New York Power Authority v. United States

42 Fed. Cl. 795, 1999 U.S. Claims LEXIS 21, 1999 WL 38966
CourtUnited States Court of Federal Claims
DecidedJanuary 29, 1999
DocketNo. 97-236C
StatusPublished
Cited by16 cases

This text of 42 Fed. Cl. 795 (New York Power Authority v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
New York Power Authority v. United States, 42 Fed. Cl. 795, 1999 U.S. Claims LEXIS 21, 1999 WL 38966 (uscfc 1999).

Opinion

OPINION

REGINALD W. GIBSON, Senior Judge.

INTRODUCTION

In this case for breach of contract, the plaintiff New York Power Authority (New York Power) alleges that the government retroactively increased the purchase price of enriched uranium services by issuing a “special assessment” to fund the decommissioning and decontaminating costs associated with the government’s uranium enrichment facilities. New York Power seeks $17,230,241.68 as damages and restitution for the government’s wrongful act, as well as a declaratory judgment that the special assessments are unlawful and an injunction prohibiting the government from collecting future special assessments. A substantially similar breach of contract claim, brought by a different party, was rejected by the Federal Circuit, whose rejection would be binding precedent on that issue in this court. New York Power now requests that this court stay the present proceeding while it pursues separate litigation in the United States District Court for the Southern District of New York, in concert with 21 other utilities, challenging the constitutionality of the scheme imposing the assessments and seeking declaratory and in-junctive relief. New York Power also requests a stay pending a decision in a similar case filed before another judge of this court. For the reasons discussed below, we hold that New York Power’s motion for a stay of proceedings is granted pending a final judgment in the district court.

FACTS1

On March 28, 1997, New York Power filed a complaint in this court seeking recovery of the Decontamination and Decommissioning Fund (D & D Fund) special assessments imposed by the Department of Energy under authority of the Energy Policy Act of 1992. The basis of its claim arises from contracts in which New York Power purchased uranium enrichment services from the government dating back to 1970. The contracts at issue in this case have been fully performed by both sides. The D & D Fund was established to pay for the cost of decontaminating and decommissioning the government’s uranium processing facilities. Financing for the D & D Fund comes from two sources: 1) annual appropriations from the government, and 2) special assessments from domestic utilities who have purchased uranium processing services before October 24, 1992, either directly from the government or through third parties. 42 U.S.C. § 2297g-l. As of the filing date of this complaint, New York Power has paid five special assessments totaling $17,230,241.68.

PROCEDURAL POSTURE

This claim is one among 30 similar challenges to the D & D Fund assessments in the Court of Federal Claims, which altogether seek $600 million in monetary relief. In its complaint before this court, New York Power asserts four counts:

(i) Breach of Contract, i.e., the special assessment is a breach of its uranium enrichment services with the [798]*798government because the government is retroactively increasing the price of their contract.
(ii) Uncompensated Taking of a Property Interest, i.e., the assessment is a taking of a property interest in the economic benefits flowing from its uranium enrichment contract at fixed prices.
(iii) Assessments on Third-Party Purchases are an Illegal Exaction, i.e., the assessment attributable to its purchases of enrichment from third parties is an illegal exaction because it violates due process (because it is excessively retroactive) and equal protection (because it requires a utility to pay assessments for indirect purchases when it has no right to impose assessments for direct purchases).
(iv) Declaratory and Injunctive relief, i.e., it requests a declaration that such assessments are unlawful and an injunction prohibiting further collection of such special assessments under this court’s ability to grant such relief to afford complete relief to the parties.

The present claim was initially stayed on May 29, 1997, pending appeal of Yankee Atomic Electric Co. v. United States, 33 Fed. Cl. 580, 582 (1995), a previously-decided case brought by another utility challenging the same statute on the same grounds as the first two grounds in the present complaint. The lower court in Yankee Atomic had held that the assessments were a taking of the utility’s vested rights under its contract. Id. at 586. On appeal, the Federal Circuit rejected the notion implicit in the lower court’s analysis that the assessment was a retroactive price increase; instead, it viewed the assessment as a legitimate exercise of the sovereign’s taxing power. Yankee Atomic Electric Co. v. United States, 112 F.3d 1569, 1573 (1997). It reached this conclusion by applying the sovereign acts doctrine — because the special assessments were targeted on those utilities that used and benefitted from enriched uranium services rather than targeting only those utilities who had contracted with the government. Congress must have intended to address the cost of a societal problem that it discovered only after performance of its uranium enrichment contracts. The court concluded, therefore, that the act constituted a sovereign act of Congress rather than an increase in price of its prior contracts with utilities. Id. at 1575. The court also concluded that the prior contracts did not contain an unmistakable promise by the government that precluded it from later exercising its sovereign power and imposing the assessments. Id. at 1579-80. In a footnote, the appeals court also asserted that it had disposed of the takings argument when it concluded that the contracts did not contain an unmistakable promise against future assessments, because Yankee Atomic would have no vested property rights that could be taken by the assessment. Id. at 1580 n. 8. Yankee Atomic then petitioned for a writ of certiorari from the Supreme Court.

After the Federal Circuit’s reversal and before the Supreme Court’s decision on the petition for certiorari, 21 utilities (including plaintiff herein) filed suit in a United States district court challenging the special assessments. Their complaint asserts seven counts:

(i) Declaratory Judgment on Unconstitutional Taking, i.e., that the retroactive nature and imposition of liability on a limited class of persons affects a taking of the utilities’ vested property interests in economic benefits represented by the various contracts.
(ii) Declaratory Judgment on Violation of Due Process, i.e., the special assessments violate due process because they impose liability on utilities for transactions completed 40 years ago.
(iii) Declaratory Judgment on Due Process, i.e., the special assessments constitute a tax that violates due process because they are levied on a narrow base and on those not responsible for the contamination while the benefit goes to all citizens.
(iv) Declaratory Judgment on Impairment of Fixed-Price Contracts, i.e., the assessments have the effect of violating the fixed-price contracts be[799]*799tween the utilities and the government because they retroactively increase the prices the utilities were contractually obliged to pay.

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Bluebook (online)
42 Fed. Cl. 795, 1999 U.S. Claims LEXIS 21, 1999 WL 38966, Counsel Stack Legal Research, https://law.counselstack.com/opinion/new-york-power-authority-v-united-states-uscfc-1999.