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Case 1:98-cv-00621-ECH

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS COMMONWEALTH EDISON COMPANY and EXELON GENERATION COMPANY, LLC, Plaintiffs, v. UNITED STATES, Defendant. ) ) ) ) ) Nos. 98-621C, 04-103C ) (Judge Hewitt) ) ) )

DEFENDANT'S ANSWER AND AFFIRMATIVE DEFENSES For its answer to the complaint that plaintiff, Exelon Generation Company, LLC ("Exelon"), filed in Docket No. 04-103C, defendant admits, denies, and alleges as follows: 1. The allegations contained in the first sentence of paragraph 1 are conclusions of

law and plaintiff's characterization of this action to which no response is required; to the extent that they may be deemed allegations of fact, they are denied. Admits the allegations contained in the second sentence of paragraph 1 to the extent supported by the contract cited, which is the best evidence of its contents; otherwise denies the allegations contained in the second sentence of paragraph 1. Denies the allegations contained in the third sentence of paragraph 1 for lack of knowledge or information sufficient to form a belief as to their truth. Denies the allegations contained in the fourth and fifth sentences of paragraph 1. Admits the allegations contained in the sixth sentence of paragraph 1 that the Department of Energy ("DOE") has not yet begun the disposal of spent nuclear fuel and high-level radioactive waste (collectively, "SNF") under the standard contract published at 10 C.F.R. § 961.11 and that DOE has stated that it anticipates it will not be able to begin SNF disposal until 2010 (see 60 Fed. Reg. 21793, 21794 (May 3, 1005)); the remaining allegations contained in the sixth sentence of paragraph 1 are plaintiff's

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characterization of this action to which no response is required; to the extent that they may be deemed allegations of fact, they are denied. 2. The allegations contained in paragraph 2 are conclusions of law to which no

response to required; to the extent that they may be deemed allegations of fact, they are denied. 3. Denies the allegations contained in the first sentence of paragraph 3 for lack of

knowledge of information sufficient to form a belief as to their truth. Admits the allegation contained in the second sentence of paragraph 3. 4. Denies the allegations contained in paragraph 4 for lack of knowledge or

information sufficient to form a belief as to their truth. 5. Denies the allegations contained in the first sentence of paragraph 5 for lack of

knowledge or information sufficient to form a belief as to their truth. The allegations contained in the second sentence of paragraph 5 of plaintiff's characterization of this action to which no response is required. 6. Denies the allegations contained in paragraph 6 for lack of knowledge or

information sufficient to form a belief as to their truth. 7. 8. Admits. The allegations contained in paragraph 8 are conclusions of law and plaintiff's

characterization of this action to which no response is required; to the extent that they may be deemed allegations of fact, they are admitted to the extent supported by the Nuclear Waste Policy Act, 42 U.S.C. §§ 10101-10270; defendant otherwise denies the allegations contained in paragraph 8.

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9.

Admits the allegations contained in the first sentence of paragraph 9. Denies the

allegations contained in the second sentence of paragraph 9 for lack of information or knowledge sufficient to form a belief as to their truth; avers that the phrase "indefinite period" is undefined. 10. The allegations contained in paragraph 10 are conclusions of law and plaintiff's

characterization of its case to which no response is required; to the extent that they may be deemed allegations of fact, they are denied. 11. The allegations contained in paragraph 11 are conclusions of law and plaintiff's

characterization of its case to which no response is required; to the extent that they may be deemed allegations of fact, they are denied. 12. Admits that allegations contained in paragraph 12 to the extent supported by the

standard contract cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 12. 13. Admits allegations contained in paragraph 13 to the extent supported by the

standard contract cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 13. 14. Admits allegations contained in the first and second sentences of paragraph 14 to

the extent supported by the standard contract cited, which is the best evidence of its contents; otherwise denies the allegations contained in the first and second sentences of paragraph 14. Admits the allegations contained in the third sentence of paragraph 14 to the extent supported by the fee submission documentation cited, which is the best evidence of its contents; otherwise denies the allegations contained in the third sentence of paragraph 14.

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15.

The allegations contained in paragraph 15 are conclusions of law to which no

response is required; to the extent that they may be deemed allegations of fact, they are denied. 16. Admits allegations contained in paragraph 16 to the extent supported by the

Office of Management and Budget documentation cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 16. 17. Admits the allegations contained in paragraph 17 to the extent supported by the

standard contract cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 17. 18. The allegations contained in paragraph 18 are conclusions of law and plaintiff's

characterization of its case to which no response is required; to the extent that they may be deemed allegations of fact, they are denied. 19. Admits the allegations contained in paragraph 19 to the extent supported by the

Federal Register notice cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 19. 20. Admits the allegations contained in paragraph 20 to the extent supported by the

petition for review cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 20. 21. Admits the allegations contained in paragraph 21 to the extent supported by the

court decision cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 21.

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22.

Admits the allegations contained in paragraph 22 to the extent supported by the

announcement cited, which are the best evidence of their contents; otherwise denies the allegations contained in paragraph 22. 23. Admits the allegations contained in paragraph 23 to the extent supported by the

petition cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 23. 24. Admits the allegations contained in paragraph 24 to the extent supported by the

preliminary determination cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 24. 25. Admits the allegations contained in paragraph 25 to the extent supported by the

court decision cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 25. 26. Admits the allegations contained in paragraph 26 to the extent supported by the

court decision cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 26. 27. Admits the allegations contained in paragraph 27 to the extent supported by the

court decision cited, which is the best evidence of its contents; otherwise denies the allegations contained in paragraph 27. 28. The allegations contained in paragraph 28 are conclusions of law and plaintiff's

characterization of its case to which no response is required; to the extent that they may be deemed allegations of fact, they are denied.

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29.

Admits the allegation contained in paragraph 29 that DOE has not yet begun the

disposal of SNF under the standard contract published at 10 C.F.R. § 961.11 and that DOE has stated that it anticipates it will not be able to begin SNF disposal until 2010 (see 60 Fed. Reg. 21793, 21794 (May 3, 1995)); the remaining allegations contained in paragraph 29 are plaintiff's characterization of this action to which no response is required; to the extent that they may be deemed allegations of fact, they are denied. 30. Admits the allegations contained in paragraph 30 to the extent supported by the

court decisions cited, which are the best evidence of their contents; otherwise denies the allegations contained in paragraph 30. 31. 32. 33. Denies. Denies. The allegations contained in paragraph 33 are conclusions of law and plaintiff's

characterization of its case to which no response is required; to the extent that they may be deemed allegations of fact, they are denied. 34. by reference. 35. The allegations contained in paragraph 35 are conclusions of law and plaintiff's Defendant's response to paragraphs 1 through 33 of the complaint are incorporated

characterization of its case to which no response is required; to the extent that they may be deemed allegations of fact, they are denied. 36. Admits the allegations contained in the first sentence of paragraph 36 to the extent

supported by the decisions issued by the courts of appeals in Indiana Michigan Power Co. v. United States, 88 F.3d 1272 (D.C. Cir. 1996); Northern States Power Co. v. United States -6-

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Department of Energy, 128 F.3d 754 (D.C. Cir. 1997)); Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336 (Fed. Cir. 2000); and Northern States Power Co. v. United States, 224 F.3d 1361; otherwise denies the allegations contained in the first sentence of paragraph 36. Admits the allegation contained in the second sentence of paragraph 36 that DOE has stated that it anticipates it will not be able to begin SNF disposal until 2010 (see 60 Fed. Reg. 21793, 21794 (May 3, 1995)); the remaining allegations contained in the second sentence of paragraph 36 are plaintiff's characterization of this action to which no response is required; to the extent that they may be deemed allegations of fact, they are denied. 37. The allegations contained in the first sentence of paragraph 37 are conclusions of

law and plaintiff's characterization of its case to which no response is required; to the extent that they may be deemed allegations of fact, they are admitted to the extent supported by the standard contract, which is the best evidence of its contents; otherwise denies the allegations contained in the first sentence of paragraph 37. The allegations contained in the second sentence of paragraph 37 are conclusions of law and plaintiff's characterization of its case to which no response is required; to the extent that they may be deemed allegations of fact, they are denied. 38. The allegations contained in paragraph 38 are conclusions of law and plaintiff's

characterization of its case to which no response is required; to the extent that they may be deemed allegations of fact, they are denied; defendant avers that the Department of Energy has not accepted any commercial spent nuclear fuel and/or high-level radioactive waste under the auspices of the Nuclear Waste Policy Act, 42 U.S.C. §§ 10101-10270. 39. Denies.

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40.

Denies that plaintiff is entitled to the relief set forth in the prayer for relief

immediately following paragraph 39, or to any relief whatsoever. 41. Denies each and every allegation not previously admitted or otherwise qualified. FIRST AFFIRMATIVE DEFENSE 42. Plaintiff has failed to satisfy a condition precedent to defendant's liability. SECOND AFFIRMATIVE DEFENSE 43. 44. Plaintiff''s claim is barred by the affirmative defense of recoupment or setoff. The Court possesses jurisdiction to entertain the merits of the defense of

recoupment or setoff pursuant to 28 U.S.C. §§ 1503 and 2508. 45. Pursuant to the standard contract at issue in this case, the contract holder is

required to pay a one-time fee for SNF discharged prior to April 7, 1983, and for in-core burned fuel as of 12:00 a.m. on April 7, 1983. See 10 C.F.R. § 961.11, Art. VIII.B.2. Plaintiff's predecessor to the standard contract at issue in this case elected to satisfy its financial obligation pursuant to Article VIII.B.2 of the standard contract "in the form of a single payment anytime prior to the first delivery, as reflected in the DOE approved delivery commitment schedule," which "shall consist of the fee plus interest on the outstanding fee balance." See id., Art. VIII.B.2(b). Neither plaintiff nor its predecessor to the standard contract at issue in this case has ever paid the one-time fee required pursuant to Article VIII of the standard contract. 46. Had DOE begun SNF acceptance pursuant to the standard contract in 1998, the

contract holder for the standard contract at issue in this case would have been required to pay the one-time fee before DOE would have had any obligation to begin to accept any fuel pursuant to that standard contract. To the extent that the plaintiff in this case receives an award of damages -8-

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based upon DOE's failure to begin SNF acceptance in 1998 and thereafter, the plaintiff should be required to provide DOE with the monies that, before DOE would have been obligated to have accepted the contract holder's SNF, the contract holder would have had to pay to DOE. Accordingly, the Court allow defendant to recoup or set-off the one-time fee owed pursuant to the terms of the standard contract at issue in this case. WHEREFORE, defendant requests that the Court enter judgment in its favor, order that the complaint be dismissed, to order that any amount that may be found due plaintiff under the standard contract at issue in this case shall be recouped or setoff by any amount owed to the United States pursuant to Article VIII.B.2 of the standard contract, and grant defendant such other and further relief as the Court may deem just and proper. Respectfully Submitted, PETER D. KEISLER Assistant Attorney General s/ David M. Cohen DAVID M. COHEN Director

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OF COUNSEL: JANE K. TAYLOR Office of General Counsel U.S. Department of Energy 1000 Independence Ave., S.W. Washington, D.C. 20585

s/ Harold D. Lester, Jr. HAROLD D. LESTER, JR. Assistant Director Commercial Litigation Branch Civil Division Department of Justice 1100 L Street, N.W. Attn: Classification Unit 8th Floor Washington, D.C. 20530 Tele: (202) 305-7562 Fax: (202) 307-2503 Attorneys for Defendant

April 26, 2004

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CERTIFICATE OF FILING I hereby certify that on this 26th day of April 2004, a copy of foregoing "DEFENDANT'S ANSWER AND AFFIRMATIVE DEFENSES" was 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/Harold D. Lester, Jr.