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A. 1. a.(1)(a) i) a) I A 1 a (1)(a) i) a)@@Final Op ##  ( ( ( (  X` hp x (#%'0*,.8135@8:/"    J Flake). 0r uBh ԍ FTN  &  XgEpXFr  ddf < See also House Report, at 534 (additional views of Reps. Hiler, Ridge, Bartlett, Dreier, McCandless, Saiki, Baker, and Paxon) ( For the institutions with substantial supervisory goodwill, the bill radically changes the terms of previously negotiated transactions);  uBD id., at 507!508 (additional views of Rep. LaFalce) ( Those institutions which carry intangible assets on their books do so generally under written agreements they have entered into with the U.S. government, agreements which generally state that they cannot be  uB  superseded by subsequent regulations); id., pt. 5, at 27 (additional views of Rep. Hyde) ( [Thrifts] were told that they would be able to carry this goodwill on their books as capital for substantial periods of time.... The courts could well construe these agreements as formal contracts. Now, ... Congress is telling these same thrifts that they cannot count this goodwill toward meeting the new capital standards); 135 Cong. Rec. H2706 (June 15, 1989) (statement of Rep. Crane) (FIRREA would require these S&Ls to write off this goodwill in a scant 5 years. This legislation violates the present agreements that these institutions made with the Federal Government). Although there was less of a focus on the impact of FIRREA on supervisory goodwill in the Senate, at least two senators noted that the new capital requirements would have the effect of  uBk abrogating government contracts. See id., at S5533 (May 17, 1989) (statement of Sen. Hatfield) ( The new tangible capital standards in the legislation specifically exclude supervisory goodwill, and in doing so effectively abrogate agreements made between the Federal Home Loan Bank Board, on behalf of the U.S. Government, and certain  uB healthy thrift institutions); id., at S10213 (Aug. 4, 1989) (statement of Sen. D'Amato) (asking whether any future transactions involving failed or failing institutions will be possible after this bill sanctions a wholesale reneging of Federal agency agreements). A similar focus on the supervisory merger contracts is evident among proponents of the legislation; Representative Rostenkowski, for example, insisted that the Federal Government should be able to change requirements when they have proven to be disastrous and contrary to the public interest. The contracts between the savings and loan owners when they acquired failing institutions in the early 1980's are not contracts written in stone. 135 Cong. Rec., at H2717?0"    J (June 15, 1989).1q uBh ԍ FTN  &  XgEpXFr  ddf < See also House Report, at 545 (Supplemental Views of Reps. Schumer, Morrison, Roukema, Gonzalez, Vento, McMillen and Hoagland) ( [A]n overriding public policy would be jeopardized by the continued adherence to arrangements which were blithely entered into by the FSLIC); 135 Cong. Rec. H2705 (June 15, 1989) (statement of Rep. Gonzalez) ( [I]n blunt terms, the Bank Board and FSLIC insurance fund managers entered into bad deals"I might  uBi even call them steals); id., at H2565 (June 14, 1989) (statement of Rep. Saxton) ( In short[,] goodwill agreements were a mistake and as the saying goes ... `Two wrongs don't make a right' q! ). These proponents defeated two amendments to FIRREA, proposed by Reps. Quillen and Hyde, which would have given thrifts that had received capital forbearances from thrift regulators varying degrees of protec uB tion from the new rules. See Transohio Sav. Bank v. Director,  uBj Office of Thrift Supervision, supra, at 616!617; see also 135 Cong. Rec. H2710 (June 15, 1989) (statement of Rep. Price) ( [T]he proponents of [the Hyde] amendment say a `Deal is a Deal' .... But to claim that Congress can never change a regulator's decision ... in  uBF the future is simply not tenable); Franklin Federal Savings Bank v.  uB Director, Office of Thrift Supervision, supra, at 1340!1341 (reviewing  uB the House debate and concluding that [n]obody expressed the view that FIRREA did not abrogate forbearance agreements regarding  uB" supervisory goodwill) (emphasis in original).  #This evidence of intense concern with contracts like the ones before us suffices to show that FIRREA had the substantial effect of releasing the Government from its own contractual obligations. Congress obviously expected FIRREA to have such an effect, and in the absence of any evidence to the contrary we accept its  J factual judgment that this would be so.~2 uB ԍ FTN  &  XgEpXFr  ddf < Despite the claims of the dissent, our test does not turn upon  uBx  some sort of legislative intent, post, at 10. Rather, we view Congress's expectation that the Government's own obligations would be heavily affected simply as good evidence that this was, indeed, the case.~ Nor is Congress's own judgment neutralized by the fact, emphasized by the Government, that FIRREA did not formally target particular transactions. Legislation can almostp@2"   always be written in a formally general way, and the want of an identified target is not much security when a measure's impact nonetheless falls substantially upon the Government's contracting partners. For like reason, it does not answer the legislative record to insist, as the Government does, that the congressional focus is irrelevant because the broad purpose of FIRREA was to advance the general welfare. Brief for United States 45. We assume nothing less of all congressional action, with the result that an intent to benefit the public can no more serve as a criterion of a public and general  JH sovereign act than its regulatory character can.&3&H  uB ԍ FTN  &  XgEpXFr  ddf < We have, indeed, had to reject a variant of this argument before.  uBg See Lynch v. United States, 292 U.S. 571, 580 (1934) (acknowledging a public need for governmental economy, but holding that [t]o abrogate contracts, in the attempt to lessen governmental expenditure, would be not the practice of economy, but an act of repudia uBC tion); see also Speidel, 51 Geo. L.J., at 522 (noting that even when the Government's acts are motivated or required by public necessity ... [t]he few decisions on point seem to reject public convenience or necessity as a defense, particularly where [the Government's action] directly alters the terms of the contract).& While our limited enquiry into the background and evolution of the thrift crisis leaves us with the understanding that Congress acted to protect the public in the FIRREA legislation, the extent to which this reform relieved the Government of its own contractual obligations precludes a finding that the statute is a public  and  J0 general act for purposes of the sovereign acts defense.4o%0 uB ԍ FTN  &  XgEpXFr ddf < The dissent contends that FIRREA must be a public and general act because it occupies 372 pages in the Statutes at Large, and under 12 substantive titles contains more than 150 numbered  uB sections. Post, at 11. But any act of repudiation can be buried in a larger piece of legislation, and if that is enough to save it then the Government's contracting power will not count for much. To the  uB extent that The Chief Justice relies on the fact that FIRREA's core capital requirements applied to all thrift institutions, we note that neither he nor the Government has provided any indication ofv3"## the relative incidence of the new statute in requiring capital increases for thrifts subject to regulatory agreements affecting capital and those not so subject.0A4"  Ԍ ;H2 dЙd@C؃  2   #Even if FIRREA were to qualify as public and general, however, other fundamental reasons would leave the sovereign acts doctrine inadequate to excuse the Government's breach of these contracts. As  Jj ԚHorowitz makes clear, that defense simply relieves the Government as contractor from the traditional blanket rule that a contracting party may not obtain discharge if its own act rendered performance impossible. But even if the Government stands in the place of a private party with respect to public and general sovereign acts, it does not follow that discharge will always be available, for the commonlaw doctrine of impossibility imposes additional requirements before a party may avoid liability for breach. As the Restatement puts it, BQ C  , , (  [w]here, after a contract is made, a party's performance is made impracticable without his fault by the occurrence of an event the nonoccurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary. Restatement (Second) of Contracts 261. vBQ d  ( , , See also 2 Farnsworth on Contracts 9.6, at 543!544 (listing four elements of the impossibility defense). Thus, since the object of the sovereign acts defense is to place the Government as contractor on par with a  J private contractor in the same circumstances, Horowitz, 267 U.S., at 461, the Government, like any other defending party in a contract action, must show that the passage of the statute rendering its performance impossible was an event contrary to the basic assumptions onB4"   which the parties agreed, and must ultimately show that the language or circumstances do not indicate that the Government should be liable in any case. While we do not say that these conditions can never be satisfied when the Government contracts with participants in a regulated industry for particular regulatory treatment, we find that the Government as such a contractor has not satisfied the conditions for discharge in the present case.  =H3 d d@1؃  2  #For a successful impossibility defense the Government would have to show that the nonoccurrence of regulatory amendment was a basic assumption of these contracts.  J See, e.g., Restatement (Second) of Contracts 261; 2  Jf Farnsworth, supra, 9.6, at 549!550. The premise of this requirement is that the parties will have bargained with respect to any risks that are both within their contemplation and central to the substance of the contract; as Justice Traynor said, [i]f [the risk] was foreseeable there should have been provision for it in the contract, and the absence of such a provision gives  JN rise to the inference that the risk was assumed. Lloyd  J& v. Murphy, 25 Cal. 2d 48, 54, 153 P.2d 47, 50 (1944).O 5 q& uB ԍ FTN  &  XgEpXFr  ddf <  FTN  <  XFrXFr ff See also Transatlantic Financing Corp. v. United States, 363 F.2d 312, 315 (CADC 1966) (requiring that the contingency render uB ing performance impossible be `something' unexpected); Companhia  uB de Navegacao Lloyd Brasiliero v. C. G. Blake Co., 34 F.2d 616, 619 (CA2 1929) (L. Hand, J.) (asking how unexpected at the time [the contract was made] was the event which prevented performance);  uB see also Kel Kim Corp. v. Central Markets, Inc., 70 N. Y. 2d 900, 902, 524 N. E. 2d 295, 296 (1987) ( [T]he impossibility must be produced by an unanticipated event that could not have been foreseen  uB or guarded against in the contract); Barbarossa and Sons, Inc. v.  uB Iten Chevrolet, Inc., 265 N. W. 2d 655, 659 (Minn. 1978) (asking whether the risk of the given contingency was so unusual or unforeseen and would have such severe consequences that to require performance would be to grant the promisee an advantage for which4"## he could not be said to have bargained in making the contract);  uBG Mishara Construction Co. v. TransitMixed Concrete Corp., 365 Mass. 122, 129, 310 N. E. 2d 363, 367 (1974) ( The question is ... Was the contingency which developed one which the parties could reasonably be thought to have foreseen as a real possibility which  uB# could affect performance?); Krell v. Henry, 2 K. B. 740, 752 (1903) ( The test seems to be whether the event which causes the impossibility was or might have been anticipated and guarded against); 18 W. Jaeger, Williston on Contracts 1931, p. 8 (3d ed. 1978) ( The important question is whether an unanticipated circumstance has made performance of the promise vitally different from what should reasonably have been within the contemplation of both parties when they entered into the contract. If so, the risk should not fairly be thrown upon the promisor). Although foreseeability is generally a relevant, but not dispositive, factor, see 2 E. Farnsworth,  uBI ԚFarnsworth on Contracts 9.6, pp. 555!556 (1990); Opera Company  uB of Boston, Inc. v. Wolf Trap Foundation for the Performing Arts, 817 F.2d 1094, 1101 (CA4 1987), there is no reason to look further where, as here, the risk was foreseen to be more than minimally likely, went to the central purpose of the contract, and could easily have been allocated in a different manner had the parties chosen to  uB do so, see id., at 1099!1102; 18 Williston on Contracts, supra, 1953, at 119.O &C5"   That inference is particularly compelling, where, as here, the contract provides for particular regulatory treatment  J (and, a fortiori, allocates the risk of regulatory change). Such an agreement reflects the inescapable recognition that regulated industries in the modern world do not live under the law of the Medes and the Persians, and the very fact that such a contract is made at all is at odds with any assumption of regulatory stasis. In this particular case, whether or not the reach of the FIRREA reforms was anticipated by the parties, there is no doubt that some changes in the regulatory structure governing thrift capital reserves were both foreseeable and likely when these parties contracted with the Government, as even the Government agrees. It says in its brief to this Court that in light of the frequency with which federal capital requirements had changed in the past ... , it D5"   would have been unreasonable for Glendale, FSLIC, or the Bank Board to expect or rely upon the fact that those requirements would remain unchanged. Brief for  J United States 26; see also id., at 3, n. 1 (listing the  J` changes).6J` uB ԍ FTN  &  XgEpXFr  ddf < The Government confirmed this point at oral argument. When asked whether FIRREA's tightening of the regulatory capital standards was exactly the event that the parties assumed might happenwhen they made their contracts, the Government responded Exactly. Congress had changed capital standards many times over the years. Tr. of Oral Arg. 9. The Federal Circuit panel in this case likewise found that the regulatory capital requirements have been the subject of numerous statutory and regulatory changes over the years, and changed three  J times in 1982 alone. 994 F.2d, at 801.Z7'  uBr ԍ FTN  &  XgEpXFr  ddf < See, e.g., GarnSt Germain Depository Institutions Act of 1982, Pub. L. 97!320, 96 Stat. 1469 (eliminating any fixed limits to Bank Board discretion in setting reserve requirements); Depository Institutions Deregulation and Monetary Control Act of 1980, Pub. L. 96!221, 94 Stat. 132, 160 (conferring discretionary authority on the Bank Board to set reserve requirements between 3% and 6%); 47  uB Fed. Reg. 3543 (lowering the reserve ratio from 4% to 3%); id., at 31859 (excluding certain contraasset accounts from reserve calcu uB* lations); id., at 52961 (permitting thrifts to count appraised equity  uB capital toward reserves); see also Charter Federal Sav. Bank v.  uB Office of Thrift Supervision, 976 F.2d, at 212 (noting that because [c]apital requirements have been an evolving part of the regulatory scheme since its inception, the Bank Board would have expected changes in statutory requirements, including capital requirements);  uBt Carteret Sav. Bank v. Office of Thrift Supervision, 963 F.2d, at 581 (observing that [i]n the massively regulated banking industry, ... the rules of the game change with some regularity).Z Given these fluctuations, and given the fact that a single modification of the applicable regulations could, and ultimately did, eliminate virtually all of the consideration provided by the Government in these transactions, it would be absurd to say that the nonoccurrence of a change in the regulatory capital rules was a basic assumption upon  J which these contracts were made. See, e.g., Moncrief v. E7"    J Williston Basin Interstate Pipeline Co., 880 F.Supp.  J 1495, 1508 (DWyo. 1995); Vollmar v. CSX Transporta J tion, Inc., 705 F.Supp. 1154, 1176 (EDVa. 1989), aff'd, 898 F.2d 413 (CA4 1990).  =H3 d d@2؃  2  #Finally, any governmental contract that not only deals with regulatory change but allocates the risk of its occurrence will, by definition, fail the further condition of a successful impossibility defense, for it will indeed indicate that the parties' agreement was not meant to be rendered nugatory by a change in the regulatory law. See Restatement (Second) of Contracts 261 (no impossibility defense where the language or the circumstances indicate allocation of the risk to the party seeking  Jf discharge).8f  uB ԍ FTN  &  XgEpXFr  ddf < See also Hughes Communications Galaxy, Inc. v. United States, 998 F.2d, at 957!959 (rejecting sovereign acts defense where contract was interpreted as expressly allocating the risk of change in governmental policy); Posner & Rosenfield, 6 J. Leg. Stud., at 98 (noting that, subject to certain constraints, [t]he contracting parties' chosen allocation of risk should always be honored as the most efficient one possible). The mere fact that the Government's contracting agencies (like the Bank Board and FSLIC) could not themselves preclude Congress from changing the regulatory rules does not, of course, stand in the way of concluding that those agencies assumed the risk of such change, for determining the consequences of legal change was the point of the agreements. It is, after all, not uncommon for a contracting party to  J& assume the risk of an event he cannot control,I9& uB ԍSee, e.g., Chicago, Milwaukee & St. Paul R. Co. v. Hoyt, 149 U.S. 1, 14!15 (1893) ( There can be no question that a party may by an absolute contract bind himself or itself to perform things which subsequently become impossible, or to pay damages for the nonperformance). This is no less true where the event that renders performance impossible is a  uB" change in the governing law. See, e.g., 4 R. Anderson, Anderson on the Uniform Commercial Code 2!615:34, p. 286 (3d ed. 1983) ( Often in8"## regard to impossibility due to change of law ... there would be no difficulty in a promisor's assuming the risk of the legal possibility of his promise); 6 A. Corbin, Corbin on Contracts 1346, p. 432 (1962) ( Just as in other cases of alleged impossibility, the risk of prevention by courts and administrative officers can be thrown upon a contractor by a provision in the contract itself or by reason of established custom and general understanding).I even&F9"   when that party is an agent of the Government. As the Federal Circuit has recognized, [government] contracts routinely include provisions shifting financial responsibility to the Government for events which might occur in the future. That some of these events may be triggered by sovereign government action does not render the relevant contractual provisions any less binding than those which contemplate third party acts, inclement  J weather and other force majeure. Hughes Communica J tions Galaxy, Inc. v. United States, 998 F.2d 953,  Jp 958!959 (CA Fed. 1993).P:p uB ԍ FTN  &  XgEpXFr  ddf < See generally Hills Materials Co. v. Rice, 982 F.2d 514, 516, n. 2 (CA Fed. 1992) ( [T]he [sovereign acts] doctrine certainly does not prevent the government as contractor from affirmatively assuming  uB responsibility for specific sovereign acts); D & L Construction Co. v.  uB United States, 185 Ct. Cl. 736, 752, 402 F.2d 990, 999 (1968) ( It has long been established that while the United States cannot be held liable directly or indirectly for public acts which it performs as a sovereign, the Government can agree in a contract that if it does exercise a sovereign power, it will pay the other contracting party the amount by which its costs are increased by the Government's sovereign act, and that this agreement can be implied as well as  uB expressed); Amino Brothers Co. v. United States, 178 Ct. Cl. 515, 525, 372 F.2d 485, 491 (1967) (same), cert. denied, 389 U.S. 846  uB$ (1967); Gerhardt F. Meyne Co. v. United States, 110 Ct. Cl. 527, 550, 76 F.Supp. 811, 815 (1948) (same). A common example of such an agreement is mandated by Federal Acquisition Regulation 52.222!43, which requires government entities entering into certain fixed price service contracts to include a price adjustment clause shifting to the Government responsibility for cost increases resulting from compliance with Department of Labor wage and fringe benefit determinations. 48 CFR 52.222!43 (1995). P pG:"  Ԍ #As to each of the contracts before us, our agreement with the conclusions of the Court of Federal Claims and the Federal Circuit forecloses any defense of legal impossibility, for those courts found that the Bank Board resolutions, Forbearance Letters, and other documents setting forth the accounting treatment to be accorded supervisory goodwill generated by the transactions were not mere statements of thencurrent regulatory policy, but in each instance were terms in an allocation of risk of regulatory change that was essential to the contract  Jp between the parties. See supra, at 21!23. Given that the parties went to considerable lengths in procuring necessary documents and drafting broad integration clauses to incorporate their terms into the contract itself, the Government's suggestion that the parties meant to say only that the regulatory treatment laid out in these documents would apply as an initial matter, subject to later change at the Government's election, is  J0 Ԛunconvincing. See ibid. It would, indeed, have been madness for respondents to have engaged in these transactions with no more protection than the Government's reading would have given them, for the very existence of their institutions would then have been in jeopardy from the moment their agreements were signed. :* *  #We affirm the Federal Circuit's ruling that the United States is liable to respondents for breach of contract. Because the Court of Federal Claims has not yet determined the appropriate measure or amount of damages in this case, we remand for further proceedings consistent with our opinion.  J ` OIt is so ordered.ă