# Petition for Writ of Certiorari — Yankee Atomic Electric Co v. United States, 41 Fed. Cl. 2365 (1998) (No. 97-801) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386013_1726%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1998 ## Text FiLED 92% 801 NOV 1 21997 No. 97 ——— iota oae an SS IN THE Supreme Court of the United States OCTOBER TERM, 1997 YANKEE ATOMIC ELECTRIC COMPANY, Petitioner, Vv. UNITED STATES OF AMERICA, Respondent. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Federal Circuit PETITION FOR A WRIT OF CERTIORARI WILLIAM E. RIETHLE JERRY STOUCK * Corporate Counsel CATHERINE R. BAUMER YANKEE ATOMIC DAVID R. LIPSON ELECTRIC COMPANY SPRIGGS & HOLLINGSWORTH 580 Main Street 1350 I Street, N.W. Bolton, MA 01740 Ninth Floor (508) 779-6711 Washington, D.C. 20005 (202) 898-5800 Attorneys for Petitioner Yankee Atomic Electric Company November 12, 1997 * Counsel of Record WILSON - EPes PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001 QUESTIONS PRESENTED 1. Whether the federal government, having entered into fixed-price contracts to sell certain services, may subsequently enact legislation that imposes additional costs—incurred by the government in providing those services—predominantly on the purchasers under the previous fixed-price contracts? 2. May Congress impose retroactive financial liability on companies based solely on the fact that they purchased government services as much as thirty years ago? ii RULE 29.6 STATEMENT The parent companies of Petitioner Yankee Atomic Electric Company are: New Engiand Power Company The Connecticut Light and Power Company Boston Edison Company Central Maine Power Company Public Service Company of New Hampshire Western Massachusetts Electric Company Montaup Electric Company Central Vermont Public Service Corporation Commonwealth Electric Company Cambridge Electric Light Company Petitioner has no subsidiaries. TABLE OF CONTENTS Page ee BETS, PD corre ecctncstenseteeesiintindinncenscnesncnsae i Be i emmnpembamiocmnnnt ii I eos as osicnancaneanisomoncnaoorapesioese Vv Ne ne cssaeeeeceannnlgimabieiaie’ 1 a IEE ING, SER ENCE St a2 SR ae ee VP OL 1 CONSTITUTIONAL AND STATUTORY PROVI- Es ERERAGY TCS SMe Dai On ne Cana U See a 2 I sa ilnsimeseuibeenloananhacaohoks 2 CONS EERE SBOE ISO ot LT nem ROR TOOL he 3 Ne soe cdinraemnanciwnpsysinons 6 REASONS FOR GRANTING THE PETITION ............. 7 I, TH# FEDERAL CIRCUIT IMPROPERLY DE- TERMINED THAT A FEDERAL STATU- TORY PROVISION THAT PREDOMINANTLY IMPACTS THE GOVERNMENT’S' CON- TRACTING PARTNERS [5 A “PUBLIC AND GENERAL” SOVEREIGN ACT FOR WHICH THE GOVERNMENT IS IMMUNE FROM CONT OAs UA LJABILITY ..................-......-.. 9 Il. THE FEDERAL CIRCUIT MISTAKENLY HELD THAT A THIRTY-YEAR RETROAC- TIVE MONETARY ASSESSMENT IS JUSTI- FIED BY NOTHING MORE THAN THE PAST PURCHASE OF GOVERNMENT- PRODUCED SERVICES .................................... 16 (iii) iv TABLE OF CONTENTS—Continued Page Ill. THE FEDERAL CIRCUIT DECISION FUN- DAMENTALLY ALTERS THE PROPER BAL- ANCE BETWEEN THE GOVERNMENT'S SOVEREIGN AUTHORITY AND THE CON- TRACTUAL AND FIFTH AMENDMENT RIGHTS OF THOSE WITH WHOM IT DOES TEER INUIT di. ciate cask anise pa incon ain eababiabaliiabalnuaamicas 19 O8).(e RA) 0) eee ss ee ak 21 PY yt ft) } Sears VALE ate POEMS PLOT Dele MUG Re Nene la Opinion of the United States Court of Appeals for I rN are si la Opinion of the United States Court of Federal UN a cl a oe ae ae fei ERC a ae 33a Order of the United States Court of Appeals for the Federal Circuit (Aug. 15, 1997) ...0....0.0000... 44a ey TIS oe ee Se Vv TABLE OF AUTHORITIES CASES Page Concrete Pipe & Prods. v. Construction Laborers Pension Trust, 508 U.S. 602 (1993) —....-00000.. 8,17 Eastern Enterprises v. Chater, 110 F.3d 150 (1st Cir. 1997), cert. granted sub nom. Eastern En- terprises v. Appel, 66 U.S.L.W. 3296 (U.S. Oct. 20, 1997) (No. 97-42) ..... Pita elt Sadie a) 8-9, 17, 18, 21 Horowitz v. United States, 267 U.S. 458 (1926)...... 11 Landgraf v. USI Film Prods., 511 U.S. 244 (1994).. 16 Lawrence v. Chater, 516 U.S. 193 (1996) ......... deceit 21 Lynch v. United States, 292 U.S. 571 (1934) .......... 13, 14 Murray v. Charleston, 96 U.S. 432 (1878) .....00002.... 13 Nichols v. Coolidge, 274 U.S. 531 (1927)... 19 Pension Benefit Guaranty Corp. v. R.A. Gray & CO EE Rs UR REE) ois anes 18-19 Perry v. United States, 294 U.S. 330 (1935) ........... 13, 14 Puerto Rico v. Russell & Co., 315 U.S. 610 (1942).. 13 United States v. Carlton, 512 U.S. 26 (1994) .......... 18, 19 United States v. Darusmont, 449 U.S. 292 (1981)... 19 United States v..Winstar Corp., 116 S.Ct. 2432 Be} WOR Sapo sarees ) SRE ap Ree Miner cknter ember ae i 2 RES Ra BLS Ye » & RMR eeneen emi eeean ene mie Onan 6 fe Sis We UG Epi soi bcescencs gcse oe eee 3 Energy Policy Act of 1992, Pub. L. No. 102-486, 106 Stat. 2776 (codified in scattered sections of Ne BEB As Fis cipcishaeebcuces Laka ores sme ee ec ee passim Oe Bre Te PR i a ae 4 ee re hse I ease ied ea on 4 ee cas. OE os cheers reccakcruns He ait 4 Ge teehee 6 ee a a 4 Te CF aaies Te TIED Sr chicciesnss cartons nttinbacceamcicae) 4,5, 16 vi TABLE OF AUTHORITIES—Continued 42 U.S.C. § 2297g-1(d) Oe EEA GSD ctitetavcecsdenitniieegitscacdcidlcomn Fe Ca ee PE iil neiditg itciegs taltcchccisathabesenthite MISCELLANEOUS H.R. Rep. No. 102-474(1) (1992), reprinted in AES UIE states sciatic nccaesempumiipeieivensies H.R. Rep. No. 102-474(II) (1992), reprinted in BE Sia ates HIT chai bikes ckcccsilcs teh cmavedicons Office of Envtl. Mgmt., U.S. Dep’t of Energy, Uranium Enrichment Decontamination & De- commissioning Fund Triennial Report 14 (May 8, 1996) 3,4 IN THE Suprene Cont of the United States OcTOBER TERM, 1997 No. 97 YANKEE ATOMIC ELECTRIC COMPANY, . Petitioner, UNITED STATES OF AMERICA, Respondent. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Federal Circuit PETITION FOR A WRIT OF CERTIORARI Yankee Atomic Electric Company respectfully petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Federal Circuit in this case. OPINIONS BELOW The opinion of the court of appeals (App. la-3la) is reported at 112 F.3d 1569. The opinion of the Court of Federal Claims (App. 33a-43a) is reported at 33 Fed. Cl. 580. JURISDICTION The judgment of the court of appeals was entered on May 6, 1997. The court of appeals denied a timely peti- tion for rehearing and suggestion for rehearing en banc on August 15, 1997. (App. 44a-45a). 2 The jurisdiction of this Court is invoked under 28 U.S.C. § 1254(1). CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED The Fifth Amendment to the Constitution of the United States provides: “[NJor shall any person . . . be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.” The relevant provisions of the Energy Policy Act of 1992, Pub. L. No. 102-486, 106 Stat. 2776, are set forth in the Appendix to this petition. App. 46a-48a. STATEMENT In enacting the Energy Policy Act of 1992 (“EPACT”), Congress imposed a monetary assessment falling primarily upon nuclear utility companies that pre- viously had contracted with the government to purchase uranium enrichment services. The assessment is ear- marked to pay costs the government incurred in perform- ing those enrichment services contracts. As a result, Petitioner Yankee Atomic Electric Com- pany (“Yankee”) is now required to pay the government $15 million more than it previously paid under fixed-price contracts for the same government enrichment services. In the aggregate, over a fifteen-year period, EPACT requires Yankee and other nuclear utilities to make “special assess- ment” payments of more than $2 billion. This case involves a challenge to EPACT’s special assessment as a violation of Yankee’s fixed-price contract rights and of Fifth Amendment due process principles. The Court of Federal Claims held that the Act was “an impermissible exercise of sovereign power.” App. 41a. A divided Federal Circuit—finding that the imposition of additional costs on the government’s prior fixed-price 3 contractors was protected by the “sovereign acts” doc- trine—reversed. A. Background 1. Beginning in the late 1950s, the government sold uranium enrichment services to utility companies that operated nuclear power plants.’ The government oper- ated its uranium enrichment enterprise as a commercial business and provided enrichment to its customers pur- suant to contracts. See 42 U.S.C. § 2201(t) (authorizing such contracts). Between 1959 and 1985, Yankee purchased uranium enrichment from the government under a series of fixed- price contracts. Both parties agree that Yankee paid the specified prices for all units of enrichment it purchased, and that the contracts precluded the government from increasing the per-unit enrichment prices. See App. 2a. Yankee permanently shut down its only nuclear plant in 1992. It therefore no longer purchases enrichment services from any source. 2. By the 1980s, Congress recognized that the govern- ment’s uranium enrichment business faced “rising com- petition from other countries” and a “declining global market share.” H.R. Rep. No. 102-474(1), at 142 (1992), reprinted in 1992 U.S.C.C.A.N. 1954, 1965. Congress addressed this problem by comprehensively restructuring, and planning to privatize, the government’s enrichment business. See H.R. Rep. No. 102-474(II), at 75 (1992), reprinted in 1992 U.S.C.C.A.N. 2064, 2082. One of the issues Congress faced in restructuring the government’s uranium enrichment business was how to address the costs of decontaminating and decommission- ——. 1 Those services were provided by a succession of federal entities, including the Atomic Energy Commission and the Department of Energy (“DOE”). 4 ing (“D&D”) the government’s uranium enrichment plants. Congress concluded that a restructured uranium enrich- ment business could not operate profitably or maximize its long-term value if it remained responsible for the outstand- ing D&D costs. See H.R. Rep. No. 102-474(1), at 142- 145, reprinted in 1992 US.C.C.A.N. at 1965-1968. Ultimately, Congress (1) created the United States Enrichment Corporation (“USEC”) to take over and eventually privatize the government’s uranium enrichment business, see 42 U.S.C. §§ 2297a, App. 48a, 2297d; and (2) established a separate Uranium Enrichment Decon- tamination and Decommissioning Fund (“D&D Fund”) to pay the D&D costs. 42 U.S.C. § 2297g(a), App. 46a. To finance the D&D Fund, Congress provided for annual deposits of $480 million (adjusted for inflation). /d. § 2297g-1(a), App. 46a. Up to $150 million annually is to be collected from “domestic utilities” over a fifteen-year period, for a total of approximately $2.25 billion. Jd. § 2297g-1(c), (e), App. 47a-48a.* To obtain the $150 million per year, Congress imposed a “special assessment” based on “the total amount of separative work units [“SWUs”]* [ea]ch utility has purchased from the [government] . . . before October 24, 1992.” Id. § 2297g-1(c), App. 47a (emphasis added). However, in apparent recognition of the small “secondary market” in which purchasing utilities occasionally had sold government-produced SWUs to others, Congress even- tually added a definition of the statutory term “purchase,” which provides that (1) a utility is considered to have 2? Congress authorized appropriations for the remainder. See 42 U.S.C. § 2297g-1(d), App. 47a. Between 1993 and 1995, Congress actually appropriated only $331 million to the D&D Fund, $692 million less than authorized by the EPACT. Office of Envtl. Mgmt., U.S. Dep’t of Energy, Uranium Enrichment Decontamination & Decommissioning Fund Triennial Report 14 (May 3, 1996). 8 The “separative work unit,” or “SWU,” is “the common measure by which uranium enrichment services are sold.” 10 C.F.R. § 766.3. 5 purchased a separative work unit if it was produced by the government but purchased by the utility from another entity, and (2) a utility is not considered to have pur- chased a government-produced separative work unit if it was initially purchased by that utility but subsequently resold. Id. § 2297g-1(c)(1) & (2), App. 47a. All secondary market SWUs subject to the EPACT assessment originally were purchased under a contract with the government. The government concedes that at most only 15% of the special assessment amounts relate to secondary market SWUs. See App. 28a. Therefore, at least 85% of the special assessment falls on enrichment units purchased directs." under government contracts.* 3. From 1959 to 1985 Yankee purchased a total of 881,860.96 units of uranium enrichment under its con- tracts with the government and paid prices ranging from $26.00 to $153.00 per SWU. See J.A. 555.5 As a result of the special assessment, Yankee now must pay the gov- ernment approximately $1 million more each year for fifteen years. Over the fifteen-year period, Yankee will Pay approximately $17.00 more for each SWU that it purchased and paid for long ago.* * Yankee believes that all secondary market purchasers subject to the EPACT assessment are utility companies that also had direct purchase contracts with the government. The EPACT as- Sessment thus falls: solely on this discrete group of contracting utilities. 5 “J.A.” refers to the joint record appendix from the United States Court of Appeals for the Federal Circuit. ® Other domestic utilities that purchased enrichment services from the government also have been assessed substantia] additional sums. Approximately 30 related cases, each involving claims similar to Yankee’s, are currently stayed in the United States Court of Fed- eral Claims pending the outcome in this case. B. Proceedings Below 4. In 1994 Yankee filed suit in the Court of Federal Claims under the Tucker Act, 28 U.S.C. § 1491(a)(1). Yankee asserted that the special assessment is a retroactive price increase that violates Yankee’s fixed-price contract rights. The trial court agreed and granted summary judg- ment to Yankee. App. 33a. It held that by imposing the per-unit special assessmert, “the Government dishonors the very promise it had earlier made: that the price to be charged for its services would not exceed the contract- stated maximum. Legislation so plainly directed at un- doing a contract liability previously assumed by the Government is an impermissible exercise of sovereign power.” /d. at 41a. 5. A split panel of the Federal Circuit reversed. /d. at la. The panel majority held that, under the “sovereign acts” doctrine, the EPACT special assessment “constitutes a general exercise of Congress’s taxing power . . . rather than an act that retroactively increases the price charged to contracting parties.” Jd. at 14a. It based this conclu- sion largely on the fact that, in view of the secondary market purchases, “the scope of the Act is not coincident with those domestic utilities that had previously entered into contracts with the DOE for uranium enrichment serv- ices.” Id. at 10a." Following the same logic with respect to the “unmistakability doctrine,” the panel majority found that the fixed-price contract terms “[a]t most” gave Yankee “a vested right to be immune from later attempts to retroactively increase the prices charged.” It concluded that “[t]his right has not been taken because . . . the 7 The Court found that, because the EPACT assessment did not fall exclusively on the government’s contract partners, (1) Con- gress’ “main purpose” was to “spread the costs” of decontami- nating and decommissioning the government’s enrichment plants among “the ultimate beneficiar[ies] of the DOE’s services,” and (2) Congress was not “acting for the purpose of retroactively in- creasing the price of its earlier contracts.” Id. at 9a, 10a. - assessment is a general, sovereign act rather than a retro- active price increase.” Id. at 21a n.8. In dissent, Judge Mayer found that “the government retroactively abrogated the essence of the contracts at issue.” Jd. at 27a. Given the government's acknowledg- ment that at least 85% of the special assessment falls on SWUs purchased directly under government contracts, the dissent concluded that the “sovereign acts” doctrine did “not insulate the government from liability because the im- pact of the special assessment falls so substantially and directly on Yankee and the government’s other contrac- tors.” Id. at 29a.* Therefore, “Yankee needed no more than the fixed-price contract terms to insulate itself from a post-performance price hike.” Jd. at 30a. REASONS FOR GRANTING THE PETITION This case presents an important question regarding the government’s power to retroactively impose additional costs on its contracting partners. A divided panel of the Federal Circuit upheld the retroactive cost-shifting effected by the EPACT assessment, finding it persuasive that “the special assessment does not reach only those utility com- panies that previously contracted with the Government; it also reaches those utilities that purchased the services through the secondary market but had no contracts with the Government.” App. 12a (emphasis added and omit- ted). Thus, despite the fact that the assessment falls pre- dominantly on the government’s contracting partners, the majority below concluded that it was a “general tax.” This striking holding merits review for several reasons. First, by allowing the government to single out its con- tracting partners for particular added burdens, the court ® See also id. at App. 29a (dissent) (“That a small fraction of others who indirectly purchased enrichment services from the gov- ernment also must pay the assessment does not mask its true iden- tity as a retroactive price increase.”’). of appeals has seriously altered the proper balance be- tween the obligation of the federal government to respect the terms of its own contracts and the power of the fed- eral government as sovereign to legislate for the public good. See United States v. Winstar Corp., 116 S.Ct. 2432 (1996). Although the fixed-price terms of a contract to purchase goods or services from the government would not typically shield purchasers from exactions imposed by general laws, such contract terms should provide a bar- rier to targeted legislation, like that involved here, which has the substantial effect of shifting the government’s performance costs as seller onto the purchaser. That principle not only sets reasonable boundaries for the “sovereign acts” defense, it also accords most naturally with the common-sense expectations of those contracting with the government: namely, that the government, al- though not contracting away its sovereign powers, is nevertheless bound not to legislate to shift the very risks it assumed in the contract back onto the other party. By treating the legislation here as a “general tax”—on the ground that its impact was not exclusively on the govern- ment’s contracting partners—the Federal Circuit has given far too much leeway to the government to evade its own contractual responsibilities. See pp. 9-16, infra. The decision below suffers from a second flaw as well: it forces petitioner (and other utility companies) to retro- actively shoulder costs of resolving a problem for which they bear no responsibility. Although this Court has up- held a number of retroactive laws against challenges under the Due Process and Taking Clauses, see e.g., Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 (1976); Concrete Pipe & Prods. v. Construction Laborers Pen- sion Trust, 508 U.S. 602 (1993), it never has allowed retroactive assessment of costs “that [are] due to causes other than the . . . conduct” of those being assessed. Turner Elkhorn, 428 U.S. at 25.° ®See Eastern Enterprises v. Chater, 110 F.3d 150 (ist Cir. 1997), cert. granted sub nom. Eastern Enterprises v. Appel, 66 sath blind ian jit hel ey te 9 Here, the government is seeking to require retroactive payment for the cleanup of its enrichment plants based solely on the utilities’ purchase of uranium enrichment services performed at those plants. If that conduct is deemed sufficient to support the imposition of retroactive liability, then the power of the government to reorder past events would be virtually limitless. Moreover, the thirty-year retroactive application of the EPACT assess- ment is particularly egregious and well beyond periods involved in this Court’s previous cases. See pp. 16-19, infra. These issues are of both particular and general im- portance. Most directly, the law at issue here requires petitioner and other utilities to pay up to $150 million annually for a fifteen-year period, a total in excess of $2 billion. More generally, the decision below has a poten- tial effect on any government contractor where the gov- ernment subsequently decides that it has paid too much or charged too little. According to the court of appeals, the government is then free to increase the obligations of its contracting partners, or presumably to reduce its own obligations, as long as it structures its later actions so that they do not fall exclusively on those contracting partners. That holding marks a significant step backward from principles recently reaffirmed by the Court in Win- star. Further review therefore is warranted. I. THE FEDERAL CIRCUIT IMPROPERLY DETER- MINED THAT A FEDERAL STATUTORY PROVI- SION THAT PREDOMINANTLY IMPACTS THE GOVERNMENT’S CONTRACTING PARTNERS IS A “PUBLIC AND GENERAL” SOVEREIGN ACT FOR WHICH THE GOVERNMENT IS IMMUNE FROM CONTRACTUAL LIABILITY. In upholding the EPACT assessment, the Federal Cir- cuit did not dispute that purchasers like Yankee had paid the full contract prices for the enrichment services. App. U.S.L.W. 3296 (U.S. Oct. 20, 1997) (No. 97-42) (challenging basis for imposing retroactive assessments): see also pp. 17-18, infra (discussing Eastern Enterprises). , 10 2a. Nor did the court question that the government would be barred by traditional pringipies of contract law from simply demanding that its contracting partners pay more for the previously-sold services. Id. at 18a. Rather, the court below held that the government was entitled to com- pel additional payments from its contracting partners to clean up its own enrichment plants because its action was protected by the “sovereign acts” doctrine. Applying a “purpose”-based test—to “determine whether the Act is designed for the purpose of affecting or altering the Government’s prior coniracts”’-—the court found it “[ijmpcrtant[]” that the EPACT assessment, while falling predominanily on the government’s con- tracting partners, did not fall exclusively on them. Id. at 9a-10a. The court thus concluded that the law was not a violation of any contract rights, but merely a “general tax.” Id. at 12a. i. The Federal Circuit’s analysis has several serious flaws. Initially, it wrongiy transforms the sovereign acts defense into a purpose-based inquiry. Nothing in this Court’s prior cases declares that inquiry inte legislative purpose is determinative of whether the government has breached its prior contracts. Rather, the decisions look to the effects on the government’s contract obligations of its later actions. See pp. 11-14, infra. Moreover, as the Court has frequently recognized, inquiry into legis- lative purpose often is unreliable. Indeed, in this very case the Federal Circuit’s focus on legislative “purpose” led it to attribute dispositive importance to a provision added simply to accommodate the small secondary market for SWUs “purchased from” the government under contracts. 10 See Winstar, 116 S.Ct. at 2468 (plurality opinion) (“Legisla- tion can almost always be written in a formally general way, and the want of an identified target is not much security when a meas- ure’s impact nonetheless falls substantially upon the Government’s contracting partners.’’). 11 2. The court of appeals then compounded its error by wholly distorting the standards for determining whether later government actions are “public and general” with only an “incidental” effect on persons contracting with the government. See Horowitz v. United States, 267 U.S. 458, 461 (1925). In finding that the special assessment was a “general tax,” because it purportedly did not apply only to the government’s contracting partners, the court below essentially ignored the standards set forth in Winstar. In the principal opinior. in Winstar, Justice Souter ex- piained that the key factor in determining whether a gov- ernmental act is “public and general” for purposes of the “sovereign acts” defense is whether “a substantial part of the impact of the Government’s action . . . falls on its own contractual obligations.” Wéinstar, 116 S.Ct. at 2466 (plurality opinion); see alse id. at 2467 (“the Govern- ment’s capacities must be ireated as fused when the Gov- ernment acts in a non-general way”); id. at 2467 (“a governmental act will not be public and general if it has the substantial effect of releasing the Government from its contractual obligations”). When a statute, like the EPACT provision involved here, falls predominantly (at least 85%) on the govern- ment’s contracting partners, a “substantial part of [its] impact” is plainly upon the government’s contractual obligations. Justice Souter also explained that in eval- uating impact, “[t]he greater the Government’s §self- interest, . . . the more suspect becomes the claim that its private contracting partners ought to bear the financial burden of the Government’s own improvidence.” Jd. at 2466. Here the EPACT assessment, by enabling the gov- ernment to divert its old D&D liabilities away from its new corporation (USEC), reflects precisely the kind of “governmental object of self-relief”’ that Justice Souter described. 12 The decision below is also at odds with Justice Scalia’s analysis in Winstar."’ Justice Scalia found that although generally “contract law imposes upon a party to a con- tract liability for any impossibility of performance that is attributable to that party’s own actions,” id. at 2477 (Scalia, J., concurring in the judgment), when the gov- ernment is a contracting party, a reverse presumption is more appropriate: [I]t is reasonable to presume (unless the opposite clearly appears) that the sovereign does not promise that none of its multifarious sovereign acts, needful for the public good, will incidentally disable it or the other party from performing. Id. (third emphasis added). A statute like EPACT that is so substantially directed at the government’s own contracts easily overcomes this “reverse presumption.” As Justice Scalia explained, gov- ernment contractors must necessarily accept that the government’s “multifarious sovereign acts, needful for the public good,” may “incidentally disable” performance. Id. It is completely untenable to suppose, however, that the government’s contracting partners understand and accept that the government can release itself from contractual liability simply by enacting legislation that is principally directed at its own contracts. Yet that is precisely the understanding that the Federal Circuit decision attributes to Yankee (and the other contracting utilities).” 11 Justice Scalia discussed the government’s sovereignty-based de- fenses primarily in terms of the “unmistakability” doctrine, noting that the “sovereign acts” doctrine is essentially the same and “is avoided whenever [the unmistakability doctrine] would be.” 116 S.Ct. at 2478 (Scalia, J., concurring in the judgment). 12 Justice Breyer, who joined Justice Souter’s opinion for the plurality in Winstar, also separately advocated an approach to un- mistakability similar to that of Justice Scalia. 116 S.Ct. at 2472 (Breyer, J., concurring). ——=_ 13 3. The Court’s prior cases also make clear that a law is not “public and general” for purposes of the sovereign acts defense merely because it affects some persons other than the government’s contracting partners. In Perry v. United States, 294 U.S. 330 (1935), the statute voided gold payment clauses in “every obligation,” public and pri- vate, id. at 349, and in Lynch v. United States, 292 U.S. 571 (1934), the statute was a sweeping repeal of “all laws granting or pertaining to” renewable term insurance. Id. at 575."* In both cases, however, the Court held that those broad-reaching statutes improperly abrogated fed- eral contracts—in Perry a government bond and in Lynch a veteran’s insurance policy. Indeed, in Winstar also, the statute required deduction of “goodwill” from the regula- tory capital of all thrifts, whether or not they had a con- tract with the government. 116 S.Ct. at 2446; see 12 U.S.C. § 1464(t)(1)(A), (9) (A) & (C); see also App. 28a. The Court’s Contract Clause cases also emphasize that the proper inquiry is the impact of legislation on govern- ment contract rights. In Puerto Rico v. Russell & Co., 315 U.S. 610, 619 (1942), for example, the Court held that a statutory assessment imposed on the Common- wealth’s prior contractors “was not a general tax” but “a clear violation of the obligation of the contracts.” In Murray v. Charleston, 96 U.S. 432 (1878), the Court struck down a municipal statute taxing interest paid on the city’s own debt, noting that “the tax must be upon all the money of the community, not upon the particular portion of it which is paid to the public creditors.” Id. at 446. 4. The panel majority’s determination that “the fixed- price terms of the contract{[s here] do not constitute an 13 Perry and Lynch were, prior to Winstar, the “two principal cases of this century holding that the Government may not simply repudiate its contractual obligations.” 116 S.Ct. at 2478 (Scalia, J., concurring in the judgment). 14 unmistakable promise on behalf of the Government that it will not impose a general assessment,” App. 20a (em- phasis added), is entirely beside the point. For reasons explained above, the EPACT special assessment is not a “public and general” sovereign act. It follows that the fixed-price terms of Yankee’s contracts do protect it from the assessment, without need for any special, more “un- mistakable,” language. The Federal Circuit panel major- ity acknowledged as much in a footnote. See App. 21a n.8. To require special language in government contracts protecting against governmental acts that are not “public and general” would contravene the bedrock principle of contract law that the intent of the parties to a contract controls its interpretation. As discussed above, see p. 12, supra, neither party to a government contract under- stands that the government may later avoid its contract obligations through legislation that is squarely directed at the government’s contracting partners and that falls pre- dominantly (at least 85%) on them. To imply such an understanding, as the Federal Circuit in effect did here, makes the sovereign acts doctrine superfluous and makes most government contracts illusory.” 5. That the EPACT special assessment violates Yankee’s fixed-price contract rights does not mean that 14 Lynch and Perry both involved legislation that had a substan- tial impact on federal contract rights, and in neither case did the contracts contain—or did the Court even look for or mention— any special “unmistakable” protective contract language. No such language is necessary, as Justices Souter and Scalia also recognized in Winstar, where, as in this case too, the government contravenes its own contractual obligations through legislation that is not “public and general.” Conversely, to protect against a legitimately “public and general” sovereign act, a government contract would have to contain special “unmistakable” language because the parties would not ordinarily understand the basic promissory language to provide such protection. : | d 4 : : 15 the government is powerless to raise funds necessary to decontaminate and decommission its uranium enrichment plants. To the contrary, as both the trial court and the Federal Circuit dissent recognized, the government re- mains free to finance its D&D effort through broader, more general taxes. App. 31a, 40a. How broad those taxes must be is not the issue here. Because the impact of this particular “tax” falls so substantially and directly on Yankee and the other utilities that were the government's contracting partners, and because that impact is so clearly contrary to the reasonable expectations of the contracting parties, the EPACT special assessment cannot possibly be considered a “public and general” act for purposes of the sovereign acts defense. * * * * The standard the Federal Circuit has adopted for determining when legislation is “public and general” turns the sovereign acts defense on its head. As interpreted by the court below, the sovereign acts doctrine is no longer a limited exception to the general principle that federal contracts are governed by ordinary contract law principles. Rather, by making application of the doctrine turn on wuether the later law is coincident with the scope of the government’s prior obligations, the decision below invites Congress to enact legislation that directly and deliberately impairs the rights of a majority of the government's con- tracting partners. The government, in that event, still can claim the defense of sovereign acts based on such a sup- posedly “public and general” law. Drawing the proper line between the government's sovereign authority and its contractual obligations is often complex and difficult. In this case the task is straight- forward, and the Federal Circuit has patently drawn the wrong line. A statute that targets and hits the overwhelm- ing majority of the government’s contracting partners is 16 not a “public and general” act. The Federal Circuit’s contrary holding represents a dramatic expansion of the sovereign acts defense and conflicts with precedent of this Court. Il. THE FEDERAL CIRCUIT MISTAKENLY HELD THAT A THIRTY-YEAR RETROACTIVE MONE- TARY ASSESSMENT IS JUSTIFIED BY NOTH- ING MORE THAN THE PAST PURCHASE OF GOVERNMENT-PRODUCED SERVICES. In 1992, Congress specifically imposed the EPACT special assessment based on the number of government- produced uranium enrichment units that utilities previously had purchased. 42 U.S.C. § 2297g-1(c), App. 47a. Under the Federal Circuit’s analysis, the sole justification for the statute’s retroactive application is that Yankee and other nuclear utility companies purchased, and therefore were the “ultimate beneficiar[ies]” of, government-produced enrichment services. App. 10a."*° Even putting aside the fact that the utilities already had paid the agreed prices for any “benefit” they obtained from the enrichment serv- ices, the mere purchase of a government-produced product or service is not enough to justify a new monetary assess- ment that reopens otherwise long-settled transactions. In prior due process decisions regarding the constitu- tionality of retroactive legislation, the Court has empha- sized the importance of a nexus between the liability im- posed by the statute and the conduct the statute targets— such as an employment relationship, which justified impos- ing On mine operators the retroactive requirement to pay benefits to disabled miners, Usery v. Turner Elkhorn Min- ing Co., 428 U.S. 1, 19-20 (1976); or participation in a multi-employer pension plan, which increased the pension 18 EPACT’s effect is clearly retroactive because it imposes a new liability in respect of past events. See Landgraf v. USI Film Prods., 511 U.S. 244, 280 (1994). wpe nanaci cate O aRCRa i ea 0 eee ee nee 17 plan’s liability and justified imposition of retroactive with- drawal liability, Concrete Pipe and Prods. v. Construction Laborers Pension Trust, 508 U.S. 602, 637-38 (1993). The Court thus has allowed retroactive cost spreading only to parties whose conduct makes them “responsible” for the conditions that prompted enactment of the remedial legis- lation. Indeed, in Turner Eikhorn, the Court pointed out that any legislative attempt to award retroactive compen- sation to workers for harm “unrelated to [a coal] oper- ator’s conduct” would present a different magnitude of constitutional “difficulties.” 428 U.S. at 24. The purchase of government-produced uranium enrich- ment services obviously has some “connection” to the D&D costs arising from the government’s contamination of its enrichment plants. But it would be a considerable step to say that the purchasers can be held legally responsible for the D&D costs. Those costs, like the underlying conduct leading to contamination of the plants, were at all times within the control of the government. The government, as producer of the uranium enrichment services—not the util- ities as purchasers of those services—was responsible both for the plant conditions and for assuring that the prices it charged were adequate and available to cover the costs of production. Whether Yankee’s purchase of government-produced enrichment services in these circumstances alone is suffi- cient conduct to support the retroactive EPACT assess- ment, even under the deferential standards recognized by the Court, is a question warranting further review. Indeed, the Court recently granted review in a case that directly raises the issue of what constitutes a sufficient nexus to justify legislative imposition of retroactive liability. See Eastern Enterprises v. Chater, 110 F.3d 150 (1st Cir. 1997), cert. granted sub nom. Eastern Enterprises v. Appel, 66 U.S.L.W. 3296 (U.S. Oct. 20, 1997) (No. 97- 42). The Court thus has squarely before it the important 18 question “whether retroactive cost-spreading legislation violates the Due Process Clause of the Fifth Amendment as applied to a party whose conduct did not cause the eco- nomic burden the statute was designed to address.” Reply Brief in Eastern Enterprises, No. 97-42 at 1-2. This case is even starker, given the implications for those who do business with the government. First, unlike Eastern Enterprises, this case involves the government’s retroactive rearrangement of its own financial liabilities rather than private liabilities. Under the decision below, the government can impose a retroactive monetary assess- ment (or other retroactive legislation) upon any person simply because he or she previously has purchased a government-produced product or service. If that conduct is sufficient to permit the imposition of retroactive liability for costs generated by the government in providing the purchased products or services, as the court below held, there would seem to be no limit on the government’s power to reorder responsibility for its own past conduct. Second, the extraordinary period of retroactivity in the Energy Policy Act goes far beyond what the Court has allowed. Indeed, the thirty-year reach-back of this statute works a particular hardship on petitioner, given that Yankee ceased operation of its only electricity-generating facility before EPACT was enacted. See App. 4a. The Act thus assesses liability for engaging in a business that petitioner does not even conduct anymore—the kind of mismatch between past and present activities that is likely to become more pronounced as the period of retro- activity lengthens. Even in upholding retroactive legislation, the Court has specifically noted that the relevant periods of retroactivity were quite limited. See, e.g., United States v. Carlton, 512 U.S. 26, 32 (1994) (“Congress acted promptly and established only a modest period of retroactivity [slightly greater than one year]”); Pension Benefit Guaranty Corp. PE Ae on eae a ee Se oe Ee 19 vy. R.A. Gray & Co., 467 U.S. 717, 731 (1984) (“Con- gress advanced the effective date chosen so that it would encompass only that retroactive time period [five months] that Congress believed would be necessary to accomplish its purposes”).’* Where, as here, the statute reaches back far beyond a “modest period of retroactivity,” the power of Congress to reorder responsibility for completed trans- actions or events should be viewed with skepticism. See United States v. Carlton, 512 U.S. at 38 (O’Connor, J., concurring in the judgment) (period of retroactivity longer than a year “would raise . . . serious constitutional questions” ). Ill. THE FEDERAL CIRCUIT DECISION FUNDAMEN- TALLY ALTERS THE PROPER BALANCE BE- TWEEN THE GOVERNMENT'S SOVEREIGN AU- THORITY AND THE CONTRACTUAL AND FIFTH AMENDMENT RIGHTS OF THOSE WITH WHOM IT DOES BUSINESS. Further consideration of the significant issues presented in this case is of special importance for several additional reasons. First, the Federal Circuit's decision directly affects approximately thirty similar cases currently stayed in the Court of Federal Claims and awaiting the outcome of this case. The pending cases collectively involve more than $2 billion in special assessment amounts to be paid until the year 2007. Second, the decision below also will have a more gen- eral impact because it is the first interpretation of Win- star by the only court of appeals with special jurisdiction over Tucker Act claims. The extreme views of the Fed- 16 See also United States v. Darusmont, 449 U.S. 292, 296-97 (1981) (per curiam) (the passage of retroactive legislation “con- fined to short and limited periods required by the practicalities of producing national legislation” is a “customary congressional prac- tice”); cf. Nichols v. Coolidge, 274 U.S. 531 (1927) (invalidating tax legislation reaching back twelve years). 20 eral Circuit panel majority—regarding both the sovereign acts defense and Congress’ retroactive powers—should at least be reviewed before they are applied more generally by the Federal Circuit and the Court of Federal Claims, the courts charged with responsibility over Tucker Act cases, and by other lower courts that may also be seeking authoritative guidance on the meaning of Winstar. Finally, this case presents contract and constitutional issues significantly affecting all who do business with the federal government (and, by extension, with state and local governments as well). To the extent the decision below invites the government to retroactively rewrite the financial or other terms of its own contracts, the decision impairs the government’s reliability as a contracting part- ner. Contractors will be deterred from dealing with the government under such circumstances. At a minimum, the decision below will “undermin[e] the Government’s credibility at the bargaining table and increas[e] the cost of its engagements,” results that are contrary to “the Gov- ernment’s own long-run interest as a reliable contracting partner in the myriad workaday transaction of its agencies.” Winstar, 116 S.Ct. at 2459 (plurality opin- ion). The court of appeals’ approval of the thirty-year retroactivity of the EPACT assessment also has far- reaching implications, making it difficult to discern any limit on the power of the government to attach new legal consequences to remote historic events. The consequences of the Federal Circuit’s decision are clear and alarming. Further review is therefore war- ranted. 21 CONCLUSION For all these reasons, the petition for a writ of certiorari should be granted.’ Respectfully submitted, WILLIAM E. RIETHLE JERRY STOUCK * Corporate Counsel CATHERINE R. BAUMER YANKEE ATOMIC DAVID R. LIPSON ELECTRIC COMPANY Spriccs & HOLLINGSWORTH 580 Main Street 1350 I Street, N.W. Bolton, MA 01740 Ninth Floor 4 (508) 779-6711 Washington, D.C. 20005 4 (202) 898-5800 Attorneys for Petitioner Yankee Atomic Electric Company November 12, 1997 * Counsel of Record esis tials st Sin Tae} 17 Alternatively, if the Court elects not to grant plenary review in this case, Yankee requests that the Court defer ruling on its petition pending disposition of Eastern Enterprises, and then re- . mand this case to the Federal Circuit for consideration in light of : that decision. See Lawrence v. Chater, 516 U.S. 193 (1996). APPENDICES la APPENDIX A UNITED STATES COURT OF APPEALS FEDERAL CIRCUIT Nos. 96-5021, 96-5025 YANKEE ATOMIC ELECTRIC COMPANY, Plaintiff /Cross-A ppellant, Vv. THE UNITED STATES, Defendant-A ppellant. May 6, 1997 Before MAYER, LOURIE, and CLEVENGER, Cir- cuit Judges. Opinion of the court filed by Circuit Judge CLEVEN- GER. Dissenting opinion filed by Circuit Judge MAYER. CLEVENGER, Circuit Judge. This case requires us to decide whether, in light of prior contracts specifying the price to be paid for uranium enrichment services, the Government may impose upon domestic utilities a special assessment to aid in funding the clean-up costs associated with the facilities that pro- vided those enrichment services. The United States appeals the decision of the United States Court of Federal Claims, Yankee Atomic Electric Co. v. United States, 33 Fed. Cl. 580 (1995), granting summary judgment to Yankee Atomic Electric Company (Yankee Atomic). In that decision, the court deter- 2a mined 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. We conclude that the assessment was lawful and therefore reverse. I As both parties acknowledge, the salient facts are not in dispute. Yankee Atomic was organized in 1954 by a number of existing utility companies in an effort to par- ticipate in the use of atomic energy as an alternative- source fuel for generating electricity. Yankee Atomic pro- duced electricity using nuclear fuels and sold the resulting electricity to the organizing utilities, which, in turn, sold it to retail customers. Yankee Atomic’s operations required an enriched form of uranium, which was produced by separating useful isotopes of uranium from other isotopes. Beginning in 1963, Yankee Atomic purchased the uranium enrichment (or separation) services from the Government through a series of contracts. Those services were provided at enrichment plants operated first by the Atomic Energy Commission (AEC or Commission) and later by the Energy Research and Development Administration and the Department of Energy (all collectively DOE). AIl- though these contracts varied somewhat from one to another, they each stated that the price paid by Yankee Atomic for the enrichment services would be based on “established Commission pricing policy,” which was de- fined. as the price in effect at the time the service was provided. There is no dispute that the Government ful- filled its contractual obligation to provide the enrichment services, and that Yankee Atomic fulfilled its obligation to pay the price in effect at that time. In the late 1980s, Congress determined that it had to restructure the Government’s uranium enrichment services in order to remain competitive with enrichment services aT Peet. eee Gi aaa ha At nae Sti te RS 3a provided by other parties. It did so by creating a new, for-profit, governmental corporation called the United States Enrichment Corporation. At the same time, Con- gress realized that there would be large costs associated with decontaminating and decommissioning the facilities that had previously been used to provide enrichment serv- ices. The Department of Energy 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. H.R.Rep. No. 474, pt. VIII, at 77 (1992), reprinted in 1992 U.S.C.C.A.N. 2282, 2295. Because this decontamination and decommissioning fiscal problem was not recognized until the 1980s, the prices charged in the Government's past uranium enrichment contracts had not accounted for the problem. This clean-up problem was one of many energy-related issues that Congress addressed in the Energy Policy Act of 1992 (Energy Policy Act or Act). The Act estab- lishes an account to be known as the Uranium Enrichment Decontamination and Decommissioning Fund (Fund), which, over a 15-year period, would accumulate the monies required to clean up the old uranium enrichment plants. The Act provides that the annual deposits of $480 million (adjusted for inflation), will come from two sources: (i) up to $150 million is to be collected as a special assessment from domestic utility companies; and (ii) the balance, at least $330 million, is to come from public funds appropriated by Congress. The Act further provides that each utility is responsible for a pro-rata share of the total annual assessment based on the percentage of uranium enrichment work units it previously purchased from the DOE relative to the total number of work units previously produced by the DOE. The Act states that a utility is considered to have pur- chased a work unit from the DOE if the work unit was originally produced by DOE, even if the utility actually purchased it from another source. Similarly, a utility is 4a not considered to have purchased a work unit from the DOE if it resold that work unit to another utility.’ In sum, the Act imposes the assessment upon whichever utility company eventually uses the enrichment services. Following the passage of the Act in October 1992, the DOE sought to assess Yankee Atomic’s share of the an- nual special assessment. Yankee Atomic responded by arguing to the DOE that it should be exempted from the assessment because its facilities had shut down before passage of the Act. When the DOE rejected this argu- ment, Yankee Atomic paid approximately $3 million pur- suant to three annual assessments, and filed a lawsuit in the Court of Federal Claims seeking recovery of those payments. II Upon cross-motions for summary judgment, the Court of Federal Claims ruled in favor of Yankee Atomic. The court rejected the Government’s contention that the spe- cial assessment was a lawful exercise of Congress’s taxing power under the sovereign acts doctrine. The court ex- plained that although the sovereign acts doctrine would have some force if the case involved a general tax that fell on all utilities alike, it had no impact in the present case which involves an assessment that “reaches only those utility companies that previously had contracted with the Government for the purchase of uranium enrichment serv- ices.” Accordingly, the court viewed the special assess- ment as a unilateral retroactive increase in the price pre- viously charged by the Government for its uranium en- richment services. 1 These provisions were designed to take into account the second- ary market that existed for uranium enrichment services, wherein some utilities purchased uranium enrichment work units from the Government and resold them to other utilities. Yankee Atomic pur- chased a portion of its uranium enrichment services through this secondary market, but does not assert any breach of contract, taking, or unlawful exaction claim concerning its monetary liability under the Act for those purchases. 9 : A j 4 F 2 | Sa The court explained that such a retroactive price in- crease would constitute an unlawful exaction in view of the prior contracts between the Government and Yankee Atomic. Because those prior contracts specified a fixed price for the uranium enrichment services, the “economic benefit which [Yankee Atomic] gained by virtue of the Government’s promise, being a benefit enforceable at law, thus became a property interest that fell beyond the reach of the Government’s power to take away.” 33 Fed. Cl. at 585. Based on this conclusion, the court granted Yankee Atomic’s motion for summary judgment without address- ing Yankee Atomic’s argument that it was exempt from the assessment because its facilities had closed before passage of the Act. We review the Government’s appeal, and Yankee Atomic’s cross-appeal, from the judgment of the Court of Federal Claims pursuant to 28 U.S.C. § 1295(a)(3) (1994). Il The decision of the Court of Federal Claims is driven by its characterization of the special assessment as a retro- active price increase rather than an exercise of the sover- eign’s taxing power, and the parties’ dispute over this characterization frames the dispositive issue of this appeal. The Government’s principal argument is that the special assessment is entirely distinct from the prior contracts be- tween the DOE and utility companies such as Yankee Atomic. The Government notes that those earlier con- tracts concerned uranium enrichment, whereas this assess- ment concerns decontamination and decommissioning. As a result, the Government asserts that the assessment can- not constitute a breach of those earlier contracts unless those contracts contained an express provision that pre- cluded the Government from imposing an assessment to fund decontamination and decommissioning costs. Yankee Atomic disagrees with the Government’s char- acterization of the assessment and contends that it is di- 6a rectly related to the earlier contracts. Yankee Atomic contends that the fixed-price nature of those contracts expressly limited its obligation to the price already paid, and shifted the risk of any additional costs (including de- contamination and decommissioning costs) onto the Gov- ernment. Yankee Atomic argues that the assessment breaches those contracts by, in effect, retroactively in- creasing the price that it must pay for the previously supplied uranium enrichment services.” Resolution of this disputed characterization requires us to consider and apply two related bodies of law: the sov- ereign acts doctrine and the unmistakability doctrine. We consider each in turn. IV The sovereign acts doctrine stems from a series of deci- sions by the Court of Claims, and was first recognized by the United States Supreme Court in Horowitz v. United States, 267 U.S. 458, 45 S.Ct. 344, 69 L.Ed. 736 (1925). In that case, Horowitz submitted a bid to buy certain Habutai silk offered for sale by the Government. The Government agreed that Horowitz would be given the Opportunity to re-sell the silk before paying the purchase price, and agreed to ship the silk within a day or two after shipping instructions were given. Id. at 459, 45 S.Ct. at 344, Horowitz sold the silk to a silk company, paid the balance of the purchase price, and requested that the silk * Throughout its briefs, Yankee Atomic contends that the special assessment constitutes a breach of its contracts with the Govern- ment. Technically, however, this does not appear to be a case involv- ing a breach of contract. Typically, a contract breach occurs while the contract is being performed, whereas the contracts in the present case have been fully performed by both parties. This appears to have been the view of the Court of Federal Claims, as indicated by the notable absence in its opinion of any reference to breach of contract. This distinction does not affect our decision, however. 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. ce At et ee ngtteey: VA a DL Bee a hi a Wn Bo = bireee ee ee ae Peay cl rebates Ta be shipped to the silk company at once. Because of a governmental embargo placed on the shipment of silk by freight, however, the silk was not shipped for several weeks. By the time it arrived, the price of silk had dropped significantly, and the consignee refused to accept delivery. As a result, Horowitz was forced to sell the silk at a loss. Id. at 460, 45 S.Ct. at 344. Horowitz sued the United States, contending that the embargo breached the valid contract he had for sale and shipment of the silk. The United States Supreme Court rejected this argument because “[i]t has long been held by the Court of Claims that the United States when sued as a contractor cannot be held liable for an obstruction to the performance of the particular contract resulting from its public and general acts as a sovereign.” Id. at 461, 45 S.Ct. at 344. The Court adopted the reasoning of the Court of Claims: The two characters which the government possesses as a contractor and as a sovereign cannot be thus fused; nor can the United States while sued in the one character be made liable in damages for their acts done in the other. Whatever acts the govern- ment may do, be they legislative or executive, so long as they be public and general, cannot be deemed specially to alter, modify, obstruct or violate the particular contracts into which it enters with private persons. ... In this court the United States appear simply as contractors; and they are to be held liable only within the same limits that any other defendant would be in any other court. Though their sovereign acts performed for the general good may work injury to some private contractors, such parties gain nothing by having the United States as their defendants. Id. (quoting Jones v. United States, 1 Ct.Cl. 383, 384 (1865)) (emphasis added).° 8 The Court of Claims expressed this same philosophy in O’Neill v. United States, 231 Ct.Cl. 823, 826 (1982), as follows: 8a The Supreme Court recently discussed Horowitz, and the sovereign acts doctrine in general, in United States v. Winstar Corp., US. , 116 S.Ct. 2432, 135 L.Ed.2d 964 (1996).* In Wéinstar, the plurality ex- plained that the doctrine is designed to distinguish between the Government's twin roles as contractor and sovereign. Id. at , 116 S.Ct. at 2463. When the Government enters into a contract, “its rights and duties therein are governed generally by the law applicable to contracts between private individuals.” Jd. at - , 116 S.Ct. at 2464-65. The Government-as-contractor cannot exercise the power of its twin, the Government-as-sovereign, for the purpose of altering, modifying, obstructing or violating the particular-contracts into which it had en- tered with private parties. Such action would give the Government-as-contractor powers that private contracting parties lack. From its earliest days ... application of the sovereign act/s] doctrine has proceeded from the recognition that in governing the country, the Government’s actions, otherwise legal, will occasionally incidentally impair the performance of contracts. Were those contracts exclusively between private parties, the party hurt by such governing action could not claim compensa- tion from the other party for the governing action. Given the large number of contracts the Government enters, its contracts will sometimes be affected by those same governing acts. The policy underlying the sovereign acts] doctrine is that in those circumstances, the Government in its contracting role, like its private counterpart, should not incur liability for its act done in the governing role. * The sovereign acts doctrine has also been cited in several other cases since Horowitz. See, e.g., Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 145-46, 102 S.Ct. 894, 905-06, 71 L.Ed.2d 21 (1982) (discussing that the petitioners confuse the Tribe’s role as commer- cial partner with its role as sovereign) ; Atlas Corp. v. United States, 895 F.2d 745, 754 (Fed.Cir.1990) (explaining that the Uranium Mill Tailings Radiation Control Act was a sovereign act undertaken for the public good and, therefore, could not form the basis for a party’s breach of contract claim). 9a On the other hand, the plurality explained, the Govern- ment-as-sovereign must remain free to exercise its powers. For this reason, the early Court of Claims cases “thought it ‘grave error’ to suppose that ‘general enactments of Con- gress are to be construed as evasions of [the plaintiff's] particular contract.’” Jd. at , 116 S.Ct. at 2464 (quoting Deming v. United States, | Ct.Cl. 190, 191, 1865 WL 2004 (1865)). The sovereign acts doctrine at- tempts to “balance[] the Government’s need for freedom to legislate with its obligation to honor its contracts by asking whether the sovereign act is properly attributable to the Government as contractor.” ° Id. at , 116 S.Ct. at 2465. Thus, it is not a hard and fast rule, but rather a case-specific inquiry that focuses on the scope of the leg- islation in an effort to determine whether, on balance, that legislation was designed to target prior governmental contracts. Under the sovereign acts doctrine, therefore, we must decide whether the Government, in enacting the relevant provisions of the Energy Policy Act of 1992, was (i) act- ing for the purpose of retroactively increasing the price of its earlier contracts with Yankee Atomic (i.e., the legisla- tion was passed for the benefit of the Government-as-con- tractor) or (ii) acting for the purpose of solving the prob- lem of decontamination and decommissioning of uranium enrichment facilities (i.e., the legislation was passed for the benefit of the public). We conclude it was the latter. As explained above, we must begin by examining the scope of the Energy Policy Act: only then can we deter- mine whether the Act is designed with the purpose of 5 The concurring and dissenting justices agreed with this general statement of the doctrine. Under the facts of Winstar, see infra section IV.A, only three justices concluded that the congressional act was not a sovereign one (i.e., the act was attributable to the Government-as-contractor). The remaining justices either viewed the act as a sovereign one or decided the case on another basis. 10a affecting or altering the Government’s prior contracts. The Energy Policy Act requires contribution to the Fund from any domestic utility that purchased separative work units from the DOE before the Act’s passage. 42 U.S.C. § 2297g-1(c) (1994). Importantly, however, the scope of the Act is not coincident with those domestic utilities that had previously entered into contracts with the DOE for uranium enrichment services, because the Act does not require contribution from a utility that contracted with the DOE if that utility re-sold the purchased services to an- other utility. See 42 U.S.C. § 2297g-1(c)(2). In con- trast, the Act does require contribution from any utility that did not have a contract with the DOE but nonetheless benefited from the DOE’s services by purchasing through the secondary market. See 42 U.S.C. § 2297g-1(c)(1). Thus, some utility/Government contracts are not em- braced by the Act, while some purchases from private entities are covered. The key is whether the purchaser was the ultimate beneficiary of the DOE’s services. The reach of the Act, therefore, makes clear that Con- gress was not focused on a retroactive increase in the price of the Government’s prior contractual agreements. Rather than targeting those utility companies that had prior con- tracts with the Government, the Act targets whichever utility eventually used and benefited from the DOE’s en- richment services. Congress’s main purpose was to spread the costs of a problem that it realized only after the con- tracts had been performed. Cf. Atlas Corp., 895 F.2d at 748 (noting that the dangers and clean-up costs associated with uranium milling operations were not fully recognized until the late 1970s). It did so by dividing the costs be- tween: (i) the Government, which was responsible for at least $330 million per year to be raised through general appropriations, and (ii) those domestic utilities that bene- fited from the DOE’s uranium enrichment services. Any impact that this approach may have on those utilities with which the Government had prior contracts is “merely. in- lla cidental to the accomplishment of a broader governmental objective.” See Winstar, U.S. at ——, 116 S.Ct. at 2466. In characterizing the essence of the Act, Yankee Atomic focuses only on the provisions that impact those utilities that contracted with the Government and that themselves used the enrichment services. While it is true that Yankee Atomic has no quarrel with the Government over its liabil- ity on consumption of enrichment services supplied by non- governmental entities through the secondary merket, that fact cannot render irrelevant the Act’s prewsons that reach even those utilities that did not contract with the Government. When construing an act of Congress, and especially when determining the essential characteristic of a particular statute, we must observe and understand the statute as a whole. See Crandon v. United States, 494 US. 152, 158, 110 S.Ct. 997, 1001, 108 L.Ed.2d 132 (1990) (“In determining the meaning of the statute, we look not only to the particular statutory language, but to the design of the statute as a whole and to its object and policy.”); Richards v. United States, 369 U.S. 1, 11, 82 S.Ct. 585, 591-92, 7 L.Ed.2d 492 (1962) (“We believe it fundamental that a section of a statute should not be read in isolation from the context of the whole Act.”); In re Nantucket, Inc., 677 F.2d 95, 98 (C.C.P.A.1982) (“Each part or section of a statute should be construed in connection with every other part or section so as to pro- duce a harmonious whole, and it is not proper to confine interpretation to the one section to be construed.” (cita- tion omitted) ). Statutory provisions that are relevant, or as here, controlling, to our interpretation cannot be ignored simply because they are not dispositive to the facts before us. Similarly, the opinion of the Court of Federal Claims seems to have been mistaken in reasoning: “The [sov- ereign acts doctrine] argument would have some force if we were dealing with a general tax that fell on all utilities 12a alike. That, however, is not our case. Rather, this specia! assessment reaches only those utility companies that previ- ously had contracted with the Government for the pur- chase of uranium enrichment services.” 33 Fed. Cl. at 585 (emphasis added). As explained above, the special assessment does not reach only those utility companies that previously contracted with the Government; it also reaches those utilities that purchased the services through the secondary market but had no contracts with the Gov- ernment. Ironically, then, the assessment appears to be very similar to what the Court of Federal Claims thought it was not: a general tax that falls proportionally on all utilities that benefited from the DOE’s uranium enrich- ment services.° The broad reach of the Energy Policy Act also distin- guishes the present case from two cases upon which ®* To the extent that the Energy Policy Act is designed to spread the costs of a societal problem, it is not unlike other instances where Congress has enacted legislation to spread societal costs. One such example involves the costs of cleaning up hazardous waste under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. § 9601 et. seq. (1994). See, e.g., United States v. Northeastern Pharmaceutical & Chemical Co., 810 F.2d 726 (8th Cir.1986). The defendants in those lawsuits have frequently challenged the retroactive application of CERCLA as a violation of their due process rights and as an unconstitutional taking. The courts, however, have rejected those arguments. See id at 734 (rejecting due process challenge because “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’). Yankee Atomic contends that the CERCLA cases, and others like them, are inapposite because they involve the impact of legislation on private parties and therefore do not implicate the Government’s self-interest. See Perry v. United States, 294 U.S. 330, 350-51, 55 S.Ct. 432, 434-35, 79 L.Ed. 912 (1935). We cite the CERCLA cases not for their insight as to Congress's motives in enacting the Energy Policy Act, but rather for their general proposition that the costs of large, unrecognized societal problems are frequently spread among those who benefited from the source of the problem. ale) re ee Sohlaendie rk Baste b vi mar, pat 13a Yankee Atomic and the Court of Federal Claims relied: Lynch v. United States, 292 U.S. 571, 54 S.Ct. 840, 78 L.Ed. 1434 (1934), and Perry v. United States, 294 US. 330, 55 S.Ct. 432, 79 L.Ed. 912 (1935). In Lynch, the plaintiffs had entered into agreements with the United States for War Risk Insurance and had paid the prescribed monthly premiums. 292 U.S. at 576, 54 S.Ct. at 842. Congress subsequently enacted the Econ- omy Act which included a clause stating: “All laws grant- ing or pertaining to yearly renewable term insurance are hereby repealed.” /d. at 575, 54 S.Ct. at 842. The Su- preme Court held the legislation unlawful without dis- cussing the sovereign acts doctrine, which is not surprising given that the clause was clearly directed to abrogating past war risk insurance contracts for reasons of economy. As the Court stated: “No doubt there was in March, 1933, great need of economy. ... But Congress was with- out power to reduce expenditures by abrogating contract- ual obligations of the United States.” Jd. at 580, 54 S.Ct. at 844. In Perry, the plaintiff owned a $10,000 government bond which, when redeemed, required the United States to pay in “gold coin of the present standard of value.” 294 US. at 346-47, 55 S.Ct. at 433. Congress later passed a joint resolution which stated that payment of obligations in gold was against public policy and, therefore, all obliga- tions shall be discharged by payment in currency that is legal tender. Id. at 349, 55 S.Ct. at 434. The enactment specifically stated that “provisions for payment in gold, ‘contained in any law authorizing obligations to be issued by or under authority of the United States,’ were repealed.” Id. Based on this clear expression of an intention to abro- gate past contracts, the Court again held the act unlawful without discussing the sovereign acts doctrine. In sum, Lynch and Perry both involved situations where the congressional act made clear that its purpose was, at 14a least in part, to abrogate past public contracts. The Energy Policy Act, in contrast, reveals no such purpose of targeting past contracts. Instead, the Act taxes all bene- ficiaries of the DOE’s uranium enrichment services. Given the focus of the relevant provisions of the Energy Policy Act, we conclude that it constitutes a general exer- cise of Congress’s taxing power for the purpose of address- ing a societal problem rather than an act that retroactively increases the price charged to contracting parties for ura- nium enrichment services. This conclusion does not end our inquiry, however. We must further consider whether the Government, by contract with Yankee Atomic, has surrendered the right to exercise this sovereign power “in terms which admit of no other reasonable interpretation.” Merrion, 455 U.S. at 148, 102 S.Ct. at 907. This requires us to consider and apply the unmistakability doctrine. Vv As the Supreme Court plurality recently explained in Winstar, the modern unmistakability doctrine “marks the point of intersection between two fundamental constitu- tional concepts.” Wéainstar, USS. at , 116 S.Ct. at 2453. One concept, which developed in England, is that of parliamentary sovereignty. This concept posits that because the legislature has absolute authority and acknowl- edges no superior power, it cannot be bound by acts of a prior legislature. Jd. The other concept, which developed in the United States, is that legislative power may be lim- ited under certain circumstances. Unlike the absolute power enjoyed by the Parliament in England, the legisla- ture in the United States is “subject to the overriding dic- tates of the Constitution and the obligations that it author- izes.” Id. at - , 116 S.Ct. at 2453-54. One such limitation is that embodied in the Contracts Clause, which prohibits a state from passing any law that impairs the obligation of contracts. See U.S. Const., Art. I, § 10, cl. 1. PC a eye Le Ne TNS ie ern ae TE See