Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 1 of 60
IN THE UNITED STATES COURT OF FEDERAL CLAIMS : YANKEE ATOMIC ELECTRIC COMPANY, : : Plaintiff, : : v. : : UNITED STATES OF AMERICA, : : Defendant. : __________________________________________: __________________________________________
No. 98-126 C (Senior Judge Merow) Filed electronically February 18, 2005
YANKEE ATOMIC'S REPLY ON ITS POST TRIAL PROPOSED FINDINGS OF FACT
JERRY STOUCK Spriggs & Hollingsworth 1350 I Street, N.W., Ninth Floor Washington, D.C. 20005 (202) 898-5800 (202) 682-1639 (facsimile) Counsel for Plaintiff, YANKEE ATOMIC ELECTRIC COMPANY Of Counsel: Robert L. Shapiro SPRIGGS & HOLLINGSWORTH Dated: February 18, 2005
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 2 of 60
Table of Contents Page I. II. III. IV. V. VI. General Findings and DOE Contract ...................................................................................1 ISFSI Development............................................................................................................12 GTCC Waste......................................................................................................................14 Good Faith and Fair Dealing..............................................................................................16 Damages.............................................................................................................................16 The Government's Proposed Alternative Damages Findings Set Forth in Its "Additional Response To Yankee Atomic's Proposed Damages Findings" Fail to Account for the Agreed Changes to Yankee Atomic's Damages or Are Wrong. ....................................................................................................28 A. B. The Government's "Summary" of the Abbott/Johnson Criticisms is Unreliable and Unhelpful.......................................................................................33 The Government's Proposed Alternative Findings That Certain of Yankee Atomic's Damages Were Not Caused By the Breach Are Wrong. ...................................................................................................................34 The Government's Assertions That Yankee Atomic's Claim Must Be Reduced to Eliminate Contingency Are Wrong...............................................40 The Government's Assertions That Yankee Atomic's Damages Must Be Reduced to Eliminate Unreasonable Costs Either Fail to Account for Changes Agreed to at Trial or Are Wrong.........................................42 The Government's Proposed Alternative Findings That Yankee Atomic's Damages Should Be Reduced to Eliminate Unsupported Costs Are Wrong Because Yankee Atomic Provided the Government With Support.....................................................................................55 The Government's Position re Discounting Yankee Atomic's Future Damages to Present Value is Incorrect.......................................................57
C. D.
E.
F.
i
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 3 of 60
IN THE UNITED STATES COURT OF FEDERAL CLAIMS : YANKEE ATOMIC ELECTRIC COMPANY, : : Plaintiff, : : v. : : UNITED STATES OF AMERICA, : : Defendant. : __________________________________________: __________________________________________
No. 98-126 C (Senior Judge Merow) Filed electronically February 18, 2005
YANKEE ATOMIC'S REPLY ON ITS POST TRIAL PROPOSED FINDINGS OF FACT Yankee Atomic submits this reply to the government's response to Yankee Atomic's post-trial Proposed Findings of Fact. As was the case in responding to the government's proposed findings, Yankee Atomic can efficiently address any of the government's responses to Yankee Atomic's Proposed Findings ("GRYAPF") in categories, while providing some additional replies to individual government responses. In many instances, the GRYAPF simply cite the government's own proposed findings of fact, to which Yankee Atomic has already responded. Yankee Atomic will not repeat those responses here, but instead respectfully refers the Court to Yankee Atomic's prior filing. I. General Findings and DOE Contract To a remarkable degree, the government's responses to Yankee Atomic's proposed findings regarding general issues and the DOE contract deliberately ignore or speak past the evidence cited by Yankee Atomic. Instead, the government stubbornly bases its responses on the government's views of the Contract, most of which have already been rejected by the Court. See Order of June 26, 2003, substantially adopting Commonwealth Edison Co. v. United States, 56
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 4 of 60
Fed. Cl. 652, 663 (2003). For example, the government cites Berry v. City of Detroit, 25 F.3d 1342 (6th Cir. 1994), at least two dozen times, for the proposition that testimony is not admissible on the issue of reasonable government performance. See GRYAPF 40-44, 48-63, 65, 79-81. The government's heavy reliance on Berry is misplaced, however, as it is neither a Federal Circuit decision nor even a contract case. It addresses the admissibility of expert testimony on the ultimate issue of fact in a 42 U.S.C. § 1983 case. Instead, in David Nassif Assoc. v. United States, 557 F.2d 249, 259 (Ct. Cl. 1977), the Federal Circuit's predecessor made clear in a contract case that consideration of testimony and other evidence is appropriate to determine what reasonable contract performance would have been where a term is missing from the parties' contract. This Court's ruling noted above (based on Commonwealth Edison) made clear that the DOE contract does not set out the terms of DOE's performance. Likewise, the government's reliance on First Heights Bank, FSB v. United States, 51 Fed. Cl. 659 (2001), see GRYAPF 59, for the proposition that testimony is irrelevant to the Court's interpretation of the obligations created by the DOE contract is also misplaced. First Heights merely recites the traditional rule that extrinsic evidence will not be received to aid the interpretation of "the terms of a contract that is clear on its face." 51 Fed. Cl. at 659 (internal citation omitted). As explained above, however, this Court has already ruled that the DOE contract is not clear on its face. The government similarly asks the Court to ignore much of the evidence cited by Yankee Atomic regarding what reasonable DOE performance would have been on the ground that such performance is not contractually binding. See, e.g., GRYAPF 60-61 (arguing that Mission Plan and related documents are not binding), 72 (arguing that testimony regarding the need for acceptance capacity to handle unanticipated contingencies is irrelevant, because such capacity is
2
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 5 of 60
not contractually required), 75 (arguing that evidence of DOE's plans to accept 3000 MTU of spent fuel per year is irrelevant because there is no obligation in the contract to accept spent fuel at that rate). Yankee Atomic, of course, has not alleged that such documents were intended to automatically impose binding obligations. But such evidence is highly probative of what reasonable DOE performance would have been evidence that the Court may use in the absence of an acceptance rate term in the parties' contract to fashion an appropriate acceptance rate provision. 4. The government's argument that the reasonably constant rate at which Yankee
Atomic will accrue damages beyond 2010 was not litigated at trial is belied by evidence cited with YAPF 158. Although Yankee Atomic is not requesting in this litigation a judgment to include such damages given the remote possibility that the government might perform by 2010, a finding regarding the accrual of such damages would help promote a more efficient resolution of the claim that Yankee Atomic will likely eventually have to bring for such damages. 39. The government's argument that Dr. Wise did little independent analysis of
plaintiffs' damages claims does not fairly reflect the totality of his testimony or what Dr. Wise, in fact, did in this case. Dr. Wise explained well his close interaction with plaintiffs and his role in assessing plaintiffs' damages. Tr. 3352:12-3356:21. 60. The government's assertion that no evidence supports the portion of the finding
that DOE would compensate utilities for the failure to timely accept spent fuel is belied by P633, which states clearly DOE's contingency plans in the event a repository is delayed. See P633 at PNL-173-1284-85 (if the repository is expected to be delayed by less than two years DOE will either add buffer storage at the repository or take title to the spent fuel and move it into dry
3
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 6 of 60
storage at the utility and pay a rental fee to the utility to store the casks at the reactor; if the repository is expected to be delayed by more than two years, then DOE would construct a MRS). 61. The government's claim that it specifically rejected utilities' requests for more
detail in the Standard Contracts is not supported by the cited government proposed findings. Those findings either merely claim that DOE did not adopt the suggestions of certain utilities or reflect Mr. Morgan's post hoc explanations for DOE's actions. The government has not cited any evidence to dispute the finding in YAPF 61.b. that DOE did not contemporaneously disavow the utilities' expressed understanding of the Standard Contracts. The government's assertion that Yankee Atomic misstated the parties' understanding of the program's goals as set forth in early program documents is flatly wrong. The government's claim that DOE did not intend to eliminate the need for all utilities to construct additional at reactor storage is belied by P678 at 11 (Mr. Morgan's December 1983 "Program Overview" for OCRWM), which stated clearly that "[d]uring the first year of operation of the repository in 1998, we should be receiving fuel at a rate so that no utility would have to add any further storage facilities either on site or at another location." (emphasis added). P636 (a December 1983 draft of the Mission Plan) at 2-1, cited by the government, is in accord with Yankee Atomic's proposed finding ("The waste materials will be accepted in accordance with a Waste Acceptance Schedule designed to provide an acceptance rate in the first five years such that no utility will have to provide additional storage capacity after January 31, 1998." (emphasis added). The Draft Mission Plan went on to explain that while an individual utility might face a need for expanded storage due to the timing of its shipment allocation, it was expected that in such instances, utilities would exchange with other utilities with earlier allocations and that "such
4
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 7 of 60
brokering arrangements should prevent the need for any utility to expand on-site storage and minimize transshipments.") (emphasis added). See P636 at 2-2 and 2-4. 64. Although the government argues that efficiency is not a contract requirement for
the pace and schedule of SNF acceptance, the government concedes that efficiency is indeed "a program goal or objective," as the Yankees have alleged in their proposed findings. The government's argument that Dr. Bartlett's testimony that OCRWM was concerned with moving "must-move" fuel when he was director should be discounted because Dr. Bartlett approved the 1991 ACR, P60, which did not provide for must-move acceptance, misses the mark. As the government has emphasized, that ACR was submitted to Dr. Bartlett for approval with a memorandum, see D23, asserting that the acceptance rates in that ACR would enable utilities from having to add onsite storage (i.e., the acceptance rates would address must-move fuel). Although, as the government acknowledges, the 1991 ACR acceptance rates would actually not have addressed all must-move fuel, the approval memorandum shows that such performance was a concern for OCRWM in general and Dr. Bartlett in particular. In other words, Mr. Milner (the official who signed D23) must have thought that at least claiming that the rates in the ACR would adequately address at reactor storage needs was appropriate in order to cure Dr. Bartlett's approval of the ACR. 65. Once again, although the government argues that cost-effective performance was
not a contract requirement, the government acknowledges that "the full cost recovery nature of the Standard Contract translates into a program goal or objective of operating the program in a cost-effective manner." The government's argument that Mr. Graves did not consider total system costs is wrong. In addition to his consideration of utilities' costs, as noted in YAPF 78, Mr. Graves relied, in part, on government studies, including P175, showing that an acceptance
5
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 8 of 60
rate of 3,000 MTU per year would have to minimize program costs. Tr. 782:10-783:3. He also considered the impact of exchanges on the ability for DOE to use efficient acceptance campaigns and found that the use of exchanges would have been much more consistent with campaigned acceptance than OFF acceptance. Tr. 836:1-839:24 and Graves Demonstrative 90. 67. The government's disputation of a generally self-evident fact (that is also
supported by undisputed trial testimony), that a utility's at-reactor SNF storage costs rise if it is forced to add to its at-reactor storage capacity or if it is forced to extend at-reactor storage of SNF after it permanently shuts down, reflects a general lack of credibility in the government's positions. The government's claim that the costs of operating a particular type of storage facility does not generally depend on the amount of SNF and it is beside the point; plaintiff's proposed findings address situations where costs rise because either a new facility must be constructed and operated or an entire existing facility has to be operated because of the presence of SNF. 68. The government's claim that growth in must-move fuel could not be projected to
rise at a 3,000 MTU per year rate is belied by the evidence the government itself cites in response to YAPF 70. It is unhelpful for the government to raise technical objections to the evidence in supporting proposed findings while elsewhere essentially conceding the essence of the finding. The government's claim that D23, the approval memorandum for the 1991 ACR, represents an "analysis" that the acceptance rates in that ACR would accommodate at-reactor SNF storage needs is wrong. The statement in the document is an unsupported assertion, and the government presented no analysis to substantiate this assertion. Moreover, the government's claim is contrary to Mr. Pollog's testimony. Tr. 4039:22-4047:1. Moreover, Mr. Graves demonstrated that the 900 MTU acceptance rate would not have addressed at-reactor storage needs. Tr. 786:23-788:7; 918:7-919:11; 7503:3-7506:9.
6
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 9 of 60
69.
The government's argument that Dr. Bartlett stated that an annual acceptance rate
of 900 MTU would have been reasonable uses Dr. Bartlett's statement out of context. Although it was reasonable for Dr. Bartlett to approve the 1991 ACR with a 900 MTU acceptance rate, that fact does not mean that such performance would have been reasonable in the context of the parties' 1983 agreement. By 1991, DOE had already made clear that it would not have a repository ready until 2010 and limitations on acceptance at another facility imposed by the 1987 NWPA amendments constrained other acceptance. See P101 (1989 Report to Congress on Reassessment of Program) and P60 (1991 ACR). Given that situation, acceptance of 900 MTU per year was reasonable in the sense that it was about the best DOE could do under the circumstances. Tr. 706:22-707:5 (as Dr. Bartlett testified, such a rate was not desirable, but reasonable). 70. The government's disputation that annual aggregate commercial discharges could
be projected to be about 2,000 MTU is silly, given that the evidence cited by the government is consistent with such discharges being at a rate between 2,000 and 3,000 MTU. If anything, the evidence cited by the government would indicate that acceptance at a rate higher than 3,000 MTU per year would have been reasonable. 71. The government's urged distinction between acceptance from utilities and an
efficient throughput for the DOE system is also silly. If DOE fails to accept spent fuel from utilities at a rate of at least 3,000 MTU per year then it could not run its system at an efficient 3,000 MTU per year rate because it would lack sufficient spent fuel to put through its system. Dr. Bartlett's testimony is in accord with this reality. Dr. Bartlett explained that the reasonable rates of acceptance from utilities and emplacement in a repository are the same 3000 MTU per year, in part, because of how the two tasks relate to each other. Tr. 609:20-611:11.
7
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 10 of 60
73.
Importantly, the government's response concedes that the evidence establishes
"that campaigns are `efficient'." The government's claim that plaintiff has not shown the relevance of campaigns in light of the oldest-fuel-first concept is wrong. Mr. Graves demonstrated that exchanges would have led to efficient campaigns. See YAPF 83.a. 75. The government correctly notes that there is a typographical error in plaintiff's
proposed findings; of course, the finding intended to note that DOE has been planning to accept 3,000 MTU per year from utilities. As noted in the reply to YAPF 71 above, the government's claim of significance between acceptance from utilities and emplacement in a repository, is without merit. The government's claim of a distinction between use of a 3,000 MTU per year rate to determine program costs and use of that rate in determining an adequate fee is similarly silly. The purpose of the fee under the cost recovery program, of course, is to adequately fund the program. 76. The government's disputation of this proposed finding that DOE could technically
have accepted spent fuel from utilities at a 3,000 MTU per year rate is evasive and disingenuous. It is obvious that the government cannot dispute that DOE could have accepted 3,000 MTU per year from utilities. The government's failure to find a place to put the spent fuel reflects the breach, not a technical impediment to robust acceptance. As reflected by the evidence cited by plaintiff (noting locations in Australia and Owl Creek), and indeed the ISFSIs plaintiff and the other Yankees are building at their sites, it is not technically difficult to identify a location at which to store spent fuel. 77. The government's suggestion that acceptance of 900 MTU per year would have
been reasonable absent the breach is without merit for the reasons noted in the replies on YAPF 68 and 69 above. Importantly, the government has not proposed a finding that a 900 MTU per
8
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 11 of 60
year acceptance rate would have been reasonable absent the breach. The government's claim that it would have accepted spent fuel at the rates in the 1991 ACR is wrong as shown in Yankee Atomic's response to GPF 93. 78. The government's claim that the record contradicts Dr. Bartlett's opinion that a
ramp up to 3,000 MTU per year acceptance in three years is wrong. The government's assertion that DOE was planning to accept spent fuel at a 900 MTU per year is not supported. The 1991 ACR does not support this claim as noted in response to GPF 93. The government's argument that a centralized interim storage facility is not the same as an MRS is beside the point (and the government cites no evidence for its assertion that Dr. Bartlett said that the facilities were the same). As explained by Dr. Bartlett in testimony cited by plaintiff, a centralized interim storage facility is the sort of facility that DOE could have used to accept spent fuel from utilities at a reasonable rate starting in 1998. The government's claim that plaintiff cannot establish what DOE actually would have done if it had started acceptance in 1998, misses the mark. Plaintiff's evidence (and the relevant issue) goes to what DOE should have done to meet its obligation to accept spent fuel at a reasonable rate. In addition, the government's reliance on P978 to challenge the ramp up rate set out in the proposed finding is misplaced. P978 (a June 1983 report on financing the DOE program) assumes that DOE will accept 1800 MTU of spent fuel in the first five years of program operations (a total 9000 MTU). This is about the same as the ramp up used by Mr. Graves, in which the first five years of acceptance (1200, 1200, 2000, 2000, 2700) totals 9100 MTU. 79. The government's claim that the parties' contract requires OFF acceptance except
for three exceptions notably ignores Art. VI.B.1(b)1. Similarly the government's argument that it can only be held liable for acceptance of spent fuel on an OFF basis ignores this Court's June
9
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 12 of 60
28, 2004 Order explaining that the Court must determine how the exchanges provision would have been used absent the government's breach. 82. For the most part, the government's disputation of plaintiff's proposed finding
that utilities would have exchanged acceptance allocations consistent with their economic interests is based on the government's misinterpretation of Mr. Graves' analysis, debunked in plaintiffs' response to the government's proposed findings, that this finding depends on the development of a "perfect" market. Indeed, the government now admits that "some" exchanges may have occurred absent the breach. a. The government's suggestion that Mr. Collier's testimony showing that utilities
do tend to find efficient ways to trade rights to further economic self interests should be ignored because his examples only pertained specifically to the front-side of the fuel cycle is without merit. The government offers no support for the proposition that utilities would have acted contrary to their economic self interests regarding the back end of the fuel cycle absent the breach. b. Yankee Atomic cites the evidence of prior success between the industry and DOE
on dealing with fuel enrichment services as a good indication of the kind of success that the parties would have enjoyed arranging for exchanges under the spent fuel contracts. The government's accusation that plaintiff is trying to mislead the Court here is unhelpful and belies the fact that the government lacks any basis with which to appropriately dispute plaintiff's evidence. The government's claim that the plaintiff's statement, that a robust and effective market developed, is unsupported simply ignores Mr. Collier's testimony.
10
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 13 of 60
83.
The government's assertion that its proposed findings show that DOE would have
used a variety of criteria to analyze proposed exchanges is wrong. GPF 139 merely asserts that certain criteria "may" have been used. a. The government asserts that Mr. Graves' model only shows allocations for some
of the spent fuel acceptance through 2002 (assuming reasonable government performance). The government's claim that this assertion is supported by GPF 171 is wrong. That proposed finding simply asserts that under Mr. Graves' model, some of the spent fuel acceptance goes to utilities with must-move fuel. b. The government's disputation of Yankee Atomic's statement that exchanges
would have led to DOE's acceptance of "cooler" fuel wrongly focuses on operating utilities. The point of the finding is that the exchange provision would have enabled shutdown reactors that have quantities of "cooler" fuel to ship all of their fuel to DOE. 84. It is significant that while the government technically disputes this proposed
finding that there are no significant technical or transportation impediments to exchanges, the government does not even to attempt to address the particulars of Mr. Stuart's testimony cited by plaintiff on this issue. 85. The government is wrong to assert that it was not obligated by the parties'
contract to accept SNF upon a reasonable or efficient schedule. Given the absence of more specificity in the contract, the Court must supply the terms of reasonable performance. 89. The government's claim that the record indicates that DOE would not have
granted priority to plaintiff, if necessary, to prevent the company from waiting a substantial period to complete its decommissioning is unsupported. Similarly, the government's claim that there is no evidence of how DOE would have provided priority is belied by the Final Rule cited
11
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 14 of 60
by the government. The government's claim that Mr. Milner testified that DOE did not have an objective of granting priority to shutdown reactors tellingly does not meet plaintiff's evidence. The evidence cited by Yankee Atomic is Mr. Milner's testimony that DOE has had an objective of allowing shutdown reactors to timely decommission. Preferably, that objective would have been met through an efficient swap mechanism. As stated in the proposed finding, the granting of priority to shutdown reactors would only have been used "if necessary." II. ISFSI Development 92 and 93. The government's primary reason for disputing these proposed findings that program delays caused Yankee Atomic to reasonably believe that DOE would not start acceptance by January 1998 or proceed on a reasonable schedule and that there was significant uncertainty regarding the date when DOE would begin acceptance is that the proposed findings do not cite testimony from Yankee witnesses. The government ignores, however, the documents cited that reflect exchanges of correspondence between DOE and Yankee Atomic that fully support the proposed finding. Ultimately, the government has no means with which to dispute the cited evidence. As noted in the response to GPF 93, the 1991 ACR is not to the contrary, as the ACR made clear, and DOE knew, that the acceptance scheme set out in that document was inconsistent with existing law. 99. Although the government complains that the evidence supporting this proposed
finding that Yankee Atomic has not had options other than on-site storage of its SNF available is limited, the government neither disputes that evidence nor offers any contrary evidence on the issue. 100. The government essentially admits the first sentence of this finding that Yankee
Atomic determined that the best and most cost-effective way to store its SNF until DOE removes it is dry storage. And while the government appears to challenge the correctness of the cost12
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 15 of 60
effectiveness part of this determination, the government does so primarily with current cost data for the ISFSI that were obviously not available to Yankee Atomic at the time it made its determination to implement dry storage. In fact, the government ultimately concedes in GRYAPF 102 that economics generally favors dry storage over the long term. 101. The government's response fails to dispute the gist of the proposed finding that
Yankee Atomic continued to evaluate its SNF storage options, and successive evaluations confirmed the appropriateness of the dry storage decision. Instead, the government for the first time in the litigation disputes the quality of those evaluations. The government's criticisms are too little too late. The government offers no evidentiary support (particularly expert testimony) that these studies should have discounted future costs or that such discounting would have been material to the results of the studies. Moreover, the government's criticisms are belied by its own concession in GRYAPF 102 that economics generally favors dry storage over the long term. 102. The government does not attempt to explain its claim that the proposed finding
and supporting evidence demonstrate that Yankee Atomic was proceeding with dry storage even assuming timely DOE performance. Indeed, over the entire period when Yankee Atomic has needed to consider SNF storage since its shutdown, it has been clear that DOE performance would be far from timely. See YAPF 92-94. And while the government claims to "not dispute" that decommissioning considerations were "central" to Yankee Atomic's decision to construct an ISFSI, Yankee Atomic's proposed finding never makes such an assertion; nor is such an assertion supported, or even alleged, in the GPF cited. 103. Here, and elsewhere, see, e.g., GRYAPF 94-96, the government complains that
Mr. Bennet's testimony is without foundation. Given that the Court has already received this evidence, these arguments are not available to the government. Moreover, the arguments are
13
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 16 of 60
without merit. Here, for example, Mr. Bennet's testimony explained the basis for Yankee Atomic's decision to use transportable storage containers, which is the substance of the proposed finding. 106. The government's claim that Mr. Bennet's testimony that Yankee Atomic would
not have built the ISFSI but for DOE's breach is premised on the fuel-out date in Mr. Graves' model is not supported by the cited testimony. There, Mr. Bennet acknowledged that Yankee Atomic's damage claims are based, in part, on exchanges. But nothing about that statement indicates that it was intended to modify his earlier testimony regarding the motivation for building Yankee Atomic's ISFSI. The government's claim that Mr. Bennet's testimony indicates that Yankee Atomic was assuming lengthy storage of SNF even assuming timely performance by DOE is patently disingenuous. 107. The government's claims regarding the costs of Yankee Atomic's ISFSI are
totally unsupported. And while the costs of dry storage did rise, the government has presented no evidence of when and how, in light of already sunk costs, Yankee Atomic's decision to implement dry storage should have been reconsidered. III. GTCC Waste 114. Notwithstanding the hesitation by the government's counsel at closing argument
to admit that the government would concede anything regarding GTCC waste, the government's response certainly does not dispute that GTCC waste is highly radioactive. 115. Although the government purports to dispute the finding that disposal in a
repository constitutes permanent isolation, the government does not address (and cannot avoid) the admission of this issue by its Rule 30(b)(6) witness. 117. The government's effort to impugn Mr. Mills' reliability is without merit. The
government asserts that Mr. Mills' understanding of the NWPA could not have been informed by 14
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 17 of 60
the government's responsibility for high-level radioactive waste because that responsibility did not arise until later. The government's premise is wrong. Although part of the government's responsibility for HLW was codified in the LLRWPAA of 1985, the government's responsibility for this material has clearly predated either the LLRWPAA of 1985 or the NWPA of 1982. See, e.g., YAPF 40. 118. Notwithstanding the government's claim of lack of evidence on this point, there is
ample support for the fact that the government has long been responsible for the disposal of highlevel radioactive waste. See, e.g., YAPF 40. 122. Helpfully, the government concedes "that the NRC has determined that GTCC
waste requires permanent isolation `unless proposals for disposal of such waste in a disposal site licensed pursuant to this part are approved by the Commission'." YA122 (citation omitted). And the government also concedes that it has not even proposed such an alternative. The government's claim that "[a]s part of the rule" NRC emphasized that it intended to preserve DOE's flexibility is wrong. The statement appears in the explanation of the rule, not the rule itself. See P1069 at 22579. And while the NRC clearly intended to preserve DOE's flexibility to pursue alternatives, that fact is not inconsistent with presently requiring (as it has since 1998 when DOE's performance was due) permanent isolation in order to "ensure that GTCC wastes are disposed of in a manner that would protect the public health and safety . . .." P1069 at 22578. 123. As is the case with spent fuel, the parties' contract is silent regarding the timing of
DOE's obligation to remove GTCC waste. The cited evidence is support for the provision of a reasonable term, that such waste had to be removed no later than the last of a utilities' spent fuel.
15
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 18 of 60
The government's failure (and inability) to dispute any of the cited evidence or to offer any contrary evidence on this issue is telling. IV. Good Faith and Fair Dealing 130. The government's claim that the proposed finding, that DOE instructed and
required Yankee Atomic to complete its DCSs in conformity with the pace and schedule for spent fuel acceptance in the 1991 ACR, is contrary to the evidence is unsupported. Ultimately, the government's "response" further confirms the proposed finding. 132. The government's response to this proposed finding, that DOE required utilities to
conform their DCS to the acceptance rates in the 1991 ACR because it wanted to try to limit its liability to utilities, is limited to a series of too late or rejected evidentiary arguments concerning the Court's decision to accept Mr. Vance's testimony and a plea to discredit his testimony because his employer represents other nuclear utilities. The notion that testimony from witnesses should be rejected as incredible if an interested party employs them is unhelpful, as it would effectively eliminate consideration of most evidence from witnesses with knowledge. V. Damages In its responses to Yankee Atomic's proposed findings 136-159, the government repetitively asserts boilerplate objections to Yankee Atomic's damages based on 1) purported deficiencies in Mr. Graves' economic sequence model; 2) lack of causation; 3) assumptions Yankee Atomic made in planning documents purportedly based on "timely DOE performance," but actually reflecting planning in the face of DOE's breach; 4) the government's position that the DOE contract does not cover GTCC waste or require timely acceptance of failed fuel; 5) alleged deficiencies in the discount rate used by Yankee Atomic in computing its damages; and 6) the government's adjustments to Yankee Atomic's damages (set forth in the government's alternative damages findings ("GAF"). Those objections have all been refuted in Yankee 16
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 19 of 60
Atomic's previous post-trial submissions and/or are addressed elsewhere in this reply. Yankee Atomic's reply points below address only objections other than this boilerplate that the government has asserted in response to Yankee Atomic's indicated proposed findings. 137. The contention that the inclusion of Yankee Atomic's 2002 costs in past damages
is a "mischaracterization of the evidence adduced at trial" is flatly wrong, as the government's citation of the Wise testimony illustrates: "The past costs are based on costs that were actually realized or, in the case of Yankee Atomic, projected to be experienced in 2002." Tr. 3248:11-13 (emphasis added) (Wise). The government also confuses costs with damages. Dr. Wise testified that "we submitted the [expert] report in 2003 so at that point, 2003 was the future and 2002 was the past." Tr. 3248:8-9 (Wise). See also Plaintiffs' Demonstrative 2043A.14 (showing Yankee Atomic's past damages in 2002 and prior years and future damages from 2003 forward). Since that time, Yankee Atomic has continued to incur additional costs due to DOE's breach, so at present an even greater percentage of Yankee Atomic's damages are comprised of past costs. Tr. 3202:11-12 (Wise) (by 2003, a very large percentage of the costs were past costs). 138. The assertion that Yankee Atomic's future minimum damages are speculative and
should await future adjudication is without merit, as set forth, e.g., in Yankee Atomic's response to DPF 314. 140. The response in 140b., that a portion of Yankee Atomic's NAC contract costs are
not recoverable as damages, duplicates GAF 9-10, to which Yankee Atomic responds below. The contention in 140d., that the record does not support a finding that "Yankee Atomic was `one of the first in the nuclear industry to construct an ISFSI,'" while not disputing that Yankee Atomic was "`among the first to completely offload [its] fuel into an ISFSI'," is a frivolous
17
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 20 of 60
quibble. The government's challenges to Yankee Atomic's ISFSI Construction damages duplicate the GAF to which Yankee Atomic responds below. 141b. This response regarding Yankee Atomic's ISFSI Operations damages duplicates various GAF, to which Yankee Atomic responds below. The government's assertion in response to 141b., that Yankee Atomic's ISFSI staffing should be reduced to 2 full-time technical staff positions and one half-time corporate executive, is not supported by the evidence the government cites. Rather, P1462YA (cited by the government) supports Yankee Atomic's current ISFSI staffing numbers of 5 on-site and 3.5 corporate FTEs. See YDK007538 (showing ISFSI staffing for 2002 and beyond at 5.1 FTEs 2 on-site [Yankee] staff and 3.1 full time equivalent YNSD [Yankee Nuclear Services Division] staff plus corporate staff of 3.5 FTEs); see also YDK007520 ("Overall staffing for the two options [wet and dry storage] differ, but total YNSD staffing is the same for both options . . . for the entire life cycle."); compare P1462YA, YDK007538 re dry storage staffing with YDK007537 re wet storage staffing). Staffing in D688 and D689 is for Connecticut Yankee's and Yankee Atomic's alternative GTCC only on-site storage alternatives in the nonbreach world, and is not relevant to the breach world staffing of Yankee Atomic's ISFSI, which stores both spent fuel and GTCC waste. See also Yankee Atomic's response to GAF 33-35 below. 142. 142a.-b. See response to 137 above. The response in 142c., regarding Yankee
Atomic's wet pool-related costs, duplicates GAF 47, to which Yankee Atomic responds below. The government's objection that the bracketed material in the quote from P169, the PNL Study, "Cost Estimates of Operating Onsite Spent Fuel Pools After Final Reactor Shutdown," (contractor-generated document) at 2.5 was incorrectly included is wrong. Mr. Abbott agreed that Yankee Atomic's pool is small after having been read the statement from P169 that "the
18
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 21 of 60
expensive outliers are all older facilities with relatively small pools." Tr. 6031:8-11; 6032:9-10 (Abbott). The government's assertion that P169 was not admitted into evidence also is wrong. The PNL Study was prepared "for the U.S. Department of Energy under Contract DE-AC0676RLO 1830," P169 at 1; see also id. at 2 ("This report was prepared as an account of work sponsored by an agency of the United States Government."). The government produced in discovery a copy of the PNL Study from DOE's files at Headquarters (Bates No. HQR 25-0873905). The PNL Study also is available to "DOE and DOE contractors from the Office of Scientific and Technical Information" and "to the public from the National Technical Information Service." P169 at 2. Pursuant to the Court's September 17, 2004 Order governing contractor-generated documents, P169 has been admitted. The assertion in 142c., that Yankee Atomic's citation to Mr. Abbott's survey of other facilities' wet pool storage costs cannot support a finding that Yankee Atomic's wet pool-related costs are reasonable because the survey results are "utility specific," is belied by Mr. Abbott's own reliance on the wet pool costs at General Electric's Morris, Illinois facility as a good method of identifying and determining the cost of operating a wet storage pool. Tr. 5652:11-17 (Abbott). The further contention in 142c. that Zion information "is not contained with an admitted exhibit" is disingenuous (and irrelevant), because the testimony regarding the Zion decommissioning cost study is in the record. Moreover, the implication in 142c. that the cost of $7.5 million at Zion to "maintain dormancy" refers to something other than the annual cost to run the Zion spent fuel pool is wrong. Mr. Abbott identified the "4B Dormancy" period in the Zion report as the period having "fairly isolated wet pool costs." Tr. 6036:6-6037:25 (Abbott). And the conclusion in YAPF 142c. regarding the annual cost of running Zion's wet fuel pool is not "base[d] upon the response to a hypothetical" but on knowledge of the author of the Zion decommissioning cost
19
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 22 of 60
estimate. See Tr. 6043:3-18 ("in our report C04-1326-002 [TLG's decommissioning cost study for the Zion Nuclear Power Station], the wet storage costs shown in tables 4.1 and 4.2 for period 4B must be added together to obtain the total wet storage costs for the Zion units. There is only one pool, and the wet storage costs were shared between both Zion pools."). 144. The government's contention in response to YAPF 144d. that the LINKS files in
P1726YA, Yankee Atomic's October 29, 2002 cost estimate, do not fall within the business records exception has been rejected by the Court's ruling to the contrary. See Tr. 3436:5-6 (Court ruling: "It's [P1726YA] admitted in evidence for business record purposes."). See also Yankee Atomic's responses to GAF 1-70. 145. The government's contention that P1726YA alone cannot establish the amounts
of Yankee Atomic's damages is wrong for two reasons. First, it has been rejected by the Court's ruling to the contrary, see Tr. 3436:5-6 (Court ruling: "It's [P1726YA] admitted in evidence for business record purposes."). Second, P1726YA is not the only evidence supporting the amounts of Yankee Atomic's damages. 146. The description of Yankee Atomic's tracking of actual costs against its estimates
(Tr. 7045:16-7048:7 (Bennet)) bolsters the reliability of the estimates and the cost process through which they are developed, contrary to the government's assertion that the process is unreliable. The increase in Yankee Atomic's damages claim from 1999 to 2003 reflects the greater reliability of actual costs and the fact of consistently rising costs in the nuclear industry, but, for the same reasons, does not make the 2003 costs other than "reasonably certain." The government's assertion that P1726YA is not reliable (or was "prepared for this litigation") has been rejected by the Court's ruling to the contrary. See Tr. 3436:5-6 (Court ruling: "It's [P1726YA] admitted in evidence for business record purposes.").
20
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 23 of 60
146a. Contrary to this assertion, abundant evidence shows that Yankee Atomic employees provide the same types of estimates and include the same documentary support for cost estimates submitted with FERC rate case filings as for P1726YA. See, e.g., Tr. 6996:176997:1-15 (Bennet) (Yankee Atomic and Connecticut Yankee estimated future D&O insurance premiums or other insurance premiums in Plaintiffs' Exhibit 1726 by obtaining input from insurance consultant Aon, "the same way" it estimates future premiums in FERC cases); Tr. 1653:3-16 (Bennet) (10/29/02 Yankee Atomic cost estimate (P1726YA) "was prepared in the same way that we prepare our annual update to the cost estimate or the FERC cost estimate. It uses the same structure and process."). 146d. This response regarding the government's "adjustments" to Yankee Atomic's cost estimates duplicate the various GAF to which Yankee Atomic responds below. 146j. Contrary to this response, the conclusion by Yankee Atomic's external auditors in P2037 that "the more significant judgments and accounting items relate to future closure costs and ISFSI related costs" and that "management's procedures for forming these estimates were acceptable and appropriate in these areas" (P2037 at 2) supports the reliability of the estimating process in Yankee Atomic's long-term cost estimates, which is the same process used to prepare P1726YA. 147e. Mr. Abbott's article does support a finding that Yankee Atomic's personnel have the knowledge and expertise to prepare reliable cost estimates, a finding that is also amply supported by other record evidence. 148. The government's assertion that "the purposes for which FERC uses Yankee
Atomic's long-term estimates are different from the damages analysis in which this Court must engage," and citing of Mr. Johnson's testimony (Tr. 6325:25-6326:2) that "it's incumbent upon
21
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 24 of 60
the proper measurement of an asserted claim for damages for it to reflect the best estimate, only the best estimate," 1) ignores the fact that the FERC estimate is relevant to the reasonableness of the damages claim, as the government's witness acknowledges, Tr. 5570:20-5571:22 (Abbott); and 2) ignores Mr. Bennet's testimony that "[o]ur decommissioning cost estimate with the contingency in it is our best estimate of what we're likely to spend to complete the work [for each respective cost item] [a]nd the entirety of the estimate." Tr. 7000:24-7001:3 (Bennet). The government's complaint that no mechanism exists for the government to obtain reimbursement for estimates that exceed Yankee Atomic's actual future damages if such damages are awarded in this case, is both legally and factually irrelevant. Courts regularly award future damages, and, as shown by the government's citations to D150 and D90 (Yankee Atomic's decommissioning cost studies in 1992 and 1994, respectively), Yankee's costs are increasing over time, so there will be no occasion for a "reimbursement" of the type the government suggests. 148c. This response regarding contingency issues duplicates GAF 23-26, to which Yankee Atomic responds below. The government's attempt to disavow Mr. Abbott's testimony that "reasonableness" is the standard for assessing costs at FERC does not make that fact untrue. 149. This response, asserting that Dr. Wise did little independent analysis of Yankee
Atomic's claim and purportedly relied on Yankee Atomic's budgets based upon the terms of his hire, misstates Dr. Wise's testimony. Dr. Wise testified that the decision to have an independent accountant from PriceWaterhouseCoopers (Mr. Barry), review Yankee Atomic's pre-1999 costs to determine which were caused by DOE's breach was not his decision, but the terms of his hire. Tr. 3363:25-3364:10 (Wise). By contrast, Dr. Wise testified that it was his independent decision to rely on Yankee Atomic's cost estimates in preparing its damages claim: "This goes back to the very early days of the project where we were trying to determine the best way to go about
22
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 25 of 60
doing our damage analysis. And through the process of educating ourselves and the companies as to what the issues are going to be and how we might address them, the use of the company budgets as a primary source of information for our analysis was a result of that process. The deliberative process led us to the conclusion that using the company budgets would be a very good way to do this analysis." Tr. 3364:11-3365:4 (Wise). See also Tr. 3195:8-18 (Wise) (same). Far from reciting the company line, as the government suggests, Dr. Wise testified that he and his staff 1) constructed an economic damages model by going through the Yankees' budgets "to see what line items would constitute damages and what line items would not constitute damages," and "interact[ing] with the company to make sure we all understand the budgets and that we're identifying the proper lines," Tr. 3196:24-3197:2, 3197:11-13; see also Tr. 3196:19-3206:25, 3208:1-3220:11 (Wise) & Wise Demonstratives 2043A.2-.8 (detailed explanation of use of company budgets to construct damages model); and 2) put their own imprimatur on the damages by "review[ing] the information from the company and challenge[ing] it where it looked like there may be inconsistencies among the companies, or numbers might look anomalously high in particular line items." Tr. 3360:25-3361:4 (Wise). See also Tr. 3353:15-3355:12, 3356:15-21, 3369:12-23 (Wise) (identifying line-item changes in company budgets). With respect to his analysis of Yankee Atomic's cost estimates, Dr. Wise testified that: "[I]t's a very thorough process where we went over every line in their budgets to make sure that there wasn't some sort of issue that we had to address to get a correct estimate of damages." Tr. 3369:24-3370:2 (Wise). See also Tr. 7284:25-7285:24 (Jewell-Kelleher) ("we worked endlessly with the Brattle Group staff, line item by line item, looking in particularly and being challenged on what lines [of the 10/29/02 cost estimate] . . . would occur . . . in the nonbreach world, and
23
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 26 of 60
what the appropriate offsets would be for each and every line item in the cost estimate, so as to determine what the true incremental costs are to the damages in this case. . . . I was very involved in that myself."). Regarding adjustments to Yankee Atomic's cost estimates, the companies determined the amount of the adjustments because "[they] have the information necessary to determine what appropriate changes in staffing would be, what appropriate changes in other items would be." Tr. 7497:2-5 (Wise). Dr. Wise, however, "was involved in the process of preparing the changes. There were changes where conversations with the companies would identify an issue where it was useful for us to go into the links. And people working under my direction would do that so that we could address those issues properly." Tr. 3360:11-16 (Wise). See also Tr. 3370:17-23 (Wise) (same). 150. This response largely reiterates the assertions in response GRYAPF 149. The
cost allocation issues addressed in this response are duplicated in the various GAF, to which Yankee Atomic responds below. 151. This response regarding the government's "adjustments" to Yankee Atomic's
damages duplicates the various GAF, to which Yankee Atomic will respond below. 153. This response largely reiterates the assertions in GRYAPF 149 and 150. The last
two sentences of this response, asserting that Dr. Wise did not rely upon Yankee Atomic's threesection analysis but on the four phases of Yankee Atomic's cost estimate, supports the conclusion that Dr. Wise performed his own independent damages analysis. As Dr. Wise explained, "The sectional analysis is the companies' first pass at what damages should be by category. But we didn't start our analysis from there. We started it from the actual budgets and the individual line items." Tr. 3279:20-24 (Wise). The government's response does not, in any
24
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 27 of 60
event, detract from the proposed finding that the three-section analysis provides a "check" on Dr. Wise's work. 154. With respect to Yankee Atomic's pre-1999 costs discussed in this response, Dr.
Wise reviewed no source documents supporting pre-1999 damages because he reviewed with Yankee Atomic his use of the numbers from the Barry reports. Tr. 3221:14-3223:7 (Wise) (received pre-1999 cost information from Barry report and reviewed Barry numbers with companies prior to inclusion in damages); see also Tr. 3338:16-17 (Wise) ("I'm relying on [Mr. Barry's] work as reviewed by the companies."). 155. Sub-responses 155a. and c. duplicate the assertions in GAF 23-26, to which
Yankee Atomic responds below. 156. Contrary to the implication in 156a., Dr. Wise did not testify that a risk free
discount rate is only appropriate when the future cost is expected to be a sum certain. He also testified that "if you believed that in fact the company's escalation rates were more appropriate than my inflation rates, you might view the risk-adjusted rate as too high, and you might view the risk-free rate as a more appropriate rate for discounting the future cashflows." Tr. 3237:5-10 (Wise). See Wise Demonstrative 2043A.13 (after-tax risk-free rate "may be appropriate if escalation of these costs is expected to exceed general inflation"). In addition, the government evasively cites only half of Dr. Wise's testimony regarding how to correct a present value calculation to accommodate a higher escalation rate. Dr. Wise testified: "There would be two ways to handle it. One way would just be to put in the higher inflation rate. The other way would be to leave my inflation rate alone but achieve the equivalent result by lowering the discount rate. Tr. 3237:17-21 (Wise) (emphasis added). Finally, contrary to the assertion in this response, there is evidence in the record to support a finding that the companies' higher
25
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 28 of 60
escalation rate was the appropriate rate to use. See Tr. 3232:10-17 (Wise) ("3.8 percent is actually a very common escalation factor in the budgets that we got. This created an issue for me because 3.8 percent, while it may be reasonable for the sorts of costs that these companies incur and may be consistent with their experience and may even be approved by FERC, is a number that's in excess of what people are predicting for general inflation."); Tr. 3002:14-16 (Smith) ("I used the escalation rate of 3.8 percent because that was the approved escalation rate from our FERC settlement from 1998."); Tr. 1667:19-22, 1668:18-23 (Bennet) (noting FERC's approval of GDP deflater as escalation factor for many items in FERC decommissioning cost estimates, and a higher escalation rate for worker salaries). Ample other evidence also shows that costs of handling high-level nuclear materials are increasing at a rate well above the general inflation rate. See response to 156c. The remaining assertions in this response regarding the appropriate discount rate for Yankee Atomic's damages to present value duplicate GAF 71-78, to which Yankee Atomic responds below. 156c. The government's assertion that "there is no evidence to support the proposition that `the types of costs included in Yankee Atomic's future damages will increase in the future at a substantially higher rate than the general inflation rate used by Dr. Wise'" is anomalous in view of the government's complaints regarding the increase in Yankee Atomic's damages claim from 1999 to 2003. The citation to P1964 (which, as Yankee Atomic noted, is "accompanying the record") is appropriate, because rising decommissioning cost estimates reflect the movement of actual costs. Indeed, Mr. Abbott counseled in P1964 that "[m]any decommissioning estimates try (usually implicitly) to argue that . . . rates of increase will not continue by ignoring the history or making philosophical arguments as to why this history can not continue. This is an example of `hopeful' engineering. That is, when faced with an unpleasant or undesirable conclusion
26
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 29 of 60
based on current or historical facts, the implication for future events is simply hoped away." P1964 at 12. 157. The government's response to YAPF 157 is remarkable for these reasons: (1) it
mounts a factual attack on Yankee Atomic's use of an after-tax discount rate with complicated "evidence" the government never produced at trial; (2) it explicitly agrees with Dr. Wise's analytic methodology, see GRYAPF p. 192; and (3) the government's central factual premise that Yankee Atomic "could," and implicitly would, invest the damages proceeds from this case exclusively in tax-free bonds is contradicted by evidence that was presented at trial. What Yankee Atomic did prove was that FERC's prudent investor rule requires that "the investment management be separate and not controlled by the day-to-day utility management." Tr. 1677:1724 (Bennet). "[T]here is a general set of requirements . . . that . . . investment managers, under the oversight of the trustee, . . . manage that [decommissioning trust] money." Tr. 1677:251678:3 (Bennet). The FERC prudent investor rule also "requires a very thoughtful allocation and diverse investment of the funds . . . Hence, the fact that we hire investment managers. And the trustee is the one that oversees the level of investments and the adherence to the prudent investor rule." Tr. 1678:12-23 (Bennet). As Mr. Bennet also explained, consistent with the prudentinvestor rule, the fund is a diversified fund. Tr. 7109:16-24 (Bennet). Given those facts, it is inconceivable that Yankee Atomic would invest the damages it receives from this case entirely in tax-free bonds. Dr. Wise's opinion that an after-tax discount rate should be used, and the factual evidence supporting use of an after-tax discount rate summarized in YAPF 157, in no way depend on the illustration depicted in P2043.4 (which was offered in rebuttal to refute Mr. Johnson). Thus, the government's factual attack is both too late and too little Dr. Wise's opinion is persuasive,
27
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 30 of 60
credible and fully supported by the factual evidence that was presented at trial. The government's hypothetical set forth on pages 193-95 and in Figure 2: Pre-Tax Discount Rate Demonstrative (which was not presented at trial, and thus is not in the record) should be disregarded. In addition, the assertion, at the bottom of page 195, that the Yankees may either pay no tax or a significantly lower tax than what Dr. Wise assumed upon any award they receive, is contradicted by the evidence. Ms. Jewell-Kelleher testified that, in the future, she expects both Yankee Atomic and Connecticut Yankee to be paying federal and state income taxes in the future, noting that "when looking at the revenue streams and the expenses incurred, both companies will find themselves in a taxable income situation in future years." Tr. 7282:9-20. VI. The Government's Proposed Alternative Damages Findings Set Forth in Its "Additional Response To Yankee Atomic's Proposed Damages Findings" Fail to Account for the Agreed Changes to Yankee Atomic's Damages or Are Wrong. The government's "additional response to Yankee Atomic's proposed damages findings" sets forth for the third time the same criticisms of Yankee Atomic's damages claim that Mr. Abbott and Mr. Johnson first made in their pretrial reports and then read (with little or no accompanying reasoning) nearly word-for-word at trial from hundreds of "flash-card" slides that comprised their "testimony." The government ignores the cross-examination of these witnesses, which demonstrated that Mr. Abbott has no credibility (or relevant experience) and that Mr. Johnson, who relied on Mr. Abbott for the majority of his criticisms, Tr. 6673:13-6674:15 (Johnson), is largely (if not entirely) simply an advocate for the government's litigation positions. See, e.g., Tr. 6800:4-6803:21 (Johnson) (deducting all of Yankee Atomic 2002 security costs based on Abbott's opinion that the costs were unsupported, noting (Tr. 6805:16-20 (Johnson)) that "I am not qualified to determine . . . what the incremental costs of security would be")." The government's post-trial presentation on these issues also ignores Yankee Atomic's 28
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 31 of 60
rebuttal case, which fully answered those government criticisms that retained any life after the cross-examinations. By thus ignoring what happened at trial, refusing to make any adjustments following Yankee Atomic's very effective cross-examination and rebuttal case and even refusing to acknowledge the "agreed changes" that Yankee Atomic accepted at trial the government's post-trial "additional response" is entirely unhelpful to the Court (particularly in light of its reliance only on the incredibly thin, "bare bones with no meat" trial testimony of Messrs. Abbott and Johnson) and ultimately is merely a distraction. Indeed, the government displayed its own lack of confidence in the Abbott/Johnson criticisms by virtually ignoring them at the January 24 closing arguments, focusing instead on broader arguments the government hopes will lead to a "zero damages" result. Despite the government's unhelpful (and ineffectual) reiteration of the Abbott/Johnson criticisms, Yankee Atomic sets forth below a succinct reply to each of the government's numbered "additional responses" with citations to more complete treatment of the issue at trial during cross-examination or rebuttal (or in some cases voir dire). Initially, however, it is important to reiterate the overarching reasons why Mr. Abbott and Mr. Johnson lack credibility and why their testimony is unreliable. Abbott. Neither Mr. Abbott nor anyone else at his consulting firm who worked on this case has an engineering degree or license (except for Mr. Brewer, who has an engineering degree but no engineering license). Tr. 5337:9-5338:7 (Abbott). The last time Mr. Abbott had any responsibility for any operations at a nuclear plant was twenty-five years ago in 1979 at FitzPatrick nuclear power plant, and his operator' license s expired when he left FitzPatrick. Tr. 5322:24-5323:9. Even at FitzPatrick, only ten to fifteen
29
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 32 of 60
percent of Mr. Abbott's time was devoted to dealing with spent fuel matters. Tr. 5324:195325:3. Mr. Abbott has never had any responsibility for operating an ISFSI, nor has he participated in transferring spent fuel from wet to dry storage at a commercial reactor, in loading spent fuel storage casks or in transporting spent fuel assemblies. Tr. 5325:7-21, 5326:5-8; see Tr. 5329:8-5333:10 (no one at ABZ, Mr. Abbott's company, has ever been involved in transporting spent nuclear fuel). Mr. Abbott also has never been employed in a position where his duties included anything involved with decommissioning a nuclear power plant or with spent fuel storage or management at a decommissioning plant. Tr. 5326:9-23, 5327:6-13 (Abbott). He has never participated in preparing an application for an ISFSI license, or in the licensing of a storage container for spent fuel. Tr. 5327:19-25 (Abbott). Prior to his engagement by the Department of Justice ("DOJ") in this case, Mr. Abbott had not reviewed even one certificate of compliance, the licensing document for a spent fuel transportation and/or storage cask. Tr. 5329:1-7. Mr. Abbott also has no experience with the design of transportation containers, Tr. 5333:18-20, and he has never been involved personally in a Part 72 license application for an ISFSI. Tr. 5353:235354:2. During the time Mr. Abbott worked at the NRC in 1979 to 1981, he did not work at all on the development of the Nuclear Waste Policy Act (and is not even sure that he was aware at that time that a statute like the NWPA or the program it established was under consideration), nor did he deal with any decommissioning or dry storage issues because they were not in the regulatory pipeline at that time. Tr. 5347:21-5348:25. He also cannot offer any opinions that are based upon specific knowledge about the current design of the Yucca Mountain repository, and, prior to this case, he had not even seen DOE's spent fuel contract with utilities. Tr. 5333:25-5334:6.
30
Case 1:98-cv-00126-JFM
Document 906
Filed 02/18/2005
Page 33 of 60
Mr. Abbott also does not know whether or not the current design of the planned repository at Yucca Mountain contemplates the accommodation of nonstandard fuel or failed fuel as defined in the DOE spent fuel contracts. Tr. 5334:7-11. Nor, with three exceptions (a meltdown situation at TMI, a review of one failed fuel assembly at Maine Yankee, and inspection of failed fuel at FitzPatrick) has Mr. Abbott ever analyzed any failed fuel issues prior to his engagement by DOJ in this case. Tr. 5334:12-23 (Abbott). Mr. Abbott also did not explain his seemingly inconsistent testimony that when he was at Fitzpatrick 25 years ago, there was no failed fuel in the pool. See Tr. 5352:11-14 (Abbott). At the time of his first deposition in this case in 2002, Mr. Abbott was not qualified to receive safeguards information regarding nuclear-related security issues and therefore he did not have access to significant information about additional post-9/11 security requirements at nuclear plants and ISFSIs, nor was he permitted at that time to look at the security plans for the Yankee plants. Tr. 5334:24-5335:17 (Abbott). Nevertheless, he believed he was qualified at that time to offer expert opinions on security matters at nuclear plants and ISFSIs. Tr. 5335:18-22 (Abbott). In fact, Mr. Abbott still belie