Free Memorandum of Contentions of Fact and 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. THE UNITED STATES, Defendant.

DEFENDANT'S MEMORANDUM OF CONTENTIONS OF FACT AND LAW

PETER D. KEISLER Assistant Attorney General DAVID M. COHEN Director OF COUNSEL: JANE K. TAYLOR Office of General Counsel U.S. Department of Energy 1000 Independence Avenue, S.W. Washington, D.C. 20585 HAROLD D. LESTER, JR. Assistant Director KEVIN B. CRAWFORD Trial Attorney Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 Telephone: (202)305-7583 Facsimile: (202)307-2503

MARIAN E. SULLIVAN RUSSELL A. SHULTIS SONIA M. ORFIELD Civil Division Department of Justice 1100 L Street, N.W. Washington, D.C. 20530

January 30, 2007

Attorneys for Defendant

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TABLE OF CONTENTS SUMMARY OF ARGUMENT ..................................................................................................... 1 STATEMENT OF FACTS ............................................................................................................ 5 I. II. THE ORIGINAL PROVISIONS OF THE NUCLEAR WASTE POLICY ACT .............. 5 THE DEPARTMENT OF ENERGY'S PROMULGATION OF THE "STANDARD CONTRACT FOR DISPOSAL OF SPENT NUCLEAR FUEL AND/OR HIGH-LEVEL RADIOACTIVE WASTE" THROUGH NOTICE AND COMMENT RULEMAKING IN THE FEDERAL REGISTER ........................................................................................ 6 A. B. C. III. IV. V. VI. The Proposed Rule ................................................................................................. 6 Public Comments ................................................................................................... 7 The Final Rule ........................................................................................................ 9

WEPCO'S EXECUTION OF ITS STANDARD CONTRACT ...................................... 12 ISSUANCE OF THE MISSION PLAN AND ITS AMENDMENT ............................... 12 THE 1987 AMENDMENTS TO THE NUCLEAR WASTE POLICY ACT .................. 13 DOE'S ISSUANCE OF ANNUAL CAPACITY REPORTS .......................................... 15 A. B. C. The 1987 Through 1990 Annual Capacity Reports ............................................. 15 The 1991 Annual Capacity Report ....................................................................... 15 The 1992 Through 1995 Annual Capacity Reports ............................................. 18

VII.

PROGRAM DOCUMENTS REFLECT PLANNED ACCEPTANCE AT AN MRS FACILITY ........................................................................................................................ 19 A. B. Program Reassessment And 1991 Draft Mission Plan Amendment .................... 19 Preliminary Estimates Of The Total-System Life Cycle Cost For The Restructured Program .......................................................................................... 20

VIII. IX.

INDUSTRY SUBMISSION OF DELIVERY COMMITMENT SCHEDULES ............. 21 WEPCO'S DELIVERY COMMITMENT SCHEDULES .............................................. 23

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DISCUSSION .............................................................................................................................. 24 I. WEPCO BEARS THE BURDEN OF ESTABLISHING ALL ELEMENTS OF ITS CLAIM, INCLUDING LIABILITY, CAUSATION, FORESEEABILITY, AND REASONABLE CERTAINTY ........................................................................................ 24 A. B. WEPCO Has The Burden Of Proving All Elements Of Its Case ......................... 24 WEPCO Must Prove That Its Damages Were Directly Caused By The Government's Breach .......................................................................................... 25 WEPCO Cannot Shift Its Burden Of Proof Upon The Causation Issue By Characterizing Its Damages As "Mitigation Expenses" ...................................... 29 WEPCO Bears The Burden Of Establishing A Reasonable "But For" World Against Which To Measure Whether Its Claimed "Mitigation Damages" Were Incremental Costs That Were "Caused" By DOE's Delay .................................. 34 The Damages Available To WEPCO For Breach Of Contract Are Limited To Those That Are Foreseeable As The Probable Outcome Of The Breach ............ 37 WEPCO Must Prove Its Damages With Reasonable Certainty ........................... 38

C.

D.

E.

F. II.

DETERMINATION OF THE PROPER RATE OF ACCEPTANCE TO BE APPLIED TO THE STANDARD CONTRACT IS CRUCIAL TO WEPCO'S CLAIM ................. 39 A. WEPCO Would Have Pursued Dry Storage Regardless Of The Manner In Which DOE Performed ................................................................................................... 39 To The Extent That WEPCO's Causation Theory Is Predicated Upon DOE's Rate Of Acceptance, WEPCO Cannot Meet Its Burden Of Proving That DOE Was Obligated To Accept SNF Pursuant To A Two-Part Test Or At An Annual Rate Of 3,000 MTUS ................................................................................................... 42 1. The NWPA Did Not Require Acceptance Of SNF At Any Particular Rate Or Under Any Particular Qualitative Standard ........................................ 42 The Standard Contract Did Not Require Acceptance of SNF At Any Particular Rate Or Pursuant To Any Particular Test ................................ 43

B.

2.

C.

Causation And Resultant Damages Should Be Determined Against The Acceptance Obligations Developed Pursuant To The Schedule Mechanism In The Contract .................................................................................................... 46 1. The Acceptance Schedule Was Established In The Dealings Between The Parties ....................................................................................................... 46

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WEPCO CANNOT MEET ITS BURDEN OF PROVING THAT ITS COSTS TO IMPLEMENT DRY STORAGE WERE CAUSED BY DOE'S DELAY ...................... 49 WEPCO CANNOT MEET ITS BURDEN OF PROVING THAT ITS COSTS FOR NRC ANNUAL FEES FROM 1999 THROUGH 2005 WERE CAUSED BY DOE'S DELAY OR THAT ANY DAMAGES RELATING TO THOSE FEES CAN BE SHOWN WITH ANY REASONABLE CERTAINTY .............................................................................. 59 WEPCO SHOULD NOT RECOVER CERTAIN OF THE COSTS INCURRED FOR THE PURCHASE OF THE THREE TN-32 CASKS BECAUSE THEY DO NOT CONSTITUTE REASONABLE MITIGATION ............................................................. 63 WEPCO SHOULD NOT RECOVER CERTAIN OF THE COSTS INCURRED FOR THE PURCHASE OF THE DUAL-PURPOSE NUHOMS TN-32PT CASKS AND FOR THE LICENSING OF ITS VSC-24 CASKS FOR TRANSPORTATION BECAUSE THEY WERE UNFORESEEABLE, DO NOT CONSTITUTE REASONABLE MITIGATION AND WERE NOT CAUSED BY DOE'S DELAY ................................ 65 WEPCO SHOULD NOT RECOVER THE COSTS INCURRED FOR PRIVATE FUEL STORAGE BECAUSE THEY WERE UNFORESEEABLE AS A MATTER OF LAW AND DO NOT CONSTITUTE REASONABLE MITIGATION ................................... 67 WEPCO SHOULD NOT RECOVER CERTAIN OF THE COSTS INCURRED FOR OTHER SNF MANAGEMENT AND OVERSIGHT ACTIVITIES BECAUSE THEY WERE UNFORESEEABLE AND DO NOT CONSTITUTE REASONABLE MITIGATION .................................................................................................................. 69 WEPCO'S FAILURE PROPERLY TO ACCOUNT FOR "BUT FOR" LOADING COSTS CONSTITUTES A FAILURE TO MEET ITS BURDEN OF PROOF AND WOULD PROVIDE WEPCO WITH A $3.1 MILLION WINDFALL ........................... 70 WEPCO SHOULD NOT RECOVER ITS FIXED, NON-INCREMENTAL COSTS FOR SALARIED EMPLOYEES ............................................................................................. 73 WEPCO SHOULD NOT RECOVER CERTAIN OF ITS CLAIMED COSTS FOR EMPLOYEE EXPENSES AND OVERHEAD ............................................................... 76 WEPCO'S CLAIM FOR THE COST OF CAPITAL IS A LEGALLY UNSUPPORTED ATTEMPT TO RECOVER PREJUDGMENT INTEREST ........................................... 77

IV.

V.

VI.

VII.

VIII.

IX.

X.

XI.

XII.

CONCLUSION ............................................................................................................................ 83

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TABLE OF AUTHORITIES CASES PAGE(S) AES Tech. Sys., Inc. v. Coherent Radiation, 583 F.2d 933 (7th Cir. 1978) .......................................................................................... 74 Autotrol Corp. v. Cont'l Water Sys. Corp., 918 F.2d 689 (7th Cir. 1990) .......................................................................................... 74 Barrow Utils. & Elec. Co. v. United States, 20 Cl. Ct. 113 (1990) ...................................................................................................... 38 Bell v. United States, 404 F.2d 975 (Ct. Cl. 1968) ............................................................................................ 82 Blake v. Califano, 626 F.2d 891 (D.C. Cir. 1980) ........................................................................................ 77 Bluebonnet Sav. Bank, FSB v. United States, 67 Fed. Cl. 231 (2005), aff'd, 466 F.3d 1349 (Fed. Cir. 2006) ............................ 34, 36, 70 Bluebonnet Sav. Bank, FSB v. United States, 266 F.3d 1348 (Fed. Cir. 2001) ....................................................................................... 25 Bluebonnet Sav. Bank, F.S.B. v. United States, 339 F.3d 1341 (Fed. Cir. 2003) ........................................................................... 24, 30, 34 Bohac v. Department of Agric., 239 F.3d 1334 (Fed. Cir. 2001) ....................................................................................... 37 Boyajian v. United States, 423 F.2d 1231 (Ct. Cl. 1970) .......................................................................................... 73 Brookfield Constr. Co. v. United States, 228 Ct.Cl. 551, 661 F.2d 159 (1981) .............................................................................. 78 California Federal Bank v. United States, 395 F.3d 1263 (Fed. Cir. 2005) ....................................................................................... 25 Castle v. United States, 48 Fed. Cl. 187 (2000), aff'd in relevant part, 301 F.3d 1328 (Fed. Cir. 2002) .............................................. 78, 81

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Chevron U.S.A., Inc. v. United States, 71 Fed. Cl. 236 (2006) .................................................................................................... 79 Citizens Federal Bank v. United States, No. 05-5173, 2007 WL 162820 (Fed. Cir. Jan. 24, 2007) ........................................ 26, 33 Coast Fed. Bank, FSB v. United States, 48 Fed. Cl. 402 (2000), rev'd on other grounds, 309 F.3d 1353 (Fed. Cir.2002), vacated, 320 F.3d 1338 (Fed. Cir. 2003) ........................................................................ 34 Columbia First Bank, FSB v. United States, 60 Fed. Cl. 97 (2004) ................................................................................................ 26, 28 Consolidated Gas Supply Co. v. Federal Energy Regulatory Comm'n, 745 F.2d 281 (4th Cir. 1984) .......................................................................................... 46 Craft v. United States, 233 F.3d 358 (6th Cir. 2000) .......................................................................................... 77 District of Columbia v. United States, 67 Fed. Cl. 292 (2005) ........................................................................................ 77, 80, 81 Energy Capital Corp. v. United States, 302 F.3d 1314 (Fed. Cir. 2002) ....................................................................................... 25 England v. Contel Advanced Sys., Inc., 384 F.3d 1372 (Fed. Cir. 2004) ................................................................................. 77, 78 Fawick Corp. v. United States, 149 Ct. Cl. 623 (1960) ..................................................................................................... 26 Fifth Third Bank v. United States, 71 Fed. Cl. 56 (2006) ...................................................................................................... 25 Fleet Nat'l Bank v. Anchor Media Television, Inc., 45F.3d 546 (1st Cir. 1995) ............................................................................................... 32 Glendale Fed. Bank, FSB v. United States, 239 F.3d 1374 (Fed. Cir. 2001) ................................................................................. 34, 36 Indiana Michigan Power Co. v. United States, 60 Fed. Cl. 639 (2004), aff'd,, 422 F.3d 1369 (Fed. Cir. 2005) ............................... passim Indiana Michigan Power Co. v. United States, 422 F.3d 1369 (Fed. Cir. 2005) ................................................................................ passim

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Jetco, Inc. v. United States, 11 Cl. Ct. 837 (1987) ....................................................................................................... 77 Koby v. United States, 54 Fed. Cl. 493, 497 (2002) ..................................................................................... passim Krauss v. Greenbarg, 137 F.2d 569 (3d Cir. 1943) ............................................................................................ 26 Krofft Entertainment, Inc. v. CBS Songs, 653 F. Supp. 1530 (S.D.N.Y. 1987) ................................................................................ 27 LaSalle Talman Bank, F.S.B. v. United States, 45 Fed. Cl. 64, 111 (1999) ................................................................................... 67, 68, 69 LaSalle Talman Bank, FSB v. United States, 317 F.3d 1363 (Fed. Cir. 2003) ....................................................................................... 28 Landmark Land Co. v. Federal Deposit Insur. Corp., 256 F.3d 1365 (Fed. Cir. 2001) ....................................................................................... 37 Library of Congress v. Shaw, 478 U.S. 310 (1986) .................................................................................................. 78, 81 Locke v. United States, 283 F.2d 521 (Ct. Cl. 1960) ............................................................................................ 28 Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336 (Fed. Cir. 2000) ............................................................................. 2, 24, 78 Menne v. Celotex Corp., 861 F.2d 1453 (10th Cir. 1988) ...................................................................................... 27 Myerle v. United States, 33 Ct. Cl. 1 (1897) ........................................................................................................... 25 National By-Products, Inc. v. United States, 186 Ct. C 405 F.2d 1256 (1969) ..................................................................................... 43 Nebraska Public Power Dist. v. United States, 73 Fed. Cl. 650 (2006),amended, No. 01-116C, 2006 WL 3754809 (Fed. Cl. Dec. 19, 2006) ..................................................................... 3 Nebraska Public Power Dist. v. United States, No. 01-116C, 2006 WL 3754809 (Fed. Cl. Dec. 19, 2006) .............................................. 3

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Northern Helex, 207 Ct. C 524 F.2d at 714 ............................................................................................... 37 Northern States Power Co. v. United States, 128 F.3d 754 (D.C. Cir. 1997) .......................................................................................... 2 Old Stone Corp. v. United States, 450 F.3d 1360 (Fed. Cir. 2006) ................................................................................. 33, 34 PSEG Nuclear, L.L.C. v. United States, 465 F.3d 1343 (Fed. Cir. 2006) ....................................................................................... 35 PSEG Nuclear, LLC v. United States, No. 05-5162 (Fed. Cir.) ..................................................................................................... 2 Pacific Gas & Elec. Co. v. United States, 73 Fed. Cl. 333 (2006) ............................................................................................. passim Pacific Gas & Electric v. United States, 58 Fed. Cl. 1 (2003) ........................................................................................................ 81 Point Prods. A.G. v. Sony Music Entm't, Inc., 215 F. Supp.2d 336 (S.D.N.Y. 2002) ........................................................................ 27, 36 Prudential Ins. Co. v. United States, 801 F.2d 1295 (Fed. Cir. 1986) ....................................................................................... 37 Ramsey v. United States, 101 F. Supp. 353 (Ct. Cl. 1951) ...................................................................................... 25 Robinson v. United States, 305 F.3d 1330, 1333 (Fed. Cir. 2002) ...................................................................... passim Roseburg Lumber v. Madigan, 978 F.2d 660, 667 (Fed. Cir. 1992) .................................................................................. 38 S.W. Eng'g Co. v. Cajun Elec. Power Coop., 915 F.2d 972 (5th Cir. 1990) .......................................................................................... 74 Sacramento Mun. Util. Dist. v. United States, 70 Fed. Cl. 332 (2006) .............................................................................................. 28, 65 Sacramento Mun. Utility Dist. v. United States, No. 98-488, 2006 WL 3490940 (Fed. Cl. Dec. 1, 2006) ................................................ 45 Saddler v. United States, 287 F.2d 411 (Ct. Cl. 1961) ............................................................................................ 73 -vii-

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San Carlos Irrig. & Drainage Dist. v. United States, 877 F.2d 957 (Fed. Cir. 1989) ......................................................................................... 24 San Carlos Irrigation & Drainage Dist. v. United States, 111 F.3d 1557 (Fed. Cir. 1997) ....................................................................................... 26 Sandstrom v. Principi, 358 F.3d 1376 (Fed. Cir. 2004) ........................................................................... 79, 80, 81 Shyface v. Secretary of Health & Human Servs., 165 F.3d 1344 (Fed. Cir. 1999) ....................................................................................... 26 Singer Co. Librascope Div. v. United States, 215 Ct. Cl. 281, 568 F.2d 695 (1977) ............................................................................ 77 Tennessee Valley Authority v. United States, 69 Fed. Cl. 515 (2006) ............................................................................................. passim Town of Grantwood v. United States, 55 Fed. Cl. 481 (2003) .................................................................................................... 81 United States v. Mescalero Apache Tribe, 207 Ct. Cl. 369, 518 F.2d 1309 (1979) ........................................................................... 79 United States v. Thayer-West Print Hotel Co., 329 U.S. 585 (1947) ........................................................................................................ 78 Wells Fargo Bank v. United States, 88 F.3d 1012 (Fed. Cir. 1996) ............................................................................. 28, 38, 66 WestFed Holdings, Inc. v. United States, 52 Fed. Cl. 135 (2002) .................................................................................................... 26 White v. Delta Constr. Int'l, Inc., 285 F.3d 1040 (Fed. Cir. 2002) ....................................................................................... 24 Wickham Contracting Co. v. United States, 12 F.3d 1574 (1994) ........................................................................................................ 82 Willred Co. v. Westmoreland Metal Mfg. Co., 200 F. Supp. 59 (E.D. Pa. 1961) ..................................................................................... 74 Wilner v. United States, 23 Cl. Ct. 241 (1991) ....................................................................................................... 73

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Wilson v. Marquette Elecs., Inc., 630 F.2d 575 (8th Cir. 1980) ........................................................................................... 74 Yankee Atomic v. United States, 73 Fed. Cl. 249 (2006) ............................................................................................. passim STATUTES AND REGULATIONS 28 U.S.C. § 2516(a) ........................................................................................................ 77, 78, 82 41 U.S.C. §§ 601-613 ................................................................................................................. 78 42 U.S.C. §§ 10101-10270 ..................................................................................................... 5, 78 42 U.S.C. § 10132 ......................................................................................................................... 5 42 U.S.C. § 10134 ......................................................................................................................... 5 42 U.S.C. § 10135 ......................................................................................................................... 5 42 U.S.C. § 10139 ......................................................................................................................... 2 42 U.S.C. § 10161 ................................................................................................................... 6, 13 42 U.S.C. § 10162(b) .................................................................................................................. 14 42 U.S.C. § 10168(d)(1) ....................................................................................................... 14, 49 42 U.S.C. § 10172(a) .................................................................................................................. 14 42 U.S.C. § 10221 ....................................................................................................................... 12 42 U.S.C. § 10222(a)(1) ................................................................................................................ 6 42 U.S.C. § 10222(a)(2) .............................................................................................................. 20 42 U.S.C. § 10242(a) .................................................................................................................. 14 10 C.F.R. § 961.11 ............................................................................................................... passim 10 C.F.R. Part 170 ................................................................................................................. 59, 60

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MISCELLANEOUS 48 Fed. Reg. 16590 ..................................................................................................................... 10 64 Fed. Reg. 3144860 .................................................................................................................. 61 48 Fed. Reg. 5458 ...................................................................................................... 6, 7, 8, 9, 43 S. Rep. No. 100-152 ............................................................................................................... 13, 14 Prosser & Keaton, The Law of Torts (5th ed. 1984) ................................................................... 27 C. McCormack, Handbook on the Law of Damages (1935) ....................................................... 27 5A Corbin on Contracts (1964) ................................................................................................... 27 3 Dobbs, Law of Remedies (1993) ............................................................................................. 30 Black's Law Dictionary 1002 (6th ed. 1990) .............................................................................. 32 11 A. Corbin, Corbin on Contracts (rev. ed. 2005) ..................................................................... 72 Restatement (Second) of Contracts § 344(a) (1981) ................................................................... 24 Restatement (Second) of Contracts § 347(a) (1981) ................................................................... 29 Restatement (Second) of Contracts § 351 cmt. a .................................................................. 38, 66 Restatement (Second) of Contracts § 352 cmt. a ........................................................................ 38 Am. Jur. 2d Damages § 416 (2004) ............................................................................................. 74

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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 MEMORANDUM OF CONTENTIONS OF FACT AND LAW Pursuant to Appendix A, ¶ 14(b), of the Rules of the Court of Federal Claims ("RCFC") and this Court's order dated December 20, 2005, defendant, the United States, respectfully submits the following memorandum of contentions of fact and law. SUMMARY OF ARGUMENT This case involves a damages claim by plaintiff, Wisconsin Electric Power Company ("WEPCO"), for approximately $48.4 million in costs and $42.6 million in prejudgment interest1 that it allegedly has incurred through December 31, 2005, at its Point Beach nuclear power plant, associated with the storage of spent nuclear fuel ("SNF"). The majority of WEPCO's claim, aside from its prejudgment interest claim, seeks costs relating to the engineering, design, licensing, and construction of a type of dry SNF storage facility known as an Independent Spent Fuel Storage Installation ("ISFSI") at the Point Beach plant. WEPCO contends that the Government is liable for these costs because the need for additional storage was caused by the Government's failure to begin accepting SNF from commercial nuclear reactors on January 31, In its pretrial brief, WEPCO characterizes its $42.6 million interest claim as "cost of capital." Contrary to WEPCO's characterization of this claimed "damage," WEPCO's experts have merely "grossed up" WEPCO's claimed damages to account for the time value of money. This type of imputed interest charge is not recoverable against the United States.
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1998, pursuant to the "Standard Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste" ("Standard Contract") between the Department of Energy ("DOE") and WEPCO. The issue in this case, as in many of the SNF cases, is WEPCO's entitlement to the amount of damages that it is seeking to recover.2
2

As the Court is aware, the DOE contracting officer, in 1997, made a preliminary determination that DOE's delay was unavoidable under the "Unavoidable Delays" clause of the Standard Contract. That provision states that "[n]either the Government nor Purchaser shall be liable under this contract for damages caused by failure to perform its obligations hereunder, if such failure arises out of causes beyond the control and without the fault or negligence of the party failing to perform." 10 C.F.R. § 961.11, Art. IX.A (emphasis added). Included in the excusable bases for a failure to perform are delays in the scheduled delivery, acceptance, or transport of SNF arising out of causes beyond the "reasonable control of . . . [the Department of Energy (`DOE')]," including "acts of Government in either its sovereign or contractual capacity:" Id. The United States Court of Appeals for the Federal Circuit has held that DOE's delay in accepting spent nuclear fuel constitutes a "[f]ailure to perform." Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336, 1343 (Fed. Cir. 2000). Nevertheless, following the contracting officer's issuance of her preliminary determination, the United States Court of Appeals for the District of Columbia Circuit issued a writ of mandamus, ordering DOE "to proceed with contractual remedies in a manner consistent with NWPA's command that it undertake an unconditional obligation to begin disposal of the SNF by January 31, 1998." Northern States Power Co. v. United States, 128 F.3d 754, 760 (D.C. Cir. 1997). The D.C. Circuit, after barring "DOE from concluding that its delay is unavoidable on the ground that it has not yet prepared a permanent repository or that it has no authority to provide storage in the interim," held that the "Unavoidable Delays" clause, "insofar as it is applied to DOE's failure to perform by 1998, is inconsistent with DOE's statutory obligation to assume an unconditional duty" and issued its writ to preclude DOE from relying upon that provision. Id. at 760-61. We have consistently argued, most recently in briefing before the Federal Circuit in PSEG Nuclear, LLC v. United States, No. 05-5162 (Fed. Cir.), that the D.C. Circuit overstepped its jurisdiction and authority in issuing this writ of mandamus (given that the judicial review provision of the NWPA, 42 U.S.C. § 10139, does not permit the D.C. Circuit to review contract administration matters) and, further, that the "Unavoidable Delays" clause in the Standard Contract was wholly appropriate and legal. The D.C. Circuit has eliminated one of the central provisions of the Standard Contract that governs the parties' liability in the event of delays in SNF acceptance. With this clause, DOE would have had the ability to present an absolute defense to liability in this case. The effect of the D.C. Circuit's elimination of at least a portion of this contract clause from the Standard Contract, 14 years after the contract was entered, has a staggering effect upon the United States: rather than excusing DOE's liability for the course of the unavoidable delay, DOE now faces billions of dollars in damages claims. The writ of 2

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WEPCO's causation theory is meritless. When WEPCO first disclosed its damages claim in July 2005, the claim was predicated upon the argument that, had DOE performed by beginning acceptance of SNF from WEPCO's Point Beach plant in 1998, WEPCO would not have needed any additional storage at the site. As such, WEPCO argued that it was entitled to all of the costs that it incurred to add dry storage at Point Beach. After extensive discovery by the Government, and after the WEPCO company witnesses had been confronted with the many company documents establishing that, when it made its decision to implement dry storage, WEPCO believed that it would run out of SNF storage capacity before DOE was obligated to begin SNF acceptance from the Point Beach plant, WEPCO reformulated its claim. WEPCO now contends that it had known all along that it would need additional SNF storage capacity before DOE was to begin acceptance in 1998. WEPCO further contends that, had it believed that DOE would have performed as expected, it would have handled that problem

mandamus wholly changes the nature of the Standard Contract, essentially and inappropriately creating a contract (one without an "Unavoidable Delays" clause) between the parties to which DOE never agreed, further bringing into question the appropriateness of a liability finding here. Nevertheless, because the D.C. Circuit's writ of mandamus is continuing, it affects our ability to rely upon the "Unavoidable Delays" clause. In Nebraska Public Power Dist. v. United States, 73 Fed. Cl. 650 (2006), amended, No. 01-116C, 2006 WL 3754809 (Fed. Cl. Dec. 19, 2006), the Court recently found that the D.C. Circuit's writ of mandamus was invalid because that court was without jurisdiction to issue the writ and there was no waiver of sovereign immunity permitting the writ. Id. at 674. On December 19, 2006, the Court certified the issue of the validity of the D.C. Circuit's writ of mandamus for interlocutory appeal. Nebraska Public Power Dist. v. United States, No. 01-116C, 2006 WL 3754809 (Fed. Cl. Dec. 19, 2006). Although the Court has determined liability in this case, that decision does not constitute law of the case, and the Court has not had the benefit of considering whether DOE's delays fall within the Unavoidable Delays clause of the Standard Contract. Plainly, whether the Government's delay in SNF acceptance constitutes an "Unavoidable Delay" under the Standard Contract is relevant in this case. We respectfully reserve our right to raise any appropriate defenses based upon the "Unavoidable Delays" clause to the extent that, in the future, we are permitted to do so. 3

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by the use of a temporary storage rack in the cask laydown area of its spent fuel pool. WEPCO contends that this project would have been performed during the 1993 through 1996 time period, but that its belief that DOE was not going to begin SNF acceptance in 1998 caused it to implement dry storage instead. We will establish at trial that WEPCO's reformulated damages claim is based upon a SNF storage management model that could only have been developed with the clarity of hindsight and is not supported by evidence. We will establish through contemporaneous evidence that, when WEPCO's management decided to implement dry storage, WEPCO believed that it needed additional permanent SNF storage in an amount in excess of what could have been provided by the newly-minted temporary solution that it has only recently identified. At that time, dry storage was the only SNF storage alternative that WEPCO believed could have provided it with the permanent SNF storage capacity that it needed to allow it to continue to operate until DOE was scheduled to begin acceptance from Point Beach. Because WEPCO's decision to implement dry storage was based upon its belief about its storage needs rather than what it believed about DOE's performance, the costs that WEPCO incurred to implement dry storage were not caused by DOE's delay in performance. At trial, WEPCO bears the burden of proving that its damages were foreseeable, were caused by DOE's partial breach, and are reasonably certain. As part of that legal obligation, WEPCO must establish that it properly has accounted for costs that would have been incurred had DOE performed beginning in 1998. This legal burden is real, and WEPCO must do more at trial than simply identify costs that it has incurred in connection with the storage of SNF and shift to the Government the burden of disproving foreseeability, causation, and reasonable certainty. 4

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WEPCO apparently intends to characterize all of its claimed costs as "mitigation efforts" in an attempt to place the burden on the Government to disprove their reasonableness, without ever establishing as an initial matter that the need for these efforts was actually caused by DOE's delay and would not have been necessary in the "but for" world. It has no basis for avoiding its own need to meet its own burden of proof. STATEMENT OF FACTS I. THE ORIGINAL PROVISIONS OF THE NUCLEAR WASTE POLICY ACT

On January 7, 1983, the Nuclear Waste Policy Act of 1982 ("NWPA"), Pub. L. 97-425, 96 Stat. 2201 (codified at 42 U.S.C. §§ 10101-10270 (1982)), was enacted. In its statement of the statutory purposes underlying the NWPA, Congress identified the following four objectives: developing repositories to ensure the protection of the public and the environment from the hazards posed by SNF and high level radioactive waste ("HLW"); establishing Federal responsibility and policy for the disposal of SNF and HLW; defining the relationship between the Federal Government and state governments regarding SNF and HLW disposal; and establishing a Nuclear Waste Fund, financed by the utilities, to pay for the costs of the DOE program. Id. § 10131(b). The NWPA defines a specific process by which the Secretary of Energy, the President of the United States, and the United States Congress would determine a site for a repository for the permanent deep geologic disposal of SNF. See 42 U.S.C. §§ 10132, 10134, 10135. Congress also included in the NWPA provisions allowing the Secretary to study the possibility of creating Monitored Retrievable Storage ("MRS") facilities, with Congress finding that "long-term storage

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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).3 In addition, the NWPA authorized the Secretary to 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 contracts had to "provide for payment to the Secretary of fees . . . sufficient to offset expenditures" described elsewhere in the statute. Id. II. THE DEPARTMENT OF ENERGY'S PROMULGATION OF THE "STANDARD CONTRACT FOR DISPOSAL OF SPENT NUCLEAR FUEL AND/OR HIGH-LEVEL RADIOACTIVE WASTE" THROUGH NOTICE AND COMMENT RULEMAKING IN THE FEDERAL REGISTER A. The Proposed Rule

On February 4, 1983, the Department of Energy ("DOE"), in furtherance of its obligations under the NWPA, published a notice of proposed rulemaking in the Federal Register, proposing terms for the Standard Contract. See 48 Fed. Reg. 5458 (Feb. 4, 1983). The proposed Standard Contract provided a mechanism for determining the order in which, and the rate at which, the contract holders' SNF would be accepted. As for the order of SNF acceptance, the Standard Contract proposed that DOE would 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. Id. at 5464 (Art. VI.B.3). Although the proposed Standard Contract did not
3

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). 6

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identify a specific rate by 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. Id. at 5463 (Art. V.B.5 & Art. V.B.6). 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, and DOE's approval, of delivery commitment schedules ("DCSs"). Id. at 5462. The proposed Standard Contract also provided for the contract holders' submission of Final Delivery Schedules ("FDSs"), which would take the annual allocation defined in an approved DCS and refine it to reflect as closely as possible the month(s) and day(s) upon which acceptance of particular SNF would occur. Id. at 5463 (Art. IV.C). The term "DOE facility" in the proposed Standard Contract referred to a permanent repository for disposal of the SNF and/or HLW. Id. at 5462 (Art. I.11). The proposed rule provided for written comments to be submitted by March 7, 1983. Id. at 5458. B. Public Comments

DOE received numerous comments in response to the proposed rule. A number of the comments recognized that the Standard Contract did not establish a specific rate at which DOE must accept SNF, and sought to have such a rate included. The Edison Electric Institute ("EEI"), an association of the nuclear power industry to which WEPCO belonged, requested as follows: The 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 7

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DOE to a specific numerical receiving rate, DOE should recognize, at least qualitatively, the need to have adequate annual receiving capacity to handle industry needs.

DX 501.34, Attachment A at 2 (ARC0010334). Other utilities submitted similar comments seeking firm commitments regarding the rate of SNF acceptance. For example, Tennessee Valley Authority ("TVA") submitted a comment, stating 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 5 (ARC0010537). Although TVA recognized that, "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," it 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. DOE also received comments seeking a commitment for DOE to accept SNF at the rates set forth in the Mission Plan that DOE was to prepare in accordance with statutory requirements for ultimate submission to Congress, for its review and consideration. For instance, Florida Power & Light Company, expressly 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. DX 501.43, attachment 1 at 1 (ARC0010439).

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WEPCO sent a letter to DOE on March 9, 1983. In that letter, WEPCO, like many other utilities, endorsed EEI's comments upon the draft Standard Contract. DX 42. EEI 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 4 (ARC0010336). EEI 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, "[t]o accommodate this, the definition of `DOE Facility' should be broadened." Id. at 5 (ARC0010337); see DX 501.14 (ARC0010180) (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 (ARC0010625) ("[t]his change would recognize the possibility of DOE shipping SNF/HLW to an intermediate storage facility such as a monitored retrievable storage facility"). C. The Final Rule

On April 18, 1983, DOE issued the Standard Contract as a final rule. The final rule, as promulgated, made certain modifications to the Standard Contract as set forth in the proposed rule. 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. at 5462, 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. Instead, the final Standard Contract only required DOE to begin SNF acceptance by January 31, 1998, after the commencement of "facility" operations. 10 C.F.R. § 961.11, Art. II. The "facility" to which the 9

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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. Id. § 961.11, Art. I.10. 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). DOE did not adopt the suggestion of EEI and many of the utilities to incorporate into the contract a requirement that DOE accept SNF at a rate equal to the annual generation rate plus some additional amount to reduce the accumulated backlog. The Government will show at trial that DOE determined it could not obligate itself to satisfy such a commitment because the number of uncertainties concerning the development of the program, the development of the contemplated disposal facilities, and the potential capabilities for accepting SNF that could be developed by 1998. Accordingly, DOE specifically declined to create any commitment to accept SNF beginning in 1998 at a specific minimum rate or based upon any mandatory minimum criteria. Instead, the contract provided that the acceptance rate would be developed later through the promulgation of the 1991 ACR. The utilities acknowledged that DOE rejected their requests regarding the inclusion of a qualitative description of the acceptance rate in both internal memoranda and correspondence

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with DOE. For example, TVA noted that its request regarding the acceptance rate term had been rejected: DOE did not accept TVA's suggestion that DOE should start accepting delivery of SNF and HLW in 1998 at a rate not less than that which they are being produced by the civilian nuclear power industry as a whole. DX 526, Attachment 2 at 3 (TV1471) (TVA memorandum, dated May 24, 1983); see also DX 532 at 1 (YDK023771) (Yankee Atomic memorandum, dated January 20, 1984). Similarly, in a letter to Robert Morgan of DOE, EEI complained that the Standard Contract as promulgated lacked "standards or milestones for DOE's performance . . . ." DX 528, Attachment 1 at 1 (SN011049).4 Finally, the Standard Contract contained an integration clause, which precluded 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.5

DOE likewise 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 1 (ARC0010439). The Standard Contract also included a "Disputes" clause that provided a mandatory administrative mechanism for the resolution of disputes arising under the contract. 10 C.F.R. § 961.11, Art. XVI.A. 11
5

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III.

WEPCO'S EXECUTION OF ITS STANDARD CONTRACT

On June 16, 1983, WEPCO executed its Standard Contract with DOE, which covered the SNF generated at the Point Beach nuclear plant, and which contained essentially the same terms and conditions as the final rule promulgated by DOE on April 14, 1983. See DX 169. IV. ISSUANCE OF THE MISSION PLAN AND ITS AMENDMENT

In June 1985, DOE issued and submitted to Congress the Mission Plan, in accordance with the requirements of 42 U.S.C. § 10221, which 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 chapter." 42 U.S.C. § 10221(a). In the 1985 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. DX 536, Volume 1 at 25-26 (HQR0031129-30). The schedules contained in the Mission Plan projected annual SNF generation rates from utilities nationwide of approximately 3,000 MTU in 1998 and increasing by 2007 to over 4,000 MTU per year. Id.6 The Mission Plan noted that these schedules were "only an approximation of how the system may operate and is subject to considerable variation. The DOE will further define and specify the system acceptance parameters as the program progresses." DX 536 at 29 (HQR0031133). The Mission Plan further advised: 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

6

Today, utilities discharge approximately 2,000 MTU of SNF per year. 12

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begin to publish firm waste-acceptance schedules for individual reactors, including shipment allocations. Id. In the 1987 Mission Plan Amendment, submitted to Congress in June 1987, DOE recommended deferral of the date contemplated for operation of the first repository from 1998 to 2003, with the second repository becoming operational by 2023. The Mission Plan Amendment reflected DOE's recognition that acceptance beginning in 1998 could not begin at a permanent repository. DOE explained that its recommendation was based upon experience gained in the program, a budget decrease for Fiscal Year 1987, and budget uncertainty for Fiscal Year 1988. However, DOE noted that it could nonetheless begin waste acceptance in 1998 at an MRS facility.7 DX 543 at 6 (HQR0031634). The 1987 Mission Plan Amendment acknowledged the importance of the Annual Capacity Report that would be issued in 1991 ­ namely, that it would be used as the basis for the DCS process. DX 543 at 60 (HQR0031687). V. THE 1987 AMENDMENTS TO THE NUCLEAR WASTE POLICY ACT

On December 22, 1987, after DOE submitted the 1987 Mission Plan Amendment, Congress amended the NWPA "to redirect the program for the management and disposal of spent nuclear fuel and high-level radioactive waste under the [NWPA]." S. Rep. No. 100-152, at 1 (Sept. 1, 1987). The Senate Committee on Energy and Natural Resources reported, in considering legislation to amend the NWPA, that "[t]he schedules included in the NWPA have proven to be overly ambitious" and that "[t]his has been largely due to the need to provide additional time for completion of necessary technical work and additional time for public
7

The ability to start accepting waste in 1998 at an MRS facility was dependent upon congressional authorization. See 42 U.S.C. § 10161(b)-(c) (1982). 13

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participation." Id. at 5. The committee reported that, "[i]n the four and a half years since passage of the NWPA, it has become clear that the program laid out in the Act will take longer to complete than was anticipated and that completion will be at much greater cost." Id. It further reported that, "[i]n addition to cost and schedule considerations, a number of other circumstances have changed since passage of the NWPA," including that, "as we approach major decision points in the nuclear waste program, there will be great potential for political opposition . . . ." Id. The 1987 amendments to the NWPA directed DOE to characterize a single site, at Yucca Mountain in Nevada, for development of a permanent repository and to terminate activities at all other sites. 42 U.S.C. § 10172(a). The 1987 amendments also authorized the Secretary to site, construct, and operate one, but only one, MRS facility. 42 U.S.C. § 10162(b). However, the 1987 amendments provided that "construction of [the MRS] facility may not begin until the Commission has issued a license for the construction of a repository under section 115(d)." 42 U.S.C. § 10168(d)(1). Finally, they also provided that "the quantity of [SNF] at the site of such facility at any one time may not exceed 10,000 metric tons of heavy metal until a repository under this Act first accepts [SNF]." Id. § 10168(d)(3).8

The 1987 amendments to the NWPA also established the Office of the Nuclear Waste Negotiator. 42 U.S.C. § 10242(a). That office was to seek to enter into negotiations with states and Indian tribes to "attempt to reach a proposed agreement" with them through which a state or Indian tribe "would agree to host a repository or [MRS] facility with such State or reservation." Id. § 10243(a). The authorization for that office expired in 1994, id. § 10250, without any agreements with any states or Indian tribes. 14

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VI.

DOE'S ISSUANCE OF ANNUAL CAPACITY REPORTS A. The 1987 Through 1990 Annual Capacity Reports

Beginning in 1987, in compliance with the NWPA and the language of the Standard Contract, DOE issued an "Annual Capacity Report." As each of these ACRs expressly stated, "[a]s specified in the Contract, the ACR is for planning purposes only and thus is not contractually binding on either DOE or the Purchasers." DX 542 at 2 (HQR0012713), DX 549 at 1 (HQR0012617), DX 558 at 2 (HQR0012494) ("projections in this initial report are based on current plans and best available information; they are not contractually binding"). Further, each of the ACRs from 1987 through 1990 contained the following, or substantially similar, language: Beginning in 1991, the ACR acceptance ranking will be converted into an Annual Priority Ranking for receipt of SNF/HLW. In 1992, based on this priority ranking, the Purchasers will submit to DOE for approval, Delivery Commitment Schedules identifying the SNF/HLW that Purchasers propose to deliver to the DOE waste management system (WMS). Once approved, these schedules will become the basis for Final Delivery Schedules to be submitted by the Purchasers not less than 12 months before the date of DOE's anticipated acceptance of title to the SNF/HLW and subsequent transport to a DOE facility. DX 542 at 2 (HQR0012713), DX 549 at 2 (HQR0012618), DX 558 at 2 (HQR0012494). B. The 1991 Annual Capacity Report

In December 1991, DOE issued its "Annual Capacity Report" for that year, DOE-RW331P. DX 566 at 1-2 (HQR0020797-HQR0020798). The 1991 ACR was significant because it was the last ACR that would be issued before the contract holders were to begin submitting DCSs beginning January 1, 1992. See 10 C.F.R. § 961.11, Art. V.B.1. In that regard, the 1991 ACR provided that, "[b]eginning in January 1992, the Purchasers may submit Delivery

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Commitment Schedules (DCS) to DOE identifying the range of SNF that the Purchasers propose to deliver to the Federal Waste Management System (FWMS) beginning sixty-three months thereafter." DX 566 at 2 (HQR0020804). It also stated that "[t]he Purchasers' allocations for each delivery year are presented in Tables A.1 through A.10 in Appendix A, and should be used as the basis for submitting DCSs." Id. at 2, 7. As dictated by the Standard Contract, the 1991 ACR specified the rate of acceptance for the first 10 years of the DOE program, beginning in 1998. Specifically, the 1991 ACR specified the following acceptance rate: TABLE 2.1 Projected Waste Acceptance Rates for Spent Nuclear Fuel Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 TOTAL SNF (MTU) 400 600 900 900 900 900 900 900 900 900 900 8,200

DX 566 at 5 (HQR0020807). This rate was created with the knowledge that no permanent repository would be available by January 31, 1998. Id. at 4 (HQR0012365). Instead, "the waste acceptance projections used in this ACR are representative of a FWMS [Federal Waste Management System] configuration authorized by the NWPA, which includes a Monitored

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Retrievable Storage (MRS) facility." Id. In particular, the rates were "consistent with the 10,000 MTU storage capacity limit contained in the NWPA for an MRS facility before a repository starts operation." Id. DOE noted, however, that the schedule assumed that the schedule linkages between the MRS construction and repository construction authorization would be eliminated. Id. In a memorandum dated December 20, 1991, Ronald A. Milner, Associate Director for Storage and Transportation, stated in a memorandum to John Bartlett, Director, Office of Civilian Radioactive Waste Management, as follows: The 1991 ACR assumes that FWMS [Federal Waste Management System] operations commence in 1998 and the system configuration is that authorized by the Nuclear Waste Policy Amendments Act of 1987, specifically a Monitored Retrievable Storage facility with a 10,000 MTU storage limit prior to repository operations. The 1991 ACR differs from previously published ACRs for two reasons. First, while the information in the ACR has traditionally been used for planning purposes only, the allocations in the 1991 ACR will also serve as the basis for submission of Delivery Commitment Schedules (DCS) by the Contract holders. These DCSs, which will provide planning information for waste acceptance activities, may be submitted to the Department as early as January 1, 1992. DX 570 (EDB0011764). The utility industry recognized the importance of the 1991 ACR in the determination of delivery commitments for performance beginning in 1998. See, e.g., DX 571 at 2 and 3 (SN169910) (UWASTE memorandum explaining that the ACR and APR "are necessary to properly complete the DCS forms"); DX 572 at 2 (SN170373) (same); DX 544 at 8 (YDK038298) (UNWMG memorandum describing the 1991 ACR as "contractually binding"). 17

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C.

The 1992 Through 1995 Annual Capacity Reports

The 1992 ACR, which was issued in May 1993, contained the same acceptance rates as the 1991 ACR. DX 578 at 4 (HQR 0012324). The 1992 ACR also provided that, "[d]uring the first ten years following projected commencement of the Civilian Radioactive Waste Management System (CRWMS) operation, the total quantity of SNF that could be accepted is projected to be 8,200 MTU." DX 578 at v (HQR 0012319). It stated that "[t]his is consistent with the storage capacity licensing conditions imposed on an MRS facility by the NWPA." Id. In 1995, DOE issued a combined APR and ACR, to "establish[] the order in which the Department allocates the projected acceptance capacity for commercial [SNF]" and to appl[y] projected nominal acceptance rates for the system to the priority ranking in the APR, resulting in individual allocations for the owners and generators expressed in metric tons per uranium (MTU)." DX 584 at 1 (HQR0290676). The 1995 ACR contained substantially similar SNF acceptance rates as the 1991 and 1992 ACRs, identifying a projected nominal waste acceptance rate of 8,200 for the first 10 years of SNF acceptance. Id. at 4 (HQR0290681). The 1995 ACR also contained the following statement: The ACR (see Appendix B) applies a 10-year projected nominal waste acceptance rate to the APR, resulting in individual capacity allocations. In the previous ACR, the projected nominal acceptance rate was based on the assumption of SNF acceptance beginning in 1998 at a Monitored Retrievable Storage facility prior to repository operations. Due to the uncertainty associated with the date of commencement of operation of the waste management system, the annual nominal waste acceptance rates are presented by year(s) of operation of the system rather than by specific calendar year(s). The projected nominal acceptance rates also reflect the capacity limit imposed by the Act on such a storage facility prior to repository operations. These projected nominal waste acceptance

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rates are presented in Table 1. The Department will continue to process DCS submittals on an annual basis. Id. at 3-4 (emphasis added). The 1995 ACR further provided that the capacity allocations listed in the ACR "form the basis for the Purchasers' submittal" of DCSs. Id. at 1. VII. PROGRAM DOCUMENTS REFLECT PLANNED ACCEPTANCE AT AN MRS FACILITY A. Program Reassessment And 1991 Draft Mission Plan Amendment

In November 1989, the Secretary of Energy submitted a report to Congress regarding DOE's reassessment of the program. In this report, DOE stated that it would be unable to begin operations at a permanent repository until 2010, because there was insufficient time to perform the scientific investigation necessary. DX 553 at vii-ix (DB001448-50). However, DOE also stated that it planned "to work with Congress to modify the current linkages between the repository and the MRS facility and to embark on an aggressive program to develop an integrated MRS facility for spent fuel." Id. at ix-x (DB0001450-51). DOE further advised that, "if the linkages [were] modified, it [was] likely that waste acceptance at an MRS facility could begin by 1998 or soon thereafter." Id. In September 1991, DOE issued another Draft Mission Plan amendment, which provided further details upon the "action plan" set forth in the Secretary's 1989 Reassessment. DX 564 at ___ (HQR0030799). In accordance with the 1989 Reassessment, the 1991 Draft Mission Plan Amendment reaffirmed DOE's plans to begin performance in 1998 at an MRS. To achieve the objective of timely and adequate waste acceptance, we plan to develop an MRS facility that is to start waste acceptance in 1998. To make this possible, the President's legislative package for the National Energy Strategy includes a provision to repeal the schedule linkages established in the Nuclear Waste Policy 19

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Amendments of 1987 (Amendments Act). This could also be achieved by congressional enactment of a negotiated siting agreement reached through the efforts of the Nuclear Waste Negotiator. Id. at 18 (HQR0030825). The schedule set forth in the 1991 Mission Plan Amendment showed acceptance by DOE up to the 10,000 MTU limit upon the MRS until the repository began operations in 2010. Id. at 205-206. B. Preliminary Estimates Of The Total-System Life Cycle Cost For The Restructured Program

DOE's anticipation of performance at an MRS was also reflected in the cost analyses that it performed around the time of the 1991 ACR to support the adequacy of fees collected for the Nuclear Waste Fund. The fee paid by utilities, 1 mil per kilowatt hour, was established by Congress in enacting the NWPA. 42 U.S.C. § 10222(a)(2). Pursuant to the NWPA, DOE is required annually to assess whether the fees collected pursuant to statute are adequate to fund all of the efforts necessary to implement the NWPA. 42 U.S.C. § 10222(a)(4). The Secretary is to advise Congress if the fee is found to be inadequate. Id. To determine whether the fee is adequate, DOE first prepares a Total System Life Cycle Cost report, in which it projects the total cost of the program. This total system cost projection is based upon the projected number of years that the program is estimated to operate, projected transportation requirements, projected interest rates, and other factors. The current program plans, including acceptance rate projections, type and location of receiving facilities, and scope of the transportation program, are the basis for