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

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

No. 00-697C

WISCONSIN ELECTRIC POWER COMPANY'S PROPOSED FINDINGS OF FACT

Of Counsel: Donald J. Carney Mary Rose Hughes Emily C.C. Poulin Jay L. Griffiths Perkins Coie LLP 607 Fourteenth Street, N.W. Washington, D.C. 20005-2003 (202) 434-1675

Richard W. Oehler Perkins Coie LLP 1201 Third Avenue, Suite 4800 Seattle, Washington 98101-3099 (206) 359-8419 Attorneys for Plaintiff WISCONSIN ELECTRIC POWER COMPANY

Dated: December 21, 2007

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TABLE OF CONTENTS Page

I. II.

INTRODUCTION AND OVERVIEW OF WE'S DAMAGES................................... 1 BACKGROUND.......................................................................................................... 3 A. B. WISCONSIN ELECTRIC POWER COMPANY............................................ 3 POINT BEACH NUCLEAR POWER PLANT............................................... 4

III. IV.

WE TRIAL WITNESSES (IN THEIR ORDER OF TESTIMONY) ........................ 11 THE NWPA AND THE STANDARD CONTRACT................................................ 22 A. WE CLOSELY FOLLOWED THE FEDERAL GOVERNMENT'S DISCHARGE OF ITS RESPONSIBILITY TO DISPOSE OF SPENT NUCLEAR FUEL .......................................................................................... 22 DEVELOPMENT OF THE NWPA AND THE STANDARD CONTRACT .................................................................................................. 25 DOE'S POST-CONTRACT CONDUCT CONFIRMED THE PARTIES' UNDERSTANDING.................................................................... 45 WE'S POST-CONTRACT EXECUTION ACTIVITIES .............................. 52

B. V.

THE STANDARD CONTRACT AND THE PARTIES' UNDERSTANDING ....... 29 A. B.

VI. VII.

BY THE END OF 1987, WE BECAME EXTREMELY CONCERNED WITH THE DOE'S IMPLEMENTATION OF THE NWPA .................................... 55 BY 1988, WE'S CONCERN WITH DOE'S LACK OF PERFORMANCE HAD INCREASED, AND WE BEGAN INVESTIGATING LONG-TERM SNF STORAGE PLANNING.................................................................................... 62 IN 1989, WE IDENTIFIED DRY STORAGE OF SNF AS THE MOST COST-EFFECTIVE AND FLEXIBLE POTENTIAL SOLUTION TO THE LONG-TERM UNCERTAINTY OF DOE'S PERFORMANCE .............................. 68 WE CONTINUED TO PURSUE DRY STORAGE IN 1990 BECAUSE OF DOE'S LACK OF PROGRESS.................................................................................. 74 THE 1991 ACR USED AN ANNUAL ACCEPTANCE RATE OF 900 MTU THAT WAS ILLEGAL UNDER EXISTING LAW ................................................. 76 IN 1991, WE APPLIED TO THE PSCW FOR AUTHORITY TO IMPLEMENT DRY STORAGE BECAUSE DOE WOULD NOT PERFORM UNTIL WELL AFTER 1998, IF AT ALL ................................................................ 82 DURING THE 1990S, DOE'S PLANS FOR AN MRS FAILED, DOE ANNOUNCED THAT IT HAD NO OBLIGATION TO TIMELY PERFORM, AND DOE SUSPENDED THE DCS/FDS PROCESS....................... 105

VIII.

IX. X. XI.

XII.

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TABLE OF CONTENTS (continued) Page

XIII.

IN 1995, WE COMMITTED TO DRY STORAGE BY CONSTRUCTING AN ISFSI.................................................................................................................. 111

XIV. IN 1996, WE EXPERIENCED A VSC-24 CASK LOADING INCIDENT AND DEVOTED SUBSTANTIAL RESOURCES TO RECOVER THE ABILITY TO USE DRY STORAGE ...................................................................... 116 XV. IN 2000, WE APPLIED TO THE PSCW FOR ADDITIONAL CASKS AND SELECTED THE NUHOMS SYSTEM FOR WE'S FUTURE STORAGE NEEDS ..................................................................................................................... 129

XVI. IF DOE HAD PERFORMED, WE WOULD NOT HAVE BUILT A DRY STORAGE FACILITY ............................................................................................ 140 A. B. C. D. E. WE COULD HAVE OPERATED AT LEAST INTO 1998 AND, IF NECESSARY, INTO 1999 WITHOUT DRY STORAGE.......................... 142 WE HAD THE ABILITY TO MAKE 1500 POOL SPACES AVAILABLE ............................................................................................... 148 DOE'S ACCEPTANCE OF SPENT FUEL IN THE NON-BREACH WORLD ....................................................................................................... 152 WE REGARDED FULL CORE RESERVE AS A GOOD OPERATING PRACTICE ........................................................................... 155 WE WOULD LIKELY HAVE USED A TEMPORARY RACK IN THE CASK LAYDOWN AREA TO MAINTAIN FCR............................. 159

XVII. WE INVESTIGATED PRIVATE FUEL STORAGE AND RELATED OPTIONS ................................................................................................................. 177 XVIII. THE NRC LEVIED LICENSING, INSPECTION, AND GENERIC FEES ON POINT BEACH................................................................................................. 180 XIX. WE ESTABLISHED ITS DAMAGES TO A REASONABLE CERTAINTY....... 193 A. B. C. D. XX. INTERNAL LABOR ................................................................................... 198 GENERAL AND ADMINISTRATIVE COSTS ......................................... 201 WEIGHTED AVERAGE COST OF CAPITAL ("WACC") CLAIM......... 202 WE CALCULATED THE TEMPORARY RACK OFFSET IN THE NON-BREACH WORLD WITH REASONABLE CERTAINTY ............. 206

WE MAY REASONABLY RELY UPON REBUTTAL EVIDENCE ................... 207

XXI. DOE CASK LOADING OFFSET ........................................................................... 210 XXII. ADDITIONAL FINDINGS ..................................................................................... 212 - ii -

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

No. 00-697C

WISCONSIN ELECTRIC POWER COMPANY'S PROPOSED FINDINGS OF FACT Plaintiff Wisconsin Electric Power Company ("WE" or "Wisconsin Electric") submits the following post-trial Plaintiff's Proposed Findings of Fact ("PFF"). I. INTRODUCTION AND OVERVIEW OF WE'S DAMAGES 1. As required by the Nuclear Waste Policy Act of 1982, Pub. L. No. 97-425, 96

Stat. 2201 (1983) ("NWPA") (codified as amended at 42 U.S.C. §§ 10101-10270), the U.S. Department of Energy ("DOE") entered into Contract No. DC-CR01-83NE44425 ("Contract" or "Standard Contract") with WE. In return for very substantial fees, DOE assumed responsibility for storage and disposal of WE's spent nuclear fuel ("spent fuel" or "SNF") and high-level radioactive waste ("HLW") "beginning not later than January 31, 1998." WE has paid all fees due under the Standard Contract, a total of $215.2 million as of December 31, 2006. - Tr. 2610:2-5 (Farron) ($215 million in fees paid as of 9/25/07). - Nuclear Waste Policy Act of 1982, Pub. L. No. 97-425, 96 Stat. 2201 (1983) (codified as amended at 42 U.S.C. §§ 10101-10270). - PX 41 (Standard Contract).

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2.

DOE breached its contractual obligation to WE to commence acceptance of

spent fuel and HLW by January 31, 1998 and thereafter. In fact, DOE has failed to accept any of WE's spent fuel and now indicates that its "best-achievable" schedule for commencement of accepting SNF is 2017 or 2018. - Wis. Elec. Power Co. v. United States, No. 00-697C, Order (Fed. Cl. Oct. 8, 2004). - Northern States Power Co. v. United States, 224 F.3d 1361 (Fed. Cir. 2000); Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336, 1342 (Fed. Cir. 2000) ("The breach involved all the utilities that had signed the contract--the entire nuclear electric industry."). - PX 719 (July 19, 2006 Statement of Edward F. Sproat III, Director, Office of Civilian Radioactive Waste Management ("OCRWM"), U.S. Department of Energy, Before the Subcommittee on Energy and Air Quality, Committee on Energy and Commerce, United States House of Representatives). - Statement of Edward F. Sproat III, Director for Civilian Radioactive Waste Management, U.S. Department of Energy, FY 2008 Appropriations Hearing, March 7, 2007, available at www.ocrwm.doe.gov/info_library/progra m_docs/testimonies/Testimony_3-07-2007.pdf (last visited Dec. 7, 2007). - Southern Nuclear Operating Co. v. United States, 77 Fed. Cl. 396, 402 (2007). 3. Because of the Government's breach, WE has incurred very substantial

damages for investigation, licensing and construction of alternative SNF storage. As detailed below, DOE's partial breach of the parties' Contract has caused WE to incur damages in the amount of $96,541,000 through the time of trial. - Tr. 4661:19-4662:11 (Metcalfe). - PDX 61-Metcalfe 22 (Summary of Total Past Damages, By Category (Through 2/2007) Including Trial Adjustment).

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II. A.

BACKGROUND WISCONSIN ELECTRIC POWER COMPANY 4. Wisconsin Electric Power Company is a wholly owned subsidiary of

Wisconsin Energy Corporation ("WEC"). WEC is listed on the New York Stock Exchange. WE provides electricity to residential and commercial customers in Wisconsin and the Upper Peninsula of Michigan. WE conducts business as We Energies and also is known as Wisconsin Electric. WE is regulated by the Federal Energy Regulatory Commission ("FERC"), the Public Service Commission of Wisconsin ("PSCW") and the Michigan Public Service Commission. - Tr. 102:21-103:13 (Baumann). - Tr. 4550:14-25 (Metcalfe). - PX 801 (WEC Forms 10-K). 5. In 1970, the Nuclear Regulatory Commission ("NRC") issued a license to WE

to operate the first unit at Point Beach Nuclear Power Plant ("Point Beach" or "PBNP") for 40 years, expiring in 2010. In 1973, the NRC licensed WE to operate the second unit, expiring in 2013. In 2005, the NRC subsequently relicensed each unit for an additional 20 years. - Tr. 108:10-16 (Baumann). - PX 1, p. 5 (Facility Operating License). - PX 2, p. 5 (Facility Operating License). 6. The Point Beach Nuclear Plant is a two-unit pressurized water reactor nuclear

power plant. It is located approximately 100 miles north of Milwaukee and 35 miles southeast of Green Bay, adjacent to Lake Michigan. The Point Beach dry storage facility is located approximately one-half mile west of the power plant. - Tr. 107:24-108:5; 110:8-22; 116:17-19 (Baumann).

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7.

Each Point Beach nuclear power unit has one pressurized water reactor. Each

unit is rated at approximately 517 megawatts of power. The latest plant upgrade increased the power generation capacity of each unit to 535 megawatts. Nuclear-generated power supplies approximately 25 percent of WE's power requirements. - Tr. 108:2-9 (Baumann). - Tr. 108:17-21 (Baumann). 8. Until 2000, WE managed Point Beach through its Nuclear Power Department

with personnel located in Milwaukee and at Point Beach. In 2000, WE, along with several other Midwest nuclear power utilities, formed the Nuclear Management Company ("NMC") to operate their nuclear power plants. Besides Wisconsin Electric, initial NMC members included Wisconsin Public Service, Iowa Electric, Northern States Power, and Consumer's Energy. In 2000, WE transferred the Point Beach operating licenses to NMC but continued to own Point Beach through September 2007. WE also continued to handle Point Beach's regulatory affairs. - Tr. 104:17-24 (Baumann). - Tr. 2536:19-24; 2537:7-11 (Farron) (NMC doesn't "have a state regulatory affairs group . . . for . . . work related to Point Beach." Instead, "[i]t was all coordinated or done by Wisconsin Electric."). B. POINT BEACH NUCLEAR POWER PLANT 9. Point Beach uses uranium fuel. Uranium oxide pellets (little-finger sized) that

are composed of U-235 are placed into 12-14 foot metal rods and bundled into assemblies, approximately nine inches square. Assemblies are placed in the reactor core, where fission produces heat, which is converted to steam, which drives turbines and generates electricity. - Tr. 116:20-123:20 (Baumann). - PDX 4 (Model: nuclear fuel assembly).

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10.

Once spent fuel assemblies are discharged from the reactor core, they are

highly radioactive and very hot from decay heat. The spent fuel assemblies are discharged from the reactor core into the spent fuel pool, where the spent fuel assemblies cool for a minimum of five years. - Tr. 115:4-116:19; 128:22-131:17 (Baumann). - PX 346, p. WISC00003550, Figure C (Aug. 1994 Final Environmental Impact Statement ("FEIS")). 11. Each reactor core at Point Beach can hold 121 fuel assemblies, a "full core."

Some of the fuel in the core is replaced during periodic refueling activities. Point Beach operated on 12-month refueling cycles prior to 1998 but currently operates on an 18-month refueling cycle. Refuelings for the two reactors are staggered over time, and the two reactors are refueled at different times. The length of the refueling cycle affects the number of assemblies removed in a given refueling. The current discharge size is typically 36 assemblies for the 18-month cycle and was typically 28 assemblies for a 12-month cycle. - Tr. 100:9-11; 123:2-125:22 (Baumann). - Tr. 125:9-12 (Baumann) (explaining that, for annual refueling cycles, 28 assemblies are discharged per year per reactor). - PX 236, ESR p. 59 (Nov. 1991 ISFSI application and ESR) (28 assembly discharges for 12-month cycles). - Tr. 646:15-24 (Zabransky) (28 assembly discharges). 12. Point Beach has one spent fuel pool located between the two power units in

the Auxiliary Building. The spent fuel pool is about 68 feet by 18 feet and 25 feet deep. Spent fuel assemblies are placed in egg crate-like racks in the pool, and the pool is filled with borated water. The boric acid in the borated water is used to control the reactivity, or criticality, of the spent fuel assemblies stored in the pool. The racks in the PBNP pool also contain a poison, known as Boraflex, to address criticality concerns. WE used to have

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mandatory, periodic testing of the effectiveness of the Boraflex periodically. Point Beach, however, no longer relies on the Boraflex for criticality protection and, therefore, no longer conducts Boraflex testing. Point Beach also could have deleted this requirement earlier. - Tr. 132:7-135:9; 143:2-150:13 (Baumann). - Tr. 1714:7-24 (Becka). - Tr. 821:6-823:16; 824:18-830:16; 893:8-12; 909:25-910:17 (Hennessy). - Tr. 830:17-831:4 (Hennessy) ("Q: Do you have to test Boraflex at Point Beach currently? A: Currently, we do not test the Boraflex at Point Beach. We used to have to test the Boraflex, but we have a new analysis for our spent fuel pool that does not rely on use of Boraflex for criticality, so we don't test our Boraflex anymore. Q: Is there any reason why you could not have done that change earlier, to not test Boraflex? A: No, that change could have been done earlier."). - PX 318, Figure 2.3 (Dec. 1993 Facility Waste Transportation Services Planning Document). - PX 346, p. WISC00003627, Figure 6-1 (Aug. 1994 FEIS). - PX 640, p. WISC00060265-67, section 3.1.2 (Oct. 8, 2002 Point Beach Nuclear Plant, DBD-05 Fuel Handling System Design Basis Document, Rev. 2). - PX 727 (Drawing 128-57, Point Beach Spent Fuel Pool). - PX 728.9 (Drawing of Point Beach Nuclear Plant Spent Fuel Pool). - PX 728.28 (Drawing of Point Beach Nuclear Plant Spent Fuel Pool). - PX 740.034 (Point Beach Nuclear Plant Photo - Spent Fuel Pool with Racks and Fuel Handling Tools). - PX 740.040 (Point Beach Nuclear Plant Photo - Spent Fuel Pool with Cask Pit Laydown Area). - PX 728.1 (Drawing of Point Beach Spent Fuel Pool).

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a.

"Pool capacity" refers to the maximum number of SNF assemblies that

can be stored in the pool. Point Beach is licensed to store 1502 SNF assemblies in its spent fuel pool, and there are currently 1500 usable SNF spaces in the Point Beach pool. WE gained access to spaces previously blocked by catwalks overhanging the pool through the use of an offset fuel handling tool. Two spaces in the pool are not considered accessible without modifications to hinges on the fuel transfer canal doors. Point Beach has had 1500 usable spaces since the early 1990s. - PFF 168-172. - PX 381, p. HQR3640809 (Nuclear Fuel Data Form RW-859 for Point Beach Unit 1). - Tr. 138:6-139:12; 142:18-143:1 (Baumann) (discussing PX 381). - Tr. 144:22-145:5 (Baumann). - PX 674 (Point Beach Nuclear Plant Operating Instructions, Offset Spent Fuel Handling Tool, OI 4A Safety Related, Revision 2) ("The offset fuel handling tool is a unique fuel handling tool that allows movement of fuel assemblies 3 rows beyond normal bridge travel. This tool is only used for rows 1, 2, 76, 77, and 78."). - Tr. 856:14-857:2; 858:3-16; 895:23-896:5 (Hennessy). - Tr. 1230:5-12; 1231:20-22 (Shimon). - PX 740.047 (Point Beach Nuclear Plant Photo - Entrance to Transfer Canal). b. "Full core reserve" or "FCR" refers to the maintenance of sufficient

unused space in the pool to discharge all assemblies from a reactor core. WE does not have a policy of preserving FCR, nor is FCR a requirement, and Point Beach has operated without FCR on numerous occasions. - PFF 178-181. - Tr. 1977:9-1978:9 (Becka).

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- Tr. 2091:3-22 (Holzmann). - Tr. 893:13-894:15 (Hennessy). - Tr. 1531:10-1532:2; 1614:17-20 (Krieser). - PDX 60-Sieracki 17. c. A section of the Point Beach pool known as the cask pit area, or cask

laydown area, is used for the loading and unloading of casks. The cask pit area does not contain permanent spent fuel racks. - Tr. 133:18-20; 146:4-20 (Baumann). - Tr. 1761:20-1762:5 (Becka). - Tr. 826:9-14 (Hennessy). - PX 740.034 (Point Beach Nuclear Plant - Cask Pit Laydown Area). - PX 740.040 (Point Beach Nuclear Plant Photo - Cask Pit Laydown Area). d. Point Beach can move heavy loads in and out of the spent fuel pool

with the use of the primary auxiliary building's crane, which is a single failure-proof crane. Such loads include the NUHOMS transfer cask, for which WE has a calculation qualifying the cask loading area for the weight of that load. - Tr. 831:5-834:13; 835:4-837:20; 846:4-22 (Hennessy). - PX 740.58 (Point Beach Nuclear Plant Photo ­ Auxiliary Building Crane). - PX 1045, pp. WISC1045-0006 to 0010 (Dec. 28, 2005 Point Beach Nuclear Plant Calculation No. 2003/0069). 13. The Point Beach spent fuel pool is a part of the plant Fuel Handling System

("FHS"). The spent fuel pool stores spent nuclear fuel assemblies discharged from the reactors. Point Beach's Reactor Engineering group is responsible for the FHS, spent fuel cooling, and purification and flux map systems. With regard to dry fuel storage, Reactor

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Engineering selects the fuel assemblies to be loaded into the dry storage casks and plans and assists Operations staff with the actual loading of the fuel assemblies. - Tr. 815:9-816:24; 818:8-821:5; 822:14-19; 823:17-21; 834:12-24 (Hennessy). - PX 652, p. WXE0011043 (Point Beach Nuclear Plant Units 1 & 2 Final Safety Analysis Report). - PX 640, p. WISC00060265 (Point Beach Nuclear Plant, DBD-05 Fuel Handling System Design Basis Document, Rev. 2). 14. Point Beach was designed based on the assumption that SNF generated at the

plant would only be stored on-site for a short time prior to shipment off-site for reprocessing. Reprocessing of SNF involves separating the reusable fuel products from the waste products, storing or disposing of the waste products, and making the reusable products available for new fuel. As a result of the then-use of reprocessing, the initial storage capacity of the original Point Beach pool was relatively low ­ only spaces for 208 assemblies in the entire pool. - Southern Nuclear, 77 Fed. Cl. at 401. - Yankee Atomic Elec. Co. v. United States, 73 Fed. Cl. 249, 253-55 (2006). - Tr. 2163:18-25 (Porter) ("[W]ith the expectation of reprocessing, Point Beach had relatively limited capacity in its spent fuel pool, it was expected that the fuel would remain on-site for only a short period of time before it would be shipped off-site for reprocessing."). - Tr. 1226:8-1227:9; 1228:24-1229:1 (Shimon). 15. In 1977, President Carter suspended U.S. commercial reprocessing of SNF,

causing an enormous spent fuel storage problem for nuclear power utilities. When President Carter suspended reprocessing, he announced that the Government would take full responsibility for spent fuel, and, in fact, the Government undertook the development of a solution for the disposition of SNF from commercial nuclear power plants. In the meantime,

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given President Carter's suspension of reprocessing, WE was unable to reprocess any spent fuel. Therefore, WE sought and received the NRC's approval to rerack the Point Beach spent fuel pool ­ increasing the licensed pool capacity to 1502 assemblies. Reracking is the replacement of existing SNF storage racks in the spent fuel pool with new racks capable of holding more spent fuel assemblies. WE had reracked the pool once previously from 208 to 351 spaces. At the time of WE's second rerack, WE also increased the cooling capacity of the Point Beach spent fuel pool to accommodate the increased licensed pool capacity. - PX 10521 (Mills Trial Desig. Yankee Atomic Tr. 274:14-275:23 ("[I]n 1977, President Carter at the time stated in April of 1977 that reprocessing of civilian nuclear fuel would be indefinitely deferred.")). - PX 1052 (Mills Trial Desig. Pac. Gas & Elec. Co. v. United States Tr. 125:24-127:18 (noting the nuclear utility industry's "considerable anxiety" in response to the moratorium because there was "no good alternative" for the storage and disposition of SNF, and noting the federal program to develop a solution for disposal of SNF in response to the suspension of reprocessing)). - Tr. 1228:12-1229:4; 1229:18-1230:12 (Shimon). - Tr. 2164:24-2166:3 (Porter) (explaining the impact of reprocessing on the design of Point Beach and the impact of the suspension of reprocessing on Point Beach's planning for SNF storage). - Tr. 313:11-314:6 (Link) (discussing increased cooling capacity). - PX 11 (April 4, 1979 Letter from NRC to WE transmitting amendments no. 35 and 41 to Facility Operating License). 16. In 1995, WE constructed and placed into operation the dry storage facility at

Point Beach, sometimes referred to as an Independent Spent Fuel Storage Installation

WE designated deposition and trial testimony during the pretrial proceedings in this case and also in post-trial motions. The Court admitted WE's pretrial designations as PX 1052. Tr. 6403:20-6407:8 (Oct. 16, 2007). WE cites to excerpts from PX 1052 by noting the witness's last name, whether the designation is of trial or deposition testimony, the identifying date of the deposition or the identifying name of the trial, and the transcript citation. WE also filed other designated testimony separately.

1

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("ISFSI"). As of the time of trial, WE had loaded and placed in service 16 Ventilated Storage Container ("VSC") -24 dry storage casks and nine NUHOMS dry storage systems at the ISFSI. - Tr. 44:20-45:1 (Baumann). - Tr. 2745:16-2746:17 (Anundson). - PX 1029, p. KRGWE003846 (ISFSI Plan View). III. WE TRIAL WITNESSES (IN THEIR ORDER OF TESTIMONY) 17. Michael Baumann provided an overview of Wisconsin Electric and the Point

Beach Nuclear Plant and discussed fuel management options used and considered by Wisconsin Electric over the years. He has a B.S. in nuclear engineering from the University of Wisconsin in Madison and has worked for Wisconsin Electric or NMC since 1986. During his tenure with Wisconsin Electric and NMC, Mr. Baumann has continuously been involved with the Point Beach plant, first as a radiological engineer, then with responsibilities for nuclear licensing, then as Manager of Nuclear Fuel Services, then as Manager of HLW issues, and ultimately as Manager of Nuclear Fuel Commodities and Supply. - Tr. 96:8-99:8; 105:23-106:22 (Baumann). 18. Robert Link was the Vice President of WE's Nuclear Department from May

1992 to late 1996. Mr. Link attained a B.S. in nuclear engineering from Kansas State University. Mr. Link also participated in continuing education courses in finance and business from the University of Wisconsin and in strategic marketing courses at Harvard University. Mr. Link worked at Wisconsin Electric from the time he graduated from Kansas State University until he left WE in late 1996, except for a short stint at Impell Corporation. Mr. Link testified extensively regarding his continuing evaluation of the best course of action

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for WE to take in response to DOE's expected failure to begin accepting spent fuel from Point Beach in 1998. - Tr. 312:19-313:1; 315:16-316:23; 323:17-324:7 (Link). 19. David Zabransky has been a DOE employee since July 1994 and was the

Government's representative at trial. Mr. Zabransky served as the Contracting Officer's Technical Representative from approximately 1995 to 2002 and has served as the Contracting Officer for the Standard Contract since mid-2002. Mr. Zabransky has testified on behalf of DOE in seven prior trials and in more than 30 depositions. Prior to his employment with DOE, Mr. Zabransky received a B.S. in Civil Engineering from Marquette University. He then worked at WE from 1978 until June 1994 in various engineering and contract administration roles. Mr. Zabransky worked in the Nuclear Department from 1984 until 1994. - Tr. 567:2-17; 586:24-587:1; 5661:18-22 (Zabransky). - Tr. 585:17-586:23 (Zabransky) (trials and depositions at which Mr. Zabransky has previously testified). 20. William Hennessy testified regarding the spent fuel pool at Point Beach based

on his extensive experience in Point Beach's Reactor Engineering group, where he served as Supervisor for many years. Mr. Hennessy has been employed at Point Beach since September 1989. He has a B.S. and a master's degree in nuclear engineering from Iowa State University. He has been a licensed professional engineer since approximately 1986. - Tr. 810:1-23 (Hennessy). a. Mr. Hennessy has numerous plant operating certifications and has

worked on spent fuel pool issues at three other nuclear plants (Plant Vogtle in Georgia, the Duane Arnold plant in Iowa, and the Seabrook plant in New Hampshire) prior to his employment at Point Beach. Initially, he was a trainer at Point Beach.

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- Tr. 810:24-815:8 (Hennessy). 21. Howard Shimon was responsible for spent fuel storage at WE from 1976 to

1990. Mr. Shimon has a B.S. in industrial engineering and an M.B.A. from Cornell University. He joined WE in September 1971 and continued with WE until February 1995. He was the Manager of Nuclear Fuels and Administrative Services from approximately 1985 until 1990. In that capacity, he was responsible for departmental budgets and administrative services, including issues related to the Standard Contract. Mr. Shimon testified regarding WE's two rerackings of the Point Beach spent fuel pool; his involvement and leadership in nuclear industry groups, particularly regarding enactment of the NWPA and promulgation and implementation of the Standard Contract; WE's SNF management considerations and decisions in the late 1980s; and the composition of WE's Nuclear Power Department from the late 1970s until the early 1990s. - Tr. 2161:12-2162:6 (Porter). - Tr. 1219:20-1221:5 (Shimon). 22. Gary Krieser received a B.S. in nuclear engineering from the University of

Wisconsin at Madison in 1972. Mr. Krieser began working at Wisconsin Electric in the summer of 1977. Mr. Krieser served as the Manager of Industry and Regulatory Services from 1992 until late 1996 and reported directly to Mr. Link in that position. Mr. Krieser also was the Director of Nuclear Fuel Services for NMC from 2000 until July 2002, at which time he joined Wisconsin Electric Power as Manager of Project Quality Assurance. Mr. Krieser testified regarding WE's spent fuel management activities from 1992 through 2000. - Tr. 1506:18-22; 1509:5-9; 1511:20-1512:4; 1514:3-19; 1515:111518:4 (Krieser). 23. James Becka, who has worked at Point Beach since 1992, is currently the

Project Manager, Dry Fuel Storage Group. In that position, he supervised the fabrication of

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VSC-24 Cask Nos. 13-16 and the procurement of all of the NUHOMS units at Point Beach. Mr. Becka has been involved in the loading of all dry storage units in place at the Point Beach dry storage facility except for the first two VSC-24 casks. Mr. Becka has a B.S. in civil engineering from Purdue University and has been a licensed professional engineer since 1986. He has attained the rank of Captain in the U.S. Navy Reserve and has commanded several units, including a nuclear submarine squadron and nuclear submarine base. Mr. Becka testified regarding WE's and NMC's dry storage groups, VSC-24 and NUHOMS cask loading campaigns, and the reasons why PBNP decided to shift to the NUHOMS dry storage system. - Tr. 1679:3-1681:15; 1683:21-1685:3; 1699:13-1700:3; 1771:191774:23; 1790:20-1802:23 (Becka). 24. Michael Holzmann is currently PBNP Shift Manager in the Operations group.

In 1985, Michael Holzmann graduated from the University of Wisconsin, Eau Claire, with degrees in math and physics. Mr. Holzmann then served 6.5 years in the U.S. Navy as a Nuclear Submarine Officer. He then took a position at Point Beach and has worked there since 1992. Since 1999, he has also served as Dry Cask Loading Supervisor. He testified regarding fabrication of dry storage casks, VSC-24 and NUHOMS cask loadings, problems PBNP encountered with the use of the VSC-24, the impact of those problems on PBNP's operations, PBNP's recovery efforts in connection with the VSC-24, and costs WE incurred in its cask loading campaigns and VSC-24 cask recovery efforts. - Tr. 2002:1-2017:24 (Holzmann). 25. David Porter, after serving in the Navy nuclear program, joined WE's nuclear

projects office in 1969. He worked at WE until he retired in 2002. During his tenure at WE, Mr. Porter served as an inside director of Wisconsin Electric from 1989 to 2000 and on other Boards of Directors. As Senior Vice President at WE in 1991, Mr. Porter signed WE's PSCW dry storage project application. He had responsibility at that time for the Corporate

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Planning Department, which was the economic regulatory interface for WE to the PSCW and other regulatory bodies. Mr. Porter testified about WE decision-making leading to dry storage, the process of preparing the 1991 application to the PSCW, and the contentious and lengthy process before the PSCW granted WE authority to build dry storage. - Tr. 2149:5-2160:13 (Porter). 26. Scott Vance received an engineering degree from Idaho State University in

1985 and master's degrees in nuclear engineering and technology and public policy from the Massachusetts Institute of Technology in 1988. Mr. Vance worked for various contractors performing OCRWM contracts from 1988 to 2000, and assisted in the preparation of documents required by the Standard Contract. Mr. Vance principally reported to Mr. Alan Brownstein who worked at DOE. As a DOE contractor at the Pacific Northwest Nuclear Laboratory, Mr. Vance worked on development of the DOE acceptance rate for the 1991 Annual Capacity Report ("ACR"). Mr. Vance later received a law degree and now works as a nuclear licensing attorney for the Tennessee Valley Authority. Mr. Vance testified about the annual DOE spent nuclear fuel acceptance rate in the 1991 ACR, and his inquiries of DOE regarding the acceptance rate that he was instructed to use in the 1991 ACR. - Tr. 2288:9-2291:20; 2295:9-15; 2356:14-2357:12 (Vance). 27. Jack Gadzala worked for Wisconsin Electric and then NMC at the Point

Beach Nuclear Plant from 1998 to 2007 as a licensing engineer. Mr. Gadzala managed the Point Beach Licensing Group's budget and personally reviewed and approved NRC fee invoices for payment. Mr. Gadzala testified regarding his knowledge of the dry storagerelated fees that the NRC charged Point Beach. Prior to joining WE, from 1988 to 1997, Mr. Gadzala worked for the NRC and was a resident NRC inspector at Point Beach from 1989 until 1994. Mr. Gadzala testified regarding his knowledge of the Point Beach spent fuel pool gained while he was an NRC inspector at Point Beach.

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- Tr. 2361:7-2362:1; 2362:9-2364:4; 2364:10-18; 2366:14-22; 2394:18-2395:17; 2398:18-2399:2; 2399:5-19 (Gadzala). 28. Paul Farron, who has extensive regulatory and nuclear plant operations

experience from work at Commonwealth Edison, the NRC and WE, testified as WE's representative regarding WE's interactions with the PSCW, WE's ability to continue operating until 1998 and beyond if DOE had performed, the potential use of a temporary rack at Point Beach, and dry storage cask-related issues. Mr. Farron received a B.S. in nuclear engineering from the University of Wisconsin in 1974 and is currently working toward a master's degree in mechanical engineering at the same institution. - Tr. 2494:2-19 (Farron). a. From 1976 to 1982, Mr. Farron worked at Commonwealth Edison as a

nuclear engineer and became a licensed Senior Reactor Operator. From 1982 to 1984, he was employed in the NRC Office of Inspection and Enforcement and was responsible for communicating with power plants in response to events and managing escalated enforcement actions for proper operation of nuclear plants. Mr. Farron also worked as a consultant with Nuclear Energy Consultants, performing consulting services on a number of projects for nuclear utilities, DOE, and the NRC. - Tr. 2494:20-2501:13 (Farron). b. Mr. Farron has been employed at WE since June 1995. He joined WE

as the Manager of the Strategic Issues group, a position he held until 2000. He was responsible for resolving all issues that could impact PBNP's continued viability including spent fuel storage issues and WE's dry storage project. Mr. Farron also was heavily engaged in industry groups such as the Nuclear Energy Institute ("NEI"), Electric Power Research Institute ("EPRI"), and the Institute for Nuclear Power

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Operations ("INPO"). Mr. Farron served as the principal liaison with DOE regarding Standard Contract issues during the period from 1995 until 2000. - Tr. 2506:3-2507:14 (Farron). c. In 2000, Mr. Farron became WE's Manager of State and Regulatory

Affairs, and he continues to serve in that capacity. He is responsible for seeking PSCW approval of major projects, engaging in state regulatory compliance issues before the PSCW, and coordinating in various activities with the PSCW. He has been involved in more than 100 PSCW proceedings. - Tr. 2508:8-2509:13 (Farron). 29. Kevin Anundson testified regarding his role as the project manager for the dry

storage project while he was at Wisconsin Electric. Mr. Anundson joined WE in January 1987 and the Nuclear Power Department in 1991. He left WE and the utility industry in 1997. He has a B.S. in mechanical engineering from the University of Wisconsin. - Tr. 2786:23-2791:7 (Anundson). 30. Marlin Conry is a senior process engineer with Power Engineers

Collaborative. Mr. Conry was employed at WE from November 1983 through January 2000 as a chemical engineer and later as Supervisor of the Chemical Engineering and Mechanical Engineering groups. Mr. Conry spent a little over 16 years in the nuclear power department at WE and was the project manager for the Unit 2 Steam Generator Replacement project. Mr. Conry has a B.S. in chemical engineering from the University of Missouri and belongs to the American Institute of Chemical Engineers and the American Society of Mechanical Engineers. - Tr. 2786:23-2791:7 (Conry). 31. Ione Straub testified regarding her more than 20 years of accounting

experience at WE, specifically in the Nuclear Power Department, including the period during

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which the Dry Fuel Storage project was developed and implemented. Ms. Straub joined WE in 1981 after receiving a B.A. in business administration from the University of Wisconsin, Madison. Ms. Straub retired from WE in 2002 and has since worked part-time in a medical office and as a contract employee for WE in the preparation of WE's claim in this action. - Tr. 2845:1-12; 2913:11-14 (Straub). 32. Eileen Supko, senior consultant and owner in Energy Resources International,

is an expert in nuclear engineering, DOE's nuclear waste management program, the storage and transportation of spent nuclear fuel, and the modeling of acceptance rate scenarios and allocations of spent nuclear fuel acceptance rights. Ms. Supko has an extensive background in analyzing the impact of DOE's Federal Waste Management System ("FWMS") program on the nuclear utilities and has testified as an expert in many spent nuclear fuel cases. She graduated from Pennsylvania State University with a B.S. in nuclear engineering. The scope of Ms. Supko's work and testimony included analyses of (1) DOE's overall spent nuclear fuel acceptance rate, (2) the spent nuclear fuel acceptance rates for WE's Point Beach Units 1 and 2, and (3) DOE's actions to encourage, or agree without objection to, the development and the use of dual-purpose casks by nuclear operating companies for dry cask storage of SNF and for transportation of SNF. - Tr. 3016:2-3062:24 (Supko). - PX 792 (ERI Expert Report Regarding Determination of the U.S. Department of Energy's Overall Spent Nuclear Fuel Acceptance Rate, ERI2098-0601). - PX 791 (ERI Expert Report Regarding Spent Nuclear Fuel Acceptance Rates for Wisconsin Electric Power Company's Point Beach Units 1 and 2, ERI-2098-0501). - PX 793 (May 2006 ERI Expert Report Regarding The Development of Dual-Purpose Casks, ERI-2098-0602 and exhibits thereto).

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33.

Richard Sieracki, Chief Executive Officer of The Kenrich Group LLC

("Kenrich"), is a damages expert with extensive background in, among other things, analyzing cost and schedule issues that arise in connection with power plant project disputes. He graduated from the University of Illinois with a B.S. in civil engineering with a primary focus on construction management. Mr. Sieracki has testified as an expert in numerous cases involving power plants, including several SNF cases. He was qualified by the Court as an expert in damages analyses and construction cost estimating in the regulated public utility, nuclear power, and Government contract arena. The scope of his work and testimony included development of a fuel management model to assess WE's spent fuel requirements in breach and non-breach scenarios, assisting WE personnel in developing the necessary technical and cost inputs, determining WE's breach on-site storage costs, and analyzing WE's non-breach temporary cask pit rack costs. - Tr. 3674:19-3703:13; 3717:9-23 (Sieracki). - PX 794, App. A and B (May 8, 2006 Revised Damages Report). - PDX 60-Sieracki 1-2 (Scope of Rich Sieracki's Work and Testimony, Kenrich's Approach to Determining WE's Damages). 34. Dr. Krishna Singh was qualified as an expert witness on (1) engineering

evaluation of spent fuel storage rack technology, (2) the NRC review process and criteria for spent fuel storage rack technology and operating license amendments, (3) the duration and extent of NRC review of operating license amendments, and (4) cost estimating related to spent fuel storage rack technology projects. Dr. Singh is the President and CEO of Holtec International ("Holtec"). Dr. Singh has a master of science and a Ph.D. from the University of Pennsylvania in mechanical engineering and is a fellow in the American Society of Mechanical Engineering. Dr. Singh also is a registered professional engineer in Pennsylvania and Michigan. Dr. Singh has more than 30 years of engineering experience, including over 20 years of experience in wet SNF storage rack projects. Dr. Singh holds

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more than a dozen nuclear storage technology-related patents. He has written dozens of articles, papers, and other publications related to SNF storage. Dr. Singh has been qualified as an expert witness in his fields of expertise more than 10 times. - PX 827 (Revised Written Testimony of Krishna P. Singh, including attachments). - Tr. 4341:20-4343:20; 4374:4-4379:17 (Singh). a. Holtec has been involved in the design of spent fuel storage racks

since 1986, when Dr. Singh founded the company. Pool storage racks are also known as "wet storage." Holtec racks are used to expand the spent fuel storage capacities consistent with pool topography. Holtec's rack projects include mini-racks, cask pit racks, whole pool reracks, and partial pool reracks. More than 70 percent of spent fuel discharged from U.S. nuclear reactors is stored in Holtec storage racks. - Tr. 4332:18-22; 4334:1-12; 4335:7-4336:19; 4337:5-8 (Singh). - PX 827 (Revised Written Testimony of Krishna P. Singh, including attachments). b. Dr. Singh has patented "detuned honeycomb" spent fuel storage rack

technology that is now used in the nuclear industry. Holtec has used this technology in more than 60 rack projects. Holtec racks have allowed rerackings of many spent fuel pools to increase prior estimated capacities. - Tr. 4344:25-4346:20; 4348:23-4350:21 (Singh). - PX 827 (Revised Written Testimony of Krishna P. Singh, including attachments). c. Dr. Singh has led the NRC licensing of more than 50 operating license

amendment requests. Holtec's role in the license amendment requests is to prepare a safety analysis report, to prepare all underlying calculations, to modify the plant technical specifications, to provide all of this documentation to the utility, and to

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answer any NRC questions. The utility, in turn, submits the license application to the NRC. - Tr. 4350:22-4351:14 (Singh). - PX 827 (Revised Written Testimony of Krishna P. Singh, including attachments). d. Holtec holds licenses for several dry SNF storage technologies and has

three dockets with the NRC related to its spent nuclear fuel storage technology. - Tr. 4338:21-4339:5 (Singh). 35. Kenneth Metcalfe, President of The Kenrich Group LLC, is a Certified Public

Accountant and a Certified Valuation Analyst. He is an economic damages consultant with extensive background in accounting and finance issues. He graduated from Georgetown University in 1982 with a B.S. in business administration, majoring in accounting. Mr. Metcalfe has extensive experience in, among other things, preparing economic damages analyses, particularly in the public utility power industry, and has testified as a an expert on numerous occasions in nuclear plant matters, including in a number of SNF cases. He was qualified by the Court as an expert on accounting, financial and economic issues, and economic damages in the regulated public utility, nuclear power, and public contract industries. The scope of his testimony included an articulation of the economic damages theory followed by Kenrich and its application to WE's claim, the economic model used to assess WE's damages, the propriety of damages model inputs, and the overall determination of WE's economic damages. - Tr. 4476:3-4478:17; 4482:4-4506:5; 4507:4-4510:23; 4517:194521:1; 4627:10-4628:5 (Metcalfe). - PX 794, App. C and D (May 8, 2006 Revised Damages Report). - PX 1047 (Trial Damages Binder). - PDX 61-Metcalfe 1 (Scope of Kenneth Metcalfe's Testimony).

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IV. A.

THE NWPA AND THE STANDARD CONTRACT WE CLOSELY FOLLOWED THE FEDERAL GOVERNMENT'S DISCHARGE OF ITS RESPONSIBILITY TO DISPOSE OF SPENT NUCLEAR FUEL 36. Historically, the disposal of SNF and HLW from the commercial production

of nuclear power has been a federal responsibility. Because of the suspension of reprocessing in 1977, the federal government developed a solution for disposal of SNF, namely, deep geologic disposal of SNF. - Fla. Power & Light Co. v. Westinghouse Elec. Corp., 826 F.2d 239, 244 (4th Cir. 1987) (discussing President Eisenhower's Atoms-for-Peace Program, the passage of the Atomic Energy Act, and other pre-NWPA history). - PX 1052 (Mills Trial Desig. Yankee Atomic Tr. 276:3-7 ("[F]rom the very beginning of the commercial nuclear program in the United States, it was always understood that the federal government would be responsible for the disposal of waste from the program."); 276:18-24 ("And it was a very well understood arrangement within the federal government at that time within the Atomic Energy Commission, as well as within the industry, that they [the government] would be responsible because of the concern of high-level waste and safety ­ long-term safety that they would be responsible for that.")). - PX 1052 (Mills Trial Desig. Pac. Gas & Elec. Co. Tr. 124:25-125:6 (as to suspension of reprocessing); 127:19-25 (as to the federal solution to create a geologic repository)). 37. WE was extensively involved in industry groups during the NWPA legislation

and promulgation and implementation of the Standard Contract. After the suspension of reprocessing, the industry groups focused on the enactment of the NWPA, and the promulgation and implementation of the Standard Contract. The senior WE person who participated in these groups at the senior executive level was the late Sol Burstein. Mr. Burstein, who passed away in 2002, joined WE in 1965 when Point Beach was in the planning stages. He was a Senior Vice President of the company and headed nuclear operations for 23 years. In 1973, he became Executive Vice Chairman of WE and continued

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in that role until he retired in the late 1980s. Mr. Burstein held a patent for a boiling water reactor super heat cycle and was a fellow with the American Society of Mechanical Engineers. Mr. Burstein was WE's primary decision-maker regarding nuclear issues. He was one of the early champions of commercial nuclear power and was very well known and respected nationally. He was frequently called upon to speak on behalf of the nuclear industry. Mr. Burstein was a member of the Utility Nuclear Waste Management Group ("UNWMG") Steering Committee and DOE appointed him to a technical review committee to develop criteria for a monitored retrieval storage system ("MRS"). - Tr. 2154:1-8 (Porter). - Tr. 1217:3-1218:12; 1248:7-1250:8; 1277:12-1278:13 (Shimon). - PX 53 (December 30, 1983 DOE letter re: MRS). 38. Mr. Shimon was WE's primary point of contact with both DOE and industry

groups at the working level regarding the NWPA and the Standard Contract. Mr. Shimon became involved in industry groups regarding spent fuel transportation because of his responsibilities for WE's SNF shipping campaigns to and from off-site facilities in Illinois and New York in the late 1970s and early 1980s. Mr. Shimon was the WE representative to the UNWMG that later became known as UWASTE. UNWMG consisted of representatives from the nuclear utilities who had expertise in the issues raised by the NWPA and responsibilities for monitoring DOE's plans for implementing the Standard Contract. Mr. Shimon also was WE's representative to the Electric Utility Companies' Nuclear Transportation Group ("EUCNTG"). Mr. Shimon eventually became the chairman and spokesman for EUCNTG. When EUCNTG ultimately moved into UWASTE, Mr. Shimon continued as the UWASTE chairman for its Transportation Working Group. Mr. Shimon also served as the chairman of the Edison Electric Institute ("EEI") Nuclear Fuels Committee.

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- PX 38 (June 3, 1983 Letter from Burstein to DOE designating WE contact point for Standard Contract to be "D.K. Porter, attention H.S. Shimon"). - Tr. 1215:13-1218:12; 1249:18-1251:18; 1309:10-1310:8 (Shimon). 39. Mr. Shimon apprised WE management of all developments regarding the

Standard Contract and how these developments related to WE's SNF storage planning. He reviewed DOE program documents, briefed WE managers regarding the meaning and impact of the documents, and participated in meetings between DOE and the industry groups. Mr. Shimon was extremely experienced and knowledgeable regarding spent nuclear fuel issues during his WE tenure. - Tr. 1220:13-1222:13; 1247:17-1248:6; 1249:18-1251:4; 1251:191252:13 (Shimon). - Tr. 2161:12-2162:6; 2167:16-22; 2174:8-20 (Porter). 40. A leading industry group involved in the enactment of the NWPA and

promulgation and implementation of the Standard Contract was EEI. EEI is a utility trade association for investor-owned electric utility companies. Loring Mills, who had a long career in the nuclear industry, joined EEI in 1976 as Nuclear Fuel Manager. Over the years, Mr. Mills eventually became Vice President of Nuclear Activities. At EEI, Mr. Mills originally worked on nuclear fuel cycle issues, including both front end issues and, after reprocessing was suspending in 1977, on issues concerning the disposal of SNF. Mr. Mills was actively involved in the late 1970s in developing the Environmental Impact Statement that elected geological disposal for SNF and gave rise to the NWPA. Subsequently, Mr. Mills was involved in the enactment of the NWPA and the promulgation of the Standard Contract. During his remaining tenure with EEI until his retirement in 1993, Mr. Mills worked to promote appropriate implementation of the Standard Contract and worked closely with DOE and other government officials.

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- PX 1052 (Mills Trial Desig. Yankee Atomic Tr. 267:25-269:21; 279:11-18; 270:5-11; 279:11-16; 288:4-289:8; 270:16-271:1). - PX 1052 (Mills Trial Desig. Pac. Gas & Elec. Co. Tr. 121:6-8; 121:20-122:4; 129:16-132:23). - Tr. 1413:4-8 (Shimon). B. DEVELOPMENT OF THE NWPA AND THE STANDARD CONTRACT 41. On January 7, 1983, recognizing the federal government's responsibility for

the disposal of SNF, President Reagan signed into law the NWPA, which aimed to eliminate the need for additional at-reactor storage after DOE commenced acceptance of SNF from commercial utilities beginning no later than January 31, 1998. The NWPA stated that "[i]n return for the payment of fees established by" the NWPA, DOE "shall take title to the highlevel 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." - NWPA, 42 U.S.C. §§ 10101 through 10270. - NWPA, 42 U.S.C. § 10222(a)(5) (DOE required (A) to take title in return for fees and (B) to provide SNF disposition services by January 31, 1998). - H.R. Rep. No. 97-491, Part 1, at 59 (1982) (DOE "is responsible for disposing of [HLW or SNF] in permanent disposal facilities, beginning no later than January 1998, in return for the payment of fees established by this section."). - PX 1052 (Mills Trial Desig. Pac. Gas & Elec. Co. Tr. 137:16138:20; 145:6-146:11; 148:16-25). - PX 1052 (Cole Dep. Desig. 3/12/02 Tr. 80:20-81:22 ("That was . . . the purpose. The basic purpose of the Nuclear Waste Policy Act was to try to help keep the utilities from having to run out of storage space, so the utilities are in there for generating electricity and not storing fuel. . . . This is a basic strategy, and a part of the primary mission was to try to keep them from having to add more storage. That was one of the major goals of the program.")).

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42.

Pursuant to the NWPA, on February 4, 1983, DOE published in the Federal

Register a proposed Standard Contract with the nuclear utilities. Utility input was largely limited to providing comments in response to the draft Standard Contract and attendance at a few meetings with DOE officials. - PX 26 (48 Fed. Reg. 5,458 (Feb. 4, 1983)). - 42 U.S.C. § 10222(a)(1) (requiring that DOE's obligations to utilities be set out in contracts). - PX 1052 (Mills Trial Desig. Pac. Gas & Elec. Co. Tr. 154:6-10 (DOE drafted the Standard Contract and provided for little input from utilities: these "were not negotiating sessions . . . . There was never really a negotiation, what you would think would be a negotiation of the contract. There was not an opportunity for that.")). - Indiana Michigan Power Co. v. DOE, 88 F.3d 1272, 1276 (D.C. Cir. 1996). - Tr. 2166:9-2167:15 (Porter) (discussing the short time in which utilities had a chance to comment on the proposed Standard Contract and noting that utilities did not have an opportunity to negotiate). - Tr. 5069:14-18 (Brownstein). 43. In a letter to DOE, EEI noted that DOE's proposed contract did not specify a

rate or a performance standard, which would be appropriate under the NWPA, 42 U.S.C. § 10222(a)(5)(A). EEI, on behalf of WE and other commercial nuclear utilities, requested a performance rate equal to at least the annual rate of SNF production, plus additional acceptance to work off accumulated backlog: [t]he contract should include a recognition 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. We believe that DOE should be able to take delivery of SNF/HLW equal to that year's generation plus a reasonable share of the backlog. While the contract may not be the appropriate place to commit DOE to a specific, numerical receiving rate, DOE should recognize, at least qualitatively, the

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need to have adequate annual receiving capacity to handle industry needs. PX 30 at Attachment A, page 2. EEI urged that the Standard Contract should be revised to add language that DOE take title to SNF "as expeditiously as practicable": WHEREAS, DOE recognizes that its ability to take delivery of [SNF] and/or [HLW] 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. - PX 30, p. 8, and Attachment A, pp. 2-3 (March 7, 1983 Letter from EEI to Morgan regarding Standard Contract). - PX 34 (March 9, 1983 Letter from WE to DOE re: Spent Fuel Disposal Contract). - PX 40 (March 9, 1983 Letter from Fay to DOE regarding support for industry positions on Standard Contract). - PX 1052 (Mills Trial Desig. Pac. Gas & Elec. Co. Tr. 319:14320:10). 44. After the formal comment period between February 4, 1983 and March 5,

1983, the utilities only had a short time in which to execute the final contract because the NWPA required that the Standard Contract be signed by June 30, 1983. On April 18, 1983, DOE issued the final Standard Contract in the Federal Register. If utilities did not sign the Standard Contract, they risked losing their NRC operating licenses. The utilities then entered into the Standard Contract in return for their payment of substantial fees. - 42 U.S.C. § 10222(b)(2)(A) (June 30, 1983 deadline for executing Standard Contract). - 48 Fed. Reg. 16,590-601 (Apr. 18, 1983). - 10 C.F.R. § 961.11, pmbl. and art. II. - Southern Nuclear, 77 Fed. Cl. at 399, 401-02.

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- 48 Fed. Reg. 5458, 5459 (Feb. 4, 1983) (DOE decided not to negotiate the terms of individual contracts with each commercial nuclear utility.). - PX 1052 (Mills Trial Desig. Pac. Gas & Elec. Co. Tr. 156:14157:21). - Tr. 2166:16-2167:15 (Porter) ("[T]here were no real negotiations. It was published in the Federal Register. It was sent to the utilities. It had a very short time for the signing of the contract and return to the Department in order to ensure services from the Department for the disposal of the spent fuel, but there were no negotiations for the give-and-take of the terms and conditions of the contract."). - PX 1052 (Morgan Dep. Desig. 11/15/06 Tr. 91:13-19 (Utilities had to sign the contract to continue operating.)). - PX 1052 (Cole Dep. Desig. 3/12/02 Tr. 56:13-23 ("It was my impression that [utilities] were required to sign the contract. They had no choice.")). 45. WE executed the Standard Contract on June 16, 1983, but reserved the right to

seek modifications of the Standard Contract, which was necessitated by the Governmentimposed urgency to sign the contract and the inadequacy of the review period. In a letter sent to DOE prior to signing the Standard Contract, WE stated: It is our intention to sign the contract in its current form, though we reserve the right to seek modifications to the Contract which may later prove later necessary pursuant to Article XI-Amendments. Reservation of this right is necessitated by the congressionally imposed urgency of signing a contract and the inadequacy of the review and the negotiation period. - PX 38, p. 2 (June 6, 1983 Letter from WE to Keefe DOE re: Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste). WE further stated: We have signed the Contract at this time because of the June 30, 1983 deadline imposed (we believe erroneously) by the U.S. Department of Energy. Our signing should not be

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interpreted as agreeing with either the Final Rule or the Standard Contract. We are not waiving our rights to seek changes in the rule and the Contract or to submit claims based upon the imposition of inappropriate or inequitable provisions contained therein. - PX 40, p. KRGWE002117(June 3, 1983 Letter from WE to Keefe DOE re: Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste). - PX 41 (WE's Executed Standard Contract). - PX 1052 (Cole Dep. Desig. 3/12/02 Tr. 53:4-56:24 (The Standard Contract "was fraught with ambiguities, contradictions, incorrect statements . . . .")). V. THE STANDARD CONTRACT AND THE PARTIES' UNDERSTANDING 46. The Standard Contract required DOE to "begin" disposal of SNF and HLW

"not later than January 31, 1998." - PX 41, p. KRGWE002123 (WE's Executed Standard Contract). - PX 1052 (Mills Trial Desig. Yankee Atomic Tr. 383:24-384:14 ("And there was expectations as indicated by the members of the Department of Energy. I came [sic] name Frank Kaufman specifically, stating that yes, we can satisfy that date. Actually, we believed we can have a repository before that time. And we fully believed that the 15-year advance time was sufficient for this program to actually carry out what was requested.")). - PX 1052 (Mills Trial Desig. Yankee Atomic Tr. 382:3-19 ("[W]e really expected that the program would have started receiving spent fuel or nuclear waste a few years prior to 1998. And ramp up to a 1998 date in which the delivery amount that was due [sic] be accepted by the federal government, was equivalent to that amount discharged from the reactors in that year, plus some amount to work off the backlog. Q: Okay. And what was the basis of that expectation? A: Many discussions that had occurred between myself and members of Congress when we were developing the waste program ­ or Waste Policy Act. And with individuals within the Department of Energy that worked on that particular program.")). 47. DOE revised the proposed Standard Contract to add the "expeditiously as

practicable" phrase requested by EEI: "Whereas, the DOE has the responsibility, following

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commencement of operation of a repository, to take title to the spent nuclear fuel or highlevel radioactive waste involved as expeditiously as practicable upon the request of the generator or owner of such waste or spent nuclear fuel . . . ." - PX 41, p. KRGWE002118 (WE's Executed Standard Contract) (Emphasis added). - PFF 43. - 48 Fed. Reg. 16,600 (Apr. 18, 1983). 48. Utilities and DOE understood that, consistent with the NWPA, "expeditiously

as practicable" meant that DOE's acceptance rate of spent fuel would be sufficient so that utilities would not have to add additional at-reactor storage after January 31, 1998 and DOE would work off the backlog of previously discharged fuel. - Tr. 1245:18-1246:10 (Shimon) ("Q: And during this time period . . . when the standard contract was being developed and executed, what was your understanding of the parties regarding the rate at which Department of Energy would accept spent fuel? A: The rate would be sufficient to preclude utilities from having to add additional spent fuel storage capacity after January 31, 1998 and would work off the backlog of spent fuel over a reasonable period of time. . . . Based upon all of the discussions we had with DOE at that time and pronouncements that they made, we believed that they were in agreement with us."). - Tr. 1496:22-1501:23 (Shimon) (The "expeditiously as practicable" language was inserted into the Contract and the parties understood that to mean that DOE would accept fuel at a rate sufficient to avoid additional atreactor storage after 1998."). - PX 1052 (Lawrence Dep. Desig. 5/20/02 Tr. 98:14-99:11 ("The purpose of the contract was to carry out the provisions of the Nuclear Waste Policy Act.")). - PX 1052 (Lawrence Dep. Desig. 5/20/02 Tr. 187:15-188:8 (DOE wanted to implement the NWPA so that it would have an acceptance rate after the first five years equivalent to the rate of utility discharge of spent fuel and such that no utility would have to build additional storage facilities after 1998.)).

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- PX 1052 (Barrett Dep. Desig. 4/22/02 Tr. 51:9-52:22 ("[I]t was significant that [DOE] design a system to remove the backlog of materials that were accumulating under the intent of the act . . . [b]ecause the concept of a Nuclear Waste Policy Act was . . . for the federal government to take the materials from the high-level waste and spent fuel sites into federal custody.")). - PX 1052 (Mills Trial Desig. Pac. Gas & Elec. Co. Tr. 145:6-146:11 (as to no additional at-reactor storage); 146:14-148:15 (as to working off the backlog); 157:3-21 (as to working off the backlog); 189:17-25 (as to working off the backlog); 197:3-17 (as to no additional at-reactor storage)). - PX 1052 (Morgan Dep. Desig. 3/21/02 Tr. 106:20-107:1; 108:3109:15 (Expeditiously as practicable referred to DOE's intent to catch up with the generating rate a few years after beginning to take spent fuel from utilities and to begin working off the backlog.)). - PX 1052 (McDuffie Dep. Desig. 3/18/02 Tr. 35:15-38:23; 70:774:17 ("[T]he intent was in the ACR . . . to devise a receipt rate that would allow the minimum or require the minimum at-reactor storage.")). - PX 1052 (Mills Trial Desig. Yankee Atomic Tr. 341:7-343:2 (discussing understanding of utility representatives and high-level DOE officials of the two-part requirements for DOE's rate of acceptance)). - PX 1052 (Mills Trial Desig. Pac. Gas & Elec. Co. Tr. 137:16138:20 (DOE's spent fuel contracts obligated DOE to help the utilities avoid costs pertaining to spent fuel storage after January 31, 1998.)). - PX 1052 (Cole Dep. Desig. 3/12/02 Tr. 201:20-202:12