Free Motion for Leave to File - 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. WISCONSIN ELECTRIC POWER COMPANY'S MOTION FOR LEAVE TO FILE AN AMENDED AND SUPPLEMENTAL COMPLAINT Pursuant to Rules 15(a) and (d) of the Rules of the Court of Federal Claims ("RCFC"), plaintiff Wisconsin Electric Power Company ("WE") moves for leave to amend and supplement its Complaint. WE seeks the Court's permission to file the Amended and Supplemental Complaint (Attachment A to this motion) in order to specify its damages in greater detail and to update the damages that WE has incurred in the more than five years since WE filed its original Complaint. I. BACKGROUND No. 00-697C (Senior Judge Merow)

On November 16, 2000, WE filed a Complaint alleging a continuing partial breach of contract arising from the Department of Energy's ("DOE's") failure to remove Spent Nuclear Fuel ("SNF") from WE's Point Beach Nuclear Plant as required by WE's Standard Contract with the DOE, as well as other claims. Compl. at 7-10. WE's Complaint alleged that its damages, estimated at $35 million by August 2000, "continue to accrue." Id. at ¶ 21. Further, WE reserved the right to recover presently unascertainable damages that may be caused by the DOE's future partial breaches of the Standard Contract. Id. On February 22, 2005, shortly after discovery regarding WE's damages case began, WE filed a motion for an order regarding subsequent damages actions. WE asked the Court

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to issue an order allowing WE to recoup all damages incurred through December 31, 2015 attributable to DOE's partial breach of contract through 2010. WE Mot. at 1. WE further asked the Court to allow WE, pursuant to Section 26 of the Restatement (Second) of Judgments, to reserve for a later-filed action its right to recover future damages. Id. at 5-8. The Government cross-moved, seeking to dismiss all the damages that WE had incurred subsequent to the filing of its Complaint. On July 14, 2005, WE served on the Government its Kenrich Group damages expert report for the calculation of damages ("Damages Calculation Report"). The report divided damages into past and future damages, with past damages defined as those incurred through December 31, 2004. See Damages Calculation Report at 4. In an August 30, 2005 Order, the Court ordered the matter to proceed to trial with evidence as to damages accrued prior to 1998 and subsequent thereto until 2010 and denied the Government's cross-motion. Additionally, the Court reserved as separate cause(s) of action (1) post-2015 impacts of pre-2010 breaches and (2) damages incurred as a result of post-2010 Government breach(es) of contract. On October 3, 2005, the Government filed a motion for reconsideration of the Court's August 30, 2005 Order. The Government asked the Court to enter an order precluding WE from claiming damages after the date of WE's original Complaint based on the Federal Circuit's decision in Indiana Michigan v. United States, 422 F.3d 1369 (Fed. Cir. 2005). The Government did not challenge the Court's reservation of WE's future damages as separate causes of action. On November 7, 2005, pursuant to the Court's request,1 WE responded to the Government's motion for reconsideration. WE explained in its opposition that the

During an October 25, 2005 conference call, WE informed the Court that it could not, under RCFC 59(b), oppose the Government's motion for reconsideration in the absence of a request from

1

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Government misread the Indiana Michigan decision which focused on prohibiting the award of future damages, not those already incurred. WE Opp'n at 4-5. WE requested that the Court deny the Government's motion and, instead, enter an order providing that WE can seek damages through December 31, 2005 in this action and damages arising after that date in future actions. Id. at 5. WE also informed the Court that it intended to move for leave to amend its Complaint in early 2006 to expressly claim WE's damages incurred through December 31, 2005. Id. at 4. In its November 21, 2005 Reply, the Government took the position that, the Indiana Michigan decision notwithstanding, it would evaluate WE's Amended and Supplemental Complaint based on a multi-factor test purportedly resulting from the Court's September 16, 2005 Order in Southern Nuclear Operating Co. v. United States, No. 98-614C (Fed. Cl. 2005).2 The Government identified the following factors that it would examine before taking a position regarding whether WE should be granted leave to amend its complaint: the date upon which Wisconsin Electric would provide [the Government] with an updated claim, the amount of time available for fact and expert discovery upon that claim, the amount of time remaining before trial, and the relationship between the damages claimed in the first complaint and those in the amended complaint. Gov't Reply at 5-6. The parties' differing positions regarding the import of the Federal Circuit's Indiana Michigan decision did not impact the on-going audit verification process in this case. On November 14, 2005, the parties commenced a three-day audit meeting at WE's Milwaukee offices regarding WE's claimed damages. During the audit, Government counsel and

the Court to do so. The Court then requested that WE file a response to the Government's motion for reconsideration. That order only addressed the time period for which partial breach damage evidence would be offered in Southern. It did not address the standard under the RCFC for leave to amend or to supplement a complaint.
2

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Government experts questioned knowledgeable current and former WE personnel regarding WE's claimed damages. In addition to its questions, the Government made more than two dozen requests for information covering policies, procedures, supporting documentation and other matters. During and after the meeting, WE responded to the Government's requests for information, serving its final responses on the Government on January 13, 2006. On December 19, 2005, the parties jointly moved the Court to revise and extend the pretrial schedule in the case. On December 20, 2005, the Court issued an Order extending fact and expert discovery through March 3 and July 7, 2006, respectively, and moving the WE trial date to March 27, 2007. II. A. ARGUMENT

WE Should Be Granted Leave to Amend Its Complaint Under Rule 15(a). WE's motion for leave should be granted in the interests of justice and to facilitate the

speedy and inexpensive determination of this action. See RCFC 1. Rule 15(a) states in pertinent part: "A party may amend the party's pleadings . . . by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." The decision to grant leave to amend a Complaint is within the sound discretion of the trial court. Holland v. United States, 62 Fed. Cl. 395, 406 (2005). The broad policy of granting amendments freely is based in part on the belief that decisions on the merits should be made whenever possible, absent countervailing considerations. Id. The U.S. Supreme Court has identified the types of limited considerations that can justify denial of a motion for leave to amend: "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc." Foman v. Davis, 371 U.S. 178, 182 (1962) (mandate of freely allowing amendment under Rule 15(a) "is to be heeded").

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No such considerations are present here. There has been no undue delay, bad faith or dilatory motive on the part of WE. There also has not been repeated failure to cure deficiencies by amendments previously allowed. WE's original Complaint sought both past and future damages. Further, WE's Amended and Supplemental Complaint sets forth the same causes of action contained in WE's original Complaint except that it adds a Count Four, Supplemental Pleading, that merely updates the damages. Thus, by this motion, WE merely seeks to affirm in greater detail the damages that WE has incurred and continues to incur arising from the Government's continuing partial breach of the Standard Contract. In addition, the expert report submitted by WE's damages experts also addressed both past and future costs. Once the Government raised a question regarding whether WE could recover past damages incurred since the filing of the Complaint based on the Federal Circuit's Indiana Michigan decision, WE moved promptly to file this motion. There will be no "undue prejudice" to the Government based on the pleadings and proceedings to date. As discussed, from the beginning of this action, the Government has been on notice that WE's damages would continue to accumulate after the filing of its complaint. See Compl. ¶ 20. Moreover, from the start of discovery regarding WE's damages, the Government has been on notice of WE's intent to present damages evidence through 2010. See WE Mot. at 1. B. WE Should Be Allowed to Supplement Its Complaint Under Rule 15(d). Rule 15(d) permits a party to set forth "transactions or occurrences or events which have happened since the date of the pleading sought to be supplemented." The purpose of Rule 15(d) is to promote as complete an adjudication of the dispute between the parties as possible by allowing the addition of claims that arise after the initial pleadings are filed. William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 668 F.2d 1014, 1057 (9th Cir. 1981) (applying parallel Fed. R. Civ. P. 15(d)). Further, it is an abuse of discretion to

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deny an amendment when a supplemental complaint "relates to the same cause of action originally pleaded." Intrepid v. Pollock, 907 F.2d 1125, 1129 (Fed. Cir. 1990). Rule 15(d) allows a plaintiff to supplement its complaint when there has been an increase in damages identified in the original complaint. J. F. Shea Co. v. United States, 4 Cl. Ct. 46, 54-55 (1983), aff'd, 754 F.2d 338 (Fed. Cir. 1985) ("it must be recognized that additional facts may be developed which could increase or decrease the amount of a claim"); see also St. Paul Fire & Marine Ins. Co. v. United States, 1994 WL 874400, at *15 (Fed. Cl.) (citing Shea and Rule 15(d), the Court stated: "[T]he rules of this court allow for amendments or supplemental pleadings that increase previously-categorized damages which have changed during the course of the litigation."). Indeed, an important purpose of supplemental pleading is to bring into the record new facts which will enlarge or change the kind of relief to which the plaintiff is entitled. Southern Pac. Co. v. Conway, 115 F.2d 746, 750 (9th Cir. 1940). In the instant case, WE's proposed Amended and Supplemental Complaint alleges further damages incurred after the filing of the original Complaint, resulting from the Government's same continuing partial breach of the Standard Contract. In its original Complaint, WE alleged the following: As a direct and proximate result of DOE's partial material breach of the Standard Contract, WE has incurred and will incur damages in a substantial amount which, as noted, exceeded $35 million dollars by August, 2000. WE's damages continue to accrue. The rate at which WE's damages will continue to accrue is dependent upon when and on what schedule DOE finally performs its contractual obligation. WE reserves its rights to recover presently unascertainable damages that may be caused by DOE's future partial breaches of the Standard Contract. Compl. ¶ 21. The damages that WE incurred prior to filing its Complaint included, among other things, the cost to construct and maintain a dry storage facility and to develop and

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purchase casks for use at that facility. Id. ¶ 17. WE had paid $168 million into the Nuclear Waste Fund at that time. Id. ¶ 10. In its proposed Amended and Supplemental Complaint, WE alleges that it continues to pay fees ­ now exceeding $207 million ­ to DOE under the Standard Contract. Amended and Supplemental Compl. ¶ 34 (Attachment A). WE further alleges the following: From November 2000 and continuing through December 2005, as a direct and proximate result of the Government's continuing partial breach of WE's Standard Contract and continuing taking of WE's property without just compensation, WE has incurred substantial damages. The amount of damages suffered by WE during this period exceeds $26 million (present dollars as of March 27, 2007), the exact amount to be determined at trial. These costs related to the following transactions, occurrences, or events, among others: fabrication oversight, purchase, and delivery of dry storage containers; loading and handling of dry storage containers; operation and maintenance of WE's ISFSI; and spent fuel management activities to address the long-term disposal of spent fuel. Id. ¶ 36. In sum, the allegations of the proposed Amended and Supplemental Complaint all concern damages resulting from DOE's same and continuing breach of the Standard Contract. WE's Amended and Supplemental Complaint merely describes in greater detail the damages previously alleged and updates the same damages that WE has incurred since WE filed its original Complaint in 2000. In the period from November 2000 through December 2005, WE has incurred approximately $26 million (present dollars as of March 27, 2007) in additional damages attributable to the Government's continued failure to perform under the Standard Contract. The Amended and Supplemental Complaint is permitted under Rule 15(d) because it is "part of the same claim arising out of the government's acts." Intrepid, 907 F.2d at 1129-30. Accordingly, the Court should grant WE's motion for leave to file its Amended and Supplemental Complaint.

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C.

WE Should Be Allowed to Amend Its Complaint to Facilitate the Efficient Determination of This Case. WE has previously explained that allowing evidence of damages incurred prior to

trial is consistent with the Indiana Michigan decision. See WE Opp'n at 4-5. Consequently, WE believes that it is not required to file an amended complaint in order to claim damages after the date of the filing of its original Complaint through 2005. Nevertheless, WE takes this action to file an amended Complaint in an abundance of caution and to facilitate an efficient determination of this action for the following reasons. First, circumstances favor an update of WE's Complaint now. The Court recently entered a pretrial schedule, extending the discovery period and time until trial. Moreover, the recent completion of calendar year 2005 permits WE to serve an updated damages submission upon the Government, providing the past costs that WE incurred during 2005. In addition to the 2005 costs, WE also will provide to the Government an identification of a few additional costs that were incurred in 2001-2004. These costs are cask loading labor costs. All of these costs are the same type of costs as those previously claimed by WE. WE will serve supplemental disclosures for its updated damages, including accounting summaries and supporting data, on the Government this week. The combined total of WE's updated damages is only approximately $3 million. Second, the Government will not be prejudiced by the granting of this motion to permit WE to update its damages claim. WE furnished the Government with WE's damages through December 31, 2004 last year in its Damages Calculations Report. WE's updated damages are the same type of damages that WE has previously claimed and provided to the Government. Indeed, the Government is quite familiar with the costs at issue. The Government has had ample time to ­ and in fact has ­ explored these cost issues during damages discovery, including the three-day audit that occurred in November 2005. Under

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the applicable Rule 15 standard, WE's motion should be granted so that the damage totals may be updated through 2005. Moreover, all of the factors that the Government has asserted should be examined to determine whether WE should be able to amend and supplement its Complaint favor granting WE's motion. See Gov't Reply at 5-6. The Government is addressing all the costs at issue during ongoing discovery. Further, expert discovery does not begin for several months and trial is more than a year away. The costs that WE will update directly relate to those covered by WE's original Complaint. Therefore, WE should be permitted to supplement its pleading to allow these damages to be resolved in this proceeding. Third, WE should be allowed to amend its Complaint because it would avoid needless uncertainty. WE's Damages Calculation Report covered "past" damages through December 31, 2004, and WE will shortly supplement this information through 2005. The Government has taken extensive discovery regarding damages incurred from the filing of the initial Complaint in November 2000 through the present. Yet, unless WE is allowed to amend its Complaint, the Government may later question WE's ability to claim post-November 2000 damages based on the "time of suit" rule that the Government asserts was established in the Indiana Michigan decision. The Court should grant WE's motion to preclude such potentially distracting and unnecessary disputes.

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III.

CONCLUSION

For the foregoing reasons, WE respectfully requests that the Court grant WE's Motion for Leave to File an Amended and Supplemental Complaint Under Rules 15(a) and 15(d), and allow WE to file its Amended and Supplemental Complaint (see Attachment A).3

Dated: February 6, 2006

Respectfully submitted,

Of Counsel: Donald J. Carney Perkins Coie LLP 607 Fourteenth Street, N.W. Washington, D.C. 20005-2011 (202) 434-1675

s/Richard W. Oehler by s/Donald J. Carney Richard W. Oehler Perkins Coie LLP 1201 Third Avenue, Suite 4800 Seattle, Washington 98101-3099 (206) 583-8419

Attorneys for Plaintiff WISCONSIN ELECTRIC POWER COMPANY

WE has already requested that the Court reserve for future actions WE's ability to seek damages arising after December 31, 2005. WE Opp. to Gov't Motion for Reconsideration at 5 (Nov. 7, 2005). Therefore, WE does not need to address that request in this motion.

3

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CERTIFICATE OF SERVICE
I certify under penalty of perjury that, on February 6, 2006, I caused a copy of the foregoing "Wisconsin Electric Power Company's Motion for Leave to File an Amended and Supplemental Complaint" to be filed electronically. I understand that notice of this filing will be sent to all parties by operation of the Court's electronic filing system. Parties may access this filing through the Court's system. s/Donald J. Carney Donald J. Carney

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ATTACHMENT A

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS WISCONSIN ELECTRIC POWER COMPANY, Plaintiff, v. THE UNITED STATES, Defendant. AMENDED AND SUPPLEMENTAL COMPLAINT Plaintiff Wisconsin Electric Power Company ("WE") files this Amended and Supplemental Complaint pursuant to Rules 15(a) and 15(d), through its undersigned counsel, and states as follows: I. 1. NATURE OF THE CASE (Senior Judge Merow)

No. 00-697C

This is an action for money damages based on a breach of contract claim that

WE brought against the United States, acting through the U.S. Department of Energy ("DOE"). More specifically, the DOE undertook an unconditional obligation to begin disposing of spent nuclear fuel and high-level nuclear waste (collectively, "SNF") generated by the commercial nuclear facility owned and operated by WE. Pursuant to the Nuclear Waste Policy Act of 1982, as amended, 42 U.S.C. §§ 10101, et seq. ("NWPA"), DOE and WE entered into a contract in 1983 under which WE has paid and continues to pay substantial fees in return for DOE's obligation to begin removal and disposal of WE's SNF no later than January 31, 1998. WE has fully complied with its fee payment obligations under the contract. DOE, however, has failed to begin disposal of SNF as of January 31, 1998 and has stated that it will not do so until 2010 at the earliest. WE has incurred and will continue to incur significant costs and other damages as a result of DOE's partial material breach of its contractual obligations.

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II. 2.

PARTIES

WE is a Wisconsin corporation with headquarters in Milwaukee, Wisconsin.

It is primarily a public utility, providing energy to residential and business users. WE's parent corporation is Wisconsin Energy Corporation. WE is the owner and operator of Units 1 and 2 of the Point Beach Nuclear Plant ("Point Beach"). WE's nuclear plant has generated and continues to generate SNF, which is stored at the Point Beach site. 3. Defendant is the United States, acting through the DOE. III. 4. 5. JURISDICTION

The Court has jurisdiction over this action under 28 U.S.C. § 1491. WE and DOE entered into a Standard Contract for Disposal of Spent Nuclear

Fuel and/or High-Level Radioactive Waste (the "Standard Contract") pursuant to which DOE is to accept and dispose of the SNF generated by WE's nuclear plant in return for payment of fees by WE. DOE's failure to begin disposal of SNF by January 31, 1998 constitutes a partial material breach of its Standard Contract with WE for which WE may seek recovery of its damages without exhausting any administrative remedies. Northern States Power Co. v. United States, 224 F.3d 1361 (Fed. Cir. 2000). 6. Furthermore, Article XI of the Standard Contract states: "Nothing in this

Contract shall be construed to preclude either party from asserting its rights and remedies under the Contract or at law." This provides another basis for WE to pursue its legal claims without exhausting any administrative remedies. IV. 7. FACTS

In 1982, Congress enacted the NWPA, codifying the Federal Government's

commitment to accept responsibility for and to provide for the timely disposition of commercial SNF. Pursuant to the NWPA, DOE was required to commence disposing of commercially-generated SNF no later than January 31, 1998, in return for the payment of

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fees by utilities and others that generated or held title to the SNF. The fees are paid into the Nuclear Waste Fund, which is the source of funds to cover DOE's costs of disposing of the SNF. 8. Pursuant to the NWPA, DOE developed the Standard Contract in 1983. The

Standard Contract embodies the reciprocal obligations mandated by the NWPA, pursuant to which the utilities agreed to pay fees into the Nuclear Waste Fund in return for the provision of the SNF disposal services by DOE, beginning no later than January 31, 1998. The Standard Contract provides: "The services to be provided by DOE under this contract shall begin, after commencement of facility operations, not later than January 31, 1998 and shall continue until such time as all SNF . . . has been disposed of." See 10 C.F.R. Pt. 961.11, art. II. 9. Consistent with the NWPA, WE entered into a Standard Contract with DOE

on June 16, 1983. A copy of WE's contract as executed with DOE is attached as Exhibit 1. The Standard Contract requires DOE to commence disposal of WE's SNF no later than January 31, 1998. The Standard Contract also requires DOE to arrange for and to provide transportation casks and all necessary transportation of the SNF from WE's site to a DOE facility. The Standard Contract permits DOE, in order to carry out its obligations under the contract, to use any appropriate facility operated by or on behalf of DOE. 10. WE's Standard Contract provides that WE will pay the Government fees

which, together with fees paid by other utilities pursuant to contracts under NWPA, will be sufficient for DOE to implement and to operate a program for the prompt disposal of all the SNF that WE will be ready to deliver. As of November, 2000, WE had paid more than $168 million into the Nuclear Waste Fund pursuant to the Standard Contract and continues to pay fees into the Fund. 11. WE's Standard Contract provides that, in return for the payment of such fees,

DOE will implement and operate a program for the prompt disposal of all the SNF that WE

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will be ready to deliver. In the more than twenty-three years since the enactment of the NWPA, DOE has failed to take reasonable actions to develop and to implement an SNF disposal program or to perform its obligations to dispose of WE's SNF. 12. In 1995, DOE issued a Final Interpretation of Nuclear Waste Acceptance

Issues ("Final Interpretation") wherein DOE indicated that it would not have either a permanent repository or an interim storage facility available by 1998 and that it would not commence disposal of the SNF at a repository until 2010 at the earliest. 60 Fed. Reg. 21973, 21974 (May 3, 1995). The Final Interpretation also stated DOE's conclusion that the NWPA did not impose an obligation on DOE to dispose of the utilities' SNF in 1998 in the absence of a disposal or interim storage facility. 13. Several nuclear utilities then sought review of DOE's Final Interpretation in

the U.S. Court of Appeals for the District of Columbia Circuit. The D.C. Circuit ruled in favor of the utilities and held that the NWPA imposed upon DOE an unconditional obligation to begin disposing of SNF by January 31, 1998. Indiana Michigan Power Co. v. Dep't of Energy, 88 F.3d 1272 (D.C. Cir. 1996). The court further held that this obligation was reciprocal to the utilities' obligation to pay fees into the Nuclear Waste Fund. The court remanded the matter to DOE for proceedings consistent with the opinion. 14. Notwithstanding the D.C. Circuit's ruling, DOE advised WE and other

Standard Contract holders that it would not begin disposal of the SNF by the January 31, 1998 deadline. Furthermore, DOE took the position that its failure to meet this deadline was excused, arguing that its delay was unavoidable. 15. In response to DOE's action, the utilities filed another petition with the D.C.

Circuit for a writ of mandamus to compel DOE to comply with the mandate in Indiana Michigan. In Northern States Power Co. v. United States, 128 F.3d 754 (D.C. Cir. 1997), the D.C. Circuit reiterated that DOE had an unconditional obligation under both the NWPA and the Standard Contract to begin disposal of the utilities' SNF by January 31, 1998. The court

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held that DOE had a clear duty to act in accordance with this unconditional obligation and issued a writ of mandamus precluding DOE from arguing that its failure to meet the January 31, 1998 deadline was unavoidable. 16. Despite the ruling in Northern States, DOE made no effort to meet the

contractual deadline. DOE did not begin disposal of the SNF by January 31, 1998, as required by the NWPA and the Standard Contract, and has indicated that it will not begin to dispose of the SNF until 2010 at the earliest. DOE has failed and refused to provide any firm commencement date for the disposal of WE's SNF. 17. As a direct consequence of DOE's breach of contractual obligations, WE has

been and will be forced to incur substantial additional costs. For example, WE has had to construct and maintain a dry storage SNF facility known as the Independent Spent Fuel Storage Installation ("ISFSI"). Construction of the ISFSI required substantial evaluation by WE, including preparation of an environmental analysis; efforts to seek the approval of the Public Service Commission of Wisconsin; and efforts to seek the approval of the Nuclear Regulatory Commission for WE's use of casks at the ISFSI. WE has also had to spend substantial monies in developing and purchasing these casks, and incurred costs relating to the delivery, loading, and handling of dry storage containers. Moreover, WE incurred costs for spent fuel management activities to address the long-term disposal of spent nuclear fuel. As of November 2000, such costs exceeded $69 million (present dollars as of March 27, 2007). V. 18. COUNT ONE: PARTIAL MATERIAL BREACH OF CONTRACT WE incorporates by reference paragraphs 1 through 17 of this Complaint as if

set forth herein. 19. WE has complied with and continues to comply with all of its obligations

under the Standard Contract, including the payment of all required fees into the Nuclear Waste Fund.

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20.

The DOE has failed to perform its obligation under the Standard Contract to

dispose of all of WE's SNF beginning no later than January 31, 1998, and thereby has partially and materially breached the Standard Contract. 21. As a direct and proximate result of DOE's partial material breach of the

Standard Contract, WE has incurred and will incur damages in a substantial amount which, as noted, exceeded $69 million (present dollars as of March 27, 2007) by November 2000. WE's damages continue to accrue. The rate at which WE's damages will continue to accrue is dependent upon when and on what schedule DOE finally performs its contractual obligation. WE reserves its rights to recover presently unascertainable damages that may be caused by DOE's future partial breaches of the Standard Contract. VI. 22. COUNT TWO: BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING WE incorporates by reference paragraphs 1 through 21 of this Complaint as if

set forth herein. 23. The Standard Contract between WE and DOE contains an implied covenant of

good faith and fair dealing pursuant to which DOE has a duty to perform its obligations under the contract in good faith and not to take actions detrimental to WE's contractual rights. DOE has breached the covenant of good faith and fair dealing by failing and refusing to make any effort to meet the contractual deadline for beginning disposal of SNF; by attempting to avoid its obligations under the Standard Contract as defined by the D.C. Circuit; by failing to make any effort to dispose of WE's SNF or even to provide WE with a firm date on which DOE will begin to perform the SNF disposal operations; and by insisting on WE's continued performance of its reciprocal obligation to pay fees into the Nuclear Waste Fund despite DOE's refusal to perform. 24. DOE's failure to act has not been a result of inadequate resources. DOE

annual expenditures from the Nuclear Waste Fund have consistently been below the level of

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annual receipts into the Nuclear Waste Fund. There are ample funds available to DOE to comply with its obligations under the Standard Contract. 25. In contrast to DOE's failure to take any action to meet its Standard Contract

commitments, DOE has taken action to receive, transport and store the SNF from other utilities. For example, DOE continues to accept and store the SNF from foreign research reactors. 26. As a direct and proximate result of DOE's breach of the implied covenant of

good faith and fair dealing, WE has suffered and will continue to suffer damages in excess of $10,000. VII. 27. COUNT THREE: UNCOMPENSATED TAKING

WE incorporates by reference paragraphs 1 through 26 of this Complaint as if

set forth herein. 28. WE's interests in Point Beach and related land are property rights within the

meaning of the Fifth Amendment to the U.S. Constitution. 29. DOE's failure to dispose of WE's SNF denies WE the use and value of its

Point Beach site for the foreseeable future until DOE performs its obligation to dispose of WE's SNF. 30. DOE's failure to dispose of WE's SNF effects a taking by DOE of WE's

property interests for a public purpose, which requires DOE to pay WE just compensation for that property under the Takings Clause of the Fifth Amendment to the U.S. Constitution. 31. DOE's failure to dispose of WE's SNF has destroyed WE's reasonable

investment-backed expectations arising from the NWPA and WE's Standard Contract with DOE regarding WE's use of its Point Beach site for the foreseeable future. 32. By reason of the foregoing, the Government has taken WE's property without

compensation and is liable to WE for just compensation for that property under the Takings Clause of the Fifth Amendment to the U.S. Constitution.

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VIII. COUNT FOUR: SUPPLEMENTAL PLEADING 33. WE incorporates by reference paragraphs 1 through 32 of this Complaint as if

set forth herein. 34. Since filing the Complaint on November 16, 2000, WE has continued to pay

fees to DOE pursuant to the Standard Contract. As of December 31, 2005, WE had paid more than $207 million into the Nuclear Waste Fund pursuant to the Standard Contract and continues to pay fees into the Fund. 35. Since filing the Complaint on November 16, 2000, WE has incurred and

continues to incur additional damages at the Point Beach, which damages arise from the Government's same and continuing partial breach of WE's Standard Contract and the Government's same and continuing taking of WE's property without just compensation. 36. From November 2000 and continuing through December 2005, as a direct and

proximate result of the Government's continuing partial breach of WE's Standard Contract and continuing taking of WE's property without just compensation, WE has incurred substantial damages. The amount of damages suffered by WE during this period exceeds $26 million (present dollars as of March 27, 2007), the exact amount to be determined at trial. These costs related to the following transactions, occurrences, or events, among others: fabrication oversight, purchase, and delivery of dry storage containers; loading and handling of dry storage containers; operation and maintenance of WE's ISFSI; and spent fuel management activities to address the long-term disposal of spent fuel. 37. WE continues to reserve its right to recover future damages that may be

caused by the Government's future partial breaches of the Standard Contract and the Government's continuing taking of WE's property without just compensation. IX. PRAYER FOR RELIEF

WHEREFORE, WE respectfully requests that the Court enter judgment in its favor and against the United States as follows:

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1.

On Count One, for damages in an amount in excess of $69 million (present

dollars as of March 27, 2007), the exact amount to be proven at trial; 2. 3. 4. On Count Two, for damages in an amount to be proven at trial; On Count Three, for damages in an amount to be proven at trial; On Count Four, for damages in an amount in excess of $26 million (present

dollars as of March 27, 2007), the exact amount to be proven at trial; 5. 6. and 7. Such other relief as the Court deems just and equitable. Pre-judgment and post-judgment interest as permitted by law; Costs of this action, including reasonable attorneys' fees, as permitted by law;

Dated: February 6, 2006

Respectfully submitted, s/Richard W. Oehler by s/Donald J. Carney Richard W. Oehler Perkins Coie LLP 1201 Third Avenue, Suite 4800 Seattle, Washington 98101-3099 (206) 583-8419

Of Counsel: Donald J. Carney Perkins Coie LLP 607 Fourteenth Street, N.W. Washington, D.C. 20005 (202) 434-1675

Attorneys for Plaintiff WISCONSIN ELECTRIC POWER COMPANY

DA060370.046.DOC

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