UNITED STATES OF AMERICA, APPELLANT V. SPERRY CORPORATION AND SPERRY WORLD TRADE, INC. No. 88-952 In The Supreme Court Of The United States October Term, 1988 On Appeal from the United States Court of Appeals for the Federal Circuit Reply Brief for the Appellant Appellees realized a substantial benefit from the Iran-United States Claims Tribunal. Prior to the Algiers Accords, appellees had only naked claims against Iran; all Iranian assets in the United States out of which the claims might have been paid had been frozen by the President and could have been released to Iran at any time. But under the Accords, appellees received an award of $2.8 million. Appellees do not and cannot contend that that award was inadequate, since it was based on their settlement with Iran, which they presented to the Tribunal for approval. That approval was necessary for appellees to be paid out of the Security Account, thereby saving them the expense of attempting to satisfy the award by locating and attaching Iranian assets in other countries. Now, appellees seek to avoid the modest 1 1/2% charge that Congress found to be their fair share of the expenses incurred by the United States on behalf of its nationals. There is, however, no merit to appellees' scattershot constitutional assault on Section 502 of the Foreign Relations Authorization Act for Fiscal Years 1986 and 1987 (99 Stat. 438). I. A. Appellees first broadly question (Br. 27-38) the President's authority to resolve their claims against Iran in a conclusive manner, at least if the arbitration process does not perfectly replicate the remedies that might have been available in their suit against Iran in federal district court. This attack on the Algiers Accords has no place here, because appellees do not argue that the Tribunal's $2.8 million award was constitutionally inadequate. But appellees do argue that the Just Compensation Clause absolutely prohibits Congress from charging any amount for their use of the Tribunal and Security Account. In their view, the Tribunal's award is "compensation" for an alleged "taking" of the claims on which they had filed suit in federal court, and any deduction from that amount constitutes an impermissible confiscation of their compensation. 1. The first defect in this argument is its premise (Br. 15, 21, 25) that appellees' claims were "taken" by the United States and that the Tribunal award is compensation for that taking. Appellees' claims against Iran were not extinguished by the Algiers Accords (Brownstein, The Takings Clause and the Iranian Claims Settlement, 29 U.C.L.A. L. Rev. 984, 1022 (1982)); the Acords merely "suspended" those claims and rendered them of "no legal effect in any action now pending in any court of the United States" (Exec. Order No. 12,294, 3 C.F.R. 104 (1982)), while providing for their resolution in a different forum. Dames & Moore v. Regan, 453 U.S. 654, 666 (1981). It follows that the Tribunal's award to appellees was not the payment of compensation by the United States for a taking of their claims; it was a payment by Iran in satisfaction of those claims. For this reason, the deduction of a reasonable charge from the award to reimburse the United States for a portion of its costs in making an alternative forum available is not an invasion of constitutionally mandated compensation. 2. Appellees' absolute taking theory also cannot be squared with the principles underlying the President's claims-settlement authority generally -- regardless of the manner of settlement. The Algiers Accords differ from many other claims-settlement agreements, in which the Government formally espouses the claims of its nationals. /1/ When a claim is espoused by the Executive, it becomes the claim of the United States, and the Executive fully controls its presentation and settlement. The private claim is extinguished apart from the espousal process and, upon settlement, the foreign government is relieved of further responsibility. /2/ This procedure is typically utilized for lump-sum settlements, which are distributed pro rata to claimants through the Foreign Claims Settlement Commission, based on its valuation of each claim. Dames & Moore, 453 U.S. at 680-681; 22 U.S.C. 1621 et seq. Appellees appear to concede (Br. 20) that the President has the authority to settle claims, by arbitration or espousal, and the Court sustained the very agreement at issue here in Dames & Moore. See also United States v. Pink, 315 U.S. 203 (1942). This authority stems from the obvious proposition -- based in practical reality and principles of international law -- that the actions of a foreign government that injure a United States national also injure the United States in its sovereign capacity. Frelinghuysen v. Key, 110 U.S. 63, 71-72 (1884). The President does not act in a fiduciary capacity in this diplomatic process, even when he formally espouses claims. But whatever protection of the claimants' interests the President does afford as the "sole organ" of the Nation in foreign affairs (United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 319-320 (1936)) is complete and does not depend on the consent of the claimants. Dames & Moore, 453 U.S. at 679-680; compare Nevada v. United States, 463 U.S. 110, 142 (1983); Heckman v. United States, 224 U.S. 413, 444-445 (1912). The private claimant is therefore bound by the President's actions, just as a beneficiary is bound by the actions of his trustee. This is so even though the President cannot act in the diplomatic process with exclusive regard for any particular claimant, because he also must protect the interests of the Nation as a whole. Dames & Moore, 453 U.S. at 680; Chicago & Southern Air Lines, Inc. v. Waterman Steamship Corp., 333 U.S. 103, 109-110 (1948); compare Nevada v. United States, 463 U.S. at 127-128, 142-143, 144 n.16; Vaca v. Sipes, 386 U.S. 171, 190-193 (1967). The President's authority would be seriously eroded if a disgruntled claimant could collaterally attack the President's judgment by bringing an action in United States courts to recover compensation for whatever additional amount he believes the President should have insisted upon. The result would be judicial second-guessing of the President's performance in diplomatic negotiations, without the benefit of confidential information about the bargaining process, the position of the foreign government, and the myriad other considerations that might have informed the President's judgment. Waterman Steamship, 333 U.S. at 111-112; Belk v. United States, 858 F.2d 706, 710 (Fed. Cir. 1988); Shanghai Power Co. v. United States, 4 Cl. Ct. 237, 247-249 (1983), aff'd mem., 765 F.2d 159 (Fed. Cir.) (Table), cert. denied, 474 U.S. 909 (1985). /3/ The established nature of the President's settlement power undermines the force of any taking argument from the perspective of the private claimant as well. Commercial and other dealings of with a foreign sovereign, and claims arising out of those dealings, entail greater uncertainty than do their domestic counterparts, and United States nationals assume both the risks and the benefits associated with the President's ability to resolve disputes by diplomatic means. Pink, 315 U.S. at 228-230; Belk, 858 F.2d at 709-710; Shanghai Power, 4 Cl. Ct. at 244-247; compare Ruckekshaus v. Monsanto Co., 467 U.S. 986, 1005-1010 (1984). The compromise that infuses diplomatic undertakings may result in a smaller recovery from the foreign sovereign than the private claimant might have obtained in a conventional lawsuit. But that foreseeable and unremarkable consequence does not create a right to sue the United States for the difference. The nature of the interests appellees assert and related problems of valuation also counsel against an inflexible invocation of taking principles developed in other settings. If we assume that appellees' unliquidated claims against Iran were "property" interests protected by the Fifth Amendment -- even as against the President's settlement power -- their value was, at most, "the sum that would in all probability (have) result(ed) from fair negotiations between an owner who is willing to sell and a purchaser who desires to buy." Brooks-Scanlon Corp. v. United States, 265 U.S. 106, 123-124 (1924); accord United States v. 50 Acres of Land, 469 U.S. 24, 29 (1984). If appellees had tried to assign their claims during the hostage crisis, they almost certainly would have realized far less than they would have received for a wholly domestic chose in action. At that time, the President's blocking order made it clear that resolution of their claims against Iran would likely depend on diplomatic measures and that their attachments were revocable at any time. Many claimants also faced legal obstacles in United States courts, including jurisdictional limitations on expropriation claims (28 U.S.C. 1605(a)(3)), insufficient contacts with the United States for commercial claims (28 U.S.C. 1605(a)(2)), the Act of State doctrine, forum-selection and arbitration clauses, and the arguably separate juridical status of Iranian entities (First National City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611 (1983)). Dames & Moore, 453 U.S. at 687. Although appellees insist (Br. 34-35) that there were no such obstacles in some cases, the intricacies of suits against foreign governments render any such prediction precarious; and the President must act with the generality of cases in mind, typically without the opportunity to ascertain the viability and value of individual claims. Cf. Langley v. FDIC, 108 S. Ct. 396, 401 (1987). In any event, appellees concede that "it would be difficult to compare directly the likelihood of recoveries in U.S. courts versus the Tribunal" (Br. 35-36). In the face of such uncertainty, the courts should not second-guess the considered judgment of the President that the claims of United States nationals would best be resolved through arbitration. Congress ratified that judgment by enacting the Iran Claims Settlement Act in 1985, after three years' experience under the Algiers Accords. /4/ Appellees' forum preferences and speculation fall far short of the showing necessary for a court to perform "'the gravest and most delicate duty'" of holding that Act of Congress unconstitutional. Rostker v. Goldberg, 453 U.S. 57, 64 (1981). 3. As precedential support for their broad taking argument, appellees primarily rely (Br. 20) on Gray v. United States, 21 Ct. Ct. 340 (1886). Gray involved unique circumstances: the Court of Claims, under a special Act of Congress requesting an advisory opinion, considered claims against the United States for the extinguishment of private claims against France by an 1800 treaty; the court believed that a taking had occurred because the American claims were valid and would have been honored by France, but were nevertheless released in full by the United States. See Aris Gloves, Inc. v. United States, 420 F.2d 1386, 1396-1397 (Ct. Cl. 1970) (Nichols, J., concurring). Here, by contrast, there was no indication that American claims would have been honored by Iran, and private claims were protected, not renounced, by the United States. Moreover, Gray was "strictly an advisory opinion which was not binding upon either of the parties and cannot be binding upon subsequent courts" (Aris Gloves, 420 F.2d at 1393). And the payments made by Congress in response to Gray "were purposely brought within the category of payments by way of gratuity, payment as of grace and not of right." Blagge v. Balch, 162 U.S. 439, 457 (1896). See also United States v. Schooner Peggy, 5 U.S. (1 Cranch) 103, 110 (1801) ("it is not for the court, but for the government, to consider whether it be a case proper for compensation"). /5/ Appellees also contend (Br. 19) that it was "implicit" in Dames & Moore that there must be a remedy in the Claims Court for any claim that the suspension of litigation in United States courts or the non-payment or reduction of Tribunal awards is an unconstitutional taking. But the Court held only that the Court of Claims would have jurisdiction to entertain a suit alleging a taking as a result of the suspension of claims; the Court expressly did not decide the merits of the taking argument. 453 U.S. at 688 & n.14. /6/ Moreover, appellees largely base their taking argument on the attachments they obtained in federal court (Br. 17, 32). But Dames & Moore held that because such attachments were obtained only pursuant to a revocable Treasury license and were "in every sense subordinate to the President's power under the IEEPA," claimants did not acquire a property interest in them that would support a taking claim. 453 U.S. at 674 n.6. Nor are appellees correct in contending (Br. 21) that they at least had a "constitutionally protected right of access to the courts" to litigate their commercial claims against Iran. A foreign sovereign was absolutely immune from suit throughout most of the Nation's history (Schooner Exchange v. McFaddon, 11 U.S. (7 Cranch) 116 (1812)) and was not subject to suit on commercial claims until the "restrictive theory" of sovereign immunity was adopted by the Executive Branch in 1952 and then codified in the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. 1605(a)(2). Dames & Moore, 453 U.S. at 683-686. Just as Congress may decline to waive the sovereign immunity of the United States or repeal an existing waiver of immunity even in pending suits, /7/ Congress also may deprive federal (and state) courts of jurisdiction over a foreign sovereign. Argentine Republic v. Amerada Hess Shipping Corp., 109 S. Ct. 683, 688-690 (1989). Although the Algiers Accords did not deprive United States courts of jurisdiction over suits against Iran (Dames & Moore, 453 U.S. at 684-685), Congress's power to do so establishes that the President's lesser action of suspending claims in United States courts did not violate appellees' constitutional rights. See Gov't Br. 36-37. Appellees argue (Br. 22-25) that enactment of the FSIA in 1976 effectively announced that the President would not invoke his constitutionally based settlement authority with respect to private commercial claims that were the subject of litigation in United States courts. This argument is refuted by Dames & Moore, which held that the FSIA "cannot be fairly read as prohibiting the President from settling claims of United States nationals against foreign governments" (453 U.S. at 685 (emphasis in original)), especially given the President's continued settlement of claims after the restrictive theory of sovereign immunity was adopted in 1952. Thus, both before and after enactment of the FSIA, United States nationals who engage in commerce with foreign sovereigns have been on notice that the President may be required to settle any ensuing disputes. Brownstein, supra, 29 U.C.L.A. L. Rev. at 1062-1069, 1074. B. In addition to challenging the President's authority to settle their underlying claims, appellees also make several narrower objections under the Just Compensation Clause. 1. Appellees concede (Br. 32) that they utilized and benefited from the Tribunal and Security Account, which afforded them a neutral forum for resolution of their claims. Appellees also do not quarrel with our submission (Gov't Br. 25) that the government may allocate the costs of its activities to those who specially benefit from them. And appellees cannot dispute that the charge imposed by Section 502 bears a direct relationship to the extent of the financial benefit they ultimately realized, since it is assessed as a percentage of the Tribunal's award. But appellees argue that "the extent to which a claimant is a beneficiary of governmental action is only relevant if the claimant was the particular intended beneficiary of the action" (Br. 32 (emphasis in original)); here, appellees insist that the intended beneficiary of the claims-settlement provisions of the Algiers Accords was the Nation as a whole, not any individual claimant. This is but a variant of appellees' assertion that their claims against Iran were sacrificed as "bargaining chips" to secure the release of the hostages. In fact, the President consistently sought to protect the interests of claimants. President Carter blocked Iranian property at the outset of the hostage crisis "to ensure that claims on Iran by the United States and its citizens are provided for in an orderly manner" (15 Weekly Comp. Pres. Doc. 2117 (Nov. 14, 1979)). Similarly, the Algiers Accords state that the Tribunal was "established for the purpose of deciding claims of nationals of the United States against Iran" and that the Security Account is "to be used for the sole purpose of securing the payment of, and paying, claims against Iran" (J.A. 38, 33). See Gov't Br. 39-40; compare YMCA v. United States, 395 U.S. 85, 92 (1969); Belk, 858 F.2d at 709. 2. Appellees' complaint (Br. 33-34) that they did not "voluntarily" submit their claims to the Tribunal fails for two reasons. First, the government is not required to allocate costs only to persons who choose to benefit from its services. For example, courts commonly assess costs against losing defendants. Moreover, the Secretary of the Interior is authorized to collect reasonable fees for managing property held in trust for Indians, even where the Indians did not request that the property be held in trust. See Gov't Br. 32-33 n.22. Although the President is not a trustee for persons having claims against a foreign government, the Constitution affords him analogous authority to act without their specific consent. The trust analogy therefore supports the right of the government to recover the costs of doing so. Second, appellees did voluntarily invoke the jurisdiction of the Tribunal and submit their settlement to the Tribunal for approval. Because appellees do not argue that they were required by law to file with the Tribunal, their argument reduces to the proposition that they had no better alternative as a practical matter. But that motivation did not render appellees' resort to the Tribunal legally "involuntary." Cf. Brady v. United States, 397 U.S. 742, 749-752 (1970). On that theory, their filing of suit in federal district court was "involuntary" as well, since it may have been the only way they could have recovered from Iran. There are many governmental services that people have little choice but to utilize -- e.g., drivers' licenses and public transportation -- yet it has never been suggested that the government is barred from charging a fee for those services. 3. Appellees next contend (Br. 36, 40) that Section 502 effects an unconstitutional taking because it departs from prior policy. They rely in part on the statement in the Algiers Accords that "(t)he expenses of the Tribunal shall be borne equally by the two governments" (J.A. 41). That provision, however, recites the reciprocal undertakings of the two governments; it does not bar them from assessing fees against their own nationals. Appellees also note that the Accords require the Tribunal to follow the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL) (J.A. 39), which, they assert (Br. 40), require the losing party to pay costs unless the parties agree otherwise. In fact, although UNCITRAL Rule 40 provides that "in principle" the costs of arbitration (other than legal representation) shall be borne by the unsuccessful party, it further provides that the arbitral tribunal "may apportion such costs between the parties if it determines that apportionment is reasonable," "taking into account the circumstances of the case." /8/ Moreover, the UNCITRAL Rules do not cover the costs of enforcing an arbitral award. In this case, the Security Account saved appellees the expense of attempting to enforce the Tribunal's award by attaching Iranian assets elsewhere. It therefore is both fair and consistent with the UNCITRAL Rules to assess a fee against appellees for their proportional share of the costs of maintaining that Account, as well as those of the Tribunal. 4. Appellees erroneously assert (Br. 36, 40) that when they filed their claim with the Tribunal on January 12, 1982, they had no reason to expect that the uniform practice of deducting a fee would be continued under the Iranian settlement. Two leading commentators on the settlement stated immediately after Dames & Moore that "(t)he United States may seek partial reimbursement for its share from claimants, perhaps in the form of a filing fee" (M. Ball & L. Harris, Iranian Claims Settlement: A Guide for Commercial Claimants, Corp. Prac. Series (BNA), at 12 (Supp. July 14, 1981)). /9/ Similarly, a specialized reporting service advised claimants in December 1981 that the government was weighing plans to deduct a percentage of awards "to offset paying its share of the Tribunal's operating costs," and that it believed such a deduction was "not ruled out by the Algerian accords or the Uncitral Rules that govern the Tribunal's operation" (Iranian Assets Litigation Rep. (Andrews), at 3923 (Dec. 4, 1981)). In any event, the fee was not triggered by appellees' filing of a claim with the Tribunal. Under both the Directive License and Section 502, the charge was not assessed until they received payment of the award. The Directive License was issued on June 7, 1982, one month before appellees and Iran submitted their settlement to the Tribunal for approval. Appellees therefore were on notice of the charge when they took the action that triggered the assessment. /10/ 5. Finally, appellees attempt to base their Fifth Amendment challenge on the manner in which the charge is calculated. Section 502 reimburses the United States for furnishing its nationals with a neutral forum for the resolution and payment of their claims; the charge is measured by the financial benefit they realize; and it is assessed at a rate that could not remotely be characterized as confiscatory. Section 502 therefore is fully consistent with the principles of "fairness and justice" embodied in the Just Compensation Clause. Armstrong v. United States, 364 U.S. 40, 49 (1960). Nevertheless, relying on decisions construing statutes that authorize agencies to assess "user fees," appellees contend (Br. 29-31) that the 1 1/2% charge is invalid under the Fifth Amendment because it is not closely calibrated to the costs that were actually incurred in resolving their particular claims. /11/ Contrary to appellees' contention, it is by no means clear that Section 502's fee structure differs from those permitted by statutes that authorize federal agencies to assess fees. See, e.g., Florida Power & Light Co. v. United States, 846 F.2d 765, 770-771 (D.C. Cir. 1988), cert. denied, 109 S. Ct. 1952 (1989); Skinner v. Mid-America Pipeline Co., 109 S. Ct. 1726, 1731 (1989) (discussing a fee based on a company's "revenues"). /12/ The Court need not address that question, however, because, as the Claims Court recognized when it invalidated the Directive License under the Independent Offices Appropriations Act, 31 U.S.C. 9701 (J.S. App. 40a-41a), the Constitution does not impose comparable restrictions on Congress. There are various ways in which a legislature may structure a fee schedule. Aside from the average or marginal costs incurred on behalf of particular individuals, which appellees stress, the legislature might take into account the nature and value of the benefits to the recipient, similar public and private fee arrangements, public policies that encourage or discourage certain conduct, ability to pay, other special attributes of persons who utilize the goods or services, the administrative costs of calculating a fee on an individualized basis market factors, and fundamental fairness. Drawing on these considerations, Congress reasonably could determine that the fee structure under Section 502 should not be based solely on the costs incurred on behalf of each individual claimant, but should also take into account the financial benefit realized by successful claimants, the past practice of deducting 5% from awards by the Foreign Claims Settlement Commission, analogous contingent-fee arrangements of private attorneys, the policy of not discouraging claimants from filing with the Tribunal, the benefit that all claimants realize from the sound operation of the Tribunal, and the difficulties of allocating costs to discrete adjudications under an ongoing program. The Court recently declined to construe the Fifth Amendment to require a particular methodology of rate regulation for public utilities, holding that as long as the impact is not "unjust" or "unreasonable," the Constitution "leaves the States free to decide what rate-setting methodology best meets their needs in balancing the interests of the utility and the public" (Duquesne Light Co. v. Barasch, 109 S. Ct. 609, 617, 620 (1989)). A fortiori, the Constitution leaves Congress free to decide what methodology is appropriate in setting rates for services furnished by the government itself. Moreover, appellees ignore the fact that Congress did tailor the fee schedule to take account of the considerations they raise. The Senate Committee stated that the assessment of a fee of 1 1/2% of awards up to $5 million and 1% in excess of that amount was a middle ground between the Administration's proposal for a flat 2% fee and the suggestion by "(s)ome claimants" that no fee be charged. S. Rep. No. 78, supra, at 5. The Committee explained that "at some point the relationship between the size of the claim and the benefit received (from the existence of the Tribunal and the services provided by the State Department) declines," and that "(b)ased on the recommendations of the American Bar Association and others, the Committee determined that $5,000,000 was the appropriate dividing line" (ibid.). /13/ See also 131 Cong. Rec. 12,516 (1985) (remarks of Sen. Evans). Nothing in the Just Compensation Clause required Congress to draw a different line or more finely calibrate the fee schedule. II. A. Appellees contend (Br. 37-41) that Section 502 violates the Due Process Clause because Congress made it effective as of June 7, 1982. As appellees concede (Br. 38), that claim fails if "retroactive application of the legislation is itself justified by a rational legislative purpose" (Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S. 717, 730 (1984); see also Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 16-17 (1976)). The June 7, 1982, date serves a "rational legislative purpose," because it rendered Section 502 effective upon the first payment of a Tribunal award and thus "provide(ed) uniform treatment" for all successful claimants. Otherwise, claimants who experienced delays in arbitration, many of whom have small claims, would have shouldered the burden. Hearing 111-112; see Turner Elkhorn, 428 U.S. at 16-19. In addition, June 7, 1982, was the effective date of the Directive License that assessed a 2% fee. In enacting Section 502, Congress ratified the Treasury Department's judgment that a fee should be assessed and cured the technical defects that the non-final Claims Court decision in this case had identified in the Directive License under the IOAA (J.S. App. 26a-51a). Appellees concede (Br. 38-39) that Congress may enact curative legislation, but they deny that Section 502 falls within that category. However, one of the cases they cite, United States v. Heinszen & Co., 206 U.S. 370 (1907), illustrates the latitude Congress has in this respect. In Heinszen, the Court sustained an Act of Congress that ratified the collection of tariffs during a period for which this Court previously had held them to be unauthorized. Drawing on the rule of agency law that allows a principal to ratify the unauthorized acts of his agent (id. at 382-383), the Court reasoned that Congress "may * * * cure irregularities, and confirm proceedings which without the confirmation would be void, because unauthorized, provided such confirmation does not interfere with intervening rights" (id. at 384). It did not matter that the plaintiff had already sued to recover the duties, because "'(t)he bringing of suits vests in a party no right to a particular decision, and his case must be determined on the law as it stands, not when the suit was brought, but when the judgment is rendered'" (id. at 387 (citations omitted)). Appellees rely (Br. 38) on Forbes Pioneer Boat Line v. Board of Commissioners, 258 U.S. 338 (1922). There, however, the legislature authorized the retroactive collection of a toll on the same day that the state supreme court held the agency was not authorized to collect the toll from the plaintiff (id. at 338-339). The statute thus deprived the plaintiff of the benefit of its judgment (id. at 340). The Court has since declined to extend Forbes "beyond its facts" (Charlotte Harbor & N. Ry. v. Welles, 260 U.S. 8, 12 (1922)), distinguishing it as a "bare attempt of the legislature retroactively to create liabilities for transactions which, fully consummated in the past, are deemed to leave no ground for legislative intervention"; by contrast, the Court has approved Heinszen and similar cases that involved "a curative statute aptly designed to remedy mistakes and defects in the administration of government where the remedy can be applied without injustice" and where the "asserted vested right" to be free of the assessment was not "linked to any substantial equity." Graham & Foster v. Goodcell, 282 U.S. 409, 429 (1931); Swayne & Hoyt, Ltd. v. United States, 300 U.S. 297, 302 (1937). Section 502 is consistent with these principles, because it cures the technical defects in the administrative assessment of a fee and because appellees' interest in being exempted from the 1 1/2% fee is not "linked to any substantial equity." /14/ B. Appellees contend (Br. 41-44) that Section 502 violates the equal protection component of the Due Process Clause because it assesses a charge only against successful claimants. Appellees fail to acknowledge the applicable standard of review: "'(a) statutory discrimination will not be set aside if any state of facts reasonably may be conceived to justify it.'" Bowen v. Gilliard, 483 U.S. 587, 601 (1987), quoting Dandridge v. Williams, 397 U.S. 471, 485 (1970). Congress reasonably could determine that only claimants who prevail before the Tribunal and receive a payment from the Security Account realize a sufficient benefit to warrant assessment of a charge. Moreover, as Senator Evans, the principal sponsor, pointed out, Section 502 is similar to contingent-fee arrangements for lawyers. Hearing 109. Finally, the State Department informed Congress in 1985 that if a flat fee were assessed against everyone who filed a claim with the Tribunal, many persons might be deterred from pursuing their claims (Hearing 113). /15/ Appellees also allege (Br. 41, 44) an equal protection violation because no fee is assessed against banks that do not recieve Tribunal awards and whose claims are instead paid out of a special account in the Bank of England (see J.A. 44). As the State Department explained to Congress in 1985, however, resolution of bank claims has resulted in little expense to the United States Government. The United States is not charged a fee to maintain the account in the Bank of England, as it is to maintain the Security Account; and because banking claims usually raise no difficult questions of liability, valuation, or proof, banks have had little reason to use the Tribunal or request assistance from the United States. Hearing 121. These factors amply justified Congress's decision not to assess a fee against banks (and other claimants) that did not utilize the Tribunal and Security Account. Compare Evansville-Vanderburgh Airport Auth. Dist. v. Delta Airlines, 405 U.S. 707, 717-718, 719 n.13 (1972). III. Appellees' final contention (see Br. 45-48) is that Sectino 502 violates the Origination clause of the Constitution (Art. I, Section 7) because it was added by the Senate to the House-passed foreign relations authorization bill. This argument is without merit. Under United States v. Norton, 91 U.S. 566 (1876); Twin City Bank v. Nebeker, 167 U.S. 196 (1897), and Millard v. Roberts, 202 U.S. 429, 436-437 (1906), which appellees concede (Br. 45-47) are the controlling precedents, the provision enacted as Section 502 was not a "Bill() for raising Revenue" within the meaning of the Origination Clause. /16/ In Norton, the Court held that the law establishing a postal money-order system was not a "revenue law." Although the case involved a question of statutory interpretation, the Court drew on the "well settled" construction by Congress of the Origination Clause. 91 U.S. at 568-569. Quoting Justice Story, the Court noted that the Clause "'has been confined to bills to levy taxes in the strict sense of the words, and has not been understood to extend to bills for other purposes which incidentally create revenue'"; and it concluded that "revenue laws" are those "'made for the direct and avowed purpose of creating revenue or public funds for the service of the government'" (id. at 569). /17/ Excluded from this category were "the proceeds of the public lands, those arising from the sale of public securities, the receipts of the Patent Office in excess of its expenditures, and those of the Post-office Department, when there should be such excess" (id. at 568). Norton thus supports our submission that Section 502, which generates receipts only for services rendered, is not a "Bill() for raising Revenue" within the meaning of the Origination Clause. In fact, appellees effectively concede that Section 502 does not "levy taxes in the strict sense of the words" (91 U.S. at 569), because they insist (Br. 27 n.30) that "Congress never claimed the taxing power." In Nebeker, the Court rejected an Origination Clause challenge to a statute that imposed a "tax" on bank notes in circulation, to defray the cost of a national currency system. The Court found the Clause inapplicable because the assessment was only the "means for effectually accomplishing" the object of establishing a national currency and "(t)here was no purpose * * * to raise revenue to be applied in meeting the expenses or obligations of the Government" (167 U.S. at 203). So here, Section 502 was enacted for the specific purpose of defraying expenses incurred on behalf of claimants before the Tribunal, not to raise revenue to support the government generally. Similarly, the Court held in Millard that the Clause did not apply to bills providing for railroad construction costs in the District of Columbia to be paid out of property taxes. Following Nebeker, the Court reasoned that "(w)hatever taxes are imposed are but means to the purpose provided by the act" (202 U.S. at 436-437). /18/ Appellees attempt (Br. 45, 47-48) to distinguish Norton, Nebeker and Millard on the ground that the Iran Claims Settlement Act did not itself establish the Tribunal or regulate the adjudication and payment of claims, but only provided for a monetary assessment. Appellees' effort to uncouple Section 502 from the Algiers Accords is unavailing. There was no occasion for Congress to enact separate statutory provisions governing the adjudication and payment of claims, because the Tribunal and Security Account had already been established pursuant to the independent constitutional authority of the President. The fact that the regulatory regime was already in existence did not transform a bill that was specifically designed to defray the expenses of that regime into a "Bill() for raising Revenue." The result in Nebeker, for example, did not turn on whether the national currency system was already in place when Congress enacted the "tax" to support it. The test under this Court's cases looks to the purpose, not the timing, of the enactment -- e.g., to whether funds are to be received for services rendered or to defray particular expenditures, rather than as general taxes. /19/ Appellees (Br. 47) and amicus Chevron (Br. 25-26) argue that a general revenue-raising purpose is revealed in Senator Evans' passing observation that the funds "would go into the Treasury to offset the deficit" (131 Cong. Rec. 12,516 (1985)). Senator Evans was explaining an incidental consequence of the bill. The true purpose of Section 502 is clear from its text, which states that the deduction is made "as reimbursement to the United States Government for expenses incurred in connection with the arbitration of claims of United States claimants against Iran * * * and the maintenance of the Security Account" (99 Stat. 438)). For the foregoing reasons and those stated in our opening brief, it is respectfully submitted that the judgment of the court of appeals should be reversed. KENNETH W. STARR Solicitor General JUNE 1989 /1/ Under the Accords, claimants such as appellees present their own claims to the Tribunal. Although the United States presents its nationals' claims of less than $250,000 to the Tribunal (J.A. 40), it does not formally espouse those claims either. By contrast, Sections 501 and 503 of the Iran Claims Settlement Act (99 Stat. 437-438) contemplate that the President may espouse and settle remaining claims against Iran at some point in the future. /2/ Z. & F. Assets Realization Corp. v. Hull, 311 U.S. 470, 487 (1941); United States ex rel. Boynton v. Blaine, 139 U.S. 306, 323 (1981); Restatement (Third) of Foreign Relations Law Sections 711, 712, 713 & comment a, 902 & comment i (1986); L. Henkin, Foreign Affairs and the Constitution 262 (1975); E. Borchard, The Diplomatic Protection of Citizens Abroad 296, 299 (1915). /3/ If the claimant is dissatisfied with the amount received in settlement of his claim, any possible cause of action against the United States would sound in tort, not in taking, because it would be based on allegations that the President failed to advance his interests adequately in the bargaining process with another government, not that his claim was appropriated by the United States. Cf. DelCostello v. Teamsters, 462 U.S. 151, 167 (1983). By virtue of the discretionary function exception to the Federal Tort Claims Act, 28 U.S.C. 2680(a), Congress has not waived the immunity of the United States to such a suit. /4/ Amicus Chevron's recitation (Br. 15-16) of one incident involving Tribunal members six years ago cannot obscure the notable success of the Tribunal, which has awarded more than $1 billion to United States claimants and has generally proceeded in a judicious manner despite the difficult relations between the United States and Iran. See Blum, Behind the Hostilities, They Talked in Court, 8 Nat'l L.J. 8 (June 19, 1989). /5/ In Meade v. United States, 2 Ct. Cl. 224 (1866), aff'd, 76 U.S. (9 Wall.) 691 (1870), also cited by appellees (Br. 20), this Court did not concur in the Court of Claims' finding that the United States was liable for a taking; it instead concluded that the claim was barred because it had been dismissed by the treaty commissioner. See 76 U.S. (9 Wall.) at 700-701, 725. /6/ As appellees point out (Br. 19, 25), Justice Powell's separate opinion, which was not joined by any other Member of the Court, did suggest that a party could recover against the United States if his claim against Iran was "not fully paid" (453 U.S. at 691). It is not clear what the quoted phrase meant -- e.g., whether it referred to situations where the Tribunal's award was less than the judgment that would have been entered by a United States court, or where an award was not paid because there were insufficient funds in the Security Account. In any event, Justice Powell did not suggest that the Fifth Amendment would bar Congress from charging a modest fee for use of the Tribunal. /7/ Lynch v. United States, 292 U.S. 571, 579-582 (1934); People of Enewetak v. United States, 864 F.2d 134 (Fed. Cir. 1988), cert. denied, No. 88-1466 (June 19, 1989); Hammond v. United States, 786 F.2d 8, 11-12 (1st Cir. 1986). /8/ Similarly, a number of appellees' contracts with Iran provided for arbitration of disputes under the rules of the International Chamber of Commerce, which also permit the allocation of costs between the parties. Gov't Br. 35-37. /9/ See also Iran Claims Legislation: Hearing on S. 771 and S. 1166 Before the Senate Comm. on Foreign Relations, 99th Cong., 1st Sess. 120 (1985) (State Department submission) ("the Administration's intention to seek reimbursement for Tribunal-related expenses from awards has been publicly known since at least August 1981, some 5 months before the filing date for private claims") (hereinafter Hearing). /10/ Amicus Chevron likewise complains (Br. 16-19) that it had no reason to believe that a fee would be assessed. But Chevron concedes (Br. 3 & n.8) that it did not receive its $115 million award until January 13, 1986, more than six months after Section 502 was enacted, and its $1.5 million award until June 1, 1983, almost one year after the Directive License was issued. Furthermore, the parties were free to agree to offset the $116.5 million Iran owed Chevron against the $175 million Chevron owed Iran. See Chevron Br. 3-4. If they had done so, Chevron would not have received any payment out of the Security Account and therefore would not have been assessed a fee under Section 502. /11/ Significantly, appellees do not contend, and have no basis for contending, that the total amount of the charges collected exceeds the total amount of the United States' expenses. Congress found in 1985 that the United States' annual expenditures for the Tribunal and Security Account were approximately $2 million and $1 million, respectively, and that additional expenditures (estimated by the State Department to be $1 million annually (Hearing 14-15, 26)) were incurred in advising claimants, arguing legal issues common to all claimants, and presenting small claims. S. Rep. 78, 99th Cong., 1st Sess. 2-3 (1985) (report on S. 1166, 99th Cong., 1st Sess. (1985), which was added as a floor amendment to the foreign relations bill, see 131 Cong. Rec. 14,913-14,916, 15,112-15,113 (1985)). By 1985, the 2% charge imposed by the Directive License had generated $6.8 million in fees, which covered only a little more than one-half of the United States' share of the expenses for the Tribunal and the Security Account. Hearing 112. The United States' contributions to the Tribunal have increased to $2.886 million annually (Gov't Br. 10 n.12), although we have been informed by the Department of the Treasury that the United States' liability for the Security Account has declined to $450,000 annually as of March 1, 1989. We also have been informed by the Departments of State and the Treasury that a total of $12.7 million had been collected under Section 502 as of June 1, 1989, and that the expenses incurred by the United States for the Tribunal and Security Account alone had totaled more than $25 million. /12/ In contrast to the fee schedules invalidated in National Cable Television Ass'n v. United States, 415 U.S. 336, 340-341, 343-344 (1974), and FPC v. New England Power Co., 415 U.S. 345, 349-351 (1974), Section 502 assesses a charge only on the basis of the value to the recipient (measured by the amount of the Tribunal award); only on the basis of a filing by and award to the claimant, and only to reimburse a portion of the aggregate expenditures incurred by the United States on behalf of claimants. Compare Central & Southern Motor Freight Tariff Ass'n v. United States, 777 F.2d 722, 729-731 (D.C. Cir. 1985); City of Vanceburg v. FERC, 571 F.2d 630, 643, 646-647 (D.C. Cir. 1977), cert. denied, 439 U.S. 818 (1978). But cf. Raton Gas Transmission Co. v. FERC, 852 F.2d 612, 617-618 (D.C. Cir. 1988); National Cable Television Ass'n v. FCC, 554 F.2d 1094, 1104-1108 & n.40 (D.C. Cir. 1976); Capital Cities Communications, Inc. v. FCC, 554 F.2d 1135, 1138 (D.C. Cir. 1976). /13/ See Hearing 99 (testimony of representative of Committee on Foreign Claims of ABA Section of International Law and Practice) ("We are satisfied that the fee schedule set out in the proposed act is reasonable under these circumstances and our committee of the American Bar Association recommends approval of the bill."); id. at 103-104 (same). /14/ As appellees concede (Br. 39-40), a related factor -- illustrated by the contrast between Heinszen and Forbes -- is whether the challenged statute is a marked departure from the substantive law that reasonably could have been expected to govern. See State ex rel. Van Emmerik v. Janklow, 304 N.W.2d 700, 704-705 (S.D. 1981), appeal dismissed, 454 U.S. 1131 (1982). Contrary to appellees' contention (Br. 40), Section 502 does not depart from prior statutory policy; it is consistent with the explicit policy of the IOAA that "each service * * * provided by an agency * * * to a person * * * is to be self-sustaining to the extent possible" (31 U.S.C. 9701(a)) and with the uniform practice of deducting a (much larger) fee from payments of awards by the Foreign Claims Settlement Commission. See Gov't Br. 44. /15/ Appellees' reliance (Br. 42-43 & n.46) on Rinaldi v. Yeager, 384 U.S. 305 (1966), is misplaced. The Court held that the state statute invidiously discriminated against incarcerated defendants (id. at 309), but it did not question the statutory distinction between successful and unsuccessful litigants. /16/ Section 502 was not the first such measure passed by Congress on the apparent assumption that it was not a "Bill() for raising Revenue" within the meaning of the Clause. Two other claims-settlement programs originated in Senate bills that provided for the deduction of a 5% charge from awards made by the Foreign Claims Settlement Commission. 22 U.S.C. 1644g (German Democratic Republic) (see S. Rep. No. 1188, 94th Cong., 2d Sess. 3 (1976); 122 Cong. Rec. 30,978 (1976)); 72 Stat. 527 (Czechoslovakia) (see S. Rep. No. 1794, 85th Cong., 2d Sess. 8 (1958); H.R. Rep. No. 2227, 85th Cong., 2d Sess. 10 (1958); 104 Cong. Rec. 13,245, 15,473-15,476 (1958)). /17/ A similar construction of the constitutional provision is supported by its language, which does not encompass all bills having the effect of generating revenue, but instead is limited to bills "for" (i.e., for the purpose of) raising revenue. This construction of the Clause is also supported by the debates at the Constitutional Convention. See 2 M. Farrand, The Records of the Federal Convention of 1787, at 263 (Randolph); id. at 273 (Mason); id. at 276 (Madison) (1966). /18/ Amicus Chevron argues (Br. 24-25) that the measures excluded from the Origination Clause in Norton and Nebeker illustrate the importance of both voluntariness in the underlying transaction and the relationship of fees to costs. In fact, neither factor was mentioned in those opinions. Although Chevron asserts that the money-order system in Norton "(was) not designed to make a profit" and that the assessments in Nebeker "were apparently limited to covering 'the expenses necessarily incurred' in managing the bank note system" (Br. 24-25), Section 502 shares those features. Congress reasonably determined that the 1 1/2% rate would cover a portion of the United States' expenses on behalf of claimants, and it expressed no purpose to "make a profit" on the claims-settlement program. Moreover, the fee in Nebeker was a fixed percentage of each bank's notes in circulation, without regard to the costs incurred on behalf of the bank concerned, and the property tax in Millard presumably was also assessed on the basis of the property's value, not the benefits conferred on its owner. Finally, there is no suggestion that the property tax assessments in Millard were voluntary in any sense, and the banks subject to the "tax" in Nebeker may have had little opportunity as a practical matter to avoid the assessment. /19/ Appellees argue (Br. 47 n.51) that if Section 502 were meant to fund the Tribunal, Congress would have directed that proceeds be deposited in a special account in the Treasury for that purpose. The absence of a special account in the Treasury in no way impeaches Congress's statement in the text of Section 502 that the deduction is intended to defray the United States' expenses for the Tribunal and Security Account. The user fees deducted under the IOAA and the International Claims Settlement Act likewise are covered into the Treasury as miscellaneous receipts. 22 U.S.C. 1626(b); 31 U.S.C. 3302, 9701.