Appendices — Sacramento Municipal Utility District v. United States
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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
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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).
ee ee ae ee ee ee re
hei i a
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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 “[cJon-
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.
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* * * * K €
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. Jd. 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(1), 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.”
—
Sa
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 .v 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(I), 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).
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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.
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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 a
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. Id. We
held that the special assessment did not constitute a
retroactive increase of the contract price, id. at 1575, but
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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
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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.” Id. at 383 (citing Ass’n of Bituminous Contractors,
Inc. v. Apfel, 156 F.3d 1246, 1255-56 (D.C.Cir.1998)).
II
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
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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, im 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 principie 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 tota! $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 “[little, 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 program, 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
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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.” /d. 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.” /d. at 15,
96 S.Ct. 2882. Thus, Turner Elkhorn held that it was not 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
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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 Turner 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 present case, 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
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
II, Subtitle A §§ 4611, 4661, Title Il, 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. § 9607(a).
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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 vy.
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-
ermment’s uranium facilities. The Utilities merely purchased
enriched uranium after the contamination had occurred, long
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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 traditional 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.
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APPENDIX B
UNITED STATES COURT OF FEDERAL CLAIMS
(Filed: July 26, 1999]
No. 96-616 C
OMAHA PUBLIC POWER DISTRICT,
Plaintiff, -
V.
THE UNITED STATES,
Defendant.
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
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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 plaintiff's
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.
19a
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 to 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.” /d. 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.
I. 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.
PR PN Re ee ee ae oye ae
OEE REET RE yy an ee oe
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
25a
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 peried that it was
operated for the government”).
27a
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). -
29a
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.” Jd. 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 appear’ 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 until 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.
t
3la
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
uranium well into the 1980s and 1990s (and presumably
aware, at Jeast 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 small, 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 societal problems are frequently spread
among those who benefited from the source of the problem.”
Id. at 1576 n. 6.
8 42 U.S.C. § 2297g-1(g), titled “Treatment of assessment” provides
that “{aJny 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.”
©
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 rationa!ly 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 __.,
i18 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 wheiher 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 unlawful exaction.
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).!!
Ge: 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 industry, 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 chgse 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-
ermment’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 “[cJonsid-
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.
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 pracess 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. Plaintif’s 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.
weet i
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
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 other
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
Ee ee
os
43a
customers in lilinois. ‘Thosé 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
owe i AM. A the time the cervice WAS
rendered. A ‘mae 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 ¥ 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 ¥ 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 (“Setthement 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
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45a
“fully contaminated with radioactive and other hazardous
materials” before they began to be used for the processing of
the utilities’ uranium, Complaint at 4 23, there is no question
that the processing of the utilities’ 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 cleanup 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. . . . I 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 J 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 share 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 in 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 unit 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 concluded.”
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 1. 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 $330 million-the lion’s share of
the costs, amounting to at least 68%-was to be paid by the
goverment. 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 collection 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 CER.
§ 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-1(c). As
noted above, the Aci 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, “[iJn 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 State:, 46 Fed. Cl. 29, 33 n. 1 (2000); see also
Complaint at ¥ 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 in 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 Edison
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, H1 1,401 (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(I), 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.” Jd. 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 Env’ t of the House Comm. on Interior and
Insular Affairs, 102d Cong. 80 (1992) (“Committee Hearings
II’). He estimated the remediation costs for that portion of
the pollution attributable to the enrichment of the utilities’
uranium amounted to approximately $1.6 billion, out of a
total cost of approximately $18.5 billion. He concluded
that “[i]f you look at it from a polluter-pays basis, about
$1.6 billion of that $18.5 billion would be properly allocated
to commercial customers” of the enrichment facilities.
Id. at 79.°
* This testimony was a joint statement of Bide L. Thomas; Michael R.
Peevey, President, Southern California Edison Co.; and Joseph M. Farley,
Chairman and Chief Executive Officer, Southern Nuclear Operating Co.
See id. at 178.
° Assistant Secretary Young further explained this proposed allocation
when questioned by Representative Kostmayer during his testimony:
MR. KOSTMAYER: Who else did the polluting besides the
government?
Sla
Based on Edison’s view of the industry’s responsibility for
the contamination, Edison reaffirmed its and other utilities’
“willingness to pay a fair share of the [decontamination and
decommissioning costs] for these [enrichment] facilities.”
Committee Hearings I at 182; see also id. at 172 (“[T]he
industry is willing to participate in the cleanup program
....') (testimony of Bide L. Thomas, President, Common-
MR. YOUNG: In some cases, there is additional pollution in the
area of the sites because of [the] commercial operations subsequent
to the exclusive operation for the government. Some of the tailings
are there as a result of commercial operations, for example.
MR. KOSTMAYER: Commercial operations conducted by some
party other than the government?
MR. YOUNG: No, no. We have run the diffusion plants. A certain
amount of the tails are there because of [the] SWUs produced for
the government. Another certain amount of the tails are there
because of SWUs produced for commercial customers.
MR. YOUNG: ... The largest piece of [the estimated total cleanup
cost] is $14 billion which is [decontamination and
decommissioning] of the buildings and systems themselves. Of
that, because of the government operation having led to the
contamination, we are saying the government would pay 100
percent of that.
There are two other elements of the cleanup that has got to take
place. One is on the grounds around the facilities and we are saying
that some of the contamination that occurred in the ground resulted
not solely from the 20 years of government operation, but a
measurable amount more resulted from the commercial-or operation
to the benefit of commercial customers. And since we did not pass
those costs on in the past, we feel it is equitable to pass those costs
on in the future.
Further, with the tails, some of the tails were created for the benefit
of commercial customers, and the portion that was, and again, not
passed on in the past, we feel it is equitable to pass it on to
commercial customers at this time.
Committee Hearings II at 80-81.
52a
wealth Edison Company). But Edison and other utilities
objected that their share should not exceed the $1.6 billion
estimated by the Department of Energy, and sought “a cap to
protect ratepayers from being assessed more than their fair
share of costs.” /d. at 181. Edison and other utilities urged
Congress to adopt a compromise funding proposal-one
adopted by the House Committee on Science, Space and
Technology (the “Science Committee”)—that would have
capped the utilities’ liability for the remediation costs at $2.5
billion. Edison and two other utilities stated, on behalf of
themselves and two industry interest groups,” that:
While $2.5 billion is significantly more than the
$1.6 billion that DOE estimates the civilian sector
should contribute [to the remediation of the enrichment
facilities], the industry is willing to accept this
compromise in the interest of providing certain liability
levels and to move forward with this restructuring
legislation and [decontamination and decommissioning]
program.
Id. at 182. (Emphasis added.). The liability cap proposed by
the Science Committee, which Edison viewed as protecting
its ratepayers from paying more than “their fair share of
[remediation] ccsts,” essentially became the cap in the
legislation that Edison now challenges, though the ultimate
liability of the atilities under the enacted legislation was
more certain than under the Science Committee proposal. See
42 U.S.C. § 2297-1.
’ These interest sroups were the American Nuclear Energy Council
(“ANEC”) and the Edison Electric Institute (“EET”). ANEC “represents
over 100 domestic aid international organizations that have an interest in
nuclear energy.” E3I, in turn, “is the national association of investor-
owned electric companies” and represents “approximately three-quarters
of all American electricity customers.” Committee Hearings I at 178.
53a
Following the enactment of EPACT in 1992, as well as
corresponding DOE regulations implementing EPACT, the
government assessed Edison and similarly situated domestic
utilities on an annual basis for each utility’s share of the
special assessment. Edison alleges that as of the date
of the complaint, it had paid the government approximately
$95.5 million in seven special assessments for the decontam-
ination and decommissioning of the enrichment facilities.
These special assessments covered the period from 1969,
when Edison first began to purchase uranium processing
services from the government, until 1992, the year of
EPACT’s enactment.
PROCEEDINGS BELOW
On April 9, 1997, Edison commenced an action in the
Court of Federal Claims challenging the legality of the
special assessments authorized by the Act. Edison’s original
complaint alleged that the special assessment breached its .
contracts with the government by retroactively increasing the
cost of the uranium enrichment services and constituted an
impermissible taking of those contracts in violation of the
Fifth Amendment. See, e.g., Original Complaint of Plaintiff
Appellant Commonwealth Edison Company at §§ 53, 68-69.
On May 6, 1997, during the pendency of Edison’s action, this
court issued its decision in Yankee Atomic rejecting identical
claims made by another utility.
Following our decision in Yankee Atomic, Edison filed a
new and separate action for declaratory and injunctive relief
in the United States District Court for the Southern District of
New York seeking to invalidate EPACT and to bar the
government from attempting to compel future payments
under the Act (the “New York action”). The district court
subsequently denied a motion by the United States to transfer
the case to the Court of Federal Claims. Consol. Edison Co.
- v. United States, 45 F.Supp.2d 331 (S.D.N.Y.1999). In
54a
Consol. Edison Co. v. United States, Dept. of Energy, 247
F.3d 1378 (Fed.Cir.2001), we reversed that decision and
instructed the district court to transfer the New York action to
the Court of Federal Claims for adjudication.
On November 6, 1998, Edison also filed a motion in the
Court of Federal Claims to stay proceedings in that court
pending resolution of the New York action. On February 2,
1999, Edison amended its original complaint in the Court of
Federal Claims to state new and additional theories for
recovery. The amended complaint stated essentially three
theories for recovery. Edison alleged that the special
assessments imposed by EPACT: (1) constituted an unlawful
taking of money undef the Takings Clause of the Fifth
Amendment; (2) constituted a breach of contract, inasmuch
as “[t]he fixed price nature of [Edison’s] enrichment
contracts, coupled with the additional release granted by the
Government pursuant to the termination of certain of those
contracts, provided [Edison] with an unmistakable promise
that it would not be subject to future liability to the
Government based upon its contractual purchases of
enrichment services”; and (3) constituted an illegal exaction
in violation of the Due Process Clause of that amendment.
The government moved to dismiss the amended complaint for
failure to state a claim.
On February 3, 2000, the Court of Federal Claims denied
Edison’s motion for a stay, noting, in part, that the original
action in the Court of Federal Claims was the first filed action
and that it “has the jurisdiction to rule on each of the counts
in the amended complaint and thus need not defer to the
district court’s broader jurisdiction.” Commonwealth Edison,
46 Fed. Cl. at 34. In a well-reasoned opinion, the Court of
Federal Claims also granted the government’s motion to
dismiss, concluding that neither the old nor new theories of
recovery stated a claim. That court rejected Edison’s first
claim—that EPACT constituted an impermissible taking of
55a 2
Edison’s property without just compensation—on the ground
that “a government-imposed payment of money cannot result
in a compensable taking.” /d. at 41.
The court dismissed the utility’s claim that the imposition
of the special assessments constituted a taking of its contract
rights with the government, finding that “this issue. was
squarely addressed” in this court’s decision in Yankee Atomic.
Id. at 46. In reaching this conclusion, the court rejected
Edison’s arguments that its contracts with the government
were significantly different from those contracts at issue in
Yankee Atomic. Id. 5
Finally, the court rejected Edison’s claim that the special
assessment constituted an illegal exaction barred under the
Due Process Clause. Recognizing the~ well-established
principle that “an economic statute, such as the Energy Policy
Act, comes to the court with a presumption of validity,”
id. at 43, the Court of Federal Claims determined that
although the Act is indeed retroactive, “it cannot be said that
the retroactivity of the Act is irrational or that that
retroactivity unfairly impacted on the plaintiff.” Jd. at 44
(citing Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 18,
96 S.Ct. 2882, 49 L.Ed.2d 752 (1976)). The court further
held that “the liability imposed by the special assessment is
neither disproportional nor excessive,” as EPACT imposed
“liability only on those utilities that benefited from the
government’s uranium enrichment services.” /d. at 45.
This timely appeal followed. We have jurisdiction over
this appeal pursuant to 28 U.S.C. § 1295(a)(3).*
* Amicus Curiae briefs in support of Edison were filed in this
case by Sacramento Municipal Utility District and Maine Yankee Atomic
Power Co.
56a
DISCUSSION
I
As an initial matter, we note that the decision of the Court
of Federal Claims to deny Edison’s request for a stay of those
proceedings pending resolution of the New York action is
now moot, in light of our decision in Consolidated Edison,
247 F.3d 1378, in which we instructed the United States
District Court for the Southern District of New York to
transfer that action to the Court of Federal Claims.
Accordingly, the only question before us is whether the
Court of Federal Claims erred in dismissing this action for
failure to state a claim upon which relief may be granted. We
review that decision without deference. First Hartford Corp.
Pension Plan & Trust v. United States, 194 F.3d 1279, 1286-
87 (Fed.Cir.1999). In so doing, we also “assume that all
well-pled factual assertions are true and make all reasonable
inferences in favor of’ Commonwealth Edison, New Valley
Corp. v. United States, 119 F.3d 1576, 1580 (Fed.Cir.1997),
to the extent that such allegations are relevant to the
constitutional issues.
7 II
Ever since the New Deal Supreme Court’s discarding of
the Lochner ” line of substantive due process cases, the Court
has repeatedly held that economic legislation “adjusting the
burdens and benefits of economic life” is to be judged under a
deferential standard. Usery v. Turner Elkhorn Mining Co.,
428 U.S. 1, 15, 96 S.Ct. 2882, 49 L.Ed.2d 752 (1976). There
remain, however, at least three areas in which judicial review
of federal legislation imposing regulatory burdens still bites.
Not surprisingly, Edison relies on each of these three theories.
* Lochner v. New York, 198 U.S. 45, 25 S.Ct. 539, 49 L.Ed.
937 (1905).
57a
First, there are the takings cases, in which the government
is alleged to have taken property without just compensation
under the Fifth Amendment. The Supreme Court has made
Clear that government regulation can constitute a taking of
property requiring compensation. See, e.g., Lucas v. So.
Carolina Coastal Council, 505 U.S. 1003, 1027-28, 112 S.Ct.
2886, 120 L.Ed.2d 798 (1992). It is also clear that a fund of
money can be property protected under the Takings Clause.
See Phillips v. Washington Legal Found., 524 U.S. 156, 160,
118 S.Ct. 1925, 141 L.Ed.2d 174 (1998) (holding that interest
income generated by funds held in IOLTA accounts is private
property of the owner of the principal for purposes of the
Takings Clause); see also Webb’s Fabulous Pharmacies, Inc.
v. Beckwith, 449 U.S. 155, 164-65, 101 S.Ct. 446, 66 L.Ed.2d
358 (1980) (holding that the Takings Clause can apply to
monetary interest generated from the operation of a specific,
separately identifiable fund of money). However, although a
minority of the Supreme Court has urged that a taking can
occur when Congress has imposed an obligation to pay
money, see Eastern Enterprises v. Apfel, 524 U.S. 498, 537,
118 S.Ct. 2131, 141 L.Ed.2d 451 (1998), we are bound to
follow the views of a majority of the Supreme Court.
In United States v. Sperry Corp., 493 U.S. 52, 110 S.Ct.
387, 107 L.Ed.2d 290 (1989), the Supreme Court held that a
federal statute that required the payment of a portion of an
arbitral award from the Iran-United States Claim Tribunal to
the United States government did not violate the Takings
Clause because, in part, “[i]t is artificial to view deductions of
a percentage of a monetary award as physical appropriations
of property. Unlike real or personal property, money is
fungible.” /d. at 62 n. 9, 110 S.Ct. 387.
In Eastern Enterprises, five justices of the Court rejected
the theory that an obligation to pay money constitutes a
taking. There, the Supreme Court confronted a constitutional
challenge to the retroactive liability provisions of the Coal
58a
Industry Retiree Health Benefit Act of 1992, codified at
26 U.S.C. §§ 9701-9722 (the “Coal Act”). The Coal Acct
required coal operators such as petitioner Eastern Enterprises
(“Eastern”) to fund future health benefits of current and
former coal mine employees. There was no majority opinion
of the Supreme Court. Writing for the plurality, Justice
O’Connor, joined by three other justices, concluded that the
retroactive impact of the Coal Act as applied to Eastern
Enterprises resulted in an unconstitutional taking of property
because it placed a “severe, disproportionate and extremely
retroactive burden on Eastern.” Eastern Enters., 524 U.S. at
538, 118 S.Ct. 2131.
Justice Kennedy in his concurrence, however, disagreed
with the plurality’s conclusion that the Coal Act resulted in an
unconstitutional taking of property:
Our cases do not support the plurality’s conclusion that
the Coal Act takes property. The Coal Act imposes a
staggering financial burden on the petitioner, Eastern
Enterprises, but it regulates the former mine owner
without regard to property. It does not operate upon or
alter an identified property interest, and it is not
applicable to or measured by a property interest. The
Coal Act does not appropriate, transfer, or encumber an
estate in land (e.g., a lien on a particular piece of
property), a valuable interest in an intangible (e.g.,
intellectual property), or even a bank account or accrued
interest. The law simply imposes an obligation to
perform an act, the payment of benefits. —-
Id. at 540, 118 S.Ct. 2131. The four dissenters in Eastern
Enterprises (Justices Stevens, Souter, Ginbsurg, and Breyer)
agreed that the Takings Clause was not implicated because
“(t]he ‘private property’ upon which the [Takings] Clause
traditionally has focused is a specific interest in physical or
intellectual property. . . . This case involves not an interest in
59a
physical or intellectual property, but an ordinary liability
to pay money... .” /d. at 554, 118 S.Ct. 2131 (Citations
omitted.).
Thus five justices of the Supreme Court in Eastern
Enterprises agreed that regulatory actions requiring the
payment of money are not takings.'? We agree with the
prevailing view that we are obligated to follow the views of
that majority.
This court has similarly concluded that the imposition of an
obligation to pay money does not constitute an unconstitu-
tional taking of property. In Atlas Corp. v. United States, 895
F.2d 745 (Fed.Cir.), cert. denied, 498 U.S. 811, 111 S.Ct. 46,
112 L.Ed.2d 22 (1990), for example, we considered the
constitutionality of the Uranium Mill Tailings Radiation
'° See Parella v. Ret. Bd. of the R.I. Employees’ Retirement Sys., 173
F.3d 46, 58 (ist Cir.1999) (upholding state statute temporarily with-
holding excess retirement benefits against a Takings Clause challenge
because “a majority of justices found that the Takings Clause did not
apply under the facts of Eastern Enterprises, because they concluded that
a Takings Clause issue can arise only after a plaintiff’s property right has
been independently established”); Unity Real Estate Co. v. Hudson, 178
F.3d 649, 659 (3d Cir.) (“[W]e are bound to follow the five-four vote
against the takings claim in Eastern.”), cert. denied, 528 U.S. 963, 120
S.Ct. 396, 145 L.Ed.2d 309 (1999); Holland v. Big River Minerals Corp.,
181 F.3d 597, 606 (4th Cir.1999) (following Supreme Court in holding
Takings Clause inapplicable to the Coal Act because five Justices in
Eastern Enterprises reasoned that “no identifiable property interest was
infringed by the legislation”), cert. denied, 528 U.S. 1117, 120 S.Ct. 936,
145 L.Ed.2d 814 (2000); but see U.S. Fidelity & Guar. Co. v. McKeithen,
226 F.3d 412, 416 (Sth Cir.2000) (citing Eastern Enterprises but
analyzing a Takings Clause challenge to retroactive assessments under the
Louisiana Workers’ Compensation Fund under ad hoc, fact-specific
factors), cert. denied, __U.S.__, 121 S.Ct. 1360, 149 L.Ed.2d 289
(2001); United States v. Hercules, Inc., 247 F.3d 706, 722 (8th Cir.2001)
(stating that “inquiry into the constitutionality of CERCLA . . . would be
‘essentially ad hoc and fact intensive’” (quoting Eastern Enterprises, 524
U.S. at 523, 118 S.Ct. 2131)).
60a
Control Act (*“UMTRCA”), Pub.L. No. 95-604, 92 Stat. 3021
(1978), which required that uranium producers spend large
sums of money to clean up uranium tailings piles, a by-
product of uranium manufacture. We held that the
UMTRCA’s imposition of the obligation to pay money to
clean up the tailings piles did not constitute an
unconstitutional taking of property under the Takings Clause:
In this case, [the uranium producer] has not alleged a
physical taking of any of its property. Its complaint
alleges only that it will be required to spend sums of
money for reclamation of tailings and mill decom-
missioning. Requiring money to be spent is not a taking
of property.
Id. at 756 (citing United States v. Sperry Corp., 493 U.S. 52,
62 n. 9, 110 S.Ct. 387, 107 L.Ed.2d 290 (1989)).
In short, while a taking may occur when a specific fund of
money is involved, the mere imposition of an obligation to
pay money, as here, does not give rise to a claim under the
Takings Clause of the Fifth Amendment.
Ill
The second area, represented by the Supreme Court’s
decision in United States v. Winstar Corp., 518 U.S. 839,
116 S.Ct. 2432, 135 L.Ed.2d 964 (1996), involves contracts
in which the government has agreed to pay damages if it
engages in certain types of regulation.
A similar contract claim was made with respect to the
present contracts and rejected by this court in Yankee Atomic.
In that case, this court was confronted with a claim that the
special assessments imposed under EPACT breached the
utility’s fixed-price contracts with the government by, “in
effect, retroactively increasing the price that it must pay
for the previously supphed uranium enrichment services.”
112 F.3d at 1573. Relying on the analysis prescribed by the
an Dt Oa tao
SEU,
6la
Supreme Court’s decision in Winstar, we held that the
imposition of the special assessments was a lawful exercise of
Congress’s taxing power under the sovereign acts doctrine,
and was not designed to retroactively increase the price of
the government’s earlier contracts with Yankee Atomic.
Id. at 1575. In other words, this court concluded that the
special assessments 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.
We further held that because the contracts between the
plaintiff in that case and the government “did not include an
unmistakable promise that precluded the Government from
later imposing an assessment upon all domestic utilities that
employed the DOE’s uranium enrichment services,” id. at
1580, the special assessments imposed by the Act did not
constitute a breach of contract. We similarly disposed of the
plaintiff's takings claim by concluding that “{b]ecause the
contracts did not contain an unmistakable promise against a
future assessment, [the utility] had no property right (via a
vested contract right) which was subsequently taken by the
assessment.” /d. at 1580 n. 8. This court denied Yankee
Atomic’s motion to rehear the case in banc, 112 F.3d 1569
(Fed.Cir.1997), and the Supreme Court denied certiorari, 524
U.S. 951, 118 S.Ct. 2365, 141 L.Ed.2d 735 (1998).
We reject Edison’s request that we distinguish our decision
in Yankee Atomic. There is no meaningful difference
between the contract theories asserted here and in Yankee
Atomic, and we therefore agree with the Court of Federal
Claims’ conclusion that Edison’s claims based on_ its
contracts with the government are barred by that decision.
This also disposes of Edison’s argument that the Act
constitutes a taking of Edison’s supposed contract rights to be
free of future government assessments.
62a
IV
The third area of judicial review occurs where a regulation
is retroactive and accordingly implicates the Due Process
Clause. The Supreme Court has made clear that federal
legislation is to be construed to avoid retroactivity." No such
issue is presented here since the statute is clear on its face,
and no party urges that a narrowing construction is either
possible or appropriate. Accordingly, we must address the
Due Process issue.
The standard of review in this area is well-settled. As the
Supreme Court stated in Turner Elkhorn, 428 U.S. at 15,
96 S.Ct. 2882, “[i]t is by now well established 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.” So too the Supreme Court
observed in Pension Benefit Guaranty Corp. v. R.A. Gray &
Co., 467 U.S. 717, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984):
Provided that the retroactive application of a statute is
supported by a legitimate legislative purpose furthered
by rational means, judgments about the wisdom of such
legislation remain within the exclusive province of the
legislative and executive branches.
Id. at 729, 104 S.Ct. 2709 (citing Turner Elkhorn, 428 U.S. at
15-16, 96 S.Ct. 2882). Where the basis for the challenge is
'' See Landgraf v. USI Film Prods., 511 U.S. 244, 270, 114 S.Ct. 1483,
128 L.Ed.2d 229 (1994) (“Since the early days of this Court, we have
declined to give retroactive effect to statutes burdening private rights
unless Congress had made clear its intent.”); Bowen v. Georgetown Univ.
Hosp., 488 U.S. 204, 208, 109 S.Ct. 468, 102 L.Ed.2d 493 (1988)
(“(C]Jongressional enactments and administrative rules will not be
construed to have retroactive effect unless their language requires
this result.”).
63a
retroactivity, the Supreme Court has held that Due Process is
satisfied “simply by showing that the retroactive application
of the legislation is itself justified by a rational legislative
purpose.” /d. at 730, 96 S.Ct. 2882.
In judging the rationality of legislation under the Due
Process Clause, an evidentiary trial of facts, such as the
relative contributions of weapons processing and utility fuel
processing to the total contamination at the government
plants, is not required. Rather, as the Supreme Court has
noted in another context:
the question is whether the legislative conclusion [to
enact the statute] was reasonable and supported by
substantial evidence in the record before Congress. In
making that determination, we are not to re-weigh the
evidence de novo, or to replace Congress’ factual
predictions with our own. Rather, we are simply to
determine if the standard [of review] is satisfied. If it is,
summary judgment . . . is appropriate regardless of
whether the evidence is in conflict.
Turner Broad. Sys., Inc. v. FCC, 520 U.S. 180, 211, 117 S.Ct.
1174, 137 L.Ed.2d 369 (1997) (Citations omitted.). In short,
legislative facts control the analysis. In these Due Process
cases the federal courts are not assigned the task of making
policy, determining a fair outcome, or determining the actual
state of facts. We are charged simply with determining
whether the congressional action was rational.
Under that rational purpose standard it will be a rare
circumstance where federal legislation that is retroactive
will be held unconstitutional under the Due Process Clause.
In the modern era this has occurred on only a very few
occasions, even if we count Eastern Enterprises as being such
acase. See Nichols v. Coolidge, 274 U.S. 531, 47 S.Ct. 710,
71 L.Ed. 1184 (1927); Blodgett v. Holden, 275 U.S. 142,
48 S.Ct. 105, 72 L.Ed. 206 (1927) (per curiam); R.R. Ret.
64a
Bd. v. Alton R.R. Co., 295 U.S. 330, 58 S.Ct. 758, 79 L.Ed.
1468 (1935); Eastern Enters., 524 U.S. 498, 118 S.Ct. 2131,
141 L.Ed.2d 451."
The cases that invalidated these statutes were most
unusual.
Both Blodgett v. Holden and Nichols v. Coolidge involved
the government's reiroactive application of revenue statutes
to transactions made well before the enactment of the
respective statutes. The Supreme Court held in both cases
that such retroactive application violated due process.
Blodgett, 275 U.S. at 147, 48 S.Ct. 105; Nichols, 274 U.S.
at 542-43, 47 S.Ct. 710."
In United States v. Carlton, 512 U.S. 26, 114 S.Ct. 2018,
129 L.Ed.2d 22 (1994), the Court questioned the continuing
relevance of those decisions to present day challenges to
retroactive statutes, concluding that “[t]hose cases were
decided during an era characterized by exacting review of
economic legislation under an approach that has long since
been discarded.” /d. at 34, 114 S.Ct. 2018. In any event
those decisions were limited to situations involving a “wholly
new tax.” /d. EPACT, unlike the statutes at issue in those
two Cases, is not a mere revenue-raising measure. Rather, it
represents an assessment on particular existing domestic
utilities, which Congress concluded benefited from the
government’s operation of the uranium enrichment facilities,
'? Cf. United States v. Sec. Indus. Bank, 459 U.S. 70, 78-82, 103 S.Ct.
407, 74 L.Ed.2d 235 (1982) (declining to retroactively construe a
provision of the Bankruptcy Reform Act, Pub.L. No. 95-592, 92 Stat.
2549 (1978), without clear evidence of Congressional intent to apply that
statute retroactively, and expressing “substantial doubt whether the
retroactive” application would “comport with the Fifth Amendment’).
ws Untermyer v. Anderson, 276 U.S. 440, 48 S.Ct. 353, 72 L.Ed. 645
(1928), involved a challenge to the same statute at issue in Blodgett, and
reached the same result.
65a
und which Congress also concluded were themselves partially
responsible for the problem the statute seeks to remedy.
In Alton, the Court invalidated a statute that required
railroads to establish a pension fund covering both current
employees and former employees who had worked for the
railroad within the year before passage of the statute because
of the retroactive effect of the statute. Alton bears little
resemblance to this case, and it appears that Alton, in any
event, has effectively been overruled. See Pension Benefit,
467 U.S. at 733, 104 S.Ct. 2709 (questioning whether Alton
“retains vitality’ despite the changes in judicial review of
economic legislation that have occurred in the ensuing
years”); see also Turner Elkhorn, 428 U.S. at 19, 96 S.Ct.
2882. We note that neither Edison nor any of its amici relies
on Alton.
Eastern Enterprises, which is the focus of the parties’
attention, is also starkly different from this case. There, the
employees’ claims of entitlement to the payment of future
health benefits arose from a number of National Bituminous
Coal Wage Agreements (“NBCWAs” or “Agreements”)
between the employees’ union and various coal mine
operators, The statute in Eastern Enterprises was justified on
the ground that expectations of future benefits had been
created by these agreements. A majority of the Court
concluded that the obligation to pay benefits could not be
imposed on companies that had no role in creating those
expectations.
The plurality noted that Agreements negotiated in 1974,
1978, and subsequently first suggested an industry commit-
ment to the funding of health benefits for former employees
and their dependents. Eastern Enters., 524 U.S. at 530, 118
S.Ct. 2131. The plurality emphasized, however, that Eastern
“ceased its coal mining operations in 1965 and neither
participated in negotiations nor agreed to make contributions
in connection with the [employees’] Benefit Plans under the
66a
1974, 1978 or subsequent NBCWA’s.” /d. Under the
particular facts of that case, the plurality accordingly
reasoned that the Coal Act’s retroactive provisions violated
the Takings Clause of the Fifth Amendment. In_ his
concurrence, Justice Kennedy agreed with the plurality that
the particular facts of the case warranted the invalidation of
the statute, but based his reasoning on Due Process grounds.
He wrote:
Eastern was once_in the coal business and employed
many of the beneficiaries, but it was not responsible for
their expectation of lifetime health benefits. . . . As the
plurality opinion discusses in detail, the expectation was
created by promises and agreements made long after
Eastern left the coal business. Eastern was not
responsible for the resulting chaos in the funding
mechanism caused by other coal companies leaving the
framework of the [NBCWA]. This case is far outside the
bounds of retroactivity permissible under our law.
524 US. at 550, 118 S.Ct. 2131 (Kennedy, J., concurring).
Even if the Eastern Enterprises plurality and concurrence
could be read together to announce a binding holding on the
Due Process issue,'* this case does not involve the
imposition of liability on companies having no responsibility
for creating the expectation of a future benefit. Rather, it
involves a congressional determination to impose liability on
companies that received a benefit, the production of which
benefit contributed to a societal problem.
'* The District of Columbia Circuit has concluded that the plurality and
concurrence in Eastern Enterprises cannot be combined into a single
holding on the Due Process issue. Ass'n of Bituminous Contractors v.
Apfel, 156 F.3d 1246, 1254-55 (D.C.Cir.1998) (“Justice Kennedy's
concurrence in the judgment is of no help in appellant’s efforts to cobble
together a due process holding from Eastern Enterprises’ fragmented
parts. . . . Justice Kennedy’s due process reasoning can in no sense be
thought a logical subset of the plurality’s takings analysis.”).
67a
On the other side of the balance, on more than ten
occasions, the Supreme Court has rejected challenges to
economic legislation based on the Due Process Clause of the
Fifth Amendment. See United States v. Carlton, 512 U.S. 26,
35, 114 S.Ct. 2018, 129 L.Ed.2d 22 (1994) (upholding a
retroactive amendment to the federal estate tax, even though
the taxpayer received no advance notice of the amendment
and relied to his detriment on pre-amendment law); Concrete
Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Trust
for S. Cal., 508 U.S. 602, 636-41, 113 S.Ct. 2264, 124
L.Ed.2d 539 (1993) (upholding retroactive withdrawal
liability provisions of the Multiemployer Pension Plan
Amendments Act (“MPPAA”) which assessed employer
nearly $300,000 for its withdrawal from a pension plan prior
to the effective date of the MPPAA); Gen. Motors Corp. v.
Romein, 503 U.S. 181, 191-92, 112 S.Ct. 1105, 117 L.Ed.2d
328 (1992) (finding that Michigan workers’ compensation
statute did not violate the Due Process Clause, even though it
required the petitioners to pay nearly $25 million for
retroactive benefits to disabled employees); United States v.
Sperry Corp., 493 U.S. 52, 64-65, 110 S.Ct. 387, 107 L.Ed.2d
290 (1989) (upholding retroactive imposition of an arbitration
fee on prevailing parties before the Iran United States Claim
Tribunal); United States v. Hemme, 476 U.S. 558, 571, 106
S.Ct. 2071, 90 L.Ed.2d 538 (1986) (rejecting Due Process
challenge to statutorily-prescribed transitional rule that
retroactively applied to gifts made before enactment of rule);
United States v. Locke, 471 U.S. 84, 105-06, 105 S.Ct. 1785,
85 L.Ed.2d 64 (1985) (upholding the retroactive application
of the filing requirements of the Federal Land Policy and
Management Act of 1976 (“FLPMA”), codified at 43 U.S.C.
§ 1744, that resulted in the forfeiture of mining claims made
before the enactment of the FLPMA); Nat'l R.R. Passenger
Corp. v. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S. 451,
475-79, 105 S.Ct. 1441, 84 L.Ed.2d 432 (1985) (upholding
legislation requiring private railroads to reimburse Amtrak for
68a
rail travel privileges provided by Amtrak to the private
railroads’ employees and former employees even though
Amtrak for some years had not imposed such costs on
the private railroads); Pension Benefit, 467 U.S. at 731-32,
104 S.Ct. 2709 (upholding the retroactive application of
the withdrawal liability provisions of the MPPAA during
period before the MPPAA’s enactment); United States v.
Darusmont, 449 U.S. 292, 296-302, 101 S.Ct. 549, 66
L.Ed.2d 513 (1981) (upholding the retroactive application of
an amendment to the federal tax statute to transactions made
before enactment of amendment); Turner Elkhorn, 428 U.S.
at 18, 96 S.Ct. 2882 (upholding requirement that coal mine
operators compensate former employees disabled by
work-related illnesses, even though those operators had never
contracted for such liability, and the employees involved
were no longer employed by the operators); FHA v. The
Darlington, Inc., 358 U.S. 84, 91, 79 S.Ct. 141, 3 L.Ed.2d
132 (1958) (upholding application of statutory requirement
that occupants of mortgaged housing must be residents as
opposed to transients to apartment buildings mortgaged prior
to enactment of the statute); Lichter v. United States, 334
U.S. 742, 788, 68 S.Ct. 1294, 92 L.Ed. 1694 (1948)
(upholding statute permitting government to require private
parties to pay excessive profits realized during wartime to the
government); Welch v. Henry, 305 U.S. 134, 146-51, 59 S.Ct.
121, 83 L.Ed. 87 (1938) (sustaining retroactive Wisconsin
statute that taxed shareholder dividends paid two years before
statute’s enactment); Funkhouser v. J.B. Preston Co., 290
U.S. 163, 167-68, 54 S.Ct. 134, 78 L.Ed. 243 (1933)
(upholding retroactive application of statute providing that
interest be added to damages awards for breach of contract
claims); Milliken v. United States, 283 U.S. 15, 21-24, 51
S.Ct. 324, 75 L.Ed. 809 (1931) (upholding retroactive
application of federal estate tax statute to tax gifts made prior
to enactment of the statute). In Eastern Enterprises, both the
plurality and Justice Kennedy suggested that liability for
50 Wi stdin hed RAR nl decialoheves
i
win tly wu ee ate
69a
health care costs limited to miners formerly employed by the
companies could be retroactively imposed, presumably
because the companies benefited from their services, and the
performance of those services contributed to the health
problems." Significantly, other courts of appeals have
rejected claims that similar retroactive effects of the
Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. § 9601, et seq., (“CERCLA”) violate
Due Process. See United States v. Northeastern Pharm. &
Chem. Co., 810 F.2d 726, 734 (8th Cir.1986), cert. denied,
484 U.S. 848, 108 S.Ct. 146, 98 L.Ed.2d 102 (1987); United
States v. Monsanto Co., 858 F.2d 160, 174 (4th Cir.1988),
cert. denied, 490 U.S. 1106, 109 S.Ct. 3156, 104 L.Ed.2d
1019 (1989); Franklin County Convention Facilities Auth. v.
Am. Premier Underwriters, Inc., 240 F.3d 534, 551-52
(6th Cir. 2001).'° And we also have repeatedly rejected Due
'S See Eastern Enters., 524 U.S. at 536, 118 S.Ct. 2131 (“Eastern might
be responsible for employment-related health problems of all former
employees whether or not the cost was foreseen at the time of
employment . .. .”) (plurality opinion); id. at 549, 118 S.Ct. 2131 (noting
that the Supreme Court has “upheld the imposition of liability on former
employers based on past employment relationships”) (Kennedy, J.,
concurring); see also Turner Elkhorn, 428 U.S. at 18, 96 S.Ct. 2882
(“[T]he imposition of liability for the effects of disabilities bred in the past
is justified as a rational measure to spread the costs of the employees’
disabilities to those who have profited from the fruits of their labor. . . .”).
'© These courts have reasoned that “{c]leaning up inactive and
hazardous waste disposal sites is a legitimate legislative purpose, and
Congress acted in a rational manner in imposing liability for the cost of
cleaning up such sites upon those parties who created and profited from
the sites and upon the chemical industry as a whole.” Northeastern
Pharm., 810 F.2d at 734. See also, e.g., O'Neil v. Picillo, 883 F.2d 176,
183 n. 12 (ist Cir.1989), cert. denied sub nom. American Cyanamid Co.
v. O’Neil, 493 U.S. 1071, 110 S.Ct. 1115, 107 L.Ed.2d 1022 (1990);
United States v. R.W. Meyer, Inc., 889 F.2d 1497, 1506 (6th Cir.1989),
cert. denied, 494 U.S. 1057, 110 S.Ct. 1527, 108 L.Ed.2d 767 (1990);
Long Beach Unified Sch. Dist. v. Godwin Cal. Living Trust, 32 F.3d 1364,
1366 (9th Cir. 1994).
70a
Process challenges to retroactive federal statutes. See, e.g.,
Atlas, 895 F.2d at 756 (upholding retroactive legislation
requiring uranium producers to spend large sums of money to
clean up uranium tailings piles).
Not surprisingly, in light of this history, the Supreme Court
has repeatedly advised us that such Due Process challenges
will only succeed in the rarest of cases. As Justice Kennedy
noted in Eastern Enterprises, “[s}tatutes may be invalidated
on due process grounds only under the most egregious of
circumstances.” 524 U.S. at 550, 118 S.Ct. 2131.
Although such “most egregious circumstances” do not
exist unless the legislation is severely retroactive, they do not
exist merely because the legislation is severely retroactive
and costly, as is the case here. Without attempting to define
exactly when retroactive legislation will be held
unconstitutional, we perceive that the imposition of even
severe retroactive obligations for past acts will be found
rational and will be held constitutional under the Due Process
Clause if two conditions are satisfied: (1) Congress
reasonably concluded that 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. It may well be that legislation is constitutional
if either of the two conditions is satisfied, but we need not
decide that question in this case. Both of those conditions
are present. ;
The first is easily disposed of. Whether or not Edison
received the enrichment services below cost from the govern-
ment, as the government asserts, it certainly benefited from
the government's provision of enrichment services. Edison
admits that it received a benefit from the government's
enrichment services (though it claims to have fully
Tila
compensated the government for the benefit).'’ Indeed,
Edison could hardly have operated nuclear reactors without
the benefit of uranium enrichment services from the United
States government or some other approved source.
Congress could reasonably conclude that the processing of
the utilities’ uranium contributed to a societal problem
(processing plant pollution) on two separate theories. First,
while the weapons processing may have fully contaminated
the buildings at the plants, the utility processing contributed
to increased costs associated with decontaminating the
grounds around the facilities and disposing of the tails.
Second, whether or not the utility processing marginally
increased the remediation costs, Congress could reasonably
conclude that the later pollution should bear a share of the
costs. Edison and utility industry groups themselves
contributed to Congress’ conclusion that the utilities were
responsible by explicitly recognizing in the course of the
legislative consideration that it would be fair to imipose a
share of the remediation costs on the utilities. See ante at
1334-36. The Court of Federal Claims does not sit to retry as
a factual matter the reasonableness of such congressional
judgments.'*
"” See Brief for Plaintiff Appellant Commonwealth Edison Co. at 62
(“Although Commonwealth Edison obviously received a ‘benefit’ when it
obtained enrichment services from the government, it paid a price agreed
between the parties to represent the fair value of that benefit.”).
Even if the legislative history here were devoid of support for
Congress’ conclusions, it would not, of course, be “significant for due
process purposes that the legislative history” did not address the issue of
causation. Ass'n of Bituminous Contractors, Inc. v. Apfel, 156 F.3d 1246,
1256 n. 7 (D.C.Cir.1998). “{T]he government can create a rational
explanation ex post to support a statute attacked on due process grounds.
That being so, we can hardly require a showing that Congress specifically
identified [the] cause of the problem before it passed the [Act] in order to
sustain the Act under rational basis review.” Jd. See also FCC v. Beach
Communications, Inc., 508 U.S. 307, 315, 113 S.Ct. 2096, 124 L.Ed.2d
72a
The remediation costs imposed on Edison and the other
domestic utilities also are not severely disproportionate;
these utilities are obligated to pay only about a third of the
remediation costs, even though evidence was presented that
the “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.'? In Pension Benefit, 475 U.S. at
225-26, 106 S.Ct. 1018, for example, the Supreme Court held
that the Multiemployer Pension Plan Amendments Act of
1980, 94 Stat. 1208 (“MPPAA”) did not constitute an
unconstitutional taking of property under the Takings Clause
of the Fifth Amendment because “[t]here is nothing to show
that the [retroactive] withdrawal liability actually imposed on
an employer will always be out of proportion to its experience
with the plan, and the mere fact that the employer must pay
money to comply with the [MPPAA] is but a necessary
consequence of the MPPAA’s regulatory scheme.” /d. The
mere fact that foreign utilities are exempted from the
assessment also does not mean that the liability imposed on
the domestic utilities is severely disproportionate. See Ass'n
of Bituminous Contractors, Inc. v. Apfel, 156 F.3d 1246,
1255-56 (D.C.Cir.1998); Holland v. Keenan Trucking Co.,
102 F.3d 736, 741-42 (4th Cir.1996).
211 (1993) (“[B]Jecause we never require a legislature to articulate its
reasons for enacting a statute, it is entirely irrelevant for constitutional
purposes whether the conceived reason . . . actually motivated the
legislature. Thus, the absence of ‘legislative facts’ . . . has no significance
in rational-basis analysis. In other words, a legislative choice_is not
subject to courtroom factfinding. . . .””) (Citations omitted.).
'? Amici Sacramento Municipal Utility District and Maine Yankee
Atomic Power Company urge that a small portion of the Fund
(approximately $75 million) has been used for thorium cleanup for which
the utilities were not responsible. Considering that $7.2 billion was
authorized for the Fund, see 42 U.S.C. § 2297g-1(a), (d), this de minimus
diversion of funds does not affect our analysis.
—o
73a
This conclusion standing alone may be sufficient to
warrant rejection of Edison’s Due Process argument. The
Supreme Court has held that it is rational for Congress to
impose costs for certain activities on “those who have
profited from the fruits of” activities that contributed to a
societal problem, Turner Elkhorn, 428 U.S. at 18, 96 S.Ct.
2882, and that “our cases are clear that legislation readjusting
rights and burdens is not unlawful solely because it upsets
otherwise settled expectations,” id. at 16, 96 S.Ct. 2882.
However, Edison also has failed to establish that the
retroactivity violated the utilities’ reasonable expectations.
That issue requires more extensive discussion.
Vv
One of the key questions in the Supreme Court’s
retroactivity decisions is whether the regulated party could
have reasonably expected that it would be free from the
regulatory exaction. Those decisions suggest that if the
regulated party could have reasonably expected that it would
be subject to regulation, there can be no constitutional Due
Process violation. See, e.g., Concrete Pipe & Prods. of Cal.,
508 U.S. at 646, 113 S.Ct. 2264.” This critical theme was
reiterated by each of the separate opinions in Eastern
Enterprises. There the question was directed to reasonable
expectations at the time that Eastern operated coal mines.
The plurality concluded that the Coal Act constituted an
impermissible taking because, in part, it “substantially
interferes with Eastern’s reasonable investment-backed
expectations.” Eastern Enters., 524 U.S. at 532, 118 S.Ct.
2131. In reaching this conclusion, the plurality emphasized,
° Cf. Rogers v. Tennessee, 532 U.S. 451, 121 S.Ct. 1693, 1700-01,
149 L.Ed.2d 697 (2001) (retroactive judicial abolition of archaic common
law rule, which precluded murder conviction where victim did not die
within year and a day of stabbing, was not unexpected under prior law,
and thus did not violate Due Process).
74a
in part, that Eastern had left the coal mining industry and had
ceased to employ miners years before “lifetime medical
benefits . . . [could] have been viewed as promised” by the
industry. /d. at 535, 118 S.Ct. 2131.
Justice Kennedy, on Due Process grounds, agreed with the
plurality that the three-factor regulatory takings analysis set
forth in Penn Central Transportation Co. v. New York City,
438 U.S. 104, 124, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978),
including investment-backed expectations, was relevant to the
analysis of the Coal Act’s retroactivity. Eastern Enters, 524
U.S. at 547, 118 S.Ct. 2131 (Kennedy, J., concurring). He
sustained Eastern’s challenge to the Coal Act, in part, because
the miners’ expectations of future health benefits were
“created by promises and agreements made long after Eastern
left the coal business.” Jd. at 550, 118 S.Ct. 2131.
The dissenters likewise focused on Eastern’s reasonable
expectations to conclude that “the historical circumstances,
taken together, prevent Eastern from showing that the Coal
Act’s ‘reachback’ liability provision so frustrates Eastern’s
reasonable settled expectations as to impose an unconsti-
tutional liability.” /d. at 559, 118 S.Ct. 2131. Thus, in
Eastern Enterprises there was remarkable agreement on the
reasonable expectations standard, if not its application to the
particular case.
In addressing the issue of reasonabie expectations here, we
must separate the government as sovereign from the
government as contracting party. The question, in other
words, is not what Edison could expect the United States as
contracting party to do but what it could reasonably expect
the United States as sovereign to do. See United States v.
Winstar Corp., 518 U.S. 839, 116 S.Ct. 2432, 135 L.Ed.2d
964 (1996). Nor does the question require an evidentiary
trial. Edison’s subjective expectations are irrelevant. The
question is what a reasonable company in Edison’s position
should have anticipated.
75a
VI
The cases suggest three factors relevant to a determination
of a party’s reasonable expectations. First, was the company
operating in a highly regulated industry? Second, did the
company know of the problem at the time it engaged in the
activity? Third, in the light of the regulatory environment at
the time of the activities, could the possibility of the
assessments have been reasonably anticipated? We conclude
that each of these three factors is present here, and therefore
we do not need to decide whether the presence of only one of
these factors, without more, suffices to establish a lack of
reasonable expectations.
Operation in a Highly Regulated Industry
First, it is undisputed that Edison operates in a highly
regulated industry. As has been noted, “the production of
energy from nuclear sources is one of the most highly
regulated human activities.” Peter Riley, Legal Control of
Nuclear Energy Between States, 21 Cal. W. Int’l L.J. 303,
303 (1991).
We have previously held that participants in this highly
regulated field can expect liability for remediation costs.
Thus, in Atlas, 895 F.2d at 745, we considered the
constitutionality of the UMTRCA, codified at 42 U.S.C.
§§ 2022, 2113, 2114, 7901-7942, which required that
uranium producers spend large sums of money to clean up
uranium tailings piles. We held that the Court of Federal
Claims had properly dismissed the complaint for failure to
state a claim:
From the outset of the uranium procurement program,
the nuclear industry has been highly regulated, as the
plaintiffs admit. “Those who do business in the regulated
field cannot object if the legislative scheme is buttressed
by subsequent amendments to achieve the legislative
end.” Connolly, 475 U.S. at 227, 106 S.Ct. 1018,
76a
quoting FHA v. The Darlington, Inc., 358 U.S. 84, 91,
79 S.Ct. 141, 146, 3 L.Ed.2d 132 (1958). The only
“expectation” that [the processors] could have under the
circumstances it has alleged is that it expected it would
not have to spend its own money to remediate health and
environmental hazards created by its production of
uranium. Such an expectation cannot be a reasonable
commercial expectation.
Id. at 758. This holding was directly supported by the
Supreme Court’s decision in Connolly, in which the Court
concluded that the imposition of withdrawal liability from a
multiemployer pension plan on certain employers did not
interfere with the company’s reasonable expectations
because, in part, the companies were well aware that
“[p]Jension plans . . . were the objects of legislative concern,”
and “it was clear” to those companies operating in that highly
regulated industry that withdrawal liability could be
retroactively imposed. 475 U.S. at 226-27, 106 S.Ct. 1018.
We are aware of no case to the contrary.
Edison’s Knowledge of the Hazards of the Uranium
Processing
Second, it is undisputed that all parties here were aware of
the hazardous nature of the materials. In its amended
complaint, Edison admitted that the need to decontaminate
and decommission the facilities “was an obligation well
understood by operators of nuclear facilities throughout the
industry.” Complaint at § 31. Likewise, counsel for Edison
conceded at oral argument here that “[i]t was recognized from
way back in the 1950s that there would be decontamination
and decommissioning costs” arising from the operation of the
uranium processing facilities.
A number of Supreme Court decisions make clear that
company knowledge of the dangers present in their operations
is relevant to a determination of reasonable expectations. In
PERNT PO RAE MAID. SL BN OTA BO DTN OOM le a LA Cee Oe Hse RANA Wn ae i Ri Ll) he wipe ta aCe
77a
Turner Elkhorn, for example, the Supreme Court noted that
the coal mine operators had “been aware of the danger of
pneumoconiosis for at least 20 years... .” 428 U.S. at 17,
96 S.Ct. 2882. So too in Gen. Motors Corp. v. Romein,
503 U.S. 181, 112 S.Ct. 1105, 117 L.Ed.2d 328 (1992), the
Supreme Court ruled that a retroactive 1987 Michigan
workers’ compensation statute had not “unreasonably
interfered with closed transactions” because the employers
“knew they were taking a risk in reducing benefits to their
workers, but they took their chances with their interpretation
of the 1981 law.” Id. at 191-92, 112 S.Ct. 1105.”
The Regulatory Environment
Finally, the regulatory environment is pertinent. We first
consider the regulatory environment at the time when Edison
received uranium enrichment services from the government.
This focus on the regulatory climate at the time of the
processing is supported not only by the Due Process cases
discussed above but also by the regulatory takings cases.
The Eastern Enterprises plurality judged reasonable
expectations for purposes of the takings analysis at the time
of the relevant activity. Eastern Enters., 524 U.S. at 532,
118 S.Ct. 2131. So too in Pension Benefit, 475 U.S. 211, 106
S.Ct. 1018, 89 L.Ed.2d 166, for example, the Supreme Court
rejected the employer’s takings claim that money had been
taken unconstitutionally because, in part, it found that:
Pension plans, however, were the objects of legislative
concern long before the passage of ERISA in 1974....
Prudent employers then had more than sufficient notice
not only that pension plans were currently regulated, but
7! Other courts of appeals have also rejected challenges to CERCLA’s
retroactivity because, in part, “it was certainly foreseeable at the time that
improper disposal could cause enormous damage to the environment.”
Monsanto Co., 858 F.2d at 174.
78a
also that withdrawal itself might trigger additional
financial obligations.
Id. at 226-27, 106 S.Ct. 1018.”
Where a Due Process violation is alleged because the
government has ordered the payment of money, we think that
reasonable expectations are to be judged as of the point at
which the complaining party entered into the activity that
triggered the obligation—here the submission of uranium for
processing. We have no doubt that the utilities were on notice
of the possible imposition of remediation liability at the times
when the material was submitted for processing.
We first address the period following the enactment in
1980 of CERCLA, when the utilities should have been aware
that statutory liability might be extended to cover other
hazardous substances.”
CERCLA is a broad, remedial statute enacted by Congress
in order to ensure “that those responsible for any damage,
environmental harm, or injury from chemical poisons bear
the costs of their actions.” Gen. Elec. Co. v. AAMCO
Transmissions, Inc., 962 F.2d 281, 285 (2d Cir.1992)
*? Where a regulatory taking of real property is alleged, the state cannot
defeat liability simply by showing that the current owner was aware of the
regulatory restrictions at the time that the property was purchased. See
Palazzolo v. Rhode Island, 533 U.S. 606,___, 121 S.Ct. 2448, 2462, 150
L.Ed.2d 592 (2001). As Justice O’Connor’s concurring opinion in
Palazzolo makes clear, however, even in that context the regulatory
environment at the time of the acquisition of the property remains both
relevant and important in judging reasonable expectations. /d. at 2465-66.
> CERCLA liability only attached to cleanup costs arising from the
remediation of substances defined to be “hazardous substances” under
CERCLA and the Environmental Protection Agency’s implementing
regulations. 42 U.S.C. § 9601(14); 40 C.F.R. § 302.4 (listing, inter alia,
arsenic, lead, mercury and methane as hazardous substances). There is no
dispute here that the uranium was a “hazardous substance” under
CERCLA.
Ao cate grt es nl aay ‘
TNE BEER ISI RAS RM PC Oa: RAL coh aren 89 5 Tahoe SURG Oy I caged 25 Aeliey What Manele
79a
(quoting S.Rep. No. 96-848, at 13 (1980)). Under CERCLA,
the Environmental Protection Agency (“EPA”) is authorized
to undertake remedial efforts to clean up hazardous waste
spills, and, where an “imminent and substantial endangerment
to the public health exists,” to take legal action in order to
compel potentially responsible parties to undertake their
own private cleanup efforts. Gen. Elec. Co., 962 F.2d at 285;
42 U.S.C. § 9606(a).
There are several aspects of CERCLA of immediate
relevance here:
“CERCLA is a strict liability statute, one of the
purposes of which is to shift the cost of cleaning up
environmental harm from the taxpayers to the parties
who benefited from the disposal of the wastes that
caused the harm.” Jn re Bell Petroleum Servs., 3 F.3d
889, 897 (Sth Cir.1993); see also United States vy.
Aceto Agric. Chems. Corp., 872 F.2d 1373, 1378 (8th
Cir.1989).
CERCLA by its terms has unlimited retroactivity. Indeed,
every court of appeals to consider the question has concluded
that Congress intended CERCLA to apply retroactively. See,
e.g., Northeastern Pharm., 810 F.2d at 732; Monsanto, 858
F.2d at 174.
While the statute does cap those costs that may be imposed
on current and former owners and other potentially
responsible parties, those caps are quite high. See 42 U.S.C.
§ 9607(c). For example, the liability for the release of a
hazardous substance from a facility is “the total of all costs
of response plus $50,000,000 for any damages... .”
§ 9607(c)(1)(D).
Costs may be imposed on any current or former property
owner or other potentially responsible party. See Monsanto,
858 F.2d at 167. Under CERCLA’s liability provision,
responsible parties include those who arrange for the
rT
80a -
treatment of hazardous substances. A party may be liable
under CERCLA for the arrangement for treatment of any
“hazardous substances owned or possessed by [that party]. . .
at any facility owned or operated by another party or entity
and containing such hazardous substances. .. .” /d. m
This type of “arranger liability” may be imposed even if
the party who arranges for the treatment of the hazardous
substance does not actually perform the treatment. In Aceto,
872 F.2d 1373, for example, the Eighth Circuit held, inter
alia, that the defendants which hired another company to
formulate their technical grade pesticides into commercial
grade pesticides, would be liable as an arranger under
CERCLA if it were established that the defendants owned the
technical grade pesticides and the final product and, in
addition, knew that the generation of hazardous wastes was
inherent in the formulation process. /d. at 1381-82.7°
4 Section 9607(a)(3) imposes liability for “all costs of removal or
remedial action incurred by the United States Government or a State” on:
[A]ny person who, by contract, agreement, or otherwise
arranged for disposal or treatment, or arranged with a transporter
for transport for disposal or treatment, of hazardous substances
owned or possessed by such person, by any other party or entity, at
any facility or incineration vessel owned or operated by another
party or entity and containing such hazardous substances ....
42 U.S.C. § 9607(a)(3) (Emphases added.).
?° Numerous other courts of appeals have approved the holding in
Aceto. See, e.g., Jones-Hamilton Co. v. Beazer Materials & Servs., Inc.,
973 F.2d 688, 695 (9th Cir.1992).
Edison and the supporting amici unsuccessfully attempt to limit the reach
of Aceto, based on decisions from other courts of appeals suggesting that
that case would not extend to other situations, for example, situations in
which the utilities merely arranged for the transportation of hazardous
substances, see United States v. Cello-Foil Products, Inc., 100 F.3d 1227,
1232 (6th Cir.1996), and Amcast Industrial Corp. v. Detrex Corp., 2 F.3d
746, 751 (7th Cir.1993), cert. denied, 510 U.S. 1044, 114 S.Ct. 691, 126
L.Ed.2d 658 (1994), or the material submitted for processing was not
8la
In other words, by 1980, Edison could have reasonably
expected that the enrichment of its uranium by an indepen-
dent contractor (the United States) could result in the passage
of legislation retroactively imposing liability for a portion of
the remediation costs on Edison and the other utilities that
benefited from the processing facilities. -
Even before the enactment of CERCLA in 1980
liability-imposing regulations were either already in place, or
could have been anticipated. CERCLA was not an
unheralded statute. Federal statutes enacted in the 1960s and
1970s imposed obligations on the federal government to
develop and maintain certain minimum standards for clean
air, see “Clean Air Act” of 1963, Pub.L. No. 88-206, 77 Stat.
392, codified at 42 U.S.C. §§ 7401-7642, and clean water, see
Federal Water Pollution Control Act Amendments of 1972,
Pub.L. No. 92-500, 86 Stat. 816, codified as amended at
33 U.S.C. §§ 1251-1376 (the “Clean Water Act” of 1972). In
1970, Congress enacted the National Environmental Policy
Act, Pub.L. No. 91-190, 83 Stat. 852 (1970), codified at
42 U.S.C. §§ 4321-4370a, which required all federal
agencies, inter alia, to conduct thorough assessments of the
environmental impacts of all major programs.
By 1969, a number of federal statutes had been enacted or
interpreted to impose liability for environmental damages.
Section 13 of the Rivers and Harbors Appropriation Act of
1899, 30 Stat. 1152 (codified as amended at 33 U.S.C. § 407),
for example, prohibited the discharge of refuse into navigable
waters without a permit. In the 1960s, the Supreme Court
interpreted that prohibition broadly to impose strict liability
on companies for obstruction of waterways caused by the
discharge of industrial waste. See, e.g., United States v.
Republic Steel Corp., 362 U.S. 482, 491, 80 S.Ct. 884,
itself hazardous, see Concrete Sales & Services, Inc., v. Blue Bird Body
Co., 211 F.3d 1333, 1339 (11th Cir.2000).
82a
4 L.Ed.2d 903 (1960); United States v. Standard Oil Co., 384
U.S. 224, 229-30, 86 S.Ct. 1427, 16 L.Ed.2d 492 (1966)
(construing the Rivers and Harbors Appropriation Act of
1899 to prohibit discharge of oil). Other statutes enacted in
the 1970s imposed liability, inter alia, for the improper
handling, storage and disposal of hazardous wastes. See, e.g.,
Resource Conservation and Recovery Act of 1976, Pub.L.
No. 94-580, 90 Stat. 2795, codified at 42 U.S.C. §§ 6901-
6987; Toxic Substances Control Act of 1976, Pub.L.
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