Yankee Atomic Elec. Co. v. U.S., s. 96-5021

Citation112 F.3d 1569
Decision Date06 May 1997
Docket NumberNos. 96-5021,96-5025,s. 96-5021
PartiesNuclear Reg. Rep. P 20,581, 65 USLW 2739, 27 Envtl. L. Rep. 21,260, 41 Cont.Cas.Fed. (CCH) P 77,083 YANKEE ATOMIC ELECTRIC COMPANY, Plaintiff/Cross-Appellant, v. The UNITED STATES, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Jerry Stouck, Spriggs & Hollingsworth, Washington, D.C., argued for plaintiff/cross-appellant. Of counsel on the brief were Catherine R. Baumer and David R. Lipson.

Douglas Letter, Attorney, Appellate Staff, Civil Division, Department of Justice, Washington, D.C., argued for defendant-appellant. With him on the brief were Frank W. Hunger, Assistant Attorney General, and Allen L. Lear, Attorney, Commercial Litigation Branch.

Before MAYER, LOURIE, and CLEVENGER, Circuit Judges.

Opinion of the court filed by Circuit Judge CLEVENGER. 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 provided 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 determined 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 participate in the use of atomic energy as an alternative-source fuel for generating electricity. Yankee Atomic produced 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). Although 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 defined as the price in effect at the time the service was provided. There is no dispute that the Government fulfilled 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 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, Congress realized that there would be large costs associated with decontaminating and decommissioning the facilities that had previously been used to provide enrichment services. 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 establishes 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 purchased 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 not considered to have purchased a work unit from the DOE if it resold that work unit to another utility. 1 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 annual 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 argument, Yankee Atomic paid approximately $3 million pursuant 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 special assessment was a lawful exercise of Congress's taxing power under the sovereign acts doctrine. The court explained 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 services." Accordingly, the court viewed the special assessment as a unilateral retroactive increase in the price previously charged by the Government for its uranium enrichment services.

The court explained that such a retroactive price increase 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 addressing 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).

III

The decision of the Court of Federal Claims is driven by its characterization of the special assessment 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.

The Government's principal argument is that the special assessment is entirely distinct from the prior contracts between the DOE and utility companies such as Yankee Atomic. The Government notes that those earlier contracts concerned uranium enrichment, whereas this assessment concerns decontamination and decommissioning. As a result, the Government asserts that the assessment cannot constitute a breach of those earlier contracts unless those contracts contained an express provision that precluded the Government from imposing an assessment to fund decontamination and decommissioning costs.

Yankee Atomic disagrees with the Government's characterization of the assessment and contends that it is directly 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 decontamination and decommissioning costs) onto the Government. Yankee Atomic argues that the assessment breaches those contracts by, in effect, retroactively increasing the price that it must pay for the previously supplied uranium enrichment services. 2

Resolution of this disputed characterization requires us to consider and apply two related bodies of law: the sovereign acts doctrine and the unmistakability doctrine. We consider each in turn.

IV

The sovereign acts doctrine stems from a series of decisions 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...

To continue reading

Request your trial
39 cases
  • Casitas Mun. Water Dist. v. U.S., 2007-5153.
    • United States
    • United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
    • September 25, 2008
    ...of the particular contract resulting from its public and general acts as sovereign.'" Yankee Atomic Elec. Co. v. United States, 112 F.3d 1569, 1574 (Fed.Cir.1997) (quoting Horowitz v. United States, 267 U.S. 458, 461, 45 S.Ct. 344, 69 L.Ed. 736 (1925)). The doctrine is based on the theory t......
  • Commonwealth Edison Co v. U.S.
    • United States
    • United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
    • November 20, 2001
    ...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 (1998). We therefore dismiss as moot the appeal from the denial of the stay request and affirm the dec......
  • Casitas Mun. Water Dist. v. United States
    • United States
    • United States Courts of Appeals. United States Court of Appeals for the Federal Circuit
    • February 27, 2013
    ...of the particular contract resulting from its public and general acts as sovereign.’ ” Yankee Atomic Elec. Co. v. United States, 112 F.3d 1569, 1574 (Fed.Cir.1997) (quoting Horowitz v. United States, 267 U.S. 458, 461, 45 S.Ct. 344, 69 L.Ed. 736 (1925)). The doctrine recognizes that “[t]he ......
  • Gulf Grp. Gen. Enters. Co. v. United States
    • United States
    • Court of Federal Claims
    • July 2, 2013
    ...of the particular contract resulting from its public and general acts as a sovereign." Yankee Atomic Elec. Co. v. United States, 112 F.3d 1569, 1574 (Fed. Cir. 1997) (quoting Horowitz v. United States, 267 U.S. 458, 461 (1925))[, reh'g denied, in banc suggestion declined (Fed. Cir. 1997), c......
  • Request a trial to view additional results
3 books & journal articles
  • STARE DECISIS AND INTERSYSTEMIC ADJUDICATION.
    • United States
    • Notre Dame Law Review Vol. 97 No. 3, March 2022
    • March 1, 2022
    ...(4th Cir. 2015) (same); Alperin v. Vatican Bank, 410 F.3d 532, 552-53 (9th Cir. 2005) (same); Yankee Atomic Elec. Co. v. United States, 112 F.3d 1569, 1578-79 (Fed. Cir. 1997) (52) See, e.g., United States v. Cundiff, 555 F.Sd 200, 209 (6th Cir. 2009) (asserting that the "narrowest' opinion......
  • Federal environmental remediation contractual and insurance-based risk allocation schemes: are they getting the job done?
    • United States
    • Air Force Law Review No. 58, March 2006
    • March 22, 2006
    ...(58) See id. at 1-2, 11-2. (59) See generally Federal Acquisition Regulation (FAR) 16.103. (60) Yankee Atomic Elec. Co. v. United States, 112 F.3d 1569, 1579 (Fed. Cir. 1997); see also United States v. Spearin, 248 U.S. 132, 136 (1918); ITT Arctic Servs., Inc. v. United States, 524 F.2d 680......
  • Bargaining in the shadow of democracy.
    • United States
    • University of Pennsylvania Law Review Vol. 148 No. 2, December 1999
    • December 1, 1999
    ...authority to enter into agreements of the sort at issue here." (citation omitted)). (60) In Yankee Atomic Electric Co. v. United States, 112 F.3d 1569 (Fed. Cir. 1997), cert. denied, 524 U.S. 951 (1998), the Federal Circuit avoided imposing liability on the government under Winstar by holdi......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT