Industrial Uranium Company v. The United States

376 F.2d 868, 180 Ct. Cl. 50, 1967 U.S. Ct. Cl. LEXIS 75
CourtUnited States Court of Claims
DecidedMay 12, 1967
Docket258-60
StatusPublished

This text of 376 F.2d 868 (Industrial Uranium Company v. The United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Industrial Uranium Company v. The United States, 376 F.2d 868, 180 Ct. Cl. 50, 1967 U.S. Ct. Cl. LEXIS 75 (cc 1967).

Opinions

OPINION

DAVIS, Judge:

Industrial Uranium Company is another miner suing for compensation the Atomic Energy Commission is said to have failed to pay under its domestic uranium program. See Radium Mines, Inc. v. United States, 153 F.Supp. 403, 139 Ct.Cl. 144 (1957); Gay v. United States, 356 F.2d 516, 174 Ct.Cl. 420 (1966), cert. denied, 385 U.S. 898, 87 S.Ct. 202, 17 L.Ed.2d 130. This plaintiff, unlike its predecessors, actually delivered acceptable uranium to the A.E.C. or its licensees for several years. The claim is that, from 1958 to 1962, plaintiff should have been, but was not, paid under an A.E.C. guarantee for the vanadium content of the uranium ores it mined and sold for the Commission’s immediate or ultimate use. We hold that the guarantee supports part, but not all, of the [870]*870claim, and that plaintiff should recover, but not to the full extent it demands.

Uranium is, of course, used by the A.E.C. in making atomic weapons, as well as civilian uses of atomic power. Originally the Manhattan Engineering District (forerunner of A.E.C.) acquired the ore chiefly by import. With the creation of the Commission by the Atomic Energy Act of 1946, 60 Stat. 755, and the breakdown of the efforts after World War II to control nuclear weapons by international agreement, the A.E.C. turned its attention in 1948 to developing domestic uranium sources. See Gay v. United States, supra, 356 F.2d at 517-519, 174 Ct.Cl. at 422-426. Section 5(b) (5) of the Act authorized it to “establish guaranteed prices for all source materials delivered to it within a specified time.” The Commission wanted to buy uranium concentrate — derived from the milling or processing of uraniferous materials— but in the earlier stages of the program felt it necessary to purchase uranium-bearing ores and process the concentrate itself. To accomplish this it acquired q surplus government-owned vanadium mill near Monticello, Utah, and adapted it for recovery of uranium from the ores of the surrounding area in the Colorado .Plateau, commonly known as the carno-tite- and roscoelite-type. These ores had previously been mined for vanadium but were known to contain uranium which had generally found its way into the tail-ings as an unwanted by-product. The A.E.C. made a minimum of alterations in the plant and produced both uranium and vanadium in it. Later, the Commission opened other ore-buying stations and also licensed and utilized private mills to receive and process the ores, selling the concentrate to the Government. These private mills were put under contract by the A.E.C. to receive, in general, such production as they could conveniently handle. At least up to 1957, “[i]t is no exaggeration to say that in this period of uranium ‘fever’ * * * it was widely assumed that the government stood ready to buy all the uranium anyone could find.” Gay v. United States, supra, 356 F.2d at 519, 174 Ct.Cl. at 426. Though this assumption was incorrect, it did reflect the well-publicized zeal with which the A.E.C. was encouraging the private exploration and development of uranium ores.

As one of the elements in this on-going program, A.E.C. published, early in 1949, Circular No. 5 guaranteeing a minimum price for uranium-bearing carnotite-type or roscoelite-type ores of the Colorado Plateau area.1 Originally for a limited period, this guarantee was continued and extended to March 31, 1962, with various changes which are not now relevant. The most important aspect, for present purposes, was that the established price was to be measured not only by the uranium content of the ore but also by its vanadium content (up to a stated maximum), regardless of whether the vanadium could be utilized by the Government or would have to be discarded. This inclusion in the guaranteed price of the vanadium factor remained in the circular until March 31, 1962, and was never removed or amended. Our case revolves around that commitment to pay for the vanadium in the ores.

Some five or six years after the promulgation of Circular No. 5, plaintiff was organized as a Utah corporation in 1955 to engage in uranium mining. It acquired mineral rights, and discovered claims, on the Navajo Indian Reservation, starting to mine in November 1955. About six months later it made its first sale to the A.E.C. at Monticello. From that date (April 1956) to March 1957, the Monticello station bought large amounts of ore from the company, under two successive contracts, paying Circular No. 5 prices (including the vanadium component). The Commission then told plaintiff that Monticello would no longer buy its ores but that it should deal with the Texas-Zinc Minerals Corporation [871]*871which was opening an ore-buying station and plant, under an A.E.C. license and contract, at a spot closer to plaintiff’s mines. Texas-Zinc was one of several such privately-operated mills which, by agreement with the Commission, was to acquire ore at guaranteed prices, process it, and then sell uranium concentrate to the Government at a price which would cover the mill’s cost of the ore. As Monticello had previously done, Texas-Zinc paid plaintiff Circular No. 5 prices, including the specified payment for vanadium values. The’ plaintiff' also sold some ore to other licensed private mills, likewise receiving full payment.

Late in 1957, however, the A.E.C. decided — apparently in order to reduce the cost of the uranium acquisition program —to begin eliminating the vanadium payment for ores sold to some of the private mills. Between 1957 and 1961 the agency amended most (but not all) of its agreements with these mills to cut out the vanadium factor in the price paid by A.E.C. for the processed uranium concentrate, and also to remove the mills’ obligation to pay the producers for the vanadium content of their ores. This change in the arrangement between A.E.C. and Texas-Zinc took effect in July 1958, and the latter then ceased paying plaintiff for the vanadium. Another private mill with which plaintiff dealt from time to time (Rare Metals Corporation) made the change in April 1958. At Monticello, however, the Commission continued to pay full Circular No. 5 prices (until the expiration of this part of the program on March 31, 1962) to those suppliers whose ore was accepted there.

When the private mills refused to pay for its vanadium, Industrial Uranium Company made efforts to obtain the vanadium payment in other ways. It tendered its ores to Monticello, but these were refused by the A.E.C. It proposed to build a mill which could recover the vanadium and sell it, but the A.E.C. refused to countenance this idea. Plaintiff sought approval from the A.E.C. to be allowed to deliver parts of its ore to a mill (other than those to which it had been selling) which offered to pay the full Circular No. 5 price, but the Commission refused permission. Plaintiff was forced, if it wished to sell its ore,2 3 to accept the ex vanadium price offered by Texas-Zinc and Rare Metals, the private mills with which it had been dealing. For redress it has brought this action against the United States, relying squarely on Circular No. 5. There is no claim of entitlement against the Government outside of the circular.

In our prior decisions, we have indicated that official regulations like this circular, forming part of the A.E.C.’s domestic uranium program, were definitive offers by the Commission, not simply invitations to miners to make offers to the Government. Radium Mines, Inc. v. United States, supra, 153 F.Supp. at 405-406, 139 Ct.Cl. at 147-148; Gay v.

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Bluebook (online)
376 F.2d 868, 180 Ct. Cl. 50, 1967 U.S. Ct. Cl. LEXIS 75, Counsel Stack Legal Research, https://law.counselstack.com/opinion/industrial-uranium-company-v-the-united-states-cc-1967.