B-207029 L/M, AUG 10, 1982

B-207029 L/M, AUG 10, 1982

PRECIS-UNAVAILABLE

MARILYN L. BOUQUARD, HOUSE OF REPRESENTATIVES:

THIS RESPONDS TO YOUR LETTER DATED MARCH 31, 1982, REQUESTING OUR OPINION ON THE CONSTITUTIONALITY OF A PROPOSED LAW WHICH WOULD PROVIDE THAT NUCLEAR POWERPLANT LICENSEES LOSE THEIR LICENSES UNLESS THEY MEET CONDITIONS WHICH WOULD REQUIRE THEM TO MAKE SUBSTANTIAL ADDITIONAL EXPENDITURES. YOU ARE CONCERNED THAT IF THE NUCLEAR REGULATORY COMMISSION FOLLOWS THE PROPOSED REVOCATION REQUIREMENT, IT MIGHT VIOLATE A LICENSEE'S CONSTITUTIONAL RIGHT TO DUE PROCESS OF LAW.

YOU ASKED US TO ADDRESS TWO ISSUES SPECIFICALLY. THE FIRST ISSUE IS WHETHER A PERSON LICENSED UNDER SECTIONS 53, 103, OR 104 OF THE ATOMIC ENERGY ACT OF 1954, CLASSIFIED TO 42 U.S.C. SECS. 2073, 2133 AND 2134 (1976), RESPECTIVELY, ACCRUES A PROPERTY INTEREST IN HIS LICENSE WITHIN THE PURVIEW OF THE DUE PROCESS CLAUSE OF THE FIFTH AMENDMENT TO THE UNITED STATES CONSTITUTION. THEN, ASSUMING A LICENSE IS SUCH A PROPERTY INTEREST, YOU ASKED:

"WHETHER ENACTING PROVISIONS THAT REQUIRE THE REVOCATION OF THAT LICENSE IF THE LICENSEE DOES NOT TAKE CERTAIN ACTIONS INVOLVING SUBSTANTIAL FINANCIAL COMMITMENTS, IS A RETROSPECTIVE IMPAIRMENT OF PROPERTY RIGHTS AND AS SUCH CONSTITUTES AN UNLAWFUL DEPRIVATION OF PROPERTY."

WE CONSIDERED THE COMMISSION'S VIEWS IN FORMULATING OUR RESPONSE TO YOU AS YOU REQUESTED. UPON RECEIPT OF YOUR INQUIRY, WE ASKED THE CHAIRMAN FOR THE COMMISSION'S COMMENTS ON THE ISSUES YOU RAISE. THE COMMISSION'S GENERAL COUNSEL PROVIDED US WITH A COPY OF HIS LETTER TO YOU, DATED MAY 7, 1982, AND INDICATED INFORMALLY THAT IT ADEQUATELY AND COMPLETELY EXPRESSES THE COMMISSION'S POSITION. IN THE LETTER HE STATES:

"*** ASSUMING THAT THE LEGISLATION IS OTHERWISE BASED ON SOUND CONSTITUTIONAL GROUNDS AND FOR THE PURPOSE OF PROTECTING THE PUBLIC HEALTH AND SAFETY OR COMMON DEFENSE AND SECURITY, THEN THE FACT THAT IT WOULD IMPOSE SEVERE ADDITIONAL ECONOMIC BURDENS ON EXISTING PROPERTY INTERESTS WOULD NOT APPEAR TO CAST DOUBT ON ITS CONSTITUTIONALITY. ***"

ESSENTIALLY, WE AGREE WITH THIS POSITION.

WITH RESPECT TO WHETHER A LICENSEE HAS A PROPERTY INTEREST IN ITS LICENSE, WE WOULD SAY THAT IT DOES HAVE CERTAIN PROPERTY RIGHTS, BUT THAT THEY ARE HIGHLY QUALIFIED. FOR EXAMPLE, NUCLEAR POWERPLANT LICENSEES ARE SUBJECT TO THE PROVISIONS OF 42 U.S.C. SEC. 2237 WHICH EXPRESSLY STATE THAT "THE TERMS AND CONDITIONS OF ALL LICENSES SHALL BE SUBJECT TO AMENDMENT, REVISION, OR MODIFICATION, BY REASON OF AMENDMENTS OF THIS CHAPTER (AUTHORIZING THE ISSUANCE OF NUCLEAR POWERPLANT LICENSES) OR BY REASON OF RULES AND REGULATIONS ISSUED IN ACCORDANCE WITH THIS CHAPTER." IN OTHER WORDS, THE LICENSEE, BY OPERATION OF THIS STATUTORY PROVISION UNDER WHICH IT APPLIED FOR AND OBTAINED ITS LICENSE, HAS AGREED TO ABIDE BY STATUTORY AND REGULATORY CHANGES. ACCORDINGLY, THE LICENSEE HAS NO LEGAL GROUNDS TO OBJECT TO DULY AUTHORIZED CHANGES IN THE BASIC FRAMEWORK IN WHICH IT OPERATES. THIS WOULD INCLUDE STATUTORY CHANGES THAT COULD REQUIRE NEW FINANCIAL COMMITMENTS BY THE LICENSEE.

MOREOVER, THE RESULT WOULD BE THE SAME WITH RESPECT TO STATUTORY CHANGES IN LICENSING REQUIREMENTS EVEN IF THIS STATUTE DID NOT EXIST. YOUR LETTER SUGGESTS THAT YOUR UNDERSTANDING IS THAT IF A STATUTE IMPAIRS AN EXISTING PROPERTY RIGHT, IT NECESSARILY VIOLATES THE RIGHT TO DUE PROCESS OF LAW. ACCORDINGLY, IF WE CONCLUDE THAT A NUCLEAR POWERPLANT LICENSEE DOES HAVE A PROPERTY INTEREST IN HIS LICENSE, THEN, IN YOUR VIEW, THE PROPOSED STATUTE WOULD AUTOMATICALLY BE UNCONSTITUTIONAL BECAUSE IT REQUIRES THAT HIS LICENSE BE REVOKED UNLESS HE SPENDS SUBSTANTIAL SUMS.

HOWEVER, THAT A STATUTE IMPAIRS EXISTING FINANCIAL INTERESTS DOES NOT MEAN THAT IT VIOLATES THE RIGHT TO DUE PROCESS OF LAW. THE CASES IN WHICH THE CONSTITUTIONALITY OF LEGISLATION IS CALLED INTO QUESTION BECAUSE IT INTERFERES WITH PRIVATE FINANCIAL INTERESTS ARE THE SO CALLED "SUBSTANTIVE (AS OPPOSED TO PROCEDURAL) DUE PROCESS" CASES. AS EXPLAINED MORE FULLY BELOW, THE PRIMARY TEST FOR DETERMINING CONSTITUTIONALITY IN THESE CASES IS WHETHER THE STATUTE IN ISSUE IS RATIONALLY RELATED TO A LEGITIMATE END OF GOVERNMENT. A STATUTE MEETING THIS TEST IS CONSTITUTIONAL EVEN THOUGH IT MAY REQUIRE THE EXPENDITURE OF SUBSTANTIAL SUMS BY LICENSEES.

OBVIOUSLY, WE CANNOT COMMENT ON WHETHER ANY PROPOSED LAW MEETS THIS STANDARD UNLESS WE KNOW SPECIFICALLY WHAT IT PROVIDES. HOWEVER, A COURT WOULD PROBABLY CHARACTERIZE A STATUTE INVOLVING NUCLEAR POWERPLANTS AS ECONOMIC LEGISLATION. FOR EXAMPLE, H.R. 5963, 97TH CONG., 2D SESS. (1982), THE NUCLEAR POWERPLANT DECONTAMINATION ACT OF 1982, DISCUSSED INFORMALLY WITH MR. VENTRE OF YOUR STAFF, WOULD REQUIRE THE NUCLEAR REGULATORY COMMISSION TO SUSPEND OR TERMINATE THE NUCLEAR POWERPLANT LICENSE OF A LICENSEE WHO DOES NOT HAVE THE SPECIFIED PROPERTY DAMAGE INSURANCE. WE FEEL SUCH LEGISLATION WOULD PROBABLY BE UPHELD.

THE SUPREME COURT SHOWS GREAT DEFERENCE TO THE LEGISLATURE'S JUDGMENT WHEN CONSIDERING THE CONSTITUTIONALITY OF ECONOMIC LEGISLATION. FOR EXAMPLE, IN FERGUSON V. SKRUPA, 372 U.S. 726 (1963), THE COURT UPHELD A STATE LAW WHICH PROVIDED, IN EFFECT, THAT ONLY LAWYERS COULD ENGAGE IN THE BUSINESS OF DEBT ADJUSTING. IN SO HOLDING THE COURT STATED:

"*** WE REFUSE TO SIT AS A 'SUPERLEGISLATURE TO WEIGH THE WISDOM OF LEGISLATION' ***. WHETHER THE LEGISLATURE TAKES FOR ITS TEXTBOOK ADAM SMITH, HERBERT SPENCER, LORD KEYNES OR SOME OTHER IS NO CONCERN OF OURS." ID. AT 731-732.

ACCORDINGLY, THE COURT NOW PRESUMES THAT A PIECE OF ECONOMIC LEGISLATION HAS A RATIONAL BASIS. FURTHERMORE, IN CASES IN WHICH THE LEGISLATURE HAS NOT STATED ITS PURPOSE, THE COURT WILL EVEN SPECULATE ON ITS OWN AS TO THE REASONS FOR ENACTING AN ECONOMIC STATUTE IN ORDER TO UPHOLD IT. SEE WILLIAMSON V. LEE OPTICAL CO., 348 U.S. 483, 490 (1955).

WE THINK THAT A STATUTE WOULD NOT BE UNCONSTITUTIONAL MERELY BECAUSE IT WOULD REQUIRE LICENSEES TO EXPEND SUMS GREATER THAN THEY HAD ANTICIPATED WHEN THEY HAD APPLIED FOR THEIR LICENSES AND BEGAN DOING BUSINESS. THE COURT HAS STATED THAT LEGISLATION READJUSTING RIGHTS AND BURDENS IS NOT UNLAWFUL SOLELY BECAUSE IT UPSETS OTHERWISE SETTLED EXPECTATIONS. THIS IS TRUE EVEN THOUGH THE EFFECT OF THE LEGISLATION IS TO IMPOSE A NEW DUTY OR LIABILITY BASED ON PAST ACTS. SEE USERY V. TURNER ELKHORN MINING CO., AND THE CASES CITED THEREIN, 428 U.S. 1, AT 16 (1976). IN USERY, THE COURT HELD THAT THE FEDERAL COAL MINE HEALTH AND SAFETY ACT WHICH REQUIRED COAL MINE OPERATORS TO COMPENSATE FORMER EMPLOYEES SUFFERING FROM PNEUMONIOSIS EVEN IF THEY HAD TERMINATED THEIR EMPLOYMENT IN THE INDUSTRY BEFORE THE ACT'S PASSAGE DID NOT VIOLATE THE DUE PROCESS CLAUSE.

DUKE POWER CO. V. CAROLINA ENVIRONMENTAL STUDY GROUP, 438 U.S. 59 (1978), EXEMPLIFIES THE COURT'S PREFERENCE FOR DEFERRING TO CONGRESS ON QUESTIONS OF ECONOMIC REGULATION. IN DUKE, AN ENVIRONMENTAL GROUP, A LABOR UNION, AND PERSONS WHO LIVED NEAR PROPOSED NUCLEAR POWERPLANT SITES SUED THE NUCLEAR REGULATORY COMMISSION AND A PUBLIC UTILITY COMPANY. THE PLAINTIFFS SOUGHT A DECLARATION THAT THE PRICE-ANDERSON ACT VIOLATED THE DUE PROCESS CLAUSE OF THE FIFTH AMENDMENT. THAT ACT LIMITS THE LIABILITY OF PRIVATE NUCLEAR POWERPLANT LICENSEES FOR NUCLEAR ACCIDENTS TO A FIXED DOLLAR AMOUNT. THE PLAINTIFFS CONTENDED THAT THE ACT CONSTITUTED ARBITRARY GOVERNMENTAL ACTION BECAUSE THE AMOUNT OF RECOVERY IT ESTABLISHED WAS NOT RATIONALLY RELATED TO THE LOSSES WHICH COULD OCCUR AS A RESULT OF A NUCLEAR ACCIDENT, BECAUSE IT ENCOURAGED NUCLEAR POWERPLANT OWNERS' IRRESPONSIBILITY, AND BECAUSE IT DID NOT PROVIDE SUFFICIENT COMPENSATION FOR THE LOSS OF THEIR COMMON LAW RIGHT OF RECOVERY. THE COURT, IN THE COURSE OF DECIDING IN FAVOR OF THE COMMISSION AND THE UTILITY COMPANY, STATED:

"OUR DUE PROCESS ANALYSIS PROPERLY BEGINS WITH A DISCUSSION OF THE APPROPRIATE STANDARD OF REVIEW.

"AS WE READ THE ACT AND ITS LEGISLATIVE HISTORY, IT IS CLEAR THAT CONGRESS' PURPOSE WAS TO REMOVE THE ECONOMIC IMPEDIMENTS IN ORDER TO STIMULATE THE PRIVATE DEVELOPMENT OF ELECTRIC ENERGY BY NUCLEAR POWER WHILE SIMULTANEOUSLY PROVIDING THE PUBLIC COMPENSATION IN THE EVENT OF A CATASTROPHIC NUCLEAR INCIDENT. SEE, E.G., S.REP. NO. 296, 85TH CONG, 1ST SESS, 15 (1957). THE LIABILITY-LIMITATION PROVISION THUS EMERGES AS A CLASSIC EXAMPLE OF AN ECONOMIC REGULATION - A LEGISLATIVE EFFORT TO STRUCTURE AND ACCOMMODATE 'THE BURDENS AND BENEFITS OF ECONOMIC LIFE.' USERY V. TURNER ELKHORN MINING CO., SUPRA, AT 15, 49 L.ED. 2D 752, 96 S.CT. 2882. 'IT IS BY NOW WELL ESTABLISHED THAT SUCH LEGISLATIVE ACTS *** COME TO THE COURT WITH A PRESUMPTION OF CONSTITUTIONALITY, AND THAT THE BURDEN IS ON ONE COMPLAINING OF A DUE PROCESS VIOLATION TO ESTABLISH THAT THE LEGISLATURE HAS ACTED IN AN ARBITRARY AND IRRATIONAL WAY.' IBID. THAT THE ACCOMMODATION STRUCK MAY HAVE PROFOUND AND FAR-REACHING CONSEQUENCES, CONTRARY TO APPELLEES' SUGGESTION, PROVIDES ALL THE MORE REASON FOR THIS COURT TO DEFER TO THE CONGRESSIONAL JUDGMENT UNLESS IT IS DEMONSTRABLY ARBITRARY OR IRRATIONAL." 438 U.S. 84 (1978).

THE COURT SUSTAINED THE PRICE-ANDERSON ACT BASED UPON THE FINDING THAT THE STATUTE ADDRESSED A PERCEIVED NEED IN A RATIONAL WAY. THE ACT'S PURPOSES WERE TO PROTECT THE PUBLIC AND ENCOURAGE THE DEVELOPMENT OF THE PRIVATE NUCLEAR INDUSTRY. THE COURT FOUND THAT THE ACT DID NOT VIOLATE THE PLAINTIFFS' DUE PROCESS RIGHTS ON THE GROUND THAT THE LIABILITY LIMITATION WAS NOT REASONABLY RELATED TO THE POTENTIAL LOSSES SINCE THE POSSIBILITY OF AN ACCIDENT IN WHICH THE DAMAGES WOULD EXCEED THE LIMITATION WAS REMOTE, AND BECAUSE OF CONGRESS' COMMITMENT IN THE ACT TO "TAKE WHATEVER ACTION IS DEEMED NECESSARY AND APPROPRIATE TO PROTECT THE PUBLIC FROM THE CONSEQUENCES OF" A NUCLEAR ACCIDENT. THE COURT REFUTED THE PLAINTIFFS' ARGUMENT THAT THE ACT ENCOURAGED NUCLEAR POWERPLANT BUILDERS' AND OWNERS' IRRESPONSIBILITY BY NOTING THAT THE LICENSING PROCESS PROVIDED PROTECTION AND THAT THE INCENTIVE FOR RESPONSIBLE CONDUCT WAS PROVIDED BY THE WISH TO AVOID FINANCIAL LOSS OR EVEN BANKRUPTCY. FINALLY, THE COURT HELD THAT THE ACT DID NOT VIOLATE THE DUE PROCESS CLAUSE ON THE GROUND THAT IT DID NOT PROVIDE AN ADEQUATE SUBSTITUTE FOR THE COMMON LAW RIGHT OF RECOVERY. THE COURT REASONED THAT A REASONABLY JUST SUBSTITUTE WAS PROVIDED BY THE ACT'S ESTABLISHMENT OF A FUND WHICH WAS READILY AVAILABLE TO COMPENSATE THOSE INJURED AS A RESULT OF NUCLEAR ACCIDENTS.

ACCORDINGLY, ECONOMIC LEGISLATION WHICH IS SEEN AS PROMOTING THE PUBLIC WELFARE IN A RATIONAL MANNER WILL BE HELD CONSTITUTIONAL EVEN THOUGH IT MAY IMPOSE A FINANCIAL BURDEN ON THE LICENSEES. ASSUMING THAT THE STATUTE YOU HAVE DESCRIBED COULD WITHSTAND A SIMILAR ANALYSIS, IT WOULD NOT BE HELD VIOLATIVE OF THE DUE PROCESS CLAUSE. OF COURSE, IF A STATUTORY PROVISION SUCH AS 42 U.S.C. SEC. 2237, DISCUSSED ABOVE, IS APPLICABLE IN ANY GIVEN SITUATION, IT MAKES THE RIGHTS OF THE LICENSEES QUITE CLEAR.

WE TRUST WE HAVE BEEN RESPONSIVE TO YOUR INQUIRY.