CONSOL ENERGY, INC., v. USA
Filing
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ORDER granting 17 Motion for Summary Judgment Signed by Sr. Judge Bohdan A. Futey. (mp1) Copy to parties.
In the United States Court of Federal Claims
(Filed March 28, 2012)
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CONSOLIDATION COAL
* Constitutionality of
COMPANY, et al.,
* SMCRA Abandoned
* Mine Reclamation Fee;
v.
* Issue Preclusion; Stare
* Decisis; Export Clause
THE UNITED STATES,
* Challenge Jurisdiction.
*
Defendant.
*
No. 07-00266C
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PEABODY HOLDING COMPANY, et al.,
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Plaintiffs,
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v.
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THE UNITED STATES,
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Defendant.
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ALEX ENERGY, INC., et al.,
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*
Plaintiffs,
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*
v.
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THE UNITED STATES,
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*
Defendant.
*
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No. 05-01211C
No. 05-00929C
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ARACOMA COAL COMPANY, et al.,
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*
Plaintiffs,
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v.
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THE UNITED STATES,
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Defendant.
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BLACK STALLION COAL COMPANY,
*
LLC, et al.,
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Plaintiffs,
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*
v.
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THE UNITED STATES,
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*
Defendant.
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CONSOL ENERGY, INC.,
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*
Plaintiff,
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*
v.
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THE UNITED STATES,
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*
Defendant.
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No. 09-00734C
No. 09-00770C
No. 05-01284C
Steven H. Becker, New York, New York, attorney of record for all
plaintiffs (other than Peabody Holding Company, Inc., Powder River Coal
Company, Twentymile Coal Company and Mid-Vol Leasing, Inc.).
Lindsay A. Minnis, law office of Baker & McKenzie, LLP, New York,
New York, attorney of record for plaintiffs, Peabody Holding Company, Inc.,
Powder River Coal Company, Twentymile Coal Company and Mid-Vol Leasing,
Inc.
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Tara K. Hogan, Department of Justice, Washington, D.C., with whom
was Assistant Attorney General Tony West, for Defendant. Jeanne E. Davidson,
Director, Todd M. Hughes, Deputy Director, and Daniel W. Kilduff, Office of the
Solicitor, Department of the Interior.
OPINION & ORDER
Futey, Judge.
These cases come before the Court on defendant’s motion for summary
judgment, filed in all of the above-captioned cases. Plaintiffs are coal producers
that believe fees they paid violate the Export Clause of the Constitution.
The Court had stayed the cases pending resolution of Consolidation Coal
Company v. United States, No. 01-254 (Fed. Cl. filed Apr. 27, 2001) (“Case No.
01-254”). In that case, the Court of Appeals for the Federal Circuit affirmed this
Court’s entry of judgment in favor of the government, Consolidation Coal. Co. v.
United States, 615 F.3d 1378 (Fed. Cir. 2010), and the Supreme Court denied
plaintiffs’ petition for a writ of certiorari on June 13, 2011. The Court then lifted
the stay in these cases on December 8, 2011.
I.
Background
In 1977, Congress passed the Surface Mining Control and Reclamation
Act of 1977 (“SMCRA”), 30 U.S.C. §§ 1201–1328 (2000), which established the
Abandoned Mine Reclamation Fund in order to restore natural resources damaged
by coal mining. Id. § 1231(c). This fund is paid for by an assessment of an
Abandoned Mine Land reclamation fee. Id. § 1232. Coal producers must pay to
the Secretary of the Interior “35 cents per ton of coal produced by surface coal
mining and 15 cents per ton of coal produced by underground mining.” Id. The
statute does not define “coal produced.” The Department of the Interior has
promulgated a regulation that requires that the “fee on each ton of coal produced
for sale, transfer, or use” will “be determined by the weight and value [of the
coal] at the time of initial bona fide sale, transfer of ownership, or use by the
operator.” 30 C.F.R. § 870.12(b) (2003).
Plaintiffs are coal producers that have paid this fee on coal that is
eventually exported from the United States. In Case No. 01-254, a group of
plaintiffs sued to recover amounts paid in reclamation fees for exported coal.
Sixty-six of those plaintiffs are parties to these cases. 1 Although the procedural
1
As the parties have noted, Def.’s Mot. S. J. 5 n.2 and Resp. of Pls.’ to Def.’s
Mot. S. J. 1 n.2, there are two groups of plaintiffs in these cases. Sixty-six of
these plaintiffs were parties to Case No. 01-254, while the other plaintiffs were
not parties to that case. This latter group includes: Alex Energy, Inc. and
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history of Case No. 01-254 has been discussed extensively elsewhere, the Court
will briefly review it because the present motions raise, for a second time, issues
already decided in that case.
This Court initially dismissed Case No. 01-254 for lack of subject matter
jurisdiction. Consolidation Coal Co. v. United States, 54 Fed. Cl. 14 (2002)
(“Consol. I”). Relying on Amerikohl Mining, Inc. v. United States, 899 F.2d
1210 (Fed. Cir. 1990), the Court held that the coal producers were essentially
challenging the regulations at issue. Consol. I, 54 Fed. Cl. at 19–20. Under 30
U.S.C. § 1276(a)(1) (2000), challenges to SMCRA regulations must be brought in
the United States District Court for the District of Columbia (“D.C. District
Court”) within sixty days of the challenged action. The Court therefore held that
D.C. District Court had exclusive jurisdiction over plaintiffs’ claims. On appeal,
the Federal Circuit reversed, and held that Section 1276(a)(1) is not “an
unambiguous withdrawal of Tucker Act jurisdiction in the Court of Federal
Claims.” Consolidation Coal Co. v. United States, 351 F.3d 1374, 1381 (Fed.
Cir. 2003) (“Consol. II”).
On remand, this Court granted summary judgment in plaintiffs’ favor on
the issue of liability and found that the reclamation fee violates the Export Clause
of the Constitution. Consolidation Coal Co. v. United States, 64 Fed. Cl. 718
(2005) (“Consol. III”). The Federal Circuit reversed. Consolidation Coal Co. v.
United States, 528 F.3d 1344 (Fed. Cir. 2008) (“Consol. IV”). Relying on the
canon of constitutional avoidance, the Federal Circuit held that Section 1232(a)’s
reference to “coal produced” refers only to “coal extracted,” which does not
conflict with the Export Clause. Id. at 1347.
On remand, the coal producers asserted that, even if Section 1232(a) is
without constitutional defect, the regulations implementing that statute violated
the Export Clause. This Court disagreed, holding that the Federal Circuit had
already found both the statute and the implementing regulations to be
constitutional. Consolidation Coal Co. v. United States, 86 Fed. Cl. 384, 389
(2009) (“Consol. V”). On appeal, the Federal Circuit directly addressed the
constitutionality of the regulations, and affirmed. The court held that “all of
OSM’s challenged regulations for collecting the reclamation fee under SMCRA,
like the statute itself, apply to ‘coal extracted’ and do not violate the Export
Delbarton Mining Company (Case No. 05-929); Colony Bay Coal Company,
Logan Fork Coal Company, Pine Ridge Coal Company, and Rivers Edge Mining,
Inc. (Case No. 05-1211); Consol Energy, Inc. (Case No. 05-1284); Alex Energy,
Inc., Consol Energy, Inc., Delbarton Mining Company, Rivers Edge Mining, Inc.,
and West Ridge Resources, Inc. (Case No. 07-266); Aracoma Coal Company,
Inc., Bandmill Coal Corporation, Spartan Mining Company, and Stirrat Coal
Company (Case No. 09-734); Black Stallion Coal Company, LLC, Coyote Coal
Company, LLC, Dodge Hill Mining Company, LLC, Highland Mining Company,
LLC, Kanawha Eagle Coal, LLC, Panther, LLC, Jupiter Holdings, LLC,
Remington, LLC, and Wildcat, LLC (Case No. 09-770).
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Clause.” Consolidation Coal Co. v. United States, 615 F.3d 1378, 1382 (Fed.
Cir. 2010) (“Consol. VI”). The Federal Circuit also denied a rehearing and
rehearing en banc on October 12, 2010. Id. at 1379. The decision was issued as a
mandate on October 19, 2010. The Supreme Court denied a petition for a writ of
certiorari on June 13, 2011. 131 S. Ct. 2990.
Although the cases now before the Court had been stayed pending the
outcome of Case No. 01-254, plaintiffs requested that the Court continue the stay,
following the final outcome of that case, while plaintiffs litigated a new case,
Coal River Energy LLC v. Ken Salazar, Secretary, & United States Department of
the Interior, No. 11-1648 (D.D.C. filed Sept. 13, 2011). The Court denied the
request for an extended stay on December 8, 2011. Defendant then filed a Motion
For Summary Judgment on January 24, 2012, and plaintiffs filed a Response Of
Plaintiffs To Defendant’s Motion For Summary Judgment on February 22, 2012.
Defendant filed a Reply To Plaintiffs’ Response To Defendant’s Motion For
Summary Judgment on March 12, 2012.
II.
Discussion
Defendant has moved for summary judgment in its favor. The parties
have both raised issues that the Federal Circuit conclusively resolved in Case No.
01-254. As discussed below, the Court is bound by the Federal Circuit’s
decisions on these issues.
A.
Summary Judgment Standard
Summary judgment is appropriate if “there is no genuine issue as to any
material fact and . . . the movant is entitled to judgment as a matter of law.”
RCFC 56(c)(1). A material fact is one that “might affect the outcome of the suit,”
and a dispute is genuine if a rational fact-finder could find in favor of the
nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A
court must draw “all justifiable [factual] inferences” in favor of the party
opposing summary judgment. Id. at 255.
B.
Plaintiffs Party to Case No. 01-254 are Precluded from Relitigating the Constitutionality of the Reclamation Fee and its
Implementing Regulations.
Issue preclusion bars the sixty-six plaintiffs that were parties to Case No.
01-254 from re-litigating the constitutionality of the reclamation fee and its
implementing regulations. Under that doctrine, a party cannot re-litigate an issue
when “(1) [there is] identity of an issue in a prior proceeding, (2) the identical
issue was actually litigated, (3) determination of the issue was necessary to the
judgment in the prior proceeding, and (4) the party defending against preclusion
had a full and fair opportunity to litigate the issue in the prior proceeding.”
Mayer/Berkshire Corp. v. Berkshire Fashions, Inc., 424 F.3d 1229, 1232 (Fed.
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Cir. 2005). Plaintiffs apparently do not contest that they are precluded from relitigating issues resolved in Case No. 01-254. See Resp. of Pls.’ to Def.’s Mot.
Summ. J. 1 (noting that “plaintiffs in Case No. 01-254 . . . . do not seek to relitigate matters precluded by the doctrine of res judicata”); id. at 9 (“Plaintiffs do
not dispute that Consol [IV] and Consol [VI] decided the same issues before this
Court. Nor can Plaintiffs distinguish this action on its facts. But Plaintiffs
respectfully contend that the Federal Circuit erred in Consol [IV] and Consol
[VI].”).
In the present cases, the sixty-six plaintiffs that were parties to Case No.
01-254 fall within the coverage of issue preclusion. Both that case and these
present cases involve the constitutionality of the reclamation fee and its
implementing regulations as applied to exported coal. That issue was—quite
vigorously—litigated in the prior case. The determination that the fee and its
regulations are constitutional was a necessary part of the judgment. Finally, the
sixty-six plaintiffs here had the opportunity to litigate that issue before this Court,
the Federal Circuit, and the Supreme Court. Summary judgment is therefore due
the government as to these sixty-six plaintiffs, since they are precluded from relitigating the constitutionality of the fee.
C.
The Federal Circuit’s Decisions in Consol. IV and Consol. VI
Require Judgment for the Government as to Those Plaintiffs not a
Party to Case No. 01-254.
As to plaintiffs not party to Case No. 01-254, the Federal Circuit’s
decision in that case is directly on point for these cases, and compels the Court to
enter judgment for defendant. See McGuire v. United States, 97 Fed. Cl. 425,
434 (2011) (“The decisions of the Federal Circuit . . . are binding on this Court.”)
(citing Coltec Indus., Inc. v. United States, 454 F.3d 1340, 1353 (Fed. Cir.
2006)).
The Export Clause provides that “[n]o Tax or Duty shall be laid on
Articles exported from any State.” U.S. Const. Art. I, § 9, cl. 5. The statute at
issue in this case imposes a fee on “coal produced.” 30 U.S.C. § 1232(a). The
statute and regulations do not define “coal produced,” but the regulations do
specify that the “fee on each ton of coal produced for sale, transfer, or
use . . . shall be determined by the weight and value at the time of initial bona fide
sale, transfer of ownership, or use by the operator.” 30 C.F.R. § 870.12. As the
Federal Circuit noted, this fee as applied to export sales would be unconstitutional
if “coal produced” refers to “the entire process of extracting and selling coal.”
Consol. IV, 528 F.3d at 1347.
The Federal Circuit relied on the canon of constitutional avoidance to
avoid any constitutional difficulties with both the statute and the regulations
implementing it. Under that canon, if there are multiple reasonable constructions
of a statute, a court should choose a construction that “‘save[s] a statute from
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unconstitutionality.’” Consol. IV, 528 F.3d at 1347 (quoting Edward J.
DeBartolo Corp. v. Fla. Gulf Bldg & Constr. Trades Council, 485 U.S. 568, 575
(1988)). The Federal Circuit noted that “coal produced” in Section 1232(a) could
mean “coal extracted,” which would be free of constitutional issues, and the court
therefore adopted that construction of the words “coal produced.” Consol. IV,
528 F.3d at 1348. Similarly, the court found that the regulations’ use of the
phrase “coal produced” also could reasonably be interpreted to mean “coal
extracted” instead of “coal sold.” See Consol. VI, 615 F.3d at 1382. The court
found that “[t]he liability [to pay the fee] incurs at the time of extraction, and
OSM merely collects the fee at the time of sale.” Id. Therefore, “all of OSM’s
challenged regulations for collecting the reclamation fee under SMCRA . . . do
not violate the Export Clause.” Id.
Plaintiffs assert that the Federal Circuit has “adopted the fiction that the
tax was a deferred assessment on the extraction of coal” rather than confronting
the reality that the tax is actually imposed “upon the sale of exported coal.” Resp.
of Pls.’ to Def.’s Mot. Summ. J. 9. Whatever the merit of that argument, the
decisions of the Federal Circuit have already ended this Court’s task, as plaintiffs
well realize. See id. at 10 (“Plaintiffs recognize that this Court must follow the
decisions of the Federal Circuit. Plaintiffs nevertheless set forth their arguments
below in order to preserve them for further proceedings on appeal or otherwise.”).
The two legal questions before this Court—whether the SMCRA’s reclamation
fee and the regulations applying that fee are constitutional—have already been
answered by the Federal Circuit. See Consol. IV, 528 F.3d at 1348; Consol. VI,
615 F.3d at 1382. Summary judgment in the government’s favor is therefore
appropriate.
D.
The Federal Circuit Found in Consol. II that this Court has
Jurisdiction Over Plaintiffs’ Claims.
In Consol. II, the Federal Circuit relied on Cyprus Amax Co. v. United
States, 205 F.3d 1369 (Fed. Cir. 2000), to hold that this Court has jurisdiction
over Export Clause challenges to the reclamation fee, but the government argues
that a recent Supreme Court decision has called into question both Cyprus Amax
and Consol. II. See United States v. Clintwood Elkhorn Mining Co., 533 U.S. 1
(2008). Because this Court may not ignore the decision of the Federal Circuit in
Consol. II, which is directly on point, the Court holds that it continues to have
jurisdiction over plaintiffs’ claims.
Under Section 1276(a)(1) of the SMCRA, “[a]ny action by the Secretary
promulgating national rules or regulations . . . shall be subject to judicial review
in the United States District Court for the District of Columbia Circuit” and any
such challenges must be filed “within sixty days from the date of such action.” 30
U.S.C. § 1276(a)(1) (2000). In Amerikohl Mining, Inc. v. United States, the
Federal Circuit held that this language shows that “Congress intended the District
Court for the District of Columbia to be the exclusive forum for challenging
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national rules and regulations promulgated under the SMCRA.” 899 F.2d 1210,
1213 (Fed. Cir. 1990). The court therefore held that challenges to the regulations
must meet Section 1276(a)(1)’s time limit and forum provisions. Id. The court
affirmed a dismissal of the plaintiff’s challenge that the regulations promulgated
by the Secretary of the Interior were in excess of his statutory authority under the
SMCRA. Id. at 1215. See also United States v. Troup, 821 F.2d 194, 199 (3d
Cir. 1987) (noting that “a regulatory challenge” to the reclamation fee can “only
be brought in the United States District Court for the District of Columbia”).
A later Federal Circuit case clarified the interaction of administrative
refund requirements with Constitutional claims. In that case, Cyprus Amax Coal
Co. v. United States, 205 F.3d 1369 (Fed. Cir. 2000), the plaintiffs had argued
that a tax on coal violated the Export Clause, but the government argued—and the
trial court held—that the Court of Federal Claims had no jurisdiction because the
plaintiffs failed to comply with the administrative requirements for seeking a tax
refund. Id. at 1371. Specifically, the plaintiffs had failed to either file a tax
refund with the Internal Revenue Service, as required by 26 U.S.C. § 7422(a), or
they had filed a refund but failed to wait the required six-months before filing
suit, as required by 26 U.S.C. § 6532(a). The Federal Circuit held that, although
the plaintiffs had not followed those requirements, they could still bring suit under
the Export Clause because “the language of the Export Clause leads to the
ineluctable conclusion that the clause provides a cause of action with a monetary
remedy.” Id. at 1373. This cause of action is “self-executing,” and “a party can
recover for payment of taxes under the Export Clause independent of the tax
refund statute.” Id. at 1374.
In Consol. II, the Federal Circuit relied on Cyprus Amax to determine that
this Court has jurisdiction to hear an Export Clause challenge to the reclamation
fee. The court noted that in Cyprus it “held that a cause of action based on the
Export Clause is self-executing and that a party can therefore recover payment of
taxes based on the Export Clause independent of the tax refund statute.” Consol.
II, 351 F.3d at 1379. The court noted that the cause of action in Consol. II was
“significantly similar” to that in Cyprus. Id. The court found that the SMCRA
does not “unambiguously withdraw[] Tucker Act jurisdiction” over Export Clause
challenges and that, as in Cyprus Amax, the Court of Federal Claims had
jurisdiction to consider the plaintiffs’ claims. Id. at 1380–81.
The Supreme Court, however, in United States v. Clintwood Elkhorn
Mining Co., 553 U.S. 1 (2008), explicitly disagreed with the conclusion of the
Federal Circuit in Cyprus Amax. That case dealt with Section 7422(a)’s filing
requirement, discussed in Cyprus Amax, and the three-year statute of limitations
that applies to tax refund claims. 26 U.S.C. § 6511(a). The Court was presented
with the question “whether a taxpayer suing for a refund of taxes collected in
violation of the Export Clause of the Constitution may proceed under the Tucker
Act, when his suit does not meet the time limits for refund actions in the Internal
Revenue Code.” Clintwood Elkhorn, 553 U.S. at 4. The Court held that a
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taxpayer could not, and that a taxpayer seeking a refund of taxes must follow the
administrative requirements Congress had put in place, even if the refund was
based on an Export Clause violation. Id. at 14.
Based on Clintwood Elkhorn, the government suggests that the basis of
Consol. II has been “called into question” and that the Court should rely on
Amerikohl and find jurisdiction lacking. Def.’s Mot. for Summ. J. 11. The
government has previously made this argument before the Federal Circuit. See
Br. Of Def.-Appellee United States at 35, Consolidation Coal Co. v. United
States, 615 F.3d 1378 (Fed. Cir. 2010) (No. 2009-5083), 2009 WL 4088515
(“Thus, after Clintwood, this Court must look to see if coal producers’ claim is
covered by a stricter statute of limitations, such as SMCRA’s limitations
period.”).
While the reasoning of Clintwood Elkhorn might potentially be construed
to cover this case, the Court will not find jurisdiction lacking in this matter. The
Federal Circuit in Consol. II already ruled that this Court has jurisdiction to
decide whether the reclamation fee as applied to exported coal violates the Export
Clause. If that court is called upon to reconsider its holding in light of Clintwood
Elkhorn, it may reverse course, but that is not a question for this Court to decide.
See Coltec Indus., 454 F.3d at 1353.
Furthermore, the precise holding of Clintwood Elkhorn does not
specifically apply to the statute in this case. The Supreme Court in Clintwood
Elkhorn held “the plain language of 26 U.S.C. §§ 7422(a) and 6511 requires a
taxpayer seeking a refund for a tax assessed in violation of the Export Clause, just
as for any other unlawfully assessed tax, to file a timely administrative refund
claim before bringing suit against the Government.” 553 U.S. at 15. This case
does not, however, involve Section 7422(a)’s refund requirement. Instead, the
government relies on the reasoning of Clintwood Elkhorn and suggests that
plaintiffs essentially challenge the validity of the SMCRA regulations, and
challenges to SMCRA rulemakings are governed by a 60-day time limit. 30
U.S.C. § 1276(a)(1). The reasoning of Clintwood Elkhorn could be read to
suggest that more strict time limitations, in general, supplant the normal six-year
statute of limitations, see Clintwood Elkhorn, 553 U.S. at 12 (“Congress may not
impose a tax in violation of the Export Clause . . . . But it is certainly within
Congress’s authority to ensure that allegations of taxes unlawfully
assessed . . . are proceed in an orderly and timely manner”), but that implication
does not necessarily follow from the Supreme Court’s analysis. This Court
therefore will not depart from the binding precedent of Consol. II upholding
jurisdiction in the Court of Federal Claims.
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III.
Conclusion
For the above-mentioned reasons, the Court GRANTS Defendant’s
Motion For Summary Judgment.
No costs.
IT IS SO ORDERED.
s/Bohdan A. Futey____________
BOHDAN A. FUTEY
Judge
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