271 F.3d 1327 (Fed. Cir. 2001), 00-5069, Commonwealth Edison Co v. United States

Docket Nº:00-5069
Citation:271 F.3d 1327
Party Name:COMMONWEALTH EDISON COMPANY, Plaintiff-Appellant, v. UNITED STATES Defendant-Appellee,
Case Date:November 20, 2001
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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271 F.3d 1327 (Fed. Cir. 2001)

COMMONWEALTH EDISON COMPANY, Plaintiff-Appellant,

v.

UNITED STATES Defendant-Appellee,

00-5069

United States Court of Appeals, Federal Circuit

November 20, 2001

Appealed from: United States Court of Federal Claims, Chief Judge Lawrence M. Baskir

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Robert A. Mangrum, Winston & Strawn, of Washington, DC, argued for plaintiff-appellant. With him on the brief was Eric J. Marcotte.

James G. Bruen, Jr., Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellee. On the brief were J. Christopher Kohn, Director; Sandra P. Spooner, Deputy Director; Theodore R. Carter, III, and Margaret Baskette, Attorneys. Of counsel were Margaret M. Newell, and Matthew J. Troy, Attorneys.

Before MAYER, Chief Judge, NEWMAN, MICHEL, LOURIE, CLEVENGER, RADER, SCHALL, BRYSON, GAJARSA, LINN, and DYK, Circuit Judges.[*]

Opinion for the court filed by Circuit Judge DYK, in which Circuit Judges MICHEL, LOURIE, CLEVENGER, SCHALL, BRYSON, GAJARSA, and LINN join. Dissenting opinion filed by Chief Judge MAYER, in which Circuit Judges NEWMAN and RADER join.

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.

In light of our decision in Consolidated Edison Co. v. United States, 247 F.3d 1378 (Fed. Cir. 2001),1 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

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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 facilities 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 (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.

BACKGROUND

This case arises against the background of our earlier decision in Yankee Atomic where we rejected contentions that EPACT breached uranium processing contracts between Yankee Atomic Electric Co. ("Yankee Atomic") and the United States and constituted a taking of those contract rights. Some of the claims asserted by Edison are the same as those asserted in Yankee Atomic. Edison also claims that the statutory obligation to pay money to the government constitutes a taking of that money, and that the retroactivity of the Act renders it unconstitutional under the Due Process Clause.

Resolution of this appeal requires a brief overview of the history of the United States government's involvement in the enrichment of low-grade uranium for Edison and 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. Id. 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 generate electrical power for sale and distribution to its customers in Illinois. Those nuclear reactors, in turn, required enriched uranium.

Edison alleges that in 1960 it began to "purchase or lease" enrichment services from the government. However, we note that until 1964 the government retained strict control over the technology used to enrich low-grade uranium for use in nuclear

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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 contracts as the price in effect at the time the service was rendered. A number of these contracts also capped the maximum per unit charge for the enrichment services. Edison alleges in its complaint that it purchased a portion of its uranium enrichment services "with the Government's knowledge and consent, from other sources." First Amended Complaint of Plaintiff-Appellant Commonwealth Edison Company (hereinafter "Complaint") at ¶ 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." Id. 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 ("Settlement Agreement"). This Utility Services Contract, like the previous contracts, charged the utilities for the services according to the "established pricing policy," and likewise capped the maximum unit charge. It appears that the government developed this Utility Services Contract, at least in part, at the request of Edison and the other domestic utilities.

As a result of the government's use of the processing facilities for national defense purposes, they had become contaminated, even before the utilities' uranium processing commenced. Although Edison alleges that the facilities were "fully contaminated

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with radioactive and other hazardous materials" before they began to be used for the processing of the utilities' uranium, Complaint at ¶ 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...

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