Free Response to Supplemental Brief - District Court of Federal Claims - federal

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ATTACHMENT

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UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT CONSOLIDATED EDISON COMPANY ¯ OF NEW YORK,et al. Petitioners,
VS.

) ) ) )
)

No.: 98-1358

DEPARTMENT ENERGY,et al. OF Respondents.

) ) ) )

PETITIONERS' RESPONSEIN OPPOSITION TO MOTIONTO DISMISS PETITION Pursuant to Federal Rule Appellate Procedure27, Petitioners respectfully submit this response in opposition to Respondents' Motionto Dismissthe Petition filed by Petitioners in this case. PRELIMINARY STATEMENT

Congresspassed the Nuclear WastePolicy Act ("NWPA") t 982, to establish national in policy and a program directed at the consolidation of high level nuclear waste including spent nuclear fuel under federal control in centralized repositories. That statute directed the Departmentof Energy ("DOE"),in exchange for the paymentof fees by generators of spent nuclear fuel, to begin disposing of spent nuclear fuel no later than January 31, 1998. DOE's performance this obligation wasthe cornerstone of Congress'efforts to set federal policy and of address this matter of urgent importanceto national security and tbe health and safety of the nation. Se.__~e H.R.Rep. No.97-491,at 28-29. Congress ~lso imposed other obligations on Respondents. The NWPA obligates the Secretary of Energyannually to review the fees and propose adjustments if excess or insufficient revenues are being collected¯ 42 U.S.C. § 10222(a)(4) (1994). In addition, the NWPA requires

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the Secretary to issue written "criteria setting forth the terms and conditions under whichsuch disposal services shall be madeavailable." 42 U.S.C. § 10222(a)(6). TheSecretary has not met these requirements. Fifteen years and almost fifteen billion dollars in generators' fees, interest and incurred debt obligations later, DOE repudiatedits has unconditional statutory obligation to site, construct, and operate a repository and commence disposal of spent nuclear fuel as Congressdirected. OnJanuary 31, 1998, the date DOE to was begin disposing of spent nuclear fuel, DOE could not even predict with certainty when, where, or if this repository wouldbe built. Nevertheless, DOE continued and continues to extract from Petitioners and other generators over $600,000,000 year in fees (on top of the existing $7.5 per billion nuclear waste fund balance) to fund a "program"which does not complywith the requirements of the NWPA is of increasingly uncertain nature. and Meanwhile, Petitioners are faced with the problemof planning for, paying for, and operating interim fuel storage facilities never intended under the Act, with no idea howlong DOE's intransigence will require themto store this waste. Petitioners have no guidancein these matters becauseDOE failed to comply has with its obligations to establish criteria for the disposal of the spent nuclear fuel. Consumers, turn, pay in their powerrates for" a disposal in facility that does not exist evenon paper. OnJuly 31, 1998, Petitioners filed a Petition challenging Respondents' failure to compljr with the NWPA's collection and expenditure provisions and raising constitutional issues of fee critical importanceto Petitioners regarding DOE's assessment and collection of fees. Petitioners also challengedthe failure to establish written terms and conditions including schedule and rate of acceptance for disposal of spent nuclear fuel, and Respondents'misuse of funds deposited in the Nuclear Waste Fund.

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Now,rather than face the merits of these claims, DOE movesto dismiss them on grounds that they are barred by claim and issue preclusion. Petitioners, however,do not raise a single issue raised in previous cases. Nopetitioner has challenged DOE's failure to conduct its a~mual analysis of the fee as required by Section 302(a)(4) of the NV~A, the mariner in which or conducts those assessments; no petitioner has challenged the legality of DOE's continued collection of fees; no petitioner has challengedDOE's failure to establish, in writing, binding terms and conditions gqverningthe disposal of spent nuclear fuel; and no petitioner has challenged DOE'smisuse of the Nuclear Waste Fundin violation of 42 U.S.C. § 10222m~d31 U.S.C. § 1321. Only by quoting selectively from the Petition can Respondentseven create the illusion that Petitioners' claims simplyrepeat those previously at issue in NorthernStates Power. DOE also movesto dismiss the Petition on groundsthat Petitioners' claims are untimely. Petitioners' claims, however, neither too early nor too late. Petitioners filed their Petition are within 180 days of each of DOE's failures to act alleged in the Petition and, whereappropriate, within 180 days of the point at which DOE's failure to act becmneunreasonable. I. THE PETITION RAISES NEW ISSUES NEVER BROUGHTBEFORE THIS COURT Respondents allege that Petitioners' claims are barred by issue and claim preclusion. (Respondents' Motion to Dismiss ("Motion") at 6-8.) Specifically, DOE contends Petitioners' claims are precluded for two reasons: (1) the Court already ruled in NorthernStates Powerthat NWPA Section 302(a)(5)(B) does not require performance of DOE'sobligation begin disposal of spent nuclear fuel as of January3 t, 1998, and (2) in that case, the Court refused to allow Petitioners and other utilities to escrowthe fee. (Motionat 7.) See Northern States PowerCo. v. Department Energw128 F.3d 754 (D.C. Cir. 1997), cert. denied, 119 of Ct. 540 (1998). Respondents'Motionto Dismissmust be denied. The allegations in the Petition

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with respect to the fee and the requirement establish criteria are separate and apart fromearlier to efforts to force DOE begin disposing of spent fuel on January 31, 1998. to A. Petitioners' Claims Are Not BarredBy Issue Preclusion

Issue preclusion requires proof of three elements: (a) the issue raised in the current litigation musthave beenactually contested by the parties and submittedto the court in the previous suit; (b) the issue must have been actually and necessarily determinedby a court competent jurisdiction; and (c) preclusion in the second case must not create an unfairness. Milton S. Kronheim Co. v. Dis~'ict of Columbia,91 F.3d 193, 197 (D.C. Cir. 1996) (quoting & Otherson v. INS, 711 F.2d 267, 273 (D.C. Cir. 1983)). See also Yamaha Corp. ofAmer, v. United States, 96t F.2d 245 (D.C. Cir. 1992); Connorsv. Tanoma MiningCo., 953 F.2d 682 (D.C. Cir. 1992). Petitioners' claims are not barred by this standard. First, contrary to Respondents' assertions, this Court, in Northern States Power,held that DOE an unconditional obligation had to dispose of spent nuclear fuel by January 31, 1998. 128 F.3d at 760. The Court denied Petitioners' request for a movefuel order and an order requiring DOE escrow fees on grounds to that Petitioners did not qualify for the narrowand extraordinary relief of mandamus. Basedon the possibility that potentially adequaterelief existed under the statutory contract, the Court ruled that the mandamus elementscould not be satisfied unless Petitioners and the other utilities first" explored potentially adequate contract remedies in the appropriate fora. Later, whenasked to enforce the limited mandateissued, the Court held that the requested relief wasbeyondthe scope of the mandate. Here, Petitioners do not seek the extraordinary relief of mandamus, do they seek nor either a move fuel order or an order requiring escrow. Instead, Petitioners have filed an original action under Section 119 of the NWPA alleging statutory violations of Sections 302(a)(4), (a)(6) 4

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and (d). Petitioners allege that DOE collected fees in violation of the NWPA, failed recommend adjustments of the fee as required by Section 302(a)(4), failed to establish written criteria including terms and conditions governingdisposal of spent nuclear fuel as required by Section 302(a)(6), and misused funds from the Nuclear WasteFundin violation of 42 U.S.C. § 10222and 31 U.S.C. § 1321. Petitioners also contend that DOE's persistent overcollection of fees contrary to the requirements of Section 302(a)(4) violates the Substantive DueProcess TakingsClauses of the Constitution. Thestatutory and constitutional provisions raised by the Petition were neither considered by the Court in NorthernStates. nor in any way"necessary" to the Court's decision. DOE relies on only one of Petitioners' claims for its issue preclusion argument. Respondents claim that the NorthernStates petitioners' request for escrowof funds is the same as Petitioners' current request for a determinationthat continuedcollection of fees is unlawful. Theseclaims, however,are plainly different. TheNorthernStates petitioners requested that their fee payments, a monetaryquidpro quo for DOE's removal of spent nuclear fuel, be held in escrow until DOE performedits obligations. 128 F.3d at 757. Theymadeno claim that the amountor collection of the fee was unlawful, and raised no challenge to DOE's failure to appropriately assess the adequacy the fee. By contrast, Petitioners.here raise claims alleging of persistent overcollection of fees, failure to appropriately analyzethe fees necessaryto fund the " programmandatedby Congress, statutory assignment of underfunding risk, and misuse of the fees collected. Theallegations in the Petition are tied to the failure to begin disposingof spent fuel on January 31, 1998only to the extent that this failure and its aftermath revealed broader concerns (e.g., fee concerns) about the national nuclear waste programmandatedby Congress.

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B.

Petitioners' Claims Are Not BarredBy Claim Preclusion

To bar relief under claim preclusion, the Court must find that: (a) there wasa judgment on the merits in a prior litigation involvingthe claims beingraised; (b) the parties wereidentical or in privity with each other; and (c) the issues being raised were the samecause of action arose out of the same"nucleus of facts" as the claims in the prior suit. Pa~ev. UnitedStates, 729 F.2d 818, 820 (D.C. Cir. 1984). ThePetition is not barred by claim preclusion for the samereasons it is not barred by issue preclusion, Theprior litigation did not involve allegations of collections of fees in violation of § 302(a)(4), nor did it involve allegations that DOE misusedthe Nuclear Waste had Fund. Theprior litigation did not challenge whetherDOE established in writing the criteria had for disposal as required by § 302(a)(6). The only "facts" at issue were DOE's unconditional obligation to move fuel beginning January 31, 1998 and the scope of relief this Court would grant on a petition to enforce its prior mandate. This Petition implicates a set of facts involving DOE's calculation, collection and use of fees. Likewise,the facts surroundingDOE's obligation to establish criteria for disposal, including specific disposal dates, schedules, rates of acceptanceand other terms and conditions that DOE refused to establish have nothing in common has with the facts surrounding Petitioners' right to a mandamus order directing DOE begin disposing of spent nuclear fuel. " to Petitioners have not previouslylitigated their current claims, nor has any court ruled on these issues. Petitioners are not precluded from raising them here. Norfolk & WesternRv. v. United States, 768 F.2d 373,377-78(D.C. Cir. 1985).

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II.

THIS COURT HAS SUBJECT MATTER JURISDICTION IN THE PETITION A.

OVER THE ISSUES

This Court Has Subject Matter Jurisdiction Over Petitioners' Fee Claims

Respondents contendthat this Court has no subject matter jurisdiction over Petitioners because Congressdid not require DOE collect by January 31, 1998, all the fees necessary to to begin repository operations by that date. Respondents'argument, however, is based on a selective reading of the fee allegations in the Petition. (Motionat 13-14.) Petitioners set forth at least four different bases for the claim that Respondents have violated their obligations to annually review, and if necessary recommend adjustment in, the an fee. First, Petitioners contendthat DOE's continuedcollection at the current rate is arbitrary and capricious in light of the tremendousuncertainty regarding whenand howultimate disposal, and interim measures,will take place. (Petition 7¶ 57-59.) Second,the Petition alleges that the NWPA required DOE collect only those revenues sufficient to cover costs of a statutorily to compliant program.(Petition 77 51-52.) Third, the Petition challenges DOE's failure to adjust the fee in light of the announced plan to shift a disproportionatequantity of incurred costs to a date at least fifteen years in the future. ~ 77 61-62.) Fourth, the Petition alleges that the Act required DOE collect, by January 31, 1998, the funds necessaryto initiate operation of the to repository by that date and that future collection of anything morethan amounts necessary to fund the nuclear waste disposal program,assumingthe present existence of a fully functioning repository, violates the Act. (Id. ¶¶ 54-56.) ThePetition thus raises both the statutory obligations regarding the fee and DOE's conduct in analyzing the appropriate fee. In addition, Count IV alleges misuse of the Nuclear WasteFund. Respondentscannot credibly contend that Congressauthorized DOE collect limitless to fees from Petitioners, without regard to whetherthe activities these fees are funding comply with

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the Act. Thegravamen the Petition is that Respondents collecting fees (CountsI, II, III) of are and spendingthe fees collected (Count IV) in violation of the Act. This Court has jurisdiction over these allegations under 42 U.S.C. § 10139(original and exclusive jurisdiction over any civil action "for reviewof any final decision or action" or "alleging the failure of the Secretary, the President, or the Commission makeany decision, or take any action" the NWPA to requires). Respondents' reliance on Nevadav. Watkins is similarly misplaced. Nevadav. Watkins simplyreiterates the role that judicial reviewis unavailable whena statute commits particular r action to agencydiscretion O provides no meaningfulstandard against whichto judge the agency's exercise of discretion. 914 F.2d 1545, 1563-64(9t~ Cir. 1990). Suchprecedent is only applicable if, as Respondentsbelieve, Congresshas granted DOE unlimited discretion to charge Petitioners limitless fees and equal discretion as to when,if ever, it choosesto begindisposing of spent nuclear fuel. The NWPA not; it includes an "unconditional obligation" to begin does disposing of spent nuclear fuel by January 31, 1998. Contraryto Respondents'view, this Court already has determinedthat the judicial review provisions of Section 10139are in fact applicable to actions and failures to act under Section 302.I See Indiana Michi,,an. 88 F.3d at 1275(review of agency action for consistency with the requirements of Section 302). Moreover,Section 302 provides specific standards against whichthis Court can assess DOE's failures to recommend reduction in the fee. Section a 302(a)(4) provides that the Secretary:

Werethis otherwise, and were Congressto have granted DOE unfettered discretion to collect fees regardless of costs and without a correspondingobligation to provide disposal services, collection of such fees wouldamountto an illegal exaction and an unconstitutional tax under Article I of the Constitution. See UnitedStates ShoeCorp. v. UnitedStates, 1 t4 F.3d 1564, 1572-74(Fed. Cir. 1997).

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shall annually review the amountof the fees.., to evaluate whethercollection of the fee will provide sufficient revenuesto offset the costs as defined in subsection (d)... In the event the Secretary determinesthat either insufficient or excess revenuesare being collected.., the Secretary shall proposean adjustmentto the fee. 42 U.S.C. § 10222(a)(4). Subsection (d) in turn provides that the Secretary may expenditures [incur costs].., only for purposesof radioactive waste disposal activities" including the siting, construction, licensing and operation of facilities, both interim and permanent, "under this chapter." 42 U.S.C. § 10222(d) (emphasis added). Commencement operation of facilities for disposing of spent nuclear fuel is governed turn by Section in 302(a)(5)(B), whichis "under this chapter." Id__~. TheNWPA provides direction thus agencyand provides a standard for review. Finally, Respondents' assertions that Petitioners' interpretation of the statute is "incorrect" go to the merits of the Petition, and henceprovideno basis for a jurisdictional motion to dismiss.~- When jurisdictional facts are inextricably intertwined with the merits of a case, the court should not decide the merits issues prematurelybut should defer the related jurisdictional determinations until the merits are heard. Herbert v. National Academy Sciences, 974 F.2d of 192, 198 (D.C. Cir. 1992)("if [jurisdictional facts] are inextricably intertwined with the merits the case, [court] shouldusually defer its jurisdictional decision until the merits are heard") (citing Landv. Dollar, 330 U.S. 731 (1947)); Garcia Copnhaver. Bell & Assocs., 104 e F.3d1256,

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Respondents similarly seek to avoid a decision on the merits of Petitioners' allegations of

Nuclear WasteFundmisuse by seeking to have these claims "dismissed" before they can truly be heard on groundsthat Petitioners' interpretation of the applicable statutory provisions is incorrect. Contrary to Respondents'representations, these allegations are comprisedof two parts. First, Petitioners allege that DOE using the waste fund to pay for the costs of its own is delay in violation of 42 U.S.C. § 10222(d). In addition, Petitioners allege that Respondents are using waste fund dollars for general treasury purposesin violation of 31 U.S.C. § 1321.

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1261 (11th Cir. 1997). Likewise, a decision on even an otherwise proper motionto dismiss for lack of jurisdiction "maybe improperbefore the plaintiffhas had a chanceto discover the facts necessary to establish jurisdiction." Herbert v National Academy Sciences, 974 F.2d at 198 of (citing Collins v. New YorkCentral System, 327 F.2d 880 (D.C. Cir. 1963)). Petitioners' right to relief in the instant case depends their ability to provethat on Respondentsare collecting and expendingfees in violation of the NWPA. Petitioners have alleged DOE's failure to act as the NWPA requires. DOE's conclusory assertion that the statute does not create such duties cannot provide a sufficient basis for dismissal. Theobligations of Respondentsunder the statute and whether Respondentscompliedwith those obligations should be resolved on the merits. B. This CourtHas Subject MatterJurisdiction OverPetitioners' Constitutional Claims

Respondents allege that this Court has no jurisdiction over Petitioners' constitutional claims because Petitioners are incorrect that Congressrequired DOE have collected by to January 31, 1998, all the fees necessary to begin repository operations by that date. As discussed above, however,the statute supports Petitioners' allegations. Respondents'disagreementwith the mannerin whichPetitioners interpret the NWPA a subject to be considered on the merits; is it is not the basis for a motionto dismiss. Respondentsmaynot dismiss Petitioners' constitutional claims on groundsthat Petitioners had only a unilateral expectation regarding Respondents'obligations. A property interest in a government programexists whenan individual has a "legitimate claim of entitlement" to governmentperformance. Board of Re~ents v. Roth, 408 U.S. 564, 577 (1972). Finally, Respondents argue that Petitioners' constitutional claims are in reality only contract claims that as a matter of taw cannot implicate either the Fifth Amendment Process Due

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or TakingsClauses. To the contrary, Petitioners' constitutional claims allege that Section 302(a)(4) created a protected property interest in paying into the Nuclear WasteFundonly the statute authorizes. Respondents cannot credibly contendthat they are free to collect limitless amounts any purpose; either the statute limits what Respondents collect or the statute for may itself is unconstitutional. However, evenif Petitioners' constitutional claims did arise entirely from violation of contractual rights, Respondents'argumentwouldbe unavailing. Underwellestablished precedent, the Fifth Amendment protects "[r]ights against the United States arising out of a contract." Lynchv. United States, 292 U.S. 571,579 (t934); Great Lakes Higher Educ. Corp. v. Cavazos,91 t F.2d 10 (7th Cir. t990).3 Thus, Petitioners' constitutional claims are proper claims before this Court. III. PETITIONERS' CHALLENGE OF DOE'S FAILURE TO RECOMMEND FEE A ADJUSTMENT IS TIMELY Respondents allege that Petitioners' challenges to the Secretary's failure to recommend an adjustmentin the fee are untimely. Specifically, Respondents allege that the Petitioners' fee challenges are too late because they were filed morethan 180 days after DOE issued its October 1996 fee assessment and too early because they were filed before DOE issued its December 1998

Thecases Respondents cite for the proposition that contract rights do not give rise to constitutional claims are inapposite. (Resp't Opp'nat 15-16.) All of these cases involve breach of contract by the government acting solely in its capacity as contracting party and are thus unavailing. DOE's programmaticfailure to perform the cornerstone of Congress' national nuclear waste disposal policy cannot be analogized to simple breach of contract cases. Moreover,the government'slong term programfor handling spent nuclear fuel disposal exhibits the "permanence" whichcourts have held creates a property interest in rights arising out of public contracts. See Rite Aid v. Houstoun,998 F. Supp. 522, 530 (E.D. Pa. 1997); see also (Mot. For Leaveat 14 (term of contract is from execution of contract to disposal of spent nuclear fuel; no termination authorized)).

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