ELR Citation: ELR 20706
No(s). s. 89-1205 et al (Fed. Cir. Feb 2, 1990)

The court rules that corporations that entered into contracts with the U.S. Atomic Energy Commission (AEC) to produce uranium or thorium cannot recover costs expended to stabilize mill tailings as required by the Uranium Mill Tailings Radiation Control Act (UMTRCA), and imposition of the Act's tailings stabilization requirement as a license condition is not an unconstitutional taking. In the 1940s, before the long-term potential health hazards from mill tailing radon emissions were recognized, the AEC began to award contracts for uranium production, and in 1978, Congress enacted the UMTRCA requiring that producers stabilize mill tailings piles. The court first rejects the corporations' contract reformation claims. The parties made no agreement with respect to the now-required tailings stabilization, and because the existence of the tailings hazard was beyond the parties' contemplation at the time of contract negotiations, they made no mutual mistake that could be rectified through reformation. Similarly, the court rejects the corporations' claims that the AEC breached the contracts by not paying the cost of tailings stabilization. The contracts contain no express provision in which the AEC agrees to pay tailings stabilization costs, and the corporations' claim that the UMTRCA is a contractual modification is barred because the government is not contractually liable for sovereign acts undertaken for the public good. That the contract provides for reimbursement of all costs does not create an implied-in-fact contract for stabilization costs, since the stabilization costs are not entirely unrelated to the costs already included in the contract prices. In addition, the Claims Court has no jurisdiction where the government has not agreed to be bound, and the corporations' circumstances are not as compelling as they might appear. The corporations failed to include escalation clauses when they entered into the contracts, and they have not alleged that they are protected by a price adjustment provision or that the contracts were price redeterminable. The court next holds that the UMTRCA tailings stabilization requirement does not constitute a compensable taking. The requirement that money be spent is not a taking of property, and no taking of physical property is alleged. The UMTRCA protects the public against tailings radiation but does not appropriate property for public use, affect uranium production, or make uranium milling unprofitable. Finally, the stabilization requirement does not interfere with any investment-backed expectations, since an expectation that the corporation would not have to spend its own money to remediate uranium production hazards is not a reasonable commercial expectation.

Counsel for Plaintiffs-Appellants
Peter J. Nickles
Covington & Burling
1201 Pennsylvania Ave. NW, P.O. Box 7566, Washington DC 20044
(202) 662-6000

Harley W. Shaver
Shaver & Licht
1212 Century Tower, 720 S. Colorado Blvd., Denver CO 80222
(303) 757-7500

Counsel for Defendant-Appellee
Stuart E. Schiffer, Acting Ass't Attorney General
Land and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 633-3306

Before MARKEY, Chief Judge, BENNETT, Senior Circuit Judge,^* and NEWMAN, Circuit Judge.