752 (1976), discussed in Part III B below.
Another pertinent principle is that economic legislation has
a presumption of constitutionality, which may be overcome
by demonstrating that the legislation is arbitrary or irrational.
Turner Elkhorn, 428 U.S. at 15, 96 S.Ct. 2882 (noting that
“legislative Acts adjusting the burdens and benefits of
economic life come to the Court with a presumption of
constitutionality, and that the burden is on one complaining of
{a due process violation to establish that the legislature has
‘acted in an arbitrary and irrational way”) (citing, for example,
Ferguson v. Skrupa, 372 U.S. 726, 83 S.Ct. 1028, 10 L.Ed.2d
93 (1963); Williamson v. Lee Optical Inc., 348 U.S. 483,
487-88, 75 S.Ct. 461, 99 L.Ed. 563 (1955)). Thus, to prevail
here, the Utilities must demonstrate that the Act is arbitrary
and irrational as applied to them. They have carried that
burden.
The special assessment was wholly retroactive: it covered
only purchases of enriched uranium before the effective date
of the Act. The retroactivity was severe. It reached back to
the Utilities’ enriched uranium purchases that occurred up to
twenty-two years (or twenty-three years, in the case of Omaha
District) before the Act was passed, six years after Maine
Yankee had stopped purchasing government enriched ura-
nium, and three years after Sacramento District closed its
lla
plant. It also was substantial, subjecting the Utilities to
additional charges which they assert would total $25 million,
$8 million and almost $20 million for the three companies.
The Utilities did not cause or contribute to the contam-
ination of the government’s plants, which the special assess-
ment was designed to cure, and did not benefit from it. The
Utilities allege that the contamination occurred prior to the
beginning of their purchases, when the plants were producing
enriched uranium “almost exclusively” for the military, and
that “[l]ittle, if any additional contamination” occurred there-
after. Moreover, when the Utilities entered into the purchase
contracts at a fixed price, they had no reason to believe, or
even suspect, that years later the government would seek to
make them pay for a substantial portion of its cleanup costs.
They may well have understood and expected that the
government would incur substantial expenses in making that
cleanup, but they reasonably would have believed that the
charges the government made for the enriched uranium
included the cleanup cost. They certainly had no basis to
expect that they would be subject to the additional large
amounts of the assessments.
To be sure, the Utilities benefited from their participation
in the government’s uranium enrichment prograrh, but the
plant contamination and the cost of cleaning it up arose from
an earlier stage of that program (when the Utilities were not
participants). For the reasons just given, however, the
Utilities’ participation is not a sufficient basis under the Due
Process Clause to subject the Utilities to such a substantial
portion of the costs of cleaning up the contamination, which
they did not cause and from which they did not benefit.
B. The government contends that Usery v. Turner Elkhorn
Mining Co., 428 U.S. 1, 24, 96 S.Ct. 2882, 49 L.Ed.2d 752
(1976), supports the retroactive assessment against the
Utilities. Turner Elkhorn involved a provision of the Federal
Coal Mine Health and Safety Act of 1969, 83 Stat. 792, as
12a
amended by the Black Lung Benefits Act of 1972, 86 Stat.
150, 30 U.S.C. § 901 et seq., that required mining companies
to pay death or total disability benefits to employee miners
suffering from pneumoconiosis (black lung disease), as
applied to miners who had stopped so working before the
effective date of the Act. The disease, whose symptoms may
“become apparent only after a miner has left the coal mines,”
id. at 8, 96 S.Ct. 2882, “is caused by long-term inhalation of
coal dust,” id. at 6, 96 S.Ct. 2882. The mining companies
challenged this retroactive application of the Act as violating
due process.
The Supreme Court upheld the Act against this challenge.
The Court recognized that the legislation imposed new
liability for disabilities developed prior to enactment, but
concluded that such retroactivity was “justified as a rational
measure to spread the costs of the employees’ disabilities to
those who have profited from the fruits of their labor.” Jd. at
18, 96 S.Ct. 2882. It reflected the “interlocking economic
rights and duties of employers and employees,” and “ad-
just[ed] the burdens and benefits of economic life.” Jd. at 15,
96 S.Ct. 2882. Thus, Turner Elkhorn held that it was noi a
due process violation for legislation “to satisfy a specific need
created by the dangerous conditions under which the former
employee labored—to allocate to the mine operator an actual,
measurable cost of his business.” /d. at 19, 96 S.Ct. 2882.
The Court, however, in sustaining the presumptions of the
Coal Act relating to total disability, which were also at issue
in the case, stated: “To the extent that the presumption of
death due to pneumoconiosis is viewed as requiring com-
pensation for damages resulting from death unrelated to the
operator’s conduct, its application to employees who
terminated their employment before the Act was passed
would present difficulties not encountered in our prior
discussion of retroactivity. The justification we found for the
_ retrospective application of the Act is that it serves to spread
13a
costs in a rational manner—by allocating to the operator an
actual cost of his business, the avoidance of which might be
thought to have enlarged the operator’s profits. The damage
resulting from a miner’s death that is due to causes other than
the operator’s conduct can hardly be termed a ‘cost’ of the
operator’s business.” /d. at 24, 96 S.Ct. 2882; see also Con-
crete Pipe and Prods. v. Constr. Laborers Pension Trust, 508
U.S. 602, 641, 113 S.Ct. 2264, 124 L.Ed.2d 539 (1993);
United States v. Carlton, 512 U.S. 26, 31, 114 S.Ct. 2018,
129 L.Ed.2d 22 (1994). Thus, in 7Jurner Elkhorn, the
Supreme Court recognized culpability as an important factor
supporting the imposition of retroactive liability.
There is a critical difference between Turner Elkhorn and
the present case that precludes the application of Turner
Elkhorn here. In Turner Elkhorn the miners’ illness was
caused by conditions that existed when they were working for
the company, for which it was responsible and which
“profited from the fruits of their labor.” The company,
therefore, could fairly be charged with responsibility for its
former employees’ condition.
In the preser* ese, however, the contamination occurred
before the government sold enriched uranium to the Utilities,
which neither were responsible for nor benefited from the
contamination. In these circumstances, as shown, it would be
unfair and unreasonable to subject the Utilities to a substantial
additional charge to cure the contamination they neither
caused nor benefited from.
In many (if not most) of the cases in which the Supreme
Court rejected Due Process challenges to retroactive legis-
lation, the statute dealt with the relationships, financial and
otherwise, among private parties; the government’s role was
only the regulation of those relationships. In the present case,
however, the statute deals with the relationship between the
government and private parties; it seeks to transfer to those
parties a substantial portion of the government’s costs of
l4a
rectifying the contamination of its plants used to produce the
product it sold to those parties. It is by no means clear that
those Supreme Court cases may be automatically and
uncritically applied to the significantly different situation
here involved.
C. The government contends that the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980 (“Environmental Response Act’), 42 U.S.C. § 9601 et
seq. (1994), supports the validity under the Due Process
Clause of the retroactive assessment of clean-up costs on the
Utilities. Among other things, that Act provides for the
clean-up of inactive hazardous waste disposal sites and
established a Hazardous Substances Response Trust Fund
(“Superfund”) to pay for it. The Superfund was funded
initially, and in large part, by special taxes on certain
petroleum products and chemicals and was to be replenished
by assessments on persons responsible for the waste.
Hazardous Substance Response Revenue Act of 1980, Title
Il, Subtitle A §§ 4611, 4661, Title II, Subtitle B, § 221, 26
U.S.C. §§ 4611, 4661, 42 U.S.C. § 9631. The government
used the Superfund to fund the clean-up and replenished the
cost by charging the persons responsible for the hazardous
waste. 42 U.S.C. §§ 9604(a)(1), 9607. Such responsible
persons include those involved in the cleanup work, including
“the owner and operator of . . . a facility,” anyone who at the
time of disposal “owned or operated any facility at which
such hazardous substances were disposed of,” anyone who
arranged for or participated in the “transport for disposal or
treatment, of hazardous substances” and anyone who
“accepted any hazardous substances for transport to disposal
treatment facilities, incineration vessels or sites selected by
such person, from which there is a release, or a threatened
release which causes the incurrence of response costs, of a
hazardous substance.” 42 U.S.C. § 96. 7(a).
15a
The Environmental Response Act thus retroactively
imposes liability on numerous persons for cleanup of
pre-enactment contamination.
The government cites two Court of Appeals cases that
upheld the retroactive application of the Environmental
Response Act against Due Process challenges to its
constitutionality, as support for the constitutionality of the
retroactive assessment against the Utilities. United States v.
Northeastern Pharm. & Chem. Co., 810 F.2d 726 (8th
Cir.1986), held liable for cleanup costs individuals who
arranged for the transportation and dumping of hazardous
waste before the effective date of the Act. In United States v.
Monsanto Co., 858 F.2d 160, 174 (4th Cir.1988), the court
ruled that retroactive application of the Environmental
Response Act did not violate due process as applied to (1)
landowners who leased their property to a company that
stored hazardous waste on the land and (2) the companies that
generated the waste but which contracted with another
waste-handling business, which provided transportation,
recycling and disposal of chemical waste. Noting that the
companies that generated the waste profited from inexpensive
waste disposal methods that may have been technically legal
prior to the [Environmental Response Act]’s enactment, it
was certainly foreseeable at the time that improper disposal
could cause enormous damage to the environment. [The
Environmental Response Act] operates remedially to spread
the costs of responding to improper waste disposal among all
parties that played-a role in creating the hazardous condi-
tions. .. . [T]he retroactive application of [the Environmental
Response Act] does not violate due process. /d. at 174
(citations omitted).
In the present case, however, the Utilities did not
participate in any way, directly or indirectly, or play any role
in, the creation of the hazardous conditions at the gov-
ernment’s uranium facilities. The Utilities merely purchased
enriched uranium after the contamination had occurred, long
16a
before the passage of the Energy Act. The Utilities’ tangential
connection with the contamination of the government’s
uranium enrichment facilities is quite different from the
relationships to the hazardous waste disposal of the
persons held constitutionally liable under the Environmental
Response Act.
D. The government also contends that because 42 U.S.C.
§ 2297g-1(g) provides that the assessments “shall be deemed
a necessary and reasonable current cost of fuel and shall be
fully recoverable in rates in all jurisdictions in the same
manner as the utility’s other fuel cost,” the Utilities will be
able to pass the assessments on to their customers, and that
the assessments, therefore, will not have any substantial
economic impact on them.
It is impossible to predict, however, to what extent (if any)
state and local regulatory agencies and courts would per-
mit the Utilities to treat the assessments as a “current cost
of fuel” in determining their rates. The question whether
§ 2297g-1(g) preempts state regulatory authority in this area
appears difficult. The power of Congress to require that
particular items be included in the Utilities’ costs for rate
making purposes is uncertain. Regulation of retail electric
power rates is a traditiona! function of state government. The
likelihood of the state action that the government envisions is
far too speculative and conjectural to constitute a valid basis
for upholding the assessments.
In any event, the question whether, and to what extent, the
state regulatory agencies and courts will recognize the
assessment as part of the Utilities’ costs for rate making
purposes appears more appropriately an issue for the damages
phase of these cases than for the liability phase.
E. In sum, I conclude that the Utilities’ complaints have
stated a valid claim under the Due Process Clause, and that the
Court of Federal Claims erred in dismissing the complaints for
failure to state a claim upon which relief could be granted.
17a
APPENDIX B
UNITED STATES COURT OF FEDERAL CLAIMS
No. 97-28 C
MAINE YANKEE ATOMIC POWER COMPANY,
Plaintiff,
V.
THE UNITED STATES,
Defendant.
July 26, 1999
OPINION
WIESE, Judge.
In the Energy Policy Act of 1992, Pub.L. No. 102-486, 106
Stat. 2776 (codified as amended in various sections of 42
U.S.C.), Congress directed the collection of a special fee from
all domestic electric utility companies that previously had
purchased enriched uranium from the Government for the
generation of electrical energy. The fee, which is to remain in
effect for fifteen years following the Act’s enactment or until
$2.5 billion has been collected, is deposited into a special
fund, the Uranium Decontamination and Decommissioning
Fund (the “D & D Fund”), to be used to meet the clean-up
costs of the Government facilities where the uranium
enrichment activities were carried out.
The lawfulness of this fee was the subject of a legal
challenge in Yankee Atomic Elec. Co. v. United States,
112 F.3d 1569 (Fed.Cir.1997), rev’g 33 Fed.Cl. 580 (1995),
cert. denied 524 U.S. 951, 118 S.Ct. 2365, 141 L.Ed.2d 735
(1998). In that case, a similarly-situated plaintiff argued
that the Government’s imposition of the fee violated the
18a
fixed-price character of the contracts under which the
enriched uranium had been sold to the utility companies.
While the trial court initially accepted the plaintiffs
argument, the Federal Circuit reversed, holding that the fee
constituted “a general exercise of Congress’s taxing power
for the purpose of addressing a societal problem rather than
an act that retroactively increases the price charged
to contracting parties for uranium enrichment services.” /d.
at 1577.
The same fee is once again brought under attack in this
case. The arguments we encounter now are that the impo-
sition of the fee amounts to an unconstitutional taking of
property, a violation of substantive due process and a denial
of equal protection.
The Government has moved to dismiss for failure to state a
claim on which relief can be granted. Plaintiffs oppose.' The
parties have filed extensive briefs and oral argument was
heard on May 18, 1999. We now decide in defendant’s favor.
FACTS
Beginning in the 1940s, the Government, acting originally
through the Atomic Energy Commission and later through the
Department of Energy (DOE), owned and operated a number
of uranium enrichment facilities as part of the national
defense program. For almost 25 years, most of the uranium
produced at these plants—approximately 96%—was used
solely for national defense purposes. In the mid-1960s,
however, the Government decided to make its enrichment
services available to commercial customers, a decision that
' Although their cases have not been formally consolidated, the actions
filed by Maine Yankee Atomic Power Company, docket number 97-28C,
Sacramento Municipal Utility District, docket number 95-823C, and
Omaha Public Power District, docket number 96-616C, present nearly
identical issues that were briefed and argued together. Accordingly, this
opinion speaks to all three claims.
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was implemented by entering into a series of contracts with
various public utilities permitting their purchase of enriched
uranium for the generation of electricity. In the main, these
contracts provided for the sale of uranium at a fixed price,
determined according to prevailing rates established by the
Commission at the time the service was provided.
In the early 1990s, following nearly fifty years of uranium
enrichment activity, Congress decided to privatize its enrich-
ment facilities by creating a new, for-profit, governmental
corporation called the United States Enrichment Corporation
(“USEC”). Under the Energy Policy Act of 1992, USEC was
to assume operational control of the enrichment facilities,
with the goal of ultimately selling the facilities to private
investors. DOE, concerned that the cost of decontaminating
the plants would stand as an obstacle to attracting private
investment, lobbied Congress io exempt USEC from all
clean-up-cost liability. Congress agreed, specifying that all
pre-enactment liabilities—including the cost of decontami-
nating and decommissioning the plants—would remain the
responsibility of DOE.
As part of the Energy Policy Act, then, Congress estab-
lished the Uranium Enrichment Decontamination and De-
commissioning Fund to pay for the clean-up of the
government-owned enrichment facilities. The Act specified
that a portion of the clean-up costs—specifically $330 million
annually, or 68% of the required amount—would be
contributed by Congress from appropriated funds. The
remaining third, a figure not to exceed $2.5 billion, would be
collected in up to $150 million annual installments over a
fifteen-year period from those domestic utility companies that
had earlier used government-enriched uranium in_ the
generation of electricity. 42 U.S.C.A. § 2297g-1 (West 1994
& Supp.1999). The utilities’ portion was subject to annual
and aggregate caps, with Congress, by statute, obligated to
make up the difference.
20a
Three aspects of the D & D Fund are, from plaintiffs’
perspective, worthy of note. First, the fee imposed by the
Energy Policy Act applies only to the end-users of the
uranium. Thus, a utility that had contracted with the Gov-
ernment for the purchase of uranium but then had resold the
uranium to another utility would not be subject to the fee. As
a result, the list of utilities responsible for the fee is strikingly
similar to, but not entirely coincident with, the list of utilities
that had contracted with the Government. Second, the special
assessments are imposed only on those utilities that purchased
government-enriched uranium prior to the Energy Policy
Act’s 1992 enactment, and thus do not apply to domestic
customers who purchased USEC services any time after 1992.
Finally, the Act specifies that foreign utilities, despite having
represented 25% of DOE’s pre-1992 commercial customer
base, are not subject to the fee.
Under the Act, the fee itself is based on the percentage of
uranium enrichment work units each utility had previously
purchased from the Department of Energy, relative to the
total number of work units produced by DOE over the life of
the enrichment facilities. | That contribution scheme—
apportion-ing liability for the fee on the basis of pro-rata
consumption of uranium—was first challenged in Yankee
Atomic, 112 F.3d 1569 as a violation of the utilities’
fixed-price contracts for the purchase of uranium.
The Federal Circuit, as we earlier noted, rejected Yankee
Atomic’s claim that the Energy Policy Act impermissibly
raised the price of uranium in breach of the parties’ fixed-
price contracts with the Government. Characterizing the fee
as a “general exercise of Congress’s taxing power,” the
Federal Circuit concluded that the assessment was “not a
deliberate retroactive increase in the price of those contracts,”
but was instead “the Government’s way of spreading the costs
of the later discovered decontamination and decommissioning
problem on all utilities that benefited from the Government’s
service.” Jd. at 1577, 1580.
—_
2la
The plaintiffs now before this court—Maine Yankee
Atomic Power Company, Sacramento Municipal Utility Dis-
trict and Omaha Public Power District—each signed enrich-
ment contracts with the Government which, in their original
form, were largely identical to the contracts between Yankee
Atomic and the Government.” As a result of the uranium
purchases made under those contracts, plaintiffs, like Yankee
Atomic, have been subject to the assessment outlined in the
Energy Policy Act. As of the date of suit in this court, Omaha
Public Power District had paid approx-imately $7.4 million of
the $19 million it is projected to owe under the Energy
Policy Act for purchases of uranium made from 1969 until
1992; Maine Yankee Atomic Power Company had paid
$9,815,718.57 of its estimated $25 million liability on
uranium purchases from 1970 until 1986; and Sacramento
Municipal Utility District had paid more than $5.8 million of
its projected $8 million liability for uranium purchased from
1969 until 1981. Of the three utilities, only one—Maine
Yankee—has abandoned the electricity gener-ating business
entirely, closing down its sole electricity generating facility
permanently in 1996.
DISCUSSION
In the first count of their amended complaints, > plaintiffs
assert that the imposition of a monetary liability which is both
? Omaha Public Power maintains that the Utility Services Contract and
the Supplemental Agreement of Settlement it signed in 1984 (terminating
all existing uranium contracts and providing that “all obligations arising
under [its then existing] contract shall be deemed to be concluded”)
differentiates its contract from the contracts at issue in Yankee Atomic.
We address this contention later in this opinion.
> The claims now before us were pending, but stayed, while the parallel
claim in Yankee Atomic was proceeding before the trial and appellate
courts. In light of the decision in Yankee Atomic, plaintiffs filed amended
complaints in which they essentially have distanced themselves from their
earlier contract-based theories. Plaintiffs attempt now to move forward
under the theories set forth in Eastern Enterprises v. Apfel, 524 U.S. 498,
22a
retroactive and unconnected to their past conduct deprives
them of property rights in violation of the Takings Clause
of the Fifth Amendment. The second count sets forth a
due process claim based on similar contentions—that the
assessment is unconstitutional to the extent that it imposes on
plaintiffs a severe, disproportionate and extremely retroactive
liability. Plaintiffs’ third and final count alleges a taking
and/or breach of plaintiffs’ contract- based rights.
Defendant, in turn, has moved to dismiss plaintiffs’ claims.
It contends first that plaintiffs’ takings and due process
arguments were considered and rejected by the Federal
Circuit in Yankee Atomic and, under the principle of stare
decisis, should not be revisited. Second, defendant argues
that the holding in Eastern Enterprises v. Apfel, 524 U.S.
498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998), striking down
as unconstitutional the imposition of a severely retroactive
liability on a party that had no reason to anticipate the liability
and whose experience was not commensurate with the burden
later imposed, is not dispositive of the issues before us.
Finally, defendant maintains that even under the traditional
tenets of due process and takings law, plaintiffs’ claims must
fail. We address those arguments in turn.
l. Stare Decisis
In urging us to apply the doctrine of stare decisis,
defendant argues that the Yankee Atomic ruling, upholding
the assessment on the grounds that it constitutes a general tax
falling proportionally on those utilities that had benefited
from the Government’s services, disposes of the issues now
before us. While we agree that the Yankee Atomic decision
goes a long way in addressing plaintiffs’ present arguments,
we are unconvinced, however, that the decision forecloses
118 S.Ct. 2131, 141 L.Ed.2d 451 (1998), specifically that a retroactive
imposition of liability may, in certain circumstances, constitute a vio-
lation either of the Takings Clause or Due Process Clause of the
Fifth Amendment.
23a
plaintiffs’ takings and due process claims. Only to the extent
that plaintiffs now attempt to maintain contract-based claims
—an issue argued before, and rejected by, the Federal Circuit
in Yankee Atomic—do we find the doctrine of stare decisis to
be applicable.
In reaching this conclusion, we begin with a fundamental
principle of stare decisis: in order for an issue of law to be
_ seen as settled, and hence binding, it must have been both
heard and decided by an earlier court. 18 James Wm. Moore
et al., Moore’s Federal Practice § 134.04 [2] (3d ed.1998).
Stare decisis applies “only to legal issues that were actually
decided in a prior action” and not to those which were
neither “litigated [nJor resolved.” Beacon Oil Co. v. O'Leary,
71 F.3d 391, 395 (Fed.Cir.1995). In addition, a case will not
be treated as binding precedent on a point of law where the
holding is only implicit or assumed in the decision but is not
announced. United States v. L.A. Tucker Truck Lines, 344
U.S. 33, 38, 73 S.Ct. 67, 97 L.Ed. 54 (1952).
Two obstacles prevent us from invoking the doctrine of
stare decisis. As an initial matter, we do not believe the
Yankee Atomic decision explicitly rules on, nor even squarely
addresses, plaintiffs’ takings or due process arguments. As
we discuss below, the takings and due process claims put
forth by Yankee Atomic differ in crucial respects from the
takings and due process claims now before this court. In
addition, the Supreme Court’s opinion in Eastern Enterprises
—issued after the Yankee Atomic decision—adds a new
perspective to the issues at hand To the extent that the
decision must guide our own thinking, we are not prepared to
conclude that the decision would in no way have shaped the
Federal Circuit’s thinking in Yankee Atomic as well. And it is
this subtle shift in legal thought we are now bound to explore.
Considering first the scope of the Yankee Atomic decision,
we note that while the Government is correct in asserting that
the Yankee Atomic court considered both due process and
24a
takings challenges to the Energy Policy Act assessment, it
considered only a single aspect of those challenges: whether
the contract rights, establishing a fixed price for govern-
ment-provided enrichment services, had been taken or
otherwise violated. The court was not asked to address, nor
did it consider, whether the assessment, properly treated as a
tax, met the standards of takings and due process law~as
applied simply to governmental demands for money.
Indeed, the takings claim that was presented and briefed in
Yankee Atomic was the taking of a contract right. The trial
court explicitly characterized the assessment as a revision in
contract price, and held the assessment unconstitutional on
the grounds that it deprived Yankee Atomic of the economic
benefit provided by the contract. To the extent that a taking
or, in the words of the trial court, an illegal exaction, had
occurred, the illegality was specifically predicated on a
violation of contract-based rights.
The contract-based approach to the problem continued at
the appellate level: “The decision of the Court of Federal
Claims is driven by its characterization of the special assess-
ment as a retroactive price increase rather than an exercise of
the sovereign’s taxing power, and the parties’ dispute over
this characterization frames the dispositive issue of this
appeal.” Yankee Atomic, 112 F.3d at 1573. However, in
focusing on what the assessment was not—an impermissible
infringement on contract rights—the Federal Circuit was
not required to explore the full dimensions of what it
concluded the assessment in fact was—the imposition of a
tax. Accordingly, the court made no explicit findings with
regard to whether money, rather than contract rights, had
indeed been taken.
Similarly, while the alleged retroactivity of the fee was a
feature of the Yankee Atomic case, it was not, either in the
arguments before the court or in the court’s decision, treated
as a true factor in assessing the fee’s constitutionality. To the
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extent that due process or takings issues were addressed, the
focus remained on the Government’s action as it affected
contract rights, not as a limitation on the Government’s
power to tax. “Regardless of whether the situation is
characterized as a breach of contract, an unlawful taking, or
an unlawful exaction, the arguments stem from Yankee
Atomic’s prior contracts with the Government.” /d. at 1574
n. 2. Yankee Atomic thus offers us no guidance as to what
restrictions on the Government’s taxing power takings law or
due process may in fact impose.
In assessing the applicability of stare decisis, then, we must
ask ourselves whether we can be assured that Yankee Atomic
answered, in a deliberate fashion, the questions plaintiffs raise
here: whether, independent of any contract right, the special
assessment imposed by the Energy Policy Act amounted to a
taking of plaintiffs’ money; whether the liability itself was so
retroactive, so divorced from plaintiffs’ experiences and so
contrary to their expectations that it violated due process.
These questions, we believe, were not answered.
With regard to plaintiffs’ contract-based claims,’ however,
we find Yankee Atomic to be dispositive. In determining that
the assessment constituted an exercise of general taxation
apart from, and wholly independent of, the parties’ earlier
contractual relationship, the Federal Circuit rejected the
contention that the assessment amounted to an impermissible
infringement on the plaintiff's contract-based rights. This
court, in turn, is bound by that ruling.
Nor do the additional contract documents put forth by
Omaha Public Power District change that result. We see
nothing in the Utility Services Contract or the 1984
Supplemental Agreement to differentiate it from the contract
that was at issue in Yankee Atomic. And to the extent that the
* With the exception of Omaha Public Power District, plaintiffs con-
cede the preclusive effect of Yankee Atomic and reiterate their contract
claims merely to preserve the issue for appeal.
26a
fixed-price terms of the contract were held by the Federal
Circuit not to constitute an unmistakable promise, no addi-
tional terms in the Supplemental Agreement satisfy that
unmistakability requirement. The unmistakability doctrine—
a principle which dictates that immunity from future legis-
lation (here, a tax) be clearly, unmistakably incorporated into
a contract with the Government in order to be enforced—
requires more than the generic statements embodied in the
Supplemental Agreement or the extra-contractual assurances
by Government officials allegedly made to Omaha.
II. The Eastern Enterprises Decision
A. The Essential Ruling
Moving forward, then, with plaintiffs’ due process and
takings claims, we begin with the contentions that the Energy
Policy Act assessment impermissibly imposes financial
liability on parties not responsible for the problem that the
legislation addresses, and is based on conduct excessively far
in the past. As evidence of those two propositions, plaintiffs
point first to testimony offered before a congressional sub-
committee to the effect that it was the use of the enrichment
facilities by the U.S. military that alone contaminated the
plants, and that the subsequent enrichment of uranium for
commercial purposes added no additional contamination.”
Plaintiffs additionally point to the fact that the fees levied are
based, in some instances, on purchases of uranium that
occurred some twenty-three years before the passage of the
Energy Policy Act.
* See, for instance, Department of Energy Budget Request for Fiscal
Year 1993: Oversight Hearing before the Subcommittee on Energy and
the Environment of the Committee on Interior and Insular Affairs, 102d
Cong., 2d Sess. at 79 (Feb. 28, 1992) (statement of William H. Young,
Assistant Secretary for Nuclear Energy, United States Department of
Energy) (acknowledging that “the contamination that was placed on the
systems and structures occurred during that 20-year period that it was
operated for the government”).
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Plaintiffs’ orientation to the present problem is shaped in
large part by the holding in Eastern Enterprises, 524 U.S.
498, 118 S.Ct. 2131, 141 L.Ed.2d 451—a decision defendant
maintains is inapplicable to the facts at hand. In Eastern
Enterprises, a coal mining company challenged the Coal
Industry Retiree Health Benefit Act of 1992 (the Coal Act),
charging that the act was unconstitutional as applied to it.
The Coal Act obligated Eastern to pay premiums, beginning
in 1992, to cover health care benefits for former employees
who had worked for Eastern prior to 1966, despite the fact
that Eastern itself had ceased its mining operations in 1965.
Central to the Supreme Court’s analysis was the fact that, of
the various bargaining agreements signed by the coal industry
throughout the years, only those agreements reached after
1965—i.e., those in which Eastern Enterprises had not
participated—contained explicit reference to, or fostered
expectations of, lifetime health benefits.
A four-justice plurality held that the assessment, reaching
back more than thirty years and unrelated to the company’s
experience with the health-care plans, violated the Takings
Clause. One justice, concurring in the result, rejected the
applicability of the Takings Clause, but reached his con-
clusion based on due process grounds. In contrast, a four-
justice dissent concluded that the Takings Clause was inap-
plicable, and that due process had not been violated.
It is the fractured nature of that decision which defendant
believes limits its holding. This court need not apply a
takings analysis, defendant maintains, since a majority of the
Court—the four dissenters along with Justice Kennedy in
his concurrence °—explicitly rejects the applicability of the
° The dissent rejected the plurality’s takings analysis on the ground that
the case involved “not an interest in physical or intellectual property, but
an ordinary liability to pay money, and not to the Government, but to third
parties.” Eastern Enterprises, 524 U.S. at__, 118 S.Ct. at 2162 (Breyer,
J., dissenting). Justice Kennedy, writing in concurrence, further cautioned
28a
Takings Clause to “an ordinary liability to pay money.”
Eastern Enterprises, 524 U.S. at __, 118 S.Ct. at 2162
(Breyer, J., dissenting). And in the absence of Eastern
Enterprises, defendant contends, prevailing case law would
only require the act to meet a standard of rationality in order
to withstand a constitutional challenge.
While we recognize that the takings analysis employed
by the plurality in Eastern Enterprises does not necessarily
reflect the approach advocated by the remaining members of
the Court, we are nonetheless mindful of the D.C. Circuit’s
observation that “[w]hen a fragmented Court decides a case
and no single rationale explaining the result enjoys the assent
of five Justices, ‘the holding of the Court must be viewed as
that position taken by those members who concurred in the
judgments on the narrowest grounds.’” King v. Palmer, 950
F.2d 771, 783 (D.C.Cir.1991) (quoting Marks v. United
States, 430 U.S. 188, 193, 97 S.Ct. 990, 51 L.Ed.2d 260
(1977)) (emphasis omitted).
If Eastern Enterprises does not stand for a single, distinct
approach to the problem before it, it nonetheless stands for a
clear principle: a liability that is severely retroactive, dis-
ruptive of settled expectations and wholly divorced from a
party’s experience may not constitutionally be imposed. We
draw that conclusion from the language offered both by the
plurality and by the concurrence. The plurality pointed out
that Supreme Court decisions “have left open the possibility
that legislation might be unconstitutional if it imposes severe
retroactive liability on a limited class of parties that could not
have anticipated the liability, and the extent of that liability is
that “[t]he plurality’s opinion disregards this requirement [that a specific
property right or interest be at stake] and, by removing this constant
characteristic from takings analysis, would expand an already difficult and
uncertain rule to a vast category of cases not deemed, in our law,
to implicate the Takings Clause.” /d at _, 118 S.Ct. at 2155 (Kennedy,
J., concurring).
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substantially disproportionate to the parties’ experience.”
Eastern Enterprises, 524 U.S. at __, 118 S.Ct. at 2149. The
plurality then went on to criticize the assessment as “not
calibrated either to Eastern’s past actions or to any agree-
ment—implicit or otherwise—by the company,” rejecting the
liability on the grounds that it was “substantial in amount,
based on the employer’s conduct far in the past, and unrelated
to any commitment that the employers made or to any injury
they caused.” /d.at__, 118 S.Ct. at 2153. Similarly, Justice
Kennedy, in his concurrence, looked to the “degree of retro-
active effect” as a “significant determinant” in assessing
a statute’s constitutionality. Eastern Enterprises, 524 U.S.
at__—, 118 S.Ct. at 2159 (Kennedy, J., concurring). Noting
that the\retroactivity in Eastern was of “unprecedented
scope,” he concluded that, to the extent that Eastern was
responsible neither for the miners’ expectations of life-long
health benefits nor for the benefit plan’s fiscal instability, it
could not constitutionally be made to bear the burden
imposed by the Coal Act. /d.
The Eastern Enterprises test thus asks us to look more
broadly—whether through the lens of takings or due
process—at the equity of imposing retroactive liability if the
length of the retroactivity is great and the party’s experience
with the underlying problem inconsequential.
B. The Ruling Applied
In examining the factors which unified the plurality and the
concurrence in Eastern Enterprises, we begin first with the
magnitude of the retroactivity. Plaintiffs urge us to measure
the length of retroactivity from the time the utilities first
purchased uranium from the Government, on the grounds that
the assessment changes the consequences of transactions
dating back to those years. By plaintiffs’ calculations, the
assessment taxes Omaha and Sacramento on purchases made
twenty-three years before the statute’s enactment, and Maine
Yankee on purchases made twenty-two years before that date.
30a
i. Retroactivity
While at first glance the length of time appears to rival the
thirty to fifty-year period found objectionable in Eastern
Enterprises, those numbers belie an important distinction:
Eastern Enterprises had left the coal business almost thirty
years before the Coal Act’s passage, and was no longer a
member of the industry either at the time the expectation of
lifetime benefits was fostered or at the time the existing
benefit fund became unstable. Plaintiffs, in contrast, con-
tinued to participate in the uranium enrichment field, in at
least one instance, up until the date of the Energy Policy Act’s
passage ” and had, by definition, contemporaneous exposure
to the process (i.e., the enrichment) which created the
problem. While the import of that distinction may not be
immediately obvious, it goes to the heart-of the case against
retroactive law-making. The objection to retroactivity is not
simply that a transaction is “reopened,” but that legitimate,
long-settled expectations are themselves disrupted. Put sim-
ply, retroactivity most offends when dealings an individual
reasonably views as both completed and long-past are,
without legitimate justification, again called into account.
We explain further.
To the extent that Eastern had left the coal business entirely
and had done so at a time when the driving forces behind the
Coal Act—the miner’s expectations of lifetime benefits and
the instability of the benefit fund—had yet to come into
existence, it could reasonably have concluded that its dealings
in the coal industry were complete. The Eastern Enterprises
decision taught in part that such thirty-year-old expectations
’Omaha Public Power District continued to purchase government-
enriched uranium until 1992; Maine Yankee untii 1986 and Sacramento
Municipal Utility District until 1981. In the case of Sacramento, however,
its contracts with the Government continued until 1990 even though it
had exercised opt-out provisions to permit its purchase of uranium from
other sources.
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should not be lightly undone. Plaintiffs’ situation offers no
parallel: unlike Eastern, they did not leave the industry
decades before the imposition of liability, nor were they
charged with remedying a problem that was still to be
recognized at the time they completed the conduct on which
their liability was later to be based. Plaintiffs, still purchasing
uraniur well into the 1980s and 1990s (and presumably
aware, at least in a general sense, of the problem of
contamination), could not reasonably have harbored the same
sense of closure with regard to those transactions as did the
plaintiff in Eastern Enterprises.
The Energy Policy Act’s retroactive effect extends, at most,
for less than a decade, though we see no need actually to
quantify that period. As intimated above, what concerns us is
not the length of the period per se--one could hardly maintain,
for instance, that an eleven-year reach-back is unacceptable
while a nine-year reach-back passes muster—but the reasons
for the retroactivity and the retroactivity’s effect. Eastern
Enterprises teaches that, even in the face of severe retro-
activity (not, we believe, the present situation), the extent of a
statute’s retroactivity is not the only factor to be considered in
determining the legislation’s constitutionality. We turn then
to the other factors.
ii. Proportionality—Present Burden and Past Conduct
Significant also to the Eastern Enterprises analysis was the
fact that Eastern had no reason to anticipate the liability
imposed on it, and its burden was substantially dispro-
portionate to its experience. Focusing on the proportionality
of the current plaintiffs’ burden to their experience, we make
two general but crucial observations: the plaintiffs’ burden,
ultimately, was smail, and its experience—at least for the
purposes of assigning liability—-was great. We explore those
conclusions further.
32a
With regard to the magnitude of the liability, we begin with
the point that a lion’s share of the expense for the clean-up—
some 68%—is to be funded by Congress through public
appropriations. The utilities, from the beginning, were slated
only to shoulder less than a third of the total costs. In
addition, the Energy Policy Act contains a specific pass-
through mechanism, designed to ensure that the utilities’
present customers, rather than the utilities themselves, bear
the ultimate expense of the assessment.*® That amount, spread
over a wide customer base and included as a present cost of
fuel, is a far less substantial burden—either on the utili-
ties or on its customers—than the one challenged in
Eastern Enterprises. :
Turning next to the experience criterion, we note first that
the calculation of liability was not, in the words of the
Supreme Court “made in a vacuum.” Eastern Enterprises,
524 U.S. at __, 118 S.Ct. at 2150 (quoting Connolly v.
Pension Benefit Guaranty Corp., 475 U.S. 211, 225, 106
S.Ct. 1018, 89 L.Ed.2d 166 (1986)). The assessments are
based on each utility’s pro rata consumption of uranium—a
method which explicitly allocates liability in direct proportion
to the amount of uranium received and used. In that respect,
then, the assessment is exactly as the Federal Circuit
described it in Yankee Atomic: “a general tax that falls
proportionally on all utilities that benefited from the DOE’s
uranium enrichment services.” Yankee Atomic, 112 F.3d at
1575. And as the Federal Circuit there recognized, “the costs
of large, unrecognized socieial problems are frequently spread
among those who benefited from the source of the problem.”
Id. at 1576 n. 6.
* 42 U.S.C. § 2297g-1(g), titled “Treatment of assessment” provides
that “[a]ny special assessment levied under this section . . . shall be
deemed a necessary and reasonable current cost of fuel and shall be fully
recoverable in rates in all jurisdictions in the same manner as the utility’s
other fuel costs.”
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33a
Plaintiffs object to that justification on the grounds that it
was the U.S. military—rather than they—who allegedly
caused the contamination of the enrichment facilities. Yet
even if we were to accept plaintiffs’ contention that the
uranium sold to plaintiffs caused no additional contamination
(as indeed we must for the purposes of this motion), we
nonetheless.conclude that plaintiffs received a benefit—i.e.,
the enriched uranium—made possible only through the prior
contamination of the plants. Thus, plaintiffs’ situation readily
accommodates itself to the observation noted by the Supreme
Court in United States v. Sperry Corp., 493 U.S. 52, 65, 110
S.Ct. 387, 107 L.Ed.2d 290 (1989) that “i]t 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.”
Plaintiffs respond that, to the extent that the enrichment
services represented a benefit, it was a benefit for which they
had already paid in full through their contract price. Yet, as
discussed in Yankee Atomic, the assessment does not repre-
sent an increase in contract price, but rather the imposition of
liability to remedy a social ill. Yankee Atomic, 112 F.3d at
1575. And the fact that the contamination—a partial legacy
of plaintiffs’ dealings with the Government—exists, neces-
sarily means that there remain unpaid social costs of those
transactions. That plaintiffs could have purchased their
uranium elsewhere (and, as with Sacramento, did in fact
do so) ° is beside the point. The contamination clean-up is an
“actual, measurable cost of [the] business” in which plaintiffs
® As a result of competition from foreign uranium suppliers, including
facilities in France, Canada, Italy, Russia, China, India and England, the
Government’s share of the enrichment market declined from-almost 100%
in the 1960s and 1970s to less than 50% in 1983. When foreign suppliers
offered lower prices—specifically in 1984, 1985, 1987, 1988 and 1990—
Sacramento elected not to exercise its contract right to purchase uranium
from the Government in those years.
34a
chose to participate. Eastern Enterprises, 524 U.S. at ___,
118 S.Ct. at 2159 (quoting Usery v. Turner Elkhorn Mining
Co., 428 U.S. 1, 19, 96 S.Ct. 2882, 49 L.Ed.2d 752 (1976)).
The question whether plaintiffs could have anticipated the
liability is an inquiry closely related, if not identical, to the
considerations which underpin our concerns about retroac-
tivity and experience. Retroactivity is largely objectionable,
for instance, to the extent it cannot be anticipated (with all the
concomitant issues such lack of notice engenders), and a
close experiential connection between the burdened party and
the fee imposed necessarily means that the liability should
have been anticipated. While we discuss below—in our
assessment of the reasonableness of their investment-backed
expectations—the extent to which plaintiffs might have
anticipated their Energy Policy Act liability, we note only that
plaintiffs’ participation in so highly regulated a field and their
receipt of benefit from that field should each have served as
notice of a possible future obligation. Heavy industry
regulation of the sort seen in the nuclear industry means that
few legislative changes can truly be seen as_ wholly
unanticipated. Atlas Corp. v. United States, 895 F.2d 745,
758 (Fed.Cir.1990). And, as a more general matter, those
who create a burden for society or who benefit from a
burden’s creation must be seen as implicitly accepting
responsibility and possessing constructive knowledge that
they may one day be called to account.
Thus, none of the factors found crucial in Eastern
Enterprises—the length of the retroactivity, the unforeseen
nature of the assessment or the disconnect between Eastern’s
conduct and its resulting liability, militate against a finding of
constitutionality in the present case. In short, the assessment
is not an urtawful exaction.
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35a
Ill. The Energy Policy Act as a Taking
_ In spite of the divided nature of the Eastern Enterprises
decision, however, plaintiffs nonetheless urge us to apply the
plurality’s takings analysis to find that the Energy Policy
assessment constitutes a compensable taking of plaintiffs’
property. Yet, despite our reservations about that approach,
we conclude that even when viewed through a traditional
takings analysis, plaintiffs’ claim must fail. None of the
factors cited in Eastern Enterprises—the economic impact of
the legislation, the reasonableness of plaintiffs’ investment-
backed expectations and the character of the government
action—support the finding of a taking of property. We
explain further.
As discussed above, the magnitude of the liability im-
posed on plaintiffs is sharply diminished by their ability
to pass through the costs to their customers. 42 U.S.C.
§ 2297g-1(g)."" The fact that the tax burden falls, as
Sacramento acknowledges, on Sacramento’s “current and
future ratepayers,” necessarily means that the economic im-
pact on Sacramento—limited perhaps to incidental costs of
collection—is slight. Thus, plaintiffs cannot show “any
deprivation significant enough to satisfy the heavy burden
placed upon one alleging a regulatory taking.” Keystone
Bituminous Coal Assn. v. De Benedictis, 480 U.S. 470, 493,
107 S.Ct. 1232, 94 L.Ed.2d 472 (1987)."'
'° Hughes Communications Galaxy, Inc. v. United States, 38 Fed.Cl.
578 (1997), a case provided to us by plaintiffs, does not reach a contrary
result. There, the court concluded in a breach of contract action that the-
contractor’s ability to receive indemnification from third parties in no way
affected the measure of the damages resulting from the Government’s
breach. Such reasoning has no application in the takings context, where
the ability to pass on a cost speaks not to the measure of damages, but to
the economic impact of the challenged action.
''The fact that Maine Yankee ceased its operations in 1996 and
presumably can no longer pass on the fee to its customers does not change
36a
As to their investment-backed expectations, plaintiffs offer
a host of reasons why they reasonably did not expect to be
subject to the fee in question: the fixed-price nature of their
original contracts; the supplemental agreements of settlement
signed’ by Sacramento & Omaha purporting to settle all
claims; the statutory requirement that the prices as originally
set be sufficient to recover all costs; the settled expectations
of twenty-two year’s time; and the Government’s sole
possession and control of the enrichment facilities.
What that assessment overlooks, however, is the benefit
conferred on plaintiffs as a byproduct of the contamination’s
creation. Retroactive legislation is most suspect when it
deprives citizens of legitimate expectations. ~But legitimate
expectations cannot include an expectation of immunity from
legislation that imposes additional costs on activities from
which the plaintiff derived a prior benefit. -As the Federal
Circuit has pointed out, a commercial expectation, harbored
in a field as regulated as the nuclear indusiry, that a company
will not have to “spend its own money to remediate health
and environmental hazards created by its own production of
uranium” is simply unreasonable. Atlas, 895 F.2d at 758.
In assessing the nature of the government action, the court
in Eastern Enterprises concluded that the liability was “quite
unusual” as it “singles out certain employers to bear a burden
that is substantial in amount, based on the employer’s conduct
far in the past, and unrelated to any commitment that the
employers made or to any injury they caused... .” Eastern
Enterprises, 524 U.S. at ___, 118 S.Ct. at 2153. But while
the analysis. Maine Yankee was in business at the time of the Energy
Policy Act’s passage, meaning that it, like the other domestic utilities to
which the act applied, was intended—and able—to pass on those costs.
That Maine Yankee later chose to leave the industry, fully aware of
its existing obligations, cannot transform either the character of the
government action or the economic impact of the Act as it was
originally imposed.
37a
plaintiffs make much of the fact that, according to the Gov-
ernment’s own account, the contamination occurred during
the twenty years the facilities were operated solely for
governmental purposes, we do not find that factor dispositive.
All indicators point to the fact that Congress, confronted
with a hazard created by uranium enrichment, looked for
partial contribution from those who created the demand for
the uranium.
Ultimately, it is that determination which most sways us.
Whether we analyze the assessment under the Due Process
Clause, under the Takings Clause, or under some amalgam of
the two, we are, in the end, faced with a single, basic
question: Is it inherently unfair, unjust, or irrational for Con-
gress, when faced with costs resulting from the enrichment of
uranium, to ask those parties who received the uranium to
contribute to the solution? The answer, quite clearly, is no.
Plaintiffs’ assessments are directly proportional to their usage
of uranium enrichment services—the very services which
created the contamination. Congress itself took responsibility
for more than two thirds of the clean-up costs and assigned
the rest, as a general tax, to the rate- payers in districts which
had previously benefited from nuclear power. Such a scheme
can hardly be construed as beyond the reach of fairness or
rationality. Accordingly, we are bound to conclude there has
been no taking here.
IV. Equal Protection
Although the Energy Policy assessment comports, in our
view, with both takings law and due process, plaintiffs
nonetheless argue that the fee constitutes a violation of equal
protection. According to plaintiffs, the fact that foreign
utilities were exempted from the assessment impermissibly
differentiates between similarly-situated entities—i.e., all
those that had consumed government-enriched uranium. In
addition, plaintiffs contend, the Act draws an illegitimate
38a
distinction between purchasers who resold the uranium, and
those who kept it for their own purposes, as well as between
pre-1992 consumers (who are subject to the fee) and
post-1992 consumers (who are exempt).
The short answer to plaintiffs’ objection is that the drawing
of such categories neither implicates nor violates the 14th
Amendment. With regard to Congress’s decision to exempt
foreign utilities from liability, we refer to the Supreme
Court’s observation in Barclay & Co. v. Edwards, 267 U.S.
442, 451, 45 S.Ct. 135, 69 L.Ed. 703 (1924) that “[c]onsid-
erations of policy toward foreign countries may very well
justify an exemption of the foreign corporations from taxes
that might legitimately be imposed on them, but which
Congress does not think it wise to exact.” In addition, we
think it significant that, as defendant points out in its motion
to dismiss, the exclusion of foreign utilities from the liability
equation in no way increases or otherwise affects plaintiffs’
portion of domestic utility usage.
Similarly, legislatures need not burden the most respon-
sible party to survive rational basis review. Association
of Bituminous Contractors, Inc. v. Apfel, 156 F.3d 1246,
1255-56 (D.C.Cir.1998). While the original purchasers of
uranium (those who resold it and were therefore exempt from
assessment) may seem, to plaintiffs, equally to have benefited
from the enrichment services, we cannot conclude that
Congress’s decision to target end-users was without rational
basis. And although plaintiffs may have preferred a system
under which USEC’s post-1992 customers likewise picked up
the tab, Congress’s assignment of liability for a past problem
to past consumers does not stretch the limits of the
reasonable.
Accordingly, plaintiffs’ equal protection challenge, like its
takings and due process claims, must fail.
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39a
CONCLUSION
In apportioning the costs of modern life, Congress must
often determine which expenses should properly be seen as
liabilities belonging to society as a whole, and which should
instead be treated as obligations of a smaller subset of the
population. Congress could reasonably have determined that
plaintiffs, along with other recipients of government-enriched
uranium, were the beneficiaries of the process through which
the uranium plants became contaminated. The fact that
plaintiffs may not have caused the contamination, and indeed
may simply have received a benefit from uranium plants
long- contaminated before plaintiffs’ arrival on the scene,
does not diminish their accountability. The burden imposed
on plaintiffs by the Energy Policy Act is not impermissibly
substantial, nor unduly retroactive, nor unacceptably divorced
from plaintiffs’ experience with the program so as to violate
any constitutional mandate. Plaintiffs have suffered no
unconstitutional taking nor other unlawful exaction of their
funds. We therefore grant defendant’s motion to dismiss and
direct the entry of judgment accordingly.
40a
APPENDIX C
UNITED STATES COURT OF APPEALS
FEDERAL CIRCUIT
No. 00-5069
COMMONWEALTH EDISON COMPANY,
Plaintiff-Appellant,
V.
UNITED STATES,
Defendant-Appellee.
Nov. 20, 2001
Before MAYER, Chief Judge, NEWMAN, MICHEL,
LOURIE, CLEVENGER, RADER, SCHALL, BRYSON,
GAJARSA, LINN, and DYK, Circuit Judges.
DYK, Circuit Judge.
This case is one of a large number of cases brought in the
Court of Federal Claims challenging the constitutionality of
the Energy Policy Act of 1992, Pub.L. No. 102-486, 106 Stat.
2776 (codified as amended in various sections of 42 U.S.C.)
(“EPACT” or “the Act”), which imposes special monetary
assessments on domestic utilities for the remediation of
environmentally contaminated uranium processing facilities
owned by the United States. See 42 U.S.C. § 2297g 1. After
argument before a panel on April 4, 2001, we sua sponte
ordered that the case be heard in banc without additional
briefing. The case was heard in banc on October 3, 2001.
* Circuit Judge Prost, who entered on duty on October 3, 2001, has not
participated in the disposition of this case.
4la
In light of our decision in Consolidated Edison Co. v.
United States, 247 F.3d 1378 (Fed.Cir.2001),' Edison’s
request for a stay of the proceedings in the Court of Federal
Claims has become moot.
On the merits, we conclude that requiring plaintiff
Commonwealth Edison Company (“Edison”) and the other
domestic utilities that benefited from the uranium processing
services to contribute to the remediation costs does not
constitute a Fifth Amendment taking because the Takings
Clause does not apply to legislation requiring the payment of -
money. We also conclude that the Act does not violate the
Due Process Clause of the Fifth Amendment. The retroactive
application of the Act rationally furthers a legitimate
legislative objective—the remediation of contaminated facili-
ties used by the United States to process uranium for
domestic utilities. Congress reasonably concluded that the
utilities received benefits from the processing and that the
utility processing contributed to the contamination. Liability
was imposed on those utilities for only a portion of the
cleanup costs. As a matter of law, Edison and other similarly
situated utilities could have reasonably expected to be liable
for a share of the remediation costs arising from the
contamination of the processing facilities. Edison’s other
arguments on the merits are foreclosed by our decision in
Yankee Atomic Electric Co. v. United States, 112 F.3d 1569
(Fed.Cir.1997), cert. denied, 524 U.S. 951, 118 S.Ct. 2365,
141 L.Ed.2d 735 (1998).
We therefore dismiss as moot the appeal from the denial of
the stay request and affirm the decision of the Court of
Federal Claims dismissing the complaint.
' This opinion replaced our previous decision in that case, reported at
234 F.3d 642 (Fed.Cir.2000).
42a
BACKGROUND
This case arises against the background of our earlier decision
in Yankee Atomic where we rejected contentions that EPACT
breached uranium processing contracts between Yankee Atomic
Electric Co. (“Yankee Atomic”) and the United States and
constituted a taking of those contract rights. Some of the claims
asserted by Edison are the same as those asserted in Yankee
Atomic. Edison also claims that the statutory obligation to pay
money to the government constitutes a taking of that money,
and that the retroactivity of the Act renders it unconstitutional
under the Due Process Clause.
Resolution of this appeal requires a brief overview of the
history of the United States government’s involvement in the
enrichment of low-grade uranium for Edison and ofher
domestic utilities, as well as the provisions of EPACT.
The uranium processing facilities involved here were
originally constructed and operated by the United States
government for national defense purposes. Between 1945
and 1970, approximately 96% of the enriched uranium
produced by the government was used for weapons
production. These facilities were also capable of producing
enriched uranium for nuclear power reactors.
Before 1954, United States law permitted only the United
States government to own nuclear power reactors. In 1954,
however, Congress enacted amendments to the Atomic
Energy Act of 1954, Pub.L. No. 83-703, 68 Stat. 919, which
for the first time authorized private ownership of nuclear
power reactors. The government extensively regulated these
reactors, inter alia, “to protect the health and safety of the
public” from the possible environmental hazards. /d. at § 2
(codified as amended at 42 U.S.C. § 2210).
Plaintiff Edison is a domestic utility company with its
principal place of business in Illinois. Beginning in 1960,
Edison owned and operated nuclear reactors, which it used to
43a
generate electrical power for sale and distribution to its
customers in Illinois. Those nuclear reactors, in turn,
required enriched uranium.
Edison alleges that in 1960 it began to “purchase or lease”
enrichment services from the government. However, we note
that until 1964 the government retained strict control over the
technology used to enrich low-grade uranium for use in
nuclear reactors, and barred private ownership of enriched
uranium. In that year, Congress passed the Private
Ownership of Special Nuclear Materials Act, Pub.L. No. 88-
489, 78 Stat. 602 (1964), which authorized the private
ownership of enriched uranium. After the passage of that act,
the government began to offer uranium enrichment services
to commercial customers like Edison.
Beginning in 1969, Edison entered into a series of
multi-year contracts with the United States government in
which Edison agreed to purchase uranium enrichment
services from the United States. Those enrichment services
were provided at enrichment plants operated first by the
Atomic Energy Commission and later (beginning in 1974) by
the Energy Research and Development Administration and,
ultimately (beginning in 1977) by the Department of Energy
(collectively, “DOE”).
Under those contracts, Edison delivered low-grade uranium
to the government-owned facilities for enrichment. The
government took title to the low-grade uranium, processed
the uranium, and returned enriched uranium to Edision. The
enrichment services were measured in terms of “separative
work units” (“SWUs”). The plaintiff here, like other
domestic utilities, paid for the services by multiplying the
number of SWUs provided by the unit price set forth in its
contracts with the government. Although the utilities’
contracts varied somewhat, each stated that the price paid by
the utility for the enrichment services would be based on an
“established Commission pricing policy,” defined under the
44a
contracts as the price in effect at the time the service was
rendered. A number of these contracts also capped the
maximum per unit charge for the enrichment services.
Edison alleges in its complaint that it purchased a portion of
its uranium enrichment services “with the Government’s
knowledge and consent, from other sources.” First Amended
Complaint of Plaintiff-Appellant Commonwealth Edison
Company (hereinafter “Complaint”) at 4 50.
Edison alleges that “[b]y the late 1970s and early 1980s,
foreign suppliers of uranium enrichment services emerged,
threatening the Government’s monopoly power and creating
significant competition for the Government.” /d. at 4 41.
Edison further alleges that the Government’s share of the
uranium processing market “declined substantially, from
nearly 100% in the 1960s and 1970s, to below 50% in 1983.”
Id. Edison elected, however, to continue to use government
processing facilities even though those foreign alternatives
became available.
In January 1984, the government developed a standard
requirements-type contract for uranium enrichment services,
referred to as a Utility Services Contract. In July 1984,
Edison entered into a Utility Services Contract after
terminating all of its existing uranium enrichment services
contracts with the government through a Supplemental
Agreement of Settlement (“Settlement Agreement”). This
Utility Services Contract, like the previous contracts, charged
the utilities for the services according to the “established
pricing policy,” and likewise capped the maximum unit
charge. It appears that the government developed this Utility
Services Contract, at least in part, at the request of Edison and
the other domestic utilities.
As a result of the government’s use of the processing
facilities for national defense purposes, they had become
contaminated, even before the utilities’ uranium processing
commenced. Although Edison alleges that the facilities were
45a
“fully contaminated with radioactive and other hazardous
materials” before they began to be used for the processing of
the utilities’ uranium, Complaint at J 23, there is no question
that the processing of the uttlities’ uranium caused the same
type of contamination as the government’s earlier use of the
facilities to enrich uranium for weapons purposes. Indeed,
Edison at oral argument specifically conceded that that was
the case, and agreed that contamination cieanup costs are
incurred any time uranium is enriched, including when it is
enriched for the benefit of the utilities. Edison alleged,
however, that the cleanup costs were not “materially”
increased by the later contamination resulting from the utility
uranium processing.”
? At oral argument, counsel for Edison explained Edison’s contribution
to the contamination as follows:
COUNSEL FOR EDISON: If it can be demonstrated— in our cases
there’s nothing in the record—but if it can be demonstrated that
there was additional cost associated with the enrichment being—
services provided to the commercial utilities, then perhaps there
would be an argument that we have a certain responsibility. . . .
THE COURT: Well, of course there are. You can’t run a nuclear
enrichment program without creating contamination, so of course-
we can quarrel about exactly how to measure them or how big they
are, but of course there are contamination cleanup costs.
COUNSEL FOR EDISON: There are. Let me try to make an
analogy. . . . | know in terms of nuclear utilities, when they have
boiling water, nuclear generated, and they periodically are required
to decontaminate, what they do is they have these very large deep
swimming pool type reactors. What they do is paint the well of the
reactor with a rubberized paint that the contamination adheres to.
Then they peel that paint off and the—. . . The contamination
adheres to that paint. So regardless of whether there is a half inch of
contamination or a full inch of contamination, all the contamination
adheres to that rubberized paint and you just peel it off, and the cost
is no more.
THE COURT: Well, that’s basically your point, that the processing
of the utilities’ uranium caused pollution, but it didn’t cost any more
46a
Edison also admits in its complaint that the obligation to
decontaminate and decommission the facilities “was an
obligation well understood by operators of nuclear facilities
throughout the industry.” Complaint at | 31. Although the
contracts provided for recovery of the government’s costs of
operating the plants and fixed the price as of the time of
delivery, the original contracts, the Utility Services Contract,
and the Settlement Agreement did not expressly preclude (or
even address) the government’s future assignment to Edison
of any remediation costs for the decontamination of the
government’s uranium enrichment facilities.°
These remediation costs were addressed by Congress in
1992. Faced with its declining .hare of the uranium
processing market, Congress decided to restructure the
government’s uranium processing services in order to remain
competitive with its overseas providers. Congress created a
new, for-profit, governmental corporation called the United
States Enrichment Corporation (““USEC”) to provide those
services to Edison and other domestic utilities.
“to clean it up than it would have cost to clean up the weapons
pollution, right?
COUNSEL FOR EDISON: Exactly. Yes, Sir.
* The Utility Services Contract merely stated, in pertinent part, that:
[T]he Customer and DOE desire to terminate all previous long-term
contracts between the Customer and DOE for the furnishing of
uranium enrichment services jim order to accommodate the
Customer's desire to obtain such services under the Utility Services
form of uranium enrichment services contract... .
(Emphasis added.). That contract further provided that “the unit charge
for enrichment services under this contract shall not exceed a ceiling
charge of $135.00 per separative work winit through September 30, 1985.”
The Settlement Agreement provided that “the Government agrees that all
obligations arising under the [previous] contracts or by reason of their
termination shall be deemed to be concliuded.”
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47a
At the same time that it created the USEC, Congress in
EPACT addressed the need to decontaminate and decom-
mission the government’s uranium enrichment facilities. The
DOE “estimated that the total cost of this clean up could
exceed $20 billion over 40 years, which amounted to about
$500 million per year, indexed to inflation.” Yankee Atomic,
112 F.3d at 1572. As this court noted in Yankee Atomic,
“[b]ecause [the magnitude of] this decontamination and
decommissioning fiscal problem was not [fully] recognized
until the 1980s, the prices charged in the Government’s past
uranium enrichment contracts had not accounted for the
problem.” /d.
EPACT established a Uranium Enrichment Deconta-
mination and Decommissioning Fund (the ‘“Fund”) to
accumulate over a fifteen-year period the funds necessary to
remediate the uranium enrichment facilities. 42 U.S.C.
§§ 2297g, 2297g |. The Act provided that the costs were to
be shared by the government and those domestic utilities that
benefited from processing at government facilities. The Act
accordingly provided that the annual deposits of $480 million
(adjusted for inflation) would come from two sources: (1) up
to $150 million (or up to approximately 32% of the total
amount) was to be collected as a special assessment from
domestic utilities’ that purchased (on the primary or
secondary markets) the uranium enriched at these facilities;
and (2) the balance of at least $230 million-the lion’s share of
the costs, amounting to at least 68%-was to be paid by the
government. The Act further provided that the imposition of
these special assessments on Edison and the other utilities
would cease after the earlier of 15 years after October 24,
1992 (the date of EPACT’s enactment) or the collecticn of
* The implementing regulations for the Fund defined “domestic utility”
as any utility in the United States that purchased SWUs from the
government between 1945 and October 23, 1992. See 10 C.F.R.
§ 766.3. It is undisputed that Edison meets this definition.
48a
$2.25 billion (again adjusted for inflation) from the domestic
utilities. See 42 U.S.C. § 2297g-1.
Under the Act, the special assessment imposed on each
domestic utility was based on the percentage of SWUs
purchased from the DOE relative to the total number of
SWUs produced by the DOE. 42 U.S.C. § 2297g-I(c). As
noted above, the Act provided that a domestic utility was
considered to have purchased a SWU from the DOE if the
SWU was originally produced by the DOE, even if the utility
actually purchased it from another source. Similarly, a utility
was not considered to have purchased a SWU from the DOE
if it subsequently resold that SWU to another utility. As this
court noted in Yankee Atomic, “[i]n sum, the Act impose[d]
the assessment upon whichever utility company eventually
use [d] the enrichment services.” 112 F.3d at 1572.
Two groups of purchasers of uranium enrichment services
were exempt from the special assessment: (1) domestic
utilities that purchased USEC services any time after 1992;
and (2) foreign utilities, which represented 25% of DOE’s
pre-1992 customer base.. See Commonwealth Edison Co. v.
United States, 46 Fed. Cl. 29, 33 n. 1 (2000); see also
Complaint at 4 25 (alleging that sales to foreign utilities
historically “accounted for approximately 25% of the
Government’s commercial uranium enrichment market”).
EPACT also provided the utilities with a “pass-through”
provision, providing im pertinent part that the special
assessment “shall be deemed a necessary and reasonable
current cost of fuel and shall be fully recoverable in rates in
all jurisdictions in the same manner as the utility’s other fuel
cost.” 42 U.S.C. § 2297g-1(g). This statutorily mandated
pass-through provision was binding on state regulatory
agencies. See Mississippi Power & Light Co. v. Mississippi,
487 U.S. 354, 369-72, 108 S.Ct. 2428, 101 L.Ed.2d 322
(1988); Nantahala Power & Light Co. v. Thornburg, 476
U.S. 953, 962-65, 106 S.Ct. 2349, 90 L.Ed.2d 943 (1986). At
49a
oral argument, counsel for Edison conceded that ©. wit
sought to recover the costs of the special assessment by
passing the costs through to Edison’s customers, though
counsel expressed some doubt whether Edison recovered
those costs in light of deregulation of the market and the
competitive rates that deregulation produced.
The cost-sharing provisions were enacted after “much
congressional debate over the issue of how these costs should
be recovered, especially to what extent DOE’s nuclear utility
customers should be expected to share in paying for these
costs.” 138 Cong. Rec. H11,399, H11,401 (1992) (statement
-of Rep. Phillip Sharp on Conference Report), reprinted in
Senate Comm. On Energy & Natural Res., 103d Congress 2d.
Sess., 6 Legislative History of the Energy Policy Act of 1992,
at 4519, 4553 (Comm. Print 1994). Ultimately, the utilities’
share was limited to 32% even though the House Report
concluded that “[h]istorical production from these plants
ha[d] been divided almost evenly between the government
and commercial sectors.” H.R.Rep. No. 102-474(1), at 144
(1992), reprinted in 1992 U.S.C.C.A.N. 1953, 1967.
Indeed, Edison and other utilities participated actively in
shaping the legislation that became EPACT and approved the
concept of cost sharing. See Comprehensive National Energy
Policy Act: Hearings on H.R. 776 Before the House Comm.
on Ways & Means, 102d Cong. 170-83 (1992) (“Committee
Hearings I’). During the course of EPACT’s consideration,
the House Committee on Energy and Commerce proposed to
impose “a $419 million annual liability, or a $9 billion
[liability] over 20 years,” on the utility industry for
remediation of the enrichment facilities. Jd. at 181. In
Edison’s case the company estimated that this funding
proposal, if enacted, would increase its uranium enrichment
costs by “one third” over the amount it had already agreed
to pay. Id. :
50a
In the hearings on EPACT, Edison’s President complained
that the industry was being asked to pay a “disproportionate
share” of the costs, and, as in the present Complaint, stated
that “virtually all the contamination at [the government
enrichment] facilities occurred during the first 20 years of
operations, when operations were strictly for the defense
program.” /d. at 180-81 (statement of Bide L. Thomas,
President, Commonwealth Edison Co., et al.).° Edison
offered no independent study of the industry’s relative
contribution to the contamination and relied entirely on the
testimony of the Department of Energy. That testimony, by
Assistant Secretary for Nuclear Energy William Young, was
that “there is additional pollution in the area of the sites [of
the enrichment facilities} because of commercial operations
subsequent to the exclusive operation [of the facilities] for the
government.” Department of Energy Budget Request for
Fiscal Year 1993: Oversight Hearing Before the Subcomm.
On Energy and the En
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