Cotter Corporation v. Seaborg

• Decision Date: 28 December 1966
• Docket Number: No. 8418.,8418.
• Citation: 370 F.2d 686
• Parties: COTTER CORPORATION, Denver-Golden Corporation, and Joseph W. Walsh, Appellants, v. Glenn T. SEABORG, Chairman, Atomic Energy Commission, John G. Palfry, Commissioner, Atomic Energy Commission, James T. Ramey, Commissioner, Atomic Energy Commission, Gerald F. Tape, Commissioner, Atomic Energy Commission, Mary I. Bunting, Commissioner, Atomic Energy Commission, Robert Hollingsworth, General Manager, Atomic Energy Commission, George F. Quinn, Assistant General Manager, Atomic Energy Commission, Rafford L. Faulkner, Director, Division of Ray Materials, Atomic Energy Commission, and Allan E. Jones, Manager, Grand Junction Office, Atomic Energy Commission, Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

370 F.2d 686 (1966)

COTTER CORPORATION, Denver-Golden Corporation, and Joseph W. Walsh, Appellants, v. Glenn T. SEABORG, Chairman, Atomic Energy Commission, John G. Palfry, Commissioner, Atomic Energy Commission, James T. Ramey, Commissioner, Atomic Energy Commission, Gerald F. Tape, Commissioner, Atomic Energy Commission, Mary I. Bunting, Commissioner, Atomic Energy Commission, Robert Hollingsworth, General Manager, Atomic Energy Commission, George F. Quinn, Assistant General Manager, Atomic Energy Commission, Rafford L. Faulkner, Director, Division of Ray Materials, Atomic Energy Commission, and Allan E. Jones, Manager, Grand Junction Office, Atomic Energy Commission, Appellees.

No. 8418.

United States Court of Appeals Tenth Circuit.

December 28, 1966.

Elmer E. Batzell, Washington, D. C. (Robert G. Nunn, Jr., Edward J. McGrath, Washington, D. C., Holme, Roberts & Owen, Donald C. McKinlay and Edward M. Heppenstall, Denver, Colo., on the brief), for appellants.

Florence Wagman Roisman, Atty., Dept. of Justice (Barefoot Sanders, Asst. Atty. Gen., Lawrence M. Henry, U. S. Atty., and David L. Rose, Atty., Dept. of Justice, on the brief), for appellees.

Before MURRAH, Chief Judge, and ALDRICH^* and HILL, Circuit Judges.

HILL, Circuit Judge.

Appellants brought suit in the United States District Court for the District of Colorado against the Chairman, Commissioners, and other officials of the Atomic Energy Commission in their individual capacities. The complaint sought declaratory judgment and injunctive relief.

The District Court, after hearing extensive argument, dismissed the action because: 1) The Complaint seeks to require the United States Government to contract for and purchase uranium concentrate, relief which the court has no authority or jurisdiction to grant, thus the complaint does not state a cause of action upon which relief can be granted, and 2) it is an unconsented suit against the United States, barred by virtue of the federal government's sovereign immunity. From the order dismissing their complaint, appellants take this appeal.

Because appellants contend the Commission officials have acted ultra vires their authority a somewhat detailed statement of the factual background of this case is essential to an understanding of the legal issues involved. Since its establishment in 1947, the Atomic Energy Commission has had the primary responsibility for the development and production of an arsenal of nuclear weapons for this Nation's defense. The Commission has been "authorized and directed" by Congress to "purchase, take, requisition, condemn, or otherwise acquire supplies of source material," including uranium.¹ The Commission has also been empowered to "establish guaranteed prices for all source material delivered to it within a specified time."² To provide incentive to develop domestic sources of uranium, the Atomic Energy Commission, in 1948, announced that it would guarantee certain purchase prices for domestic uranium.

At an early stage in the uranium procurement program, the Commission determined that it should try to satisfy its uranium needs by purchasing uranium concentrates rather than raw, un-processed ore. It therefore made purchases of the concentrates through individually negotiated contracts for the construction and operation of privately owned domestic mills which, under the contracts, would process uranium concentrates and sell them to the Atomic Energy Commission. Under the program, the privately owned mills buy directly from the ore miners.³ The Atomic Energy Commission, in its contracts with the mills, provided the price at which the mills would buy ore from the miners as well as the price the Atomic Energy Commission would pay the mills for the concentrate. These incentive programs were to expire on March 31, 1962. To insure an adequate supply thereafter, the Atomic Energy Commission, in a press release of May 24, 1956, announced that it would, for the period April 1, 1962, through December 31, 1966, guarantee a market for "all uranium concentrates produced by domestic mills from domestic ores."⁴ The announcement also stated that the "present uranium procurement program will remain in effect until March 31, 1962."

Apparently the response to the procurement program exceeded the Commission's expectation for in 1957 the domestic uranium ore supplies were in excess of the amount the government could use. As a consequence, the Commission announced on October 28, 1957, that it no longer would guarantee a market for all domestic uranium. Because of the economic hardship this policy imposed on certain uranium areas, including the Colorado Front Range where appellants operate, the Commission, on April 2, 1958, announced that it would "expand to a limited extent domestic uranium procurement" in order to "provide an additional market for ore reserves developed prior to November 1, 1957." The Commission stressed the fact that over-expansion of the uranium production facilities should be avoided and that "new capacity provided through purchase contracts should be held to the minimum."

On November 24, 1958, the Commission announced its new guarantees and this press release announcement is at the heart of the appellants' contentions. As applicable to this case, it reads as follows:

"Modification of USAEC 1962-1966 Uranium Program

"The United States Atomic Energy Commission: Notice is hereby given of modification of the 1962-1966 domestic uranium concentrate procurement program.

"1. On May 24, 1956, the Atomic Energy Commission announced that it would guarantee the purchase of U3O8 in concentrates produced and delivered during the period April 1, 1962-December 31, 1966. The Commission will carry out its May 24, 1956, commitment with respect to ore reserves developed prior to this date in reliance upon the May 24, 1956, announcement by negotiating for the purchase of appropriate quantities of concentrates derived from such ore reserves during the 1962-1966 period. Such purchases will be at the previously established price of $8.00 per pound for U3O8 in an acceptable concentrate."⁵

To effectuate this program, the Commission had to determine what quantity of ore reserves had been "developed prior to this date," i. e., November 24, 1958. This they did by using certain unchallenged measurement procedures. The ore reserves thus determined were called "Allocations" and the amount of ore concentrate the Commission, by contracting with the various mills, agreed to purchase from the mills — that is, that ore developed prior to November 24, 1958 — was called "eligible ore". It will be remembered that this "eligible ore" was to be delivered to the Commission during the period April 1, 1962, through December 31, 1966.

On November 17, 1962, the Commission announced its procurement program for the period January 1, 1967, through December 31, 1970.⁶ The Commission's projected requirements for this period were considerably less than the amounts of uranium which would be available if domestic operations continued through the 1967-1970 period at the "current" production levels. Therefore, the Commission announced the "stretch-out" program. Under this program, the mills could defer, until after 1966, delivery of a portion of the "eligible ore" they had contracted to deliver during the 1962-1966 period. Under the program, the mills were invited to submit proposals on the amounts of concentrate in their present contracts with the Atomic Energy Commission which they would be willing to defer delivery of until after 1966. The Commission retained the right to reject any and all proposals. If the proposal was approved, the mill could make delivery of the "eligible ore" during 1967 and 1968, and, the Commission would, in addition, purchase during 1969 and 1970 an amount equal to that delivered during 1967 and 1968. The announcement expressly provided that "with respect to deliveries before January 1, 1969, that is, during the 1967-1968 period all proposals must be limited to U3O8 in concentrates produced from ores derived from property units which are determined by the Atomic Energy Commission to be eligible under the November 24, 1958, announcement * * *." The effect of this provision is this: Any mill owner who sells concentrates to the government must have an ore supplier who has some ore sources which were developed prior to November 24, 1958, if that mill owner and the producer are to participate in the "stretch-out" program. The appellant ore producer Walsh has no remaining ore sources which were developed prior to November 24, 1958. Thus, neither he nor appellant Cotter, a mill operator, can participate in the "stretch-out" program.

With this general background statement, we turn to the relationship between the Commission and the appellants. Appellant Cotter is a uranium mill owner and operator.⁷ In 1957, Cotter and the Commission entered into a contract under which Cotter, using its own funds, constructed a small uranium processing plant — a mill — in Colorado. The Commission purchased the uranium concentrates produced by Cotter at the plant. Subsequently, a new contract was entered into, on December 17, 1959, under which Cotter, using its own monies, expanded the capacity of the processing plant from 50⁸ to 200 tons of ore per day. Included in this 1959 contract were provisions whereby the Commission could carry out its program announced November 24, 1958, by providing that the allocations of ore eligible to be processed into concentrate must have been developed prior to November 24, 1958. The government then agreed to purchase certain prescribed amounts of ore during the contract's effective period. That period was March 1, 1960, through February 28, 1965. Appellant Walsh is one of the producers who supplies ore to appellant Cotter. Walsh is, of course, limited in participating in the government program by the contractual provision which limits Cotter's operation to that eligible ore developed...