Free Proposed Findings of Fact and Conclusions of Law - District Court of Federal Claims - federal

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No. 00-697C (Senior Judge Merow) _____________________________________________________________________________ IN THE UNITED STATES COURT OF FEDERAL CLAIMS WISCONSIN ELECTRIC POWER COMPANY, Plaintiff, v. UNITED STATES, Defendant. ______________________________________________________________________________ DEFENDANT'S PROPOSED FINDINGS OF UNCONTROVERTED FACT ______________________________________________________________________________

JEFFREY S. BUCHOLTZ Acting Assistant Attorney General OF COUNSEL: JANE K. TAYLOR Office of the General Counsel U.S. Department of Energy 1000 Independence Ave., S.W. Washington, D.C. 20585 ALAN LO RE Senior Trial Attorney STEPHEN FINN SONIA M. ORFIELD RUSSELL A. SHULTIS Trial Attorneys Commercial Litigation Branch Civil Division Department of Justice March 25, 2008 JEANNE E. DAVIDSON Director HAROLD D. LESTER, JR. Assistant Director SHARON A. SNYDER Trial Attorney Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 Tele: (202) 305-9640 Fax: (202) 307-2503 Attorneys for Defendant

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TABLE OF CONTENTS PAGE I. THE ORIGINAL PROVISIONS OF THE NUCLEAR WASTE POLICY ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 THE DEPARTMENT OF ENERGY'S PROMULGATION OF THE "STANDARD CONTRACT FOR DISPOSAL OF SPENT NUCLEAR FUEL AND/OR HIGHLEVEL RADIOACTIVE WASTE" THROUGH NOTICE AND COMMENT RULEMAKING IN THE FEDERAL REGISTER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 A. B. The Proposed Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Comments Upon The Proposed Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1. 2. 3. C. D. E. III. Industry Involvement In Drafting The Standard Contract Terms . . . . . . 11 Rate Of SNF And HLW Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Plaintiffs' Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

II.

The Final Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 WEPCO's Execution Of The Standard Contract . . . . . . . . . . . . . . . . . . . . . . . . . 24 Industry Activities Following The Execution Of The Standard Contract . . . . . . 25

DOE'S ISSUANCE OF A STATUTORILY REQUIRED MISSION PLAN, WHICH THE INDUSTRY UNDERSTOOD WAS NOT CONTRACTUALLY BINDING . . . . 27 THE BELIEFS THAT WEPCO EXPRESSED AT TRIAL ABOUT DOE'S OBLIGATIONS UNDER THE STANDARD CONTRACT . . . . . . . . . . . . . . . . . . . . . 35 WEPCO's INVOLVEMENT IN INDUSTRY GROUPS, INCLUDING EEI AND UNWMG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 THE 1987 AMENDMENTS TO THE NUCLEAR WASTE POLICY ACT AND THE FURTHER DEVELOPMENT OF THE WASTE MANAGEMENT PROGRAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

IV.

V.

VI.

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TABLE OF CONTENTS (cont'd) PAGE VII. DOE'S ISSUANCE OF CONTRACTUALLY-REQUIRED ANNUAL CAPACITY REPORTS AND ACCEPTANCE PRIORITY RANKINGS . . . . . . . . . . . . . . . . . . . . . 42 A. B. C. D. VIII. IX. 1987 and 1990 Annual Capacity Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 1991 Acceptance Priority Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 The 1991 Annual Capacity Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 The 1992 Through 1995 Annual Capacity Reports . . . . . . . . . . . . . . . . . . . . . . . 48

DELIVERY COMMITMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 TSLCCs AND FEE ADEQUACY REPORTS BASED UPON THE THENCURRENT PROGRAM PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 WEPCO's PARTICIPATION IN THE DCS PROCESS . . . . . . . . . . . . . . . . . . . . . . . . 53 WEPCO MAINTAINS FULL CORE RESERVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 WEPCO'S NEED FOR ADDITIONAL AT-REACTOR STORAGE . . . . . . . . . . . . . . 62 A. WEPCO Needed To Bridge The Gap Before DOE Performed in 1998 . . . . . . . 62 1. 2. WEPCO Needed Additional At-Reactor Storage By 1998 . . . . . . . . . . . 62 WEPCO's Contemporaneous Documents During The Development Of The ISFSI Project All Indicated A Need For Additional At-Reactor Storage Before 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 WEPCO Reported A Need For Dry Fuel Storage Assuming DOE Performance Beginning In 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

X. XI. XII.

3.

B.

The Use Of A Temporary Cask Pit Rack Was Not Considered An Option In The But-For World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 1. WEPCO Did Not Evaluate The Use Of A Temporary Cask Pit Rack Until At Least 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

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TABLE OF CONTENTS (cont'd) PAGE 2. WEPCO's Reference To Use Of A Temporary Cask Pit Rack Is A Litigation-Driven Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

C.

The Use Of Racks in the Transfer Canal Was Not Considered An Option In The But-For World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 WEPCO Determined That Operating At Reduced Power Would Not Be Cost-Effective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

D.

XIII.

EVIDENCE OF WEPCO'S POOL CAPACITY DEMONSTRATES THAT WEPCO NEVER USED 1,500 SPACES IN ITS POOL . . . . . . . . . . . . . . . . . . . . . . . . . 85

XIV. WEPCO'S DECISION TO UTILIZE THE VSC 24 CASKS . . . . . . . . . . . . . . . . . . . . . 87 XV. PROBLEMS AT POINT BEACH HALT THE LOADING OF THE VSC-24 CASKS AND SHUT-DOWN BOTH UNITS 1 AND 2 . . . . . . . . . . . . . . . . . . . . . . . . . 89

XVI. WEPCO USED THE 900 MTU RATE IN ITS PLANNING DOCUMENTS . . . . . . . . 91 XVII. THE OPINIONS PROFFERED AT TRIAL BY WEPCO'S EXPERT MS. SUPKO SHOULD BE IGNORED BY THE COURT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 A. B. C. Ms. Supko's Opinions Are Irrelevant To This Case . . . . . . . . . . . . . . . . . . . . . . 95 Ms. Supko's Model Mixes But-For And Actual Worlds . . . . . . . . . . . . . . . . . . . 96 The Test Used by Ms. Supko In Her Analysis Is Not Supported By The Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Ms. Supko's Rate Does Not Support Her Assertions Regarding DOE's Obligations Under The Standard Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Ms. Supko's Rate Does Not Support Her Assertions Regarding Removal Of Backlog Or Timely Decommissioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Ms. Supko Did No Analysis Regarding So-Called Flexibilities . . . . . . . . . . . . 102 1. Ms. Supko Did Not Analyze The Impact Of The Use Of The Exchanges Provision of the Standard Contract . . . . . . . . . . . . . . . . 102

D.

E.

F.

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TABLE OF CONTENTS (cont'd) PAGE 2. Ms. Supko Did Not Analyze The Impact Of The Use Of The Plus Or Minus 20 Percent Provision Of The Standard Contract . . . . . . . . . 103 Ms. Supko Did Not Analyze The Effect Of The Use Of The IntraUtility Exchanges Provision of the Standard Contract . . . . . . . . . . . . . 105

3.

XVIII. ISSUES RELEVANT TO THE ENTITLEMENT ADJUSTMENTS TO WEPCO'S CLAIMED COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 A. Expenditures By WEPCO For Private Fuel Storage And The Newton Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 WEPCO'S Payment Of Fees To The Nuclear Regulatory Commission . . . . . . 110 WEPCO's Claim For ISFSI Fabrication And VSC-24 Casks 1 Through 5 . . . 128 WEPCO Incurred The Costs Of Fabricating Three TN-32B Casks . . . . . . . . . 130 1. WEPCO Sought The TN-32B Casks As A Contingency In The Event That It Could Not Load The VSC-24 Casks By The Spring 2000 Outage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 WEPCO Should Have Delayed Fabrication of the TN-32B Casks in September 1998, And Then Cancelled The Contract By April 1999 . . 134 WEPCO Should Have Sold Its Long-Lead Materials, Or Its Three Completed TN-32B Casks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

B. C. D.

2.

3.

E.

WEPCO'S Pursuit Of Dual Purpose Casks . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 1. 2. WEPCO's Decision To Switch To The NUHOMS Cask System . . . . . 141 WEPCO'S Efforts To License The VSC-24 Cask For Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

XIX. ISSUES RELEVANT TO INDIVIDUAL COSTS IN WEPCO's CLAIM . . . . . . . . . . 148 A. Internal Labor Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

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TABLE OF CONTENTS (cont'd) PAGE B. C. D. XX. Employee Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 Payroll Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 Overhead Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

AVOIDED COSTS OF LOADING CASKS TO DOE . . . . . . . . . . . . . . . . . . . . . . . . . 156

XXI. WEPCO'S CLAIM FOR WEIGHTED AVERAGE COST OF CAPITAL OR WEIGHTED AVERAGE COST OF DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 XXII. TOTAL ADJUSTMENTS MADE TO WEPCO'S DAMAGES CLAIM . . . . . . . . . . . 164

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS WISCONSIN ELECTRIC POWER COMPANY, Plaintiff, v. UNITED STATES, Defendant. ) ) ) ) ) ) ) ) ) )

No. 00-697C (Senior Judge Merow)

DEFENDANT'S PROPOSED FINDINGS OF UNCONTROVERTED FACT

I.

THE ORIGINAL PROVISIONS OF THE NUCLEAR WASTE POLICY ACT 1. On January 7, 1983, Congress enacted the Nuclear Waste Policy Act of 1982

("NWPA"), Pub. L. 97-425, 96 Stat. 2201 (codified at 42 U.S.C. §§ 10101-10270 (1982)). Congress specifically determined that the public health and safety necessitated that the Government provide a solution for the permanent storage and disposal of spent nuclear fuel ("SNF") and high-level radioactive waste ("HLW") but that the costs of the interim and permanent storage and disposal of SNF and HLW were the responsibility of those entities that created the SNF and HLW. 42 U.S.C. §§ 10131(a)(4)-(5) (1982). 2. In its statement of the statutory purposes underlying the NWPA, Congress

identified the following four objectives: (1) developing repositories to ensure the protection of the public and the environment from the hazards posed by SNF and HLW; (2) establishing Federal responsibility and policy for the disposal of SNF and HLW; (3) defining the relationship

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between the Federal Government and state governments regarding SNF and HLW disposal; and (4) establishing . . . a Nuclear Waste Fund, composed of payments made by the generators and owners of such waste and spent fuel, that will ensure that the costs of carrying out activities relating to the disposal of such waste and spent fuel will be borne by the persons responsible for generating such waste and spent fuel. Id. at § 10131(b). 3. In addition to the process for the siting of a repository, the Secretary of Energy

was to "prepare a comprehensive report, to be known as the Mission Plan, which shall provide an informational basis sufficient to permit informed decisions to be made in carrying out the repository program and the research, development, and demonstration programs required under this chapter." 42 U.S.C. § 10221(a) (1982). 4. The Mission Plan was to include, among other things, (1) an identification of the primary scientific, engineering, and technical information . . . with respect to the siting and construction of a test and evaluation facility and repositories; (2) an identification of any information described in paragraph (1) that is not available because of any unresolved scientific, engineering, or technical questions, or undemonstrated engineering or systems integration, a schedule including specific major milestones for the research, development, and technology demonstration program required under this chapter and any additional activities to be undertaken to provide such information, a schedule for the activities necessary to achieve important programmatic milestones, and an estimate of the costs required to carry out such research, development, and demonstration programs; (3) an evaluation of financial, political, legal, or institutional problems that may impede the implementation of this chapter, the plans of the Secretary to resolve such problems, and

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recommendations for any necessary legislation to resolve such problems; * * *

(7) a description of known sites at which site characterization activities should be undertaken . . .; * * *

(9) an estimate of (A) the total repository capacity required to safely accommodate the disposal of all [HLW] and [SNF] expected to be generated through December 31, 2020, . . ., (B) the number and type of repositories required to be constructed to provide such disposal capacity; (C) a schedule for the construction of such repositories . . .; (10) an estimate, on an annual basis, of the costs required (A) to construct and operate the repositories anticipated to be needed . . .; (B) to construct and operate a test and evaluation facility, or any other facilities, other than repositories . . .; and (C) to carry out any other activities under this chapter; and (11) an identification of the possible adverse economic and other impacts to the State or Indian tribe involved that may arise from the development of a test and evaluation facility or repository at a site. 42 U.S.C. § 10221(a) (1982) (emphasis added). 5. The Secretary was to provide a draft mission plan to the states, affected Indian

tribes, the Nuclear Regulatory Commission ("NRC"), and other Federal Government agencies within 15 months of the date of the NWPA's enactment. Id. § 10221(b)(1). The Secretary was then to obtain those entities' comments, revise the draft mission plan in response to them, and, within 17 months of the NWPA's enactment, provide the appropriate committees of Congress with the Mission Plan. Id. § 10221(b)(2)-(3).

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6.

Congress also included in the NWPA provisions that allowed the Secretary to

study the possibility of creating Monitored Retrievable Storage ("MRS") facilities, with Congress finding that "long-term storage of high-level radioactive waste or spent nuclear fuel in monitored retrievable storage facilities is an option for providing safe and reliable management of such waste or spent fuel." 42 U.S.C. § 10161(a)(1) (1982). By July 1, 1985, the Secretary was to "complete a detailed study of the need for and feasibility of, and shall submit to the Congress a proposal for, the construction of one or more monitored retrievable storage facilities for high-level radioactive waste and spent nuclear fuel." Id. § 10161(b)(1). The proposal was to "include, for the first such facility, at least 3 alternative sites and at least 5 alternative combinations of such proposed sites and facility designs . . . ." Id. § 10161(b)(4). However, the NWPA provided that any MRS facility that Congress might authorize in response to the Secretary's proposal could not "be constructed in any State in which there is located any site approved for site characterization under section 10132 of this title." Id. § 10161(g).1 7. In addition, the NWPA provided that the Secretary would enter into contracts

with the owners and generators of SNF of domestic origin for "the acceptance of title, subsequent transportation, and disposal of such [SNF]." 42 U.S.C. § 10222(a)(1) (1982). The

In the NWPA, Congress also provided that DOE could create a program for interim SNF and HLW storage in other than a permanent repository "to provide for the utilization of available spent nuclear fuel pools at the site of each civilian nuclear power reactor to the extent practical and the addition of new spent nuclear fuel storage capacity where practical at the site of such reactor . . .," 42 U.S.C. § 10151(b)(1) (1982), or for the establishment of Federally-owned interim storage facilities. Id. § 10151(b)(2); see id. §§ 10151-57. This interim storage program would involve interim storage contracts separate from the Standard Contract at issue in this case, to be funded through a separate interim storage fund. Id. § 10156(a). No utility ever entered such a contract. The possibility of an interim storage facility, to be funded through a separate interim storage fund, expired on January 1, 1990. Id. -4-

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contracts had to "provide for payment to the Secretary of fees . . . sufficient to offset expenditures" described elsewhere in the statute. Id. 8. The NWPA also mandated that: Contracts entered into under this section shall provide that ­ (A) following commencement of operation of a repository, the Secretary shall take title to the high-level radioactive waste or spent nuclear fuel involved as expeditiously as practicable upon the request of the generator or owner of such waste or spent fuel; and (B) in return for the payment of fees established by this section, the Secretary, beginning not later than January 31, 1998, will dispose of the high-level radioactive waste or spent nuclear fuel involved as provided in this subtitle. 42 U.S.C. § 10222(a)(5). The NWPA did not identify any other requirements for the contracts specified by 42 U.S.C. § 10222(a)(5). 9. The NWPA also "established within the Department of Energy an Office of

Civilian Radioactive Waste Management ["OCRWM"]," which would be headed by a Director responsible "for carrying out the responsibilities of the Secretary" under the NWPA. 42 U.S.C. § 10224(a)-(b) (1982). 10. There is no provision in the NWPA that requires the DOE to accept SNF at a rate

that would obviate the need for additional at-reactor storage on the sites of nuclear facilities after January 31, 1998. See 42 U.S.C. §§ 10101-10270 (1982); see also Tr.5123:4-14 (Brownstein).

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II.

THE DEPARTMENT OF ENERGY'S PROMULGATION OF THE "STANDARD CONTRACT FOR DISPOSAL OF SPENT NUCLEAR FUEL AND/OR HIGHLEVEL RADIOACTIVE WASTE" THROUGH NOTICE AND COMMENT RULEMAKING IN THE FEDERAL REGISTER A. 11. The Proposed Rule On February 4, 1983, DOE, in furtherance of its obligations pursuant to the

NWPA, 42 U.S.C. § 10222, published a notice of proposed rulemaking in the Federal Register, proposing terms for the "Standard Contract for Disposal of Spent Nuclear Fuel and/or HighLevel Radioactive Waste" ("Standard Contract") mandated by the NWPA, 42 U.S.C. § 10222. See 48 Fed. Reg. 5458 (Feb. 4, 1983); Joint Stipulation No. 8. 12. The proposed "scope" of the Standard Contract provided for the acceptance and

disposal of SNF from civilian nuclear power reactors pursuant to the NWPA: This Contract applies to the acceptance by DOE of spent nuclear fuel (SNF) and/or high-level radioactive waste (HLW) from civilian nuclear power reactors and with respect to such material, establishes the fees to be paid by the Purchaser for the services rendered hereunder by DOE. The services provided to the Purchaser by DOE under this contract are related to disposal of SNF and/or HLW of domestic origin from civilian nuclear power reactors. . . . 48 Fed. Reg. 5458, 5462 (Feb. 4, 1983) (emphasis added). 13. The term "disposal," as referenced in the proposed scope of the Standard

Contract, referred to emplacement in a permanent repository: The term "Disposal" means the emplacement in a repository of high-level radioactive waste, spent nuclear fuel, or other highly radioactive waste with no foreseeable intent of recovery, whether or not such emplacement permits recovery of such waste. 48 Fed. Reg. 5458, 5462 (Fed. 4. 1983) (Art. I.9).

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14.

Similarly, the term "DOE facility" in the proposed Standard Contract referred to a

facility for disposal, in a permanent repository, of the SNF and/or HLW: The term "DOE Facility" means a facility operated by or on behalf of DOE for the purpose of disposing of spent nuclear fuel and/or high level radioactive waste. 48 Fed. Reg. 5458, 5462 (Feb. 4, 1983) (Art. I.11). 15. As required by the NWPA, the proposed rule contained a mechanism for defining

each contract holder's financial obligations under the Standard Contract. Specifically, DOE proposed that each entity which entered into the Standard Contract would pay fees to the Secretary, for deposit into the Nuclear Waste Fund ("NWF"), in the following forms and amounts: (1) a one-time fee for SNF generated or fuel in-core prior to April 7, 1983, and (2) continuing quarterly fees for SNF generated on or after April 7, 1983, in an amount of 1.0 mil per kilowatt-hour (or as otherwise adjusted) on electricity generated by the contract holder's nuclear power reactor. 48 Fed. Reg. at 5464 (Art. VIII). 16. The proposed Standard Contract also provided a mechanism for determining both

the order in which, and the rate at which, the various contract holders' SNF would be accepted. As for the order of SNF acceptance, the Standard Contract required DOE to issue an "acceptance priority ranking" ("APR") of SNF and/or HLW, through which SNF and/or HLW would receive acceptance priority based generally upon its age: Acceptance Priority Ranking. Delivery commitment schedules for SNF and/or HLW may require the disposal of more material than the annual capacity of the DOE disposal facility (or facilities) can accommodate. The following acceptance priority ranking will be utilized: (a) Except as may be provided for in paragraph (2) below, acceptance priority shall be based upon the age of the SNF and/or -7-

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HLW as calculated from the date of discharge of such materials from the civilian nuclear power reactor to the date specified for transportation by DOE in the delivery commitment schedule. DOE will first accept from Purchaser the oldest SNF and/or HLW for disposal in the DOE facility.2 17. Although the proposed Standard Contract itself did not identify a specific rate at

which DOE would accept contract holders' SNF, it provided for DOE's issuance of documents for planning purposes to assist in the eventual definitization of the specific rate and order of SNF acceptance and disposal: 5. DOE shall annually provide to the Purchaser pertinent information to support waste disposal program cost projections, project plans and progress reports. 6. Beginning on April 1, 1991, DOE shall issue an annual acceptance priority ranking for receipt of SNF and/or HLW at the DOE repository. This priority ranking shall be based on the age of SNF and/or HLW as calculated from the date of discharge of such material from the civilian nuclear power reactor. The oldest fuel or waste will have the highest priority for acceptance, except as provided in paragraph B.3 of Article VI of this contract. 48 Fed. Reg. 5458, 5463 (Feb. 4, 1983) (Art. V.B.5 & Art. V.B.6) (emphasis added). 18. The proposed contract further provided that, following DOE's issuance of

planning documents, rates of SNF acceptance, as well as the specific order of SNF acceptance from particular contract holders, would be defined through the contract holders' submission of, and DOE's approval of, delivery commitment schedules ("DCSs"):

However, as an exception to the requirement to accept the oldest SNF and/or HLW first, the next paragraph of the proposed rule provided DOE with the discretion to grant priority to SNF and/or HLW removed from a reactor that had shut down permanently. 48 Fed. Reg. 5458, 5464 (Feb. 4, 1983) (Art. VI.B.3). -8-

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. . . The SNF and/or HLW shall be specified in a delivery commitment schedule as provided in Article IV below. The disposal services to be provided by DOE under this contract shall commence not later than January 31, 1998 and shall continue until such time as all SNF and/or HLW from the civilian nuclear power reactors specified in Appendix "A", annexed hereto and made a part hereof, has been disposed of as provided for in this contract. 48 Fed. Reg. 5458, 5462 (Feb. 4, 1983) (emphasis added). 19. Specifically, in describing the purpose of the DCS in the preamble to its proposed

rule, DOE stated that the procedures to be followed in defining any particular contract holder's allocations for SNF acceptance for any given year included the contract holder's obligation to describe the SNF that it would deliver to DOE, followed by submission of a DCS and of a final delivery schedule ("FDS"): Article IV ­ Delivery of SNF and/or HLW ­ Sets forth the procedures to be followed by Purchaser, including the requirement that the Purchaser describe the waste material to be delivered to DOE, the furnishing of a delivery commitment schedule 63 months prior to the specified delivery date, and a final delivery schedule which Purchaser submits 12 months prior to delivery. In case of an emergency DOE may, subject to prior approval, accept a Purchaser's waste material before the scheduled delivery date. 48 Fed. Reg. 5458, 5459 (Feb. 4, 1983) (italics in original; emphasis added). 20. In Article I.7 of the proposed Standard Contract, the term "delivery commitment"

was defined as the SNF and/or HLW that a contract holder would deliver to DOE in a given year: The term "Delivery Commitment" means a promise by the Purchaser to deliver spent nuclear fuel and/or high-level radioactive waste to the DOE within a specified year. 48 Fed. Reg. 5458, 5462 (Feb. 4, 1983) (Art. I.7).

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21.

The proposed contract provided that, after DOE had issued its proposed

acceptance ranking, the contract holder was required to submit DCSs at least 63 months before the proposed delivery date: Delivery commitment schedule(s), in the form set forth in Appendix B, annexed hereto and made a part hereof, for delivery of SNF and/or HLW shall be furnished to DOE by Purchaser. After DOE has issued its proposed acceptance ranking, described in paragraph B.6 of Article V of this contract, the Purchaser shall submit delivery commitment schedule(s) at least sixty-three (63) months prior to the delivery date specified therein. DOE shall approve or disapprove such schedules within three (3) months after receipt. In the event of disapproval, DOE shall advise the Purchaser in writing of the reasons for such disapproval and request a revised schedule from the Purchaser, to be submitted to DOE with thirty (30) days after receipt of DOE's notice of disapproval. Purchaser shall have the right to adjust the quantities of SNF and/or HLW + or - 20%, and the delivery schedule +2 months, up to the submission of the final delivery schedule. In addition, the Purchaser may change the specific assemblies to be delivered so long as the SNF meets the acceptance criteria of the contract. These adjustments shall be subject to DOE's prior written approval, which approval shall not be unreasonably withheld. 48 Fed. Reg. 5458, 5463 (Feb. 4, 1983) (Art. IV.B). 22. The proposed Standard Contract also provided for the contract holders'

subsequent submission of Final Delivery Schedules ("FDSs"), which would serve to take the annual allocation defined in a DCS and further refine it to reflect as closely as possible the month(s) and day(s) upon which SNF acceptance would occur in that year: Final delivery schedule(s), in the form set forth in Appendix C, annexed here and made a part hereof, for delivery of SNF and/or HLW covered by an approved delivery commitment schedule(s) shall be furnished to DOE by Purchaser. The Purchaser shall submit to DOE final delivery schedules not less than 12 months prior to the delivery date specified therein. DOE shall approve or -10-

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disapprove final delivery schedule within forty-five (45) days after receipt. In the event of disapproval, DOE shall advise the Purchaser in writing of the reasons for such disapproval and shall request a revised schedule from the Purchaser, to be submitted to DOE within thirty (30) days after receipt of disapproval. 48 Fed. Reg. 5458, 5463 (Feb. 4, 1983) (Art. IV.C). 23. Nowhere in the proposed Standard Contract did DOE propose that it would accept

at a rate equal to the annual generation rate of SNF plus some additional quantity necessary to eliminate the backlog of SNF that would accumulate by January 31, 1998. Nor did DOE propose that it would accept SNF at a rate sufficient to eliminate the need to construct additional storage facilities. 24. The proposed rule provided that written comments had to be submitted by March

7, 1983. 48 Fed. Reg. at 5458. B. Comments Upon The Proposed Rule 1. 25. Industry Involvement In Drafting The Standard Contract Terms

The nuclear utilities and their industry representatives were very involved in the

drafting of the Standard Contract and its terms. Almost immediately after the NWPA was signed into law, industry groups began working upon drafting comments to DOE regarding the contracts that DOE was to enter into with industry. Tr.3906:3-3907:21 (Mills designation, Northern States trial, 11/16/06).3

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2. 26.

Rate Of SNF And HLW Acceptance

DOE received numerous comments in response to the proposed rule, all of which

became a part of the administrative record of the rulemaking. Tennessee Valley Authority ("TVA") stated that "a commitment to do no more than start accepting deliveries by 1998 is empty and meaningless without setting forth some reasonable minimum rate of acceptance which corresponds to the purposes of the Act." DX 501.63 at ARC001 0537. TVA recognized that, "[o]f course, under the priority ranking system in the draft contract, it would be difficult at the time contracts are executed to give each Purchaser assurances of delivery acceptance at any specific rate," but suggested that "[t]his could, however, be done on an industry wide basis." Id. TVA suggested that DOE add a contract provision to provide that "DOE shall start accepting delivery of SNF or HLW not later than January 31, 1998, at not less than the annual rate [at which] SNF and/or HLW is then being produced from civilian nuclear power plants covered by contracts . . . ." Id. 27. Similarly, Edison Electric Institute ("EEI"), an association of investor-owned

utilities, and the Utility Nuclear Waste Management Group ("UNWMG"), a consortium of 43 utilities with specific interests relating to nuclear waste management, expressly recognized that "the contract may not be the appropriate place to commit DOE to a specific, numerical receiving rate." DX 501.34 at ARC001 0334. 28. However, EEI and UNWMG, like several individual utilities, stated that the

Standard Contract should contain a requirement that "DOE will design its facilities with the capacity to receive SNF/HLW at a rate commensurate with the amount of SNF/HLW then being generated together with the accumulated backlog of SNF/HLW." DX 501.34 at ARC001 0334.

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EEI and UNWMG suggested the inclusion in the Standard Contract of the following language, intended to add an additional obligation upon DOE beyond that imposed by the proposed rule: WHEREAS, DOE recognizes that its ability to take delivery of spent nuclear fuel and/or high-level radioactive waste must be commensurate with the amount of such fuel and waste then being generated together with the amount of such fuel and waste previously generated, and consistent with its obligation to take title to such fuel and waste as expeditiously as practicable upon the request of the owner or generator of such fuel and waste. Id. at ARC001 0335; see Tr.1407:20-1409:19 (Shimon). 29. Mr. Shimon agreed at trial that the "Whereas" clause requiring a specific

performance standard, requested by EEI, was not included in the final Standard Contract: Q: Mr. Shimon, just so we're clear about it, you testified earlier that there is no specific rate of acceptance in the Standard Contract, that's correct, isn't it? A: In terms of a metric tons of uranium per year, that's correct.

Q: And there is no requirement that DOE pick up spent fuel at a rate commensurate with the amount being generated along with an obligation to work off the backlog, isn't that right, there's no such language in the contract, correct? A: I believe that's correct.

Tr.1409:23-1410:10 (Shimon). One of plaintiff's experts, Mr. Sieracki, also agreed that the contract does not contain a rate of acceptance. Tr. 4003:22-25 (Sieracki).4 Mr. Sieracki was aware that some utilities wanted to add the two-part test for a rate of acceptance, one that would

Richard Sieracki and Kenneth Metcalfe work for the Kenrich Group ("the Kenrich Group" or "Kenrich"). They were both retained to work on the damages claim on behalf of WEPCO for the litigation. -13-

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result in no additional at reactor storage and working off the back log to the Standard Contract, and that this idea was not added to the contract. Tr. 4004:23-4008:25 (Sieracki). 30. The nuclear industry was concerned that the priority system set forth in the draft

contract did not give priority to reactors that might need to ship fuel offsite to ensure continued operation of their plants. Tr.1249:5-1251:4 (Shimon). Specifically, in the cover letter to its comments, EEI recognized that "[n]o priority is given to utilities who may need to ship SNF to DOE in order to keep their facilities operating (although DOE can, in its discretion, take `emergency deliveries'). Nor is any consideration given to the size of a Purchaser's SNF inventory." DX 501.34 at ARC001 0331. 31. Florida Power & Light Company, in its written comments, stated that DOE

should create a mandatory obligation that would require DOE to accept SNF and HLW at the rates identified in the Mission Plan, once that plan was approved by Congress: The [NWPA] specifically requires the Department of Energy to prepare a Mission Plan detailing a schedule for the construction of repositories and their capacities (Section 301). It is proposed that once this Mission Plan has been approved by Congress (18 months after the enactment of the [NWPA]), it becomes the standard by which contract performance by the DOE is judged. It is suggested that Article V B (3) be modified to include the statement: "Should the DOE fail to meet the schedule and capacities detailed in the approved 1984 DOE Mission Plan, because of Force Majeure or other causes, DOE shall, to the extent permitted by the [NWPA], as it may be amended from time to time, bear the reasonable and necessary incremental costs of storage or alternative disposal incurred by the Purchaser." DX 501.43, Attachment 1 at ARC001 0439 (Testimony & Comments of Michael Cook, VP, Florida Power & Light).

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32.

Many commenters suggested that the proposed contract requirement for DOE to

provide reports regarding acceptance information beginning in 1991 was insufficient to allow the contract holders to plan for their future SNF interim storage needs. EEI and UNWMG stated that DOE instead should issue an annual report, beginning in 1984 (after submission of the Mission Plan to Congress), "setting out its schedules, projected receiving rates, and projected allocations for all purchasers," with the report "cover[ing] at least 10 years of repository operation." DX 501.34 at ARC001 0356 (emphasis added); see DX 501.12 at ARC001 0166 (reports beginning in 1984 "are necessary to provide Northern States Power Company with an adequate planning horizon for interim storage"). Others suggested that, "[t]o assist in planning, DOE should provide in its reports 10 year forward projections of its receiving capacity and purchaser allocations of that capacity." DX 501.69 at ARC001 0627 (emphasis added). 33. EEI and UNWMG also suggested that "[t]he definition of `DOE Facility' (Article

I.11) should be broadened to include destinations other than the repository." DX 501.34, Attachment A at ARC001 0336-37. They stated that "[t]he contract does not recognize the possibility that DOE might send SNF/HLW to an intermediate location (such as a monitored retrievable storage facility) before it goes to a repository" and that, "[t]o accommodate this, the definition of `DOE Facility' should be broadened." Id.; see DX 501.14 at ARC001 0180 (change to contract language "would implicitly recognize DOE's option to reprocess SNF or to utilize Monitored Retrievable Storage prior to permanent disposal"); DX 501.69 at ARC001 0625 ("[t]his change would recognize the possibility of DOE shipping SNF/HLW to an intermediate storage facility such as a monitored retrievable storage facility").

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3. 34.

Plaintiffs' Comments

C.W. Fay, the Vice-President of Nuclear Power for WEPCO, received a copy of

the draft Standard Contract in February 1983, when it was issued in the Federal Register. PX 27. 35. On March 9, 1983, Mr. Fay sent correspondence to DOE in which he noted that

WEPCO had not submitted its own formal comments regarding the draft standard contract but that WEPCO supported the positions taken jointly by EEI, UNWMG, and the Electric Utility Companies' Nuclear Transportation Group. DX 42. In that correspondence, Mr. Fay provided information in response to the February 14, 1983 letter from DOE. Id.; Tr.1238:4-1239:21 (Shimon); PX 30; PX 34. 36. WEPCO did not submit any objections to the proposed Standard Contract,

including objections to the issue of rate of acceptance. Id. C. 37. The Final Rule On April 18, 1983, DOE issued the Standard Contract as a final rule. 48 Fed.

Reg. 16590 (April 18, 1983). 38. The final rule, as promulgated, made several important modifications to the

Standard Contract set forth in the proposed rule. First, although the proposed rule provided that "services provided to the Purchaser by DOE under this contract are related to disposal of SNF," 48 Fed. Reg. 5458, 5462 (Feb. 4, 1983) (emphasis added), that "disposal" was defined as emplacement in a permanent repository, id., and that such "disposal" services would begin by January 31, 1998, id., the final Standard Contract eliminated any requirement for DOE to begin SNF "disposal" in a permanent repository by January 31, 1998. Id. Instead, the final Standard

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Contract only required DOE to begin SNF acceptance by January 31, 1998, after the commencement of "facility" operations: This contract applies to the delivery by Purchaser to DOE of SNF and/or HLW of domestic origin from civilian nuclear power reactors, acceptance of title by DOE to such SNF and/or HLW, subsequent transportation and, with respect to such material, establishes the fees to be paid by the Purchaser for the services to be rendered hereunder by DOE. The SNF and/or HLW shall be specified in a delivery commitment schedule as provided in Article V below. The services to be provided by DOE under this contract shall begin, after commencement of facility operations, not later than January 31, 1998 and shall continue until such time as all SNF and/or HLW from the civilian nuclear power reactors specified in Appendix A, annexed hereto and made a part hereof, has been disposed of. 10 C.F.R. § 961.11, Art. II (emphasis added). 39. The "facility" to which the final Standard Contract refers is either a permanent

repository to be constructed pursuant to the NWPA or such other facility to which SNF might be shipped by DOE prior to its transportation to a permanent repository: The term "DOE facility" means a facility operated by or on behalf of DOE for the purpose of disposing of spent nuclear fuel and/or high-level radioactive waste, or such other facility(ies) to which spent nuclear fuel and/or high-level radioactive waste may be shipped by DOE prior to its transportation to a disposal facility. Id. § 961.11, Art. I.10 (emphasis added). 40. As the preamble to the final rule expressly recognized, the final Standard Contract

would not obligate DOE to have an operational permanent repository by January 31, 1998: The definition of "DOE facility" (Article I.10) was expanded to expressly state, in accordance with the Act, that there may be an interim storage facility (or facilities) which DOE may utilize prior to emplacement in a repository. 48 Fed. Reg. 16590, 16591 (Apr. 18, 1983). -17-

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41.

The final Standard Contract retained the fee requirements identified in the

proposed rule, requiring contract holders to pay the one-time fee for waste generated prior to April 7, 1983, and continuing quarterly fees in the amount of 1.0 mill per kilowatt-hour on electricity generated. 10 C.F.R. § 961.11, Art. VIII. 42. As for the order of SNF acceptance, the final Standard Contract retained the

proposed rule's intention to provide SNF acceptance priority among contract holders upon an "oldest fuel first" basis, 10 C.F.R. § 961.11, Art. VI.B.1, and, like the proposed rule, provided for DOE's issuance of an acceptance priority ranking beginning April 1, 1991. 10 C.F.R. § 961.11, Art. IV.B.5.a. 43. As for identification of the rate of SNF acceptance, although the proposed rule

stated that DOE would "annually provide to the Purchaser pertinent information to support waste disposal program cost projections, project plans and progress reports," 48 Fed. Reg. 5458, 5463 (Feb. 4, 1983), the final Standard Contract provided, "at the request of a substantial number of commenters," 48 Fed. Reg. 16590, 16592 (Apr. 18, 1983), that DOE would issue an annual capacity report "for planning purposes" beginning no later than July 1, 1987 to set forth information regarding "the projected annual receiving capacity for the DOE facility(ies)" for the 10 years following the projected commencement of the initial DOE facility: Beginning not later than July 1, 1987, DOE shall issue an annual capacity report for planning purposes. This report shall set forth the projected annual receiving capacity for the DOE facility(ies)

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and the annual acceptance ranking relating to DOE contracts for the disposal of SNF and/or HLW including, to the extent available, capacity information for ten (10) years following the projected commencement of operation of the initial DOE facility. 10 C.F.R. § 961.11, Art. IV.B.5.b (emphasis added). 44. In the final Standard Contract, DOE did not adopt TVA's request that DOE add a

provision to require DOE to "start accepting delivery of SNF or HLW not later than January 31, 1998, at not less than the annual rate [at which] SNF and/or HLW is then being produced from civilian nuclear power plants covered by contracts . . . ." See 10 C.F.R. § 961.11. 45. Similarly, DOE did not adopt EEI and UNWMG's request for additional

"performance standards" by adding a contract clause to require DOE to accept SNF and/or HLW "commensurate with the amount of such fuel and waste then being generated together with the amount of such fuel and waste previously generated." DX 501.02 (48 Fed. Reg. 16590, 16598 (Apr. 18, 1983)); Tr.3795:4-3798:12 (Morgan designation, Northern States trial, 11/16/06); Tr.2209:9-20 (Morgan designation, TVA trial, 7/14/05).5 46. In the final Standard Contract, DOE inserted the following whereas clause, which

corresponds, in part, to the language that EEI and UNWMG had proposed in its comments: Whereas, DOE has the responsibility, following commencement of operation of a repository, to take title to the spent nuclear fuel or high-level radioactive waste involved as expeditiously as practicable upon request of the generator or owner of such waste or spent nuclear fuel. 10 C.F.R. § 961.11.

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47.

DOE denied these requests to include either an acceptance rate or qualitative

acceptance performance standards in the Standard Contract because DOE did not have enough information regarding how the program would develop to be able provide such a rate. Tr.3798:4-16, 3782:3-20 (Morgan designation, Northern States trial, 11/16/06); Tr.2211:142213:3 (Morgan designation, TVA trial, 7/14/05). 48. DOE was unable to commit to an acceptance rate in the contract because of the

numerous uncertainties that the program faced. In addition to funding constraints from Congress, Mr. Morgan and other program personnel did not know what licensing requirements the NRC would issue, whether there would be intervenors in the licensing proceedings, or, perhaps most importantly, what type of facility would be designed and built. Tr.3782:3-20 (Morgan designation, Northern States trial); Tr.2220:9-2221:17 (Morgan designation, TVA trial). 49. Given these uncertainties, DOE chose to defer the development of an acceptance

rate until the program was more developed. By 1987, DOE planned to have selected the repository site. Tr. 3838:3-3839:5 (Morgan designation, Northern States trial, 11/16/06). By 1991, DOE expected to establish a schedule for acceptance. Id. These were the dates to which DOE was willing to commit in the Standard Contract. Tr. 93:19-94:8 (Morgan designation, Northern States trial, 11/15/06). 50. DOE also denied the request that priority be granted to utilities which need to ship

SNF to DOE to keep their plants operating, stating that, "by the time the repository commences operations, utilities will have made adequate preparations to provide on-site storage in order to ensure continued plant operations." 48 Fed. Reg. 16590, 16592 (Apr. 18, 1983).

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51.

DOE did not adopt Florida Power & Light Company's request that DOE add a

contract clause obligating DOE to accept SNF and/or HLW under "the schedule and capacities detailed in the approved 1984 DOE Mission Plan." DX 501.43, Attachment 1 at ARC001 0439. 52. The final Standard Contract also deleted some provisions from the proposed rule

regarding the DCSs, but with the intention only of eliminating redundant provisions. As the "Sectional Analysis of Contract" portion of the final rule provided, DOE's intention was to retain the purpose of the DCSs, as had been defined in the proposed rule: The definition of "delivery commitment" which appeared in the proposed rule (48 FR 5462, Article I.7) has been deleted as this aspect is adequately covered in the contract itself (See Articles IV and V). 48 Fed. Reg. 16590, 16591 (Apr. 18, 1983). 53. Accordingly, adopting the purpose of the DCSs from the proposed rule, the final

Standard Contract established a procedure through which, after DOE's issuance of the 1991 Annual Capacity Report ("ACR") and Acceptance Priority Ranking ("APR"), contract holders would be required to begin submission of DCSs (beginning January 1, 1992) for any SNF and/or HLW that they wanted DOE to accept 63 months later: 1. Delivery commitment schedule(s), in the form set forth in Appendix C annexed hereto and made a part hereof, for delivery of SNF and/or HLW shall be furnished to DOE by Purchaser. After DOE has issued its proposed acceptance priority ranking, as described in paragraph B.5 of Article IV hereof, beginning January 1, 1992 the Purchaser shall submit to DOE the delivery commitment schedule(s) which shall identify all SNF and/or HLW the Purchaser wishes to deliver to DOE beginning sixty-three (63) months thereafter. DOE shall approve or disapprove such schedules within three (3) months after receipt. In the event of disapproval, DOE shall advise the Purchaser in writing of the reasons for such disapproval and request a revised schedule from

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the Purchaser, to be submitted to DOE within thirty (30) days after receipt of DOE's notice of disapproval. 2. DOE shall approve or disapprove such revised schedule(s) within sixty (60) days after receipt. In the event of disapproval, DOE shall advise the Purchaser in writing of the reasons for such disapproval and shall submit its proposed schedule(s). If these are not acceptable to the Purchaser, the parties shall promptly seek to negotiate mutually acceptable schedule(s). Purchaser shall have the right to adjust the quantities of SNF and/or HLW plus or minus (+/-) twenty percent (20%), and the delivery schedule up to two (2) months, until the submission of the final delivery schedule. 10 C.F.R. § 961.11, Art. V.B (emphasis added). 54. Unlike the proposed rule, the DCS submission provision of the final Standard

Contract included a requirement that, if DOE found a DCS that a contract holder proposed to be unacceptable, "the parties shall promptly seek to negotiate mutually acceptable schedule(s)." Id. The final Standard Contract also included a "Disputes" clause, the purpose of which was to provide a mandatory administrative mechanism for the resolution of contract disputes arising under the contract: Except as otherwise provided in this contract, any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Purchaser. The decision of the Contracting Officer shall be final and conclusive unless within ninety (90) days from the date of receipt of such copy, the Purchaser mails or otherwise furnishes to the Contracting Officer a written appeal addressed to the DOE Board of Contract Appeals (Board). . . . 10 C.F.R. § 961.11, Art. XVI.A (emphasis added).6

In its comments upon the proposed Standard Contract, EEI recognized that the Disputes clause would function to resolve any differences between the parties concerning DCSs. DX 501.34 at ARC001 0346. -22-

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55.

The final Standard Contract, like the proposed rule, contained (1) language

providing for the submission of FDSs after the submission and approval of DCSs and (2) a new sentence that required the parties "promptly [to] seek to negotiate mutually acceptance schedules" if the FDS that DOE was willing to approve was unacceptable to the contract holder: Final delivery schedule(s), in the form set forth in the Appendix D, annexed hereto and made a part hereof, for delivery of SNF and/or HLW covered by an approved delivery commitment schedule(s) shall be furnished to DOE by Purchaser. The Purchaser shall submit to DOE final delivery schedules not less than twelve (12) months prior to the delivery date specified therein. DOE shall approve or disapprove a final delivery schedule within forty-five (45) days after receipt. In the event of disapproval, DOE shall advise the Purchaser in writing of the reasons for such disapproval and shall request a revised schedule from the Purchaser, to be submitted to DOE within thirty (30) days after receipt of DOE's notice of disapproval. DOE shall approve or disapprove such revised schedule(s) within sixty (60) days after receipt. In the event of disapproval, DOE shall advise the Purchaser in writing of the reasons for such disapproval and shall submit its proposed schedule(s). If these are not acceptable to the Purchaser, the parties shall promptly seek to negotiate mutually acceptable schedule(s). 10 C.F.R. § 961.11, Art. V.C. 56. The final Standard Contract contained an integration clause, precluding reliance

upon any representation, promise, or condition not expressly incorporated into the contract: This contract, which consists of Articles I through XXII and Appendices A through G, annexed hereto and made a part hereof, contains the entire agreement between the parties with respect to the subject matter hereof. Any representation, promise, or condition not incorporated in this contract shall not be binding on either party. No course of dealing or usage of trade or course of performance shall be relevant to explain or supplement any provision contained in this contract. 10 C.F.R. § 961.11, Art. XXII.A.

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57.

The final Standard Contract did not contain any language that expressly required

DOE to accept fuel at a rate that would preclude the need for expenditures upon at-reactor storage after January 31, 1998, at a rate equal to the annual generation rate of SNF plus an amount sufficient to work off the backlog of fuel that would have accumulated by January 31, 1998, or at any specific numerical acceptance rate. See 10 C.F.R. § 961.11. 58. The final Standard Contract contained an express recognition that its terms "had

been developed in the light of uncertainties necessarily attendant upon long-term contracts." 10 C.F.R. § 961.11, Art. XV. D. 59. WEPCO's Execution Of The Standard Contract WEPCO did not refuse to sign the contract or sue DOE for developing a contract

without a rate of acceptance. Tr.1449:10-1450:17 (Shimon). 60. WEPCO did, however, send correspondence to DOE on June 3, 1983, several

weeks before it signed the Standard Contract. PX 38. In that correspondence, signed by Sol Burstein, WEPCO's executive vice-president, WEPCO identified its disagreement with the process for generating the one mill fee associated with the contract: While you have made it clear in your letter that you are not interested in receiving comments on the Final Rule and/or the disposal contract, we are, nevertheless, compelled to point out your inappropriate, and unjustifiable, adoption of "gross" kilowatt-hours of generation as the basis for assessing the one mil fee. PX38 at COF-003-0626. 61. On June 16, 1983, WEPCO executed its Standard Contract with DOE, which

covered the SNF generated at the Point Beach Nuclear Power Plant ("Point Beach" or PBNP"),

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and which contained essentially the same terms and conditions as the final rule promulgated by DOE on April 14, 1983. See DX 169A. 62. Soon after WEPCO signed the Standard Contract, WEPCO challenged the basis

for the fee that it paid to DOE pursuant to the contract. DX528: Tr.1430:6-24 (Shimon). When WEPCO disagreed with an interpretation of the Standard Contract, it challenged it, in the case of the fee issue, by filing a complaint right away. Id. E. 63. Industry Activities Following The Execution Of The Standard Contract After the contracts were signed, the industry continued to pursue the issue of

incorporating additional performance standards in the Standard Contract. In September 1983, Mr. Zabransky attended numerous industry meetings with DOE during which the need for such a rulemaking was discussed: I believe there were several attempts and at least one that ­ it was a continuous theme at meetings with DOE, to lobby for such inclusion in the contract. I know there was at least some set of correspondences from the industry that was proposing, on many of the contracts, to include performance standards. I think this was a euphemism that was used, but basically, it was a rate type of amendment. Tr.721:9-17 (Zabransky). As Mr. Zabransky further testified, the industry continued to lobby DOE because there was no rate included in the contract. Tr.721:18-722:7 (Zabransky). 64. At an informational meeting held in December 1983 with the nuclear industry,

Mr. Mills of EEI explained that, in the contract, DOE had promised to take SNF "at some unspecified rate" in the future and that the industry expected to initiate a petition for rulemaking in the future to define additional contractual performance assurances: In return for the money within the contracts, DOE has promised that it will take the nuclear waste some unspecified day, at some -25-

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unspecified rate, hopefully starting in 1998. The DOE promise must be carried out, and it is our task as contract holders to do everything we can to assure that it is achieved. * * *

We really were never under an illusion that we would get a fair and equitable contract with DOE, with firm commitments and detailed performance standards, with penalties for non-performance. We were not really looking for that, however, there were many concerns expressed by the utilities that were not resolved, as we believed equitably during the contract generation process. Because several concerns were not handled satisfactorily, we fully expect to see a petition initiated for rule-making to achieve a more reasonable understanding on several issues. The money question is not involved. It is a matter of some of the performance assurances, to include some of the things we heard this morning which were not embodied in the contract. DX 493 at SN069619; Tr. 3924:18-3925:9 (Mills designation, Northern States trial, 11/16/06), (one of those performance standards was the rate of acceptance); Tr.1414:1-1416:21 (Shimon). 65. On or about January 1984, UNWMG distributed a draft petition for rulemaking to

be submitted to DOE. Tr.3441:19-3444:3 (Supko). The accompanying draft supporting memorandum noted that DOE had rejected its requests for additional performance standards in the rulemaking on the Standard Contract and urged that DOE provide for a minimum receiving rate for SNF ­ an annual receiving rate not less than the rate at which SNF is being discharged ­ and that DOE commit to accept the entire backlog of SNF over a ten year period. Tr.720:10722:7 (Zabransky). 66. In April 1987, UNWMG submitted to the DOE contracting officer a request that

the Standard Contract be "interpreted, clarified or amended to include additional performance standards by which DOE's progress may be evaluated." DX 541 at CTR-006-0248; Tr.3932:243935:10 (Mills designation, Northern States trial, 11/16/06) (letter was a request to DOE to -26-

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"reconsider" the issue of the rate of acceptance). Specifically, UNWMG requested that "DOE provide for a minimum receiving rate for SNF ­ an annual receiving rate not less than the rate at which SNF is being discharged -- and that DOE commit to accept the entire backlog of SNF over a ten year period." DX 541 at CTR-006-0249; Tr.1450:15-1451:15 (Shimon) ("I'm pretty confident that I didn't say that the utilities did not ask for a rate of acceptance. In fact, they asked for it quite strongly and did not receive it."); Tr.732:10-735:4 (Zabransky); Tr.5059:135063:1 (Brownstein) (utilities requested insertion of performance standards into Standard Contract because they recognized it did not contain any such standards). 67. DOE responded to this request by letter dated October 2, 1987. DX 545. In

response to the industry's request that DOE commit to minimum receipt rate, the DOE contracting officer explained that, "given the current status of the [waste management system], the Department is unable to make a commitment to a minimum receipt rate of spent nuclear fuel (SNF) which will equal or exceed the annual rate at which SNF is being discharged from reactors." Id. at PNL-028-1143; Tr.5063:9-5067:16 (Brownstein) (because of uncertainties in the program, DOE could not agree to a specific rate). III. DOE'S ISSUANCE OF A STATUTORILY REQUIRED MISSION PLAN, WHICH THE INDUSTRY UNDERSTOOD WAS NOT CONTRACTUALLY BINDING 68. In June 1985, DOE issued a Mission Plan, PX 87, pursuant to the requirements of

42 U.S.C. § 10221 for "submission to the appropriate committees of the Congress." 42 U.S.C. § 10221(b)(3). Although the Mission Plan contained potential acceptance rates based upon various assumptions regarding the availability of two repositories and an MRS facility, these rates were not intended to be contractually binding or to create some obligation upon DOE to

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satisfy some particular acceptance rate, regardless of whether the assumptions in the Plan proved accurate: a. In his cover letter providing the Mission Plan to Congress, Ben Rusche,

Director of OCRWM, stated that the purpose of this plan was to "provide an informational basis sufficient to permit informed decisions to be made in carrying out the repository program and the research, development, and demonstration programs required under this Act." PX 87 at PA140164 (emphasis added); see 42 U.S.C. § 10221 (1982). In the Mission Plan, DOE projected, for informational purposes, that an initial permanent repository would begin operations in 1998 and that a second permanent repository would commence operations in 2006. PX 87 at PA140201 ("Assumptions About Geologic Repositories, A. Number of Repositories, Two"); id. ("Table 2-2 shows a schedule that is based on the current estimated emplacement capacities of the two planned geologic repositories, one of which is currently authorized"). The 1985 Mission Plan also described an improved performance system that would include An MRS facility that could start receiving SNF in 1996, two years ahead of the first repository (although DOE recognized that it lacked statutory authority to pursue this approach absent congressional approval of the MRS proposal to be submitted pursuant to section 10161), which would "service[] the first repository." PX 87 at PA-140201-205. b. Studying an assumption that it would have two repositories and an MRS,

DOE projected in the Mission Plan, in Tables 2-2 and 2-3, schedules at which it could potentially accept SNF. Id.. However, these acceptance rates were not intended to be contractually binding, see, e.g., PX 87 at PA-140205; Tr.5153:9-18 (Kouts) (no relationship between Mission Plan schedules and DOE's contractual obligation), and DOE had declined the

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utilities' request to include in the Standard Contract a provision making the acceptance rates identified in the 1985 Mission Plan binding. See DX 501.43, Attachment 1 at ARC001 0439. c. In the Mission Plan, DOE expressly represented that "[i]t should be

emphasized that this schedule is only an approximation of how the system may operate and is subject to considerable variation" and that "DOE will further define and specify the system acceptance parameters as the program progresses." PX 87 at PA-140205; see Tr.5152:6-5153:8 (Kouts). Further, in the Mission Plan, DOE advised Congress that it would not begin to publish firm waste acceptance schedules until 1991, as follows: Under the terms of the contracts for disposal services that have been signed between the DOE and the utilities, an annual capacity report with projected annual receiving capacities and rankings will be issued by the DOE beginning in 1987. In 1991, the DOE will begin to publish firm waste acceptance schedules for individual reactors, including shipment allocations. PX 87 at PA-140205; Tr.1466:8-1467:12 (Shimon). Accordingly, in the Mission Plan, DOE pointed to the issuance of the 1991 ACR as the beginning of the process for scheduling deliveries from utilities. Tr.5153:24-5154:15 (Kouts). d. In section 2.7 of the 1985 Mission Plan, DOE expressly represented that

the estimated schedule contained in it, based upon particular assumptions, was only an approximation of the how the system "may operate," that it was subject to considerable varia