Free Post Trial Brief - District Court of Federal Claims - federal

Case 1:98-cv-00614-JFM

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No. 98-614C (Senior Judge Merow)

IN THE UNITED STATES COURT OF FEDERAL CLAIMS SOUTHERN NUCLEAR OPERATING COMPANY, ALABAMA POWER COMPANY, GEORGIA POWER COMPANY, Plaintiffs, v. UNITED STATES, Defendant. ______________________________________________________________________________ DEFENDANT'S POST-TRIAL BRIEF

OF COUNSEL: JANE K. TAYLOR Office of General Counsel U.S. Department of Energy 1000 Independence Ave., S.W. Washington, D.C. 20585 STEPHEN FINN JOSHUA E. GARDNER HEIDE L. HERRMANN MARIAN E. SULLIVAN Trial Attorneys Commercial Litigation Branch Civil Division Department of Justice Washington, D.C. 20530

PETER D. KEISLER Assistant Attorney General DAVID M. COHEN Director HAROLD D. LESTER, JR. Assistant Director JOHN C. EKMAN Trial Attorney Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit 8th Floor 1100 L Street, N.W. Washington D.C. 20530 Tele: (202) 353-0897 Fax: (202) 307-2503 Attorneys for Defendant

May 24, 2006

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TABLE OF CONTENTS PAGE DEFENDANT'S POST-TRIAL BRIEF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 STATEMENT OF FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 I. THE ORIGINAL PROVISIONS OF THE NUCLEAR WASTE POLICY ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 THE "STANDARD CONTRACT FOR DISPOSAL OF SPENT NUCLEAR FUEL AND/OR HIGH-LEVEL RADIOACTIVE WASTE" WAS CREATED THROUGH NOTICE AND COMMENT RULEMAKING IN THE FEDERAL REGISTER . . . . . . . . . . . . . . . . . . . . . . 11 A. B. C. III. IV. The Proposed Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Public Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 The Final Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

II.

PLAINTIFFS' EXECUTION OF THEIR STANDARD CONTRACTS . . . . . . 22 ISSUANCE OF THE MISSION PLAN AND ITS AMENDMENT . . . . . . . . . . 22 A. B. The Documents That Set Forth DOE's Early Program Plans . . . . . . . . . 22 Testimony About DOE's Obligation And Early Program Plans . . . . . . . 27

V.

THE 1987 AMENDMENTS TO THE NUCLEAR WASTE POLICY ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 PLANNED ACCEPTANCE AT AN MRS FACILITY UNTIL 2010 . . . . . . . . 38 A. B. Program Reassessment And 1991 Draft Mission Plan Amendment . . . . 38 DOE's Efforts To Site And Plans To Perform At An MRS . . . . . . . . . . 40

VI.

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TABLE OF CONTENTS (cont'd) PAGE VII. DOE'S ISSUANCE OF ANNUAL CAPACITY REPORTS . . . . . . . . . . . . . . . 41 A. B. C. VIII. The 1987 Through 1990 Annual Capacity Reports . . . . . . . . . . . . . . . . . 41 The 1991 Annual Capacity Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 The 1992 Through 1994 Annual Capacity Reports . . . . . . . . . . . . . . . . . 47

INDUSTRY SUBMISSION OF DELIVERY COMMITMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 THE TOTAL SYSTEM LIFE CYCLE COST REPORTS AND FEE ADEQUACY REPORTS ARE BASED UPON THE THEN-CURRENT TECHNICAL BASELINE FOR THE PROGRAM . . . . . . . . . . . . . . . . . . . . . . 53 ADDITIONAL FACTS AFFECTING THE PLAINTIFFS' CLAIM . . . . . . . . . 55 A. Plaintiffs Historically Have Operated Their Facilities With A Single Full Core Reserve In Their Wet Pools . . . . . . . . . . . . . . . . . . . . . 55 The Government's Expert Witnesses Offered Significant Testimony Relevant To Determining The Quantum Of Plaintiffs' Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 1. The Testimony Of The Government's Accounting And Damages Expert, R. Larry Johnson . . . . . . . . . . . . . . . . . . . . . . . 64 The Testimony Of The Government's Economics and 67 Modeling Expert, Dr. Jonathan Neuberger . . . . . . . . . . . . . . . . . 65 Summary Of The Work Performed By Plaintiffs' Damages Expert, Kenneth Metcalfe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

IX.

X.

B.

2.

3.

C.

The Application Of The Terms Of The Standard Contract And Plaintiffs' Full Core Reserve Policies Reduce Plaintiffs' Asserted Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 1. In The "But For" World, And Under A 900 MTU Rate Of Acceptance, Plants Hatch And Vogtle Both Required Additional On-Site SNF Storage After January 31, 1998 . . . . . . 68 - ii -

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TABLE OF CONTENTS (cont'd) PAGE 2. Applying A Single Full Core Reserve Assumption To Plaintiffs' Damages Claim Demonstrates That Plant Hatch Has Loaded An Unreasonable Number Of Casks To Its ISFSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Of The $17,230,533 Related To Plaintiffs' Decision To Exceed One Full Core Reserve In The Actual World, At Least $9,533,518 Is Related To The Decision To Load Hi-STAR Casks In 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

3.

D.

Implementing A Two Full Core Reserve Policy Requires Additional Storage At Plants Hatch And Vogtle In The "But For" World Regardless Of The Rate Of Acceptance Applied To Plaintiffs' Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Plaintiffs' Damages Require Further Adjustment To Reflect Actual Costs Incurred As A Result Of DOE's Partial Breach . . . . . . . . . 76 1. Plaintiffs Failed To Establish That Internal Labor Charges Were Incremental To DOE's Partial Breach . . . . . . . . . . . . . . . . 80 In Addition To Adjustments Related To Cask Loading And Internal Labor, Plaintiffs' Alleged Damages Associated With Plant Hatch Require Further Adjustment . . . . . . . . . . . . . . 83 Other Than The Adjustment Associated With The Maine Yankee Racks At Plant Vogtle, The Remaining Adjustments At Plants Farley And Vogtle Largely Are Associated With PFS, Prejudgment Interest, and Internal Labor Charges . . . . . . . 86

E.

2.

3.

XI. XII.

PLAINTIFFS' INVESTMENT IN PRIVATE FUEL STORAGE . . . . . . . . . . . 86 PLAINTIFFS' ASSERTED COST OF CAPITAL CONSTITUTES PRE-JUDGMENT INTEREST AND, IN ANY EVENT, WAS NOT A COST INCURRED BY ANY OF THE NAMED PLAINTIFFS IN THIS CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

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TABLE OF CONTENTS (cont'd) PAGE ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 I. SOUTHERN NUCLEAR OPERATING COMPANY IS NOT A PROPER PARTY PLAINTIFF IN THIS CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 PLAINTIFFS BEAR THE BURDEN OF ESTABLISHING ALL ELEMENTS OF THEIR CLAIM, INCLUDING LIABILITY, CAUSATION, FORESEEABILITY, AND REASONABLE CERTAINTY . . . 94 A. B. Plaintiffs Have The Burden Of Proving All Elements Of Their Case . . . 94 Plaintiffs' Burden Includes Their Obligation To Establish A Reasonable "But For" World Against Which To Measure Whether DOE's Delay "Caused" Them To Incur Incremental Costs . . . . . . . . . . 95 Plaintiffs Have The Burden Of Demonstrating That Their Claimed Damages Were Foreseeable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 Plaintiffs Must Prove Their Damages With Reasonable Certainty . . . . . 98 After Establishing The Legal And Factual Predicates To Damages, Plaintiffs Must Demonstrate That Their Action Mitigated Those Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

II.

C.

D. E.

II.

PLAINTIFFS HAVE FAILED TO ESTABLISH THAT, IN THE "BUT FOR" WORLD, DOE WAS CONTRACTUALLY OR STATUTORILY OBLIGATED TO ACCEPT SNF AT AN ANNUAL RATE OF 3,000 MTU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 A. The Plaintiffs Have Failed To Establish That DOE Was Obligated To Accept SNF At A Rate Sufficient To Preclude The Need For Additional At-Reactor Storage And To Allow "Timely Decommissioning" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 1. The Plaintiffs Have Failed To Identify Any Language In Either The NWPA Or The Standard Contract That Requires DOE To Satisfy The Plaintiffs' Proposed Two-Part Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

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TABLE OF CONTENTS (cont'd) PAGE 2. The Plaintiffs Failed To Establish That, In Light Of The Contract's Integration Clause, The Contract Is Not Fully Integrated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 Even If The Court Considered Parol Evidence To Seek To Interpret The Contract's Terms, The Plaintiffs Have Failed To Identify Any Contemporaneous Evidence Supporting Their Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

3.

B.

Plaintiffs Cannot Rely Upon Program Planning Documents To Establish The Government's Obligation To Accept SNF At An Annual Rate Of 3,000 MTU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 1. As A Factual Matter, The Documents Upon Which The Plaintiffs Rely To Demonstrate DOE's Intent To Accept SNF At A 3,000 MTU Rate Relate To Acceptance At A Repository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 As A Legal Matter, Program Documents Expressing An Agency's Hopes And Goals Do Not Somehow Become Contract Obligations, Absent An Express Modification Of The Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

2.

C.

Plaintiffs' Argument That The NWPA And The Standard Contract Require DOE Meet A Qualitative Two-Part Obligation Fails To Account For The Significant Changes In The Industry Over The Course Of The DOE Program . . . . . . . . . . . . . . . . . . . . . . . . 117 The 3,000 MTU Rate Of Acceptance That The Plaintiffs Advocate Does Not Satisfy The Two-Part, Qualitative Obligation Upon Which The Plaintiffs Rely To Justify That Rate . . . . . . . . . . . . . . . . . . 121

D.

III.

THE COURT SHOULD REJECT EILEEN SUPKO'S OPINIONS CONCERNING THE "REASONABLENESS" OF A PARTICULAR RATE OF ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 A. Ms. Supko's Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

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TABLE OF CONTENTS (cont'd) PAGE B. The Court Should Reject Ms. Supko's Opinions Because They Are Neither Relevant Nor Reliable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 1. Ms. Supko's Opinions Are Not Relevant To Any Issue In This Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 Ms. Supko's Opinions Should Be Afforded Little, If Any, Weight Because They Are Not Reliable . . . . . . . . . . . . . . . . . . 127

2.

C.

The Court Should Disregard Ms. Supko's Opinions Because Her Model Lacks Evidentiary Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 Ms. Supko's Model Inconsistently Mixes Information From The "But For" And Actual Worlds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 Even If The Court Were To Accept Counsel's Assertion Concerning The Two "Primary Requirements," A 3,000 MTU Rate Of Acceptance Does Not Satisfy These Two Requirements Under Ms. Supko's Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

D.

E.

IV.

ANY DAMAGES IN THIS CASE SHOULD NOT BE MEASURED AGAINST ANY ACCEPTANCE RATE GREATER THAN THAT TO WHICH DOE ACKNOWLEDGED IT WAS WILLING TO COMMIT . . 146 A. Contrary To The Plaintiffs' Representations, The Standard Contract Is Not "Missing" An Acceptance Rate Term . . . . . . . . . . . . . . . . . . . . . 146 Absent Agreement By The Parties Upon The Rate Of Acceptance, The Court Must Ensure That The Plaintiffs Do Not Obtain Greater Rights Through Litigation Than They Would Have Under The Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 The Court Must Ensure That It Does Not Create A Contract For The Parties To Which They Had Not Mutually Agreed . . . . . . . . . . . . 153 In This Case, Damages Must Not Be Measured Against Any Rate Of Acceptance Greater Than That Identified In The 1991 ACR . . . . . . 154

B.

C.

D.

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TABLE OF CONTENTS (cont'd) PAGE E. Some Of The Decisions Issued Since The Government Filed Its Motion Regarding The Spent Nuclear Fuel Acceptance Rate Incorrectly Analyze The Standard Contract Schedule Provisions . . . . . 157

V.

PLAINTIFFS HAVE NOT ESTABLISHED THE NECESSARY CAUSAL LINK BETWEEN ALL OF THEIR CLAIMED STORAGE CONSTRUCTION COSTS AND DOE'S DELAY IN BEGINNING SNF ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 PLAINTIFFS FAILED TO ESTABLISH THAT THE COSTS THEY ALLEGEDLY INCURRED FOR INTERNAL LABOR, OVERHEAD, AND ENGINEERING SUPERVISION WERE INCREMENTAL TO DOE'S BREACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 THIS COURT SHOULD ADJUST AN ADDITIONAL $5,006,399 ASSOCIATED WITH CASKS THAT WOULD HAVE BEEN LOADED TO THE PLANT HATCH ISFSI AFTER 2004 . . . . . . . . . . . . . . . . . . . . . . . . 167 EVEN IF THIS COURT FINDS THAT DOE WAS OBLIGATED TO PERFORM AT A 3,000 MTU RATE OF ACCEPTANCE, THE PLAINTIFFS' DAMAGES SIGNIFICANTLY ARE OVERSTATED . . . . . . 168 PLAINTIFFS CANNOT RELY UPON DIFFERENT FULL CORE RESERVE POLICIES IN THE "BUT FOR" AND ACTUAL WORLDS IN ESTABLISHING CAUSATION FOR THE INCREMENTAL NATURE OF DRY STORAGE COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 A. Plaintiffs' Damages Claim And The Evidence Adduced At Trial Supports A Finding That Plaintiffs' Historic Operating Reserve Of Single Core Offload Is Appropriate In Determining Damages . . . . 169 The Government's Case Concerning Full Core Reserve Is Based Upon The Testimony Of Plaintiffs' Personnel And Historic Operating Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 To Award Damages Related To APC For Plant Farley At A 900 MTU Rate Of Acceptance, The Court Must Implement A Fungible Single Full Core Reserve Policy Per Pool At That Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176

VI.

VII.

VIII.

IX.

B.

C.

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TABLE OF CONTENTS (cont'd) PAGE X. SOUTHERN NUCLEAR'S INVESTMENT IN PRIVATE FUEL STORAGE IS NOT RECOVERABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 A. Plaintiffs Failed To Establish that GPC or APC Paid Any Money In Connection With PFS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 Even If GPC Or APC Had Been Responsible For PFS Costs, They Were Not Foreseeable And Did Not Constitute Reasonable Mitigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

B.

XI.

PLAINTIFFS' CANNOT RECOVER THEIR CLAIM FOR THE COST OF CAPITAL GROSS-UP OF PAST COSTS AS A MATTER OF LAW OR FACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

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TABLE OF AUTHORITIES CASES PAGE(S)

AES Technology System, Inc. v. Coherent Radiation, 583 F.2d 933 (7th Cir. 1978) ........................................................................................ 163 Abbott Labs. v. Brennan, 952 F.2d 1346 (Fed. Cir. 1992) ...................................................................................... 97 Alaska Pulp Corp. v. United States, 59 Fed. Cl. 400 (2004) .................................................................................................... 94 Autotrol Corp. v. Cont'l Water Sys. Corp, 918 F.2d 689 (7th Cir. 1990) ........................................................................................ 163 Aviation Contractor Employees, Inc. v. United States, 945 F.2d 1568 (Fed. Cir. 1991) .................................................................................... 160 BMW Manufacturing Corp. v. United States, 241 F.3d 1357 (Fed. Cir. 2001) .................................................................................... 101 Barron Bancshares, Inc. v. United States, 366 F.3d 1360 (Fed. Cir. 2003) .................................................................................... 103 Barrow Utils. & Elec. Co. v. United States, 20 Cl. Ct. 113, 121 (1990) .............................................................................................. 99 Bel Pre Health Care Center, Inc. v. United States, 24 Cl. Ct. 495, 496 (1991), aff'd, 980 F.2d 745 (Fed. Cir. 1992) (table) ...................... 153 Blackstone Consulting Inc. v. United States, 65 Fed. Cl. 463 (2005) .................................................................................................. 109 Bluebonnet Savings Bank, FSB v. United States, 67 Fed. Cl. 231 (2005) ............................................................................................ 97, 120 Bluebonnet Savings Bank, F.S.B. v. United States, 266 F.3d 1348 (Fed. Cir. 2001) .................................................................................... 133 Bluebonnet Savings Bank, F.S.B. v. United States, 339 F.3d 1341 (Fed. Cir. 2003) ............................................................................... passim Bohac v. Department of Agriculture, 239 F.3d 1334 (Fed. Cir. 2001) ...................................................................................... 98 - ix -

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Boyajian v. United States, 423 F.2d 1231 (Ct. Cl. 1970) ........................................................................................ 162 Branhill Realty Co. v. Montgomery Ward & Co., 60 F.2d 922 (2d Cir. 1932) ................................................................................... 116, 152 Brown v. Wal-Mart Stores, Inc., 402 F. Supp. 2d 303 (D. Maine 2005) .......................................................................... 129 California Federal Bank v. United States, 395 F.3d 1363 (Fed. Cir. 2005) ...................................................................................... 96 Castle v. United States, 48 Fed. Cl. 187 (2000), aff'd in part, rev'd in part and remanded in part, 301 F.3d 1328 (Fed. Cir. 2002) .................................................................................... 133 City of Tacoma, Department of Public Utilities v. United States, 31 F.3d 1130 (Fed. Cir. 1994) ...................................................................................... 160 Coast Federal Bank, FSB v. United States, 48 Fed. Cl. 402 (2000) .................................................................................................... 97 Columbia First Bank v. United States, 54 Fed. Cl. 693 (2002) .................................................................................................. 183 Columbia First Bank v. United States, 60 Fed. Cl. 97 (2004) .................................................................................................. 4, 97 Commercial Metals Co. v. United States, 176 Ct. Cl. 343, 349 (1966) ........................................................................................... 116 Commonwealth Edison Co. v. United States, 56 Fed. Cl. 652 (2003) .......................................................................................... 157, 158 Convoy Co. v. Sperry Rand Corp., 672 F.2d 781 (9th Cir. 1982) ........................................................................................ 164 Coyle's Pest Control, Inc. v. Cuomo, 154 F.3d 1302 (Fed. Cir. 1998) .................................................................................... 160

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Daubert v. Merrill Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) ...................................................................................... 126, 128, 130 David Nassif Associates v. United States, 214 Ct. Cl. 407, 557 F.2d 249 (1977) ................................................................... 147, 154 Department of Energy v. Westland, 565 F.2d 685 (C.C.P.A. 1977) ...................................................................................... 101 Dolphin Tours, Inc. v. Pacifico Creative Services, Inc., 773 F.3d 1506 (9th Cir. 1985) ...................................................................................... 132 Dunn Appraisal Co. v. Honeywell Information Systems, Inc., 687 F.2d 877 (6th Cir. 1982) ........................................................................................ 164 England v. Contel Advanced Systems, Inc., 384 F.3d 1372 (Fed. Cir. 2004) .................................................................................... 182 Ericsson, Inc. v. Harris Corp., 352 F.3d 1369 (Fed. Cir. 2003) .................................................................................... 132 Fawick Corp. v. United States, 149 Ct. Cl. 623, 637 (1960) ............................................................................................. 95 Fifth Third Bank v. United States, 55 Fed. Cl. 223 (2003) .............................................................................................. 7, 133 Florida Power & Light Co. v. United States, 64 Fed. Cl. 37 (2005), interlocutory appeal pending sub nom. PSEG Nuclear, L.L.C. v. United States, No. 05-5162 (Fed. Cir. filed Aug. 5, 2005). . 102 Foley Co. v. United States, 11 F.3d 1032 (Fed. Cir. 1993) ...................................................................................... 102 Fraas Surgical Mfg. Co. v. United States, 215 Ct. Cl. 820, 571 F.2d 34 (1978) ............................................................................. 149 Framlau Corp. v. United States, 568 F.2d 687 (Ct. Cl. 1977) .......................................................................................... 184

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TABLE OF AUTHORITIES (cont'd) CASES PAGE(S)

Franklin Federal Savings Bank v. United States, 55 Fed. Cl. 108 (2003) ................................................................................................... 133 Freeport Sulphur Co. v. The S/S Hermosa, 526 F.2d 300 (5th Cir. 1976) ........................................................................................ 164 Fuesting v. Zimmer, Inc., 421 F.3d 528 (7th Cir. 2005) ................................................................................ 128, 130 Gardner & North Roofing & Siding Corp. v. Board of Governors of the Fed. Reserve Sys., 464 F.2d 838 (D.C. Cir. 1972) ...................................................................................... 101 Gevyn Construction Corp. v. United States, 827 F.2d 752 (Fed. Cir. 1987) ...................................................................................... 184 Glendale Federal Bank, FSB v. United States, 43 Fed. Cl. 390 (1999) .................................................................................................. 134 Glendale Federal Bank, FSB v. United States, 239 F.3d 1374 (Fed. Cir. 2001) .............................................................................. 97, 134 Globe Savings Bank v. United States, 61 Fed. Cl. 91 (2004) ...................................................................................................... 28 Grynberg v. Federal Energy Regulatory Commission, 71 F.3d 413 (D.C. Cir. 1995) ........................................................................................ 109 Guillory v. Domtar Indus. Inc., 95 F.3d 1320 (5th Cir. 1996) ........................................................................................ 136 Home Savings of America v. United States, 57 Fed. Cl. 694 (2003), aff'd in part, rev'd in part, 399 F.3d 1341 (Fed. Cir. 2005) ...................................................................................................................... 133 Honeywell, Inc. v. United States, 228 Ct. Cl. 591, 661 F.2d 182 (1981) ........................................................................... 104 In the Matter of Community Medical Center, 623 F.2d 864 (3d Cir. 1980) ......................................................................................... 152

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Indiana Michigan Power Co. v. United States, 57 Fed. Cl. 88 (2003) ............................................................................................... passim Indiana Michigan Power Co. v. United States, 60 Fed. Cl. 639 (2004), aff'd, 422 F.3d 1369 (Fed. Cir. 2005) ................................ passim Indiana Michigan Power Co. v. United States, 88 F.3d 1272 (D.C. Cir. 1996) ........................................................................ 51, 110, 111 Indiana Michigan Power Co. v. United States, 422 F.3d 1369 (Fed. Cir. 2005) ............................................................................... passim J.D. Hedin Construction Co. v. United States, 197 Ct. Cl. 782, 456 F.2d 1315 (1972) ................................................................... 96, 184 Julius Goldman's Egg City v. United States, 697 F.2d 1051 (Fed. Cir. 1983), cert. denied, 464 U.S. 814 (1983) ............................. 106 KMS Fusion, Inc. v. United States, 36 Fed. Cl. 68 (1996), aff'd 108 F.3d 1393 (Fed. Cir. 1997) ........................................ 109 Kidder, Peabody & Co. v. IAG Int'l Acceptance Group N.V., 28 F. Supp. 2d 126 (S.D.N.Y. 1998) ............................................................................. 133 Koby v. United States, 53 Fed. Cl. 493 (2002) .................................................................................... 99, 151, 152 Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) ...................................................................................................... 128 LaSalle Talman Bank, F.S.B. v. United States, 45 Fed. Cl. 64 (1999) , rev'd on other grounds, 317 F.3d 1363 (Fed. Cir. 2003) ............................................................................................................... 99, 133 Landmark Land Co. v. United States, 256 F.3d 1365 (Fed. Cir. 2001) ...................................................................................... 98 Liberty Bank v. Talman Home Mortgage Corp., 877 F.2d 400 (5th Cir. 1989) ........................................................................................ 152

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Library of Congress v. Shaw, 478 U.S. 310 (1986) ...................................................................................................... 182 Long Island Savings Bank v. United States, 63 Fed. Cl. 157 (2004) .................................................................................................... 28 Massengill v. Guardian Mgt. Co., 19 F.3d 196 (5th Cir. 1994) .......................................................................................... 160 Mays v. Trump Indiana, Inc., 255 F.3d 351 (7th Cir. 2001) ........................................................................................ 153 McAbee Constr, Inc. v. United States, 97 F.3d 1431 (Fed. Cir. 1996) ...................................................................................... 103 McDonnell Douglas Corp., ASBCA No. 26747, 83-1 BCA ¶ 16,377 (1983) .......................................................... 149 Menne v. Celotex Corp., 861 F.2d 1453 (10th Cir. 1988) ...................................................................................... 96 Microstrategy Inc. v. Business Objects, S.A., 429 F.3d 1344 (Fed. Cir. 2005) .................................................................................... 128 Modern Systems Technology Corp. v. United States, 979 F.2d 200 (Fed. Cir. 1992) ...................................................................................... 153 Monessen Southwestern Railway Co. v. Morgan, 486 U.S. 330 (1988) ...................................................................................................... 182 Myerle v. United States, 33 Ct. Cl. 1, 27 (1897) ........................................................................................ 94, 95, 96 National By-Products, Inc. v. United States, 186 Ct. Cl. 546, 405 F.2d 1256 (1969) ................................................................. 115, 116 National School of Aeronautics, Inc. v. United States, 135 Ct. Cl. 343, 142 F. Supp. 933 (1956) ..................................................................... 100 Needleman v. John Hancock Life Ins. Co., No. 03-1955, 2006 WL 842370 (N.D. Tex. Mar. 31, 2006) ......................................... 126 - xiv -

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Neeley v. Bankers Trust Co. of Texas, 757 F.2d 621 (5th Cir. 1985) ........................................................................................ 153 Northern Helex Co. v. United States, 207 Ct. Cl. 862, 524 F.2d 707 (1975), cert. denied, 429 U.S. 866 (1976) .... 95, 97, 98, 99 Northern States Power Co. v. United States Department of Energy, 128 F.3d 754 (D.C. Cir. 1997), cert. denied, 525 U.S. 1015 & 1016 (1998) ................... 2 Oddi v. Ford Motor Co., 234 F.3d 136 (3d Cir. 2000) ................................................................................. 129, 130 Omni Corp. v. United States, 41 Fed. Cl. 585 (1998) .................................................................................................. 106 Point Productions A.G. v. Sony Music Entertainment, Inc., 215 F. Supp. 2d 336 (S.D.N.Y. 2002) ............................................................................. 96 Prudential Insurance Co. v. United States, 801 F.2d 1295 (Fed. Cir. 1986) ...................................................................................... 98 Quiman, S.A. de C.V. v. United States, 39 Fed. Cl. 171 (1997), aff'd, 178 F.3d 1313 (Fed. Cir. 1999) ....................................... 95 Ramsey v. United States, 121 Ct. Cl. 426, 101 F. Supp. 353 (1951) ....................................................................... 95 Rapid City Indian Health Advisory Bd. of Directors, ASBCA No. 26641, 83-1 BCA ¶ 16,311 (1983) .......................................................... 149 Ridge Runner Forestry v. Veneman, 28 F.3d 1058 (Fed. Cir. 2002) ...................................................................................... 153 Rink v. Cheminova, Inc., 400 F.3d 1286 (11th Cir. 2005) .................................................................................... 126 Robertson v. National R.R. Passenger Corp., No. 98-1397, 1999 WL 280407 (E.D. La. May 3, 1999) .......................................... 28, 29 Robinson v. United States, 305 F.3d 1330 (Fed. Cir. 2002) ...................................................................................... 99 - xv -

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Roseburg Lumber Co. v. Madigan, 978 F.2d 660 (Fed. Cir. 1992) .................................................................................. 94, 98 Rumsfeld v. Freedom N.Y., Inc., 329 F.3d 1320 (Fed. Cir. 2003) .................................................................................... 103 S.W. Engineering Co. v. Cajun Electric Power Cooperative, 915 F.2d 972 (5th Cir. 1990) ........................................................................................ 163 Sacramento Municipal Utility District v. United States, 70 Fed. Cl. 332 (2006) .................................................................................. 125, 129, 164 Saddler v. United States, 287 F.2d 411 (Ct. Cl. 1961) .......................................................................................... 162 San Carlos Irrigation & Drainage District v. United States, 877 F.2d 957 (Fed. Cir. 1989) ........................................................................................ 94 San Carlos Irrigation & Drainage District v. United States, 111 F.3d 1557 (Fed. Cir. 1997) ...................................................................................... 95 Santa Fe Engineers, Inc. v. United States, 801 F.2d 379 (Fed. Cir. 1986) ...................................................................................... 104 Seaboard Lumber Co. v. United States, 308 F.3d 1283 (Fed. Cir. 2002) .................................................................................... 126 Shann v. Dunk, 84 F.3d 73 (2d Cir. 1996) ............................................................................................. 153 Shapiro, Lifschitz, & Schram, P.C. v. Hazard, 90 F. Supp. 2d 15 (D.D.C. 2000) .................................................................................... 28 Shyface v. Secretary of Health and Human Servs., 165 F.3d 1344 (Fed. Cir. 1999) ...................................................................................... 97 Singer Co. Librascope Div. v. United States, 568 F.2d 695 (Ct. Cl. 1977) .......................................................................................... 184 Southern California Federal Savings & Loan Association v. United States, 422 F.3d 1319 (Fed. Cir. 2005) .................................................................................... 103 - xvi -

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Southern National Corp. v. United States, 57 Fed. Cl. 294 (2003) .................................................................................................. 134 Southern Pacific Co. v. Darnell-Taenzer Lumber Co., 245 U.S. 531 (1918) ........................................................................................................ 96 Southern Pacific Communications Co. v. AT&T, 556 F. Supp. 2d 825 (D.D.C. 1982) ...................................................................... 133, 171 Standard Federal Bank v. United States, 62 Fed. Cl. 265 (2004) .................................................................................................. 184 Suess v. United States, 52 Fed. Cl. 221 (2002) .................................................................................................. 134 Sylvania Electric Products, Inc. v. United States, 198 Ct. Cl. 106, 458 F.2d 994 (1972) ........................................................................... 103 Tennessee Valley Authority v. United States, 60 Fed. Cl. 665 (2004) ............................................................................................. passim Tennessee Valley Authority v. United States, 69 Fed. Cl. 515 (2006) .................................................................................... 95, 165, 184 Thomas W. Yoder Co., VABCA No. 997, 74-1 BCA ¶ 10,424 (1974) .............................................................. 149 Transamerica Equipment Leasing Corp. v. Union Bank, 426 F.2d 273 (9th Cir. 1970) ........................................................................................ 153 United States Fidelity & Guaranty Co. v. United States, 230 Ct. Cl. 355, 676 F.2d 622 (1982) ........................................................................... 149 United States Steel Corp. v. United States, 618 F. Supp. 496 (C.I.T. 1985) ..................................................................................... 101 United States v. The John R. Williams, 144 F.2d 451 (2d Cir. 1944) ................................................................................. 164, 175 Wells Fargo Bank v. United States, 88 F.3d 1012 (Fed. Cir. 1996) .................................................................................. 96, 98 - xvii -

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White v. Delta Construction International, Inc., 285 F.3d 1040 (Fed. Cir. 2002) ...................................................................... 94, 152, 161 Wickham Contracting Co. v. Fischer, 12 F.3d 1574 (Fed. Cir. 1994) ...................................................................................... 184 Willems Industries., Inc. v. United States, 155 Ct. Cl. 360, 295 F.2d 822 (1961) ...................................................................... 94, 133 Willred Co. v. Westmoreland Metal Mfg. Co., 200 F. Supp. 59 (E.D. Pa. 1961) ................................................................................... 163 Wilner v. United States, 23 Cl. Ct. 241, 258, 262-63 (1991) ................................................................................ 162 Wilson v. Marquette Elecs., Inc., 630 F.2d 575 (8th Cir. 1980) ........................................................................................ 163 Young v. James Green Mgt., Inc., 327 F.3d 616 (7th Cir. 2003) .......................................................................................... 28 Zaremba v. General Motors Corp., 360 F.3d 355 (2d Cir. 2004) ................................................................................. 129, 130 Zenith Electronics Corp. v. WH-TV Broadcasting Corp., 395 F.3d 416 (7th Cir.), cert. denied, 125 S. Ct. 2978 (2005) .............................. 128, 129

STATUTES AND REGULATIONS 10 C.F.R. § 961.11 ............................................................................................................... passim 42 U.S.C. §§ 10101-10270 ......................................................................................................... 10 42 U.S.C. § 10131 ..................................................................................................................... 101 42 U.S.C. §§ 10132 ....................................................................................................................... 9 42 U.S.C. §§ 10133 ................................................................................................................... 112

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42 U.S.C. § 10161 ............................................................................................................. 9, 10, 26 42 U.S.C. § 10162 ....................................................................................................................... 38 42 U.S.C. § 10168 ............................................................................................................... 38, 155 42 U.S.C. § 10172 ....................................................................................................................... 38 42 U.S.C. § 10221 ................................................................................................................ passim 42 U.S.C. § 10242 ....................................................................................................................... 38 48 Fed. Reg. 16590 (April 18, 1983) .............................................................. 18, 19, 20, 104, 111 48 Fed. Reg. 5458 (Feb. 4, 1983) ................................................................................. 11, 12, 104 Fed. R. Evid. 106 ........................................................................................................................ 28 Fed. R. Evid. 801 ................................................................................................................. passim S. Rep. No. 100-152, at 1 (Sept. 1, 1987) ............................................................................. 37, 38

MISCELLANEOUS W. Keeton, et al., Prosser and Keaton on the Law of Torts 266-68 (5th ed. 1984) .................... 96 1 R. Lord, Williston on Contracts § 4:26 (4th ed. 1990) .................................................. 150, 151 11 A. Corbin, Corbin on Contracts § 1079 (interim ed. 1979) ......................................... 150, 151 11 W. Jaeger, Williston on Contracts § 1407 (3d ed. 1968) ............................................. 150, 152 Am. Jur. 2d Damages § 416 (2004) ........................................................................................... 163 Restatement of Contracts § 344 cmt. a (1932) .................................................................. 150, 151 Restatement (Second) of Contracts § 204 (1981) ..................................................................... 146 Restatement (Second) of Contracts § 211 (1981) ..................................................................... 105 - xix -

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Restatement (Second) of Contracts § 347 ................................................................................. 132 Restatement (Second) of Contracts § 350 cmt. b ........................................................................ 99 Restatement (Second) of Contracts § 351 cmt. a ........................................................................ 98 Restatement (Second) of Contracts § 352 cmt. a ........................................................................ 98

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS SOUTHERN NUCLEAR OPERATING, COMPANY, ALABAMA POWER COMPANY, and GEORGIA POWER COMPANY, Plaintiffs, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) ) ) )

No. 98-614C (Senior Judge Merow)

DEFENDANT'S POST-TRIAL BRIEF Pursuant to this Court's order dated January 31, 2006, defendant, the United States, respectfully submits the following post-trial brief. SUMMARY OF ARGUMENT This partial breach action involves a damages claim by plaintiffs, Alabama Power Company ("APC"), Georgia Power Company ("GPC"), and Southern Nuclear Operating Company ("Southern Nuclear") (collectively, the "plaintiffs"), for $107 million in costs through December 31, 2004, that they allegedly have incurred for, among other things, the design, licensing, and fabrication of dry storage facilities at two of the nuclear facilities at issue in this litigation and the licensing and installation of additional racks in the wet pool at one of GPC's nuclear reactor sites, the A.W. Vogtle Electric Generating Plant, Units 1 and 2 ("Vogtle"), in which to store GPC's spent nuclear fuel ("SNF"). Plaintiffs also are seeking $8.5 million for amounts that Southern Nuclear paid for a yet-to-be constructed Private Fuel Storage, LLC ("PFS") facility in Utah, a venture that Southern Nuclear recently has abandoned. Finally, plaintiffs seek $28.9 million in pre-judgment interest, an amount that totals nearly 40 percent of the plaintiffs' asserted past damages. Plaintiffs contend that the Government is liable for these

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costs because the need for additional storage was wholly caused by the Government's failure to begin accepting SNF from commercial nuclear reactors on January 31, 1998, pursuant to a Standard Contract between the Department of Energy ("DOE") and APC and 2) three Standard Contracts between DOE and GPC. As the Court is aware, on June 13, 1983, the Department of Energy ("DOE") entered into a "Standard Contract For Disposal Of Spent Nuclear Fuel And/Or High-Level Radioactive Waste," the basic terms of which are published at 10 C.F.R. § 961.11, with APC for the Joseph M. Farley Nuclear Plant, Units 1 and 2 ("Farley"), that APC owns. Compl. ¶¶ 9 & 14. On June 10, 1983, GPC executed three Standard Contracts with DOE for its nuclear power plants: the Edwin I. Hatch Nuclear Plant, Units 1 and 2 ("Hatch"), and Units 1 and 2 at Vogtle. Compl. ¶¶ 9 & 14. Previously, in its order dated April 7, 2004, the Court found that DOE had partially breached the contracts that it had entered with APC and GPC and was liable to APC and GPC for contract damages resulting from the partial breach. Order, at 4-5 (Apr. 7, 2004).1 Further, pursuant to the Court's order dated September 16, 2005, the trial of this matter was limited to

As the Court is aware, because of a writ of mandamus issued by the United States Court of Appeals for the District of Columbia Circuit in Northern States Power Co. v. United States Department of Energy, 128 F.3d 754 (D.C. Cir. 1997), cert. denied, 525 U.S. 1015 & 1016 (1998), the Government is "preclude[d] . . . from concluding that its delay is unavoidable on the ground that it has not yet prepared a permanent repository or that it has no authority to provide storage in the interim" or from "implement[ing] any interpretation of the Standard Contract that excuses its failure to perform on the grounds of `acts of Government in either its sovereign or contractual capacity.'" Id. at 760. Because of this writ of mandamus, we have been unable to assert in this litigation that DOE's delay is covered by the "Unavoidable Delays" clause in the Standard Contract, Article IX.A. To the extent that the writ of mandamus were lifted or found ineffective, we would be able to assert that position here. However, in light of the existing writ, we have been unable to do so. 2

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those damages in this case that were incurred on or before December 31, 2004. Order, at 2 (Sept. 16, 2005). Based upon these parameters, the parties presented their cases at trial. With regard to the specific damages claims that the plaintiffs have raised in this litigation, the Court, as an initial matter, should dismiss Southern Nuclear as a plaintiff in this case. As we established in earlier briefing filed on December 21, 2001, and March 22, 2002, Southern Nuclear is not a party to the Standard Contracts that APC and GPC entered and, without any privity of contract, lacks standing to maintain a contract action against the United States.2 In fact, this Court, in its April 7, 2004 order, recognized that, "[a]bsent contractual privity between [Southern Nuclear] and the United States, no judgment can be rendered in favor of [Southern Nuclear]." Order, at 4 (Apr. 7, 2004). As we will discuss later in this brief, the plaintiffs seek to recover damages that Southern Nuclear, and only Southern Nuclear, has incurred. Because it lacks standing to maintain any action against the United States, it cannot recover those damages. Regardless of Southern Nuclear's lack of standing, plaintiffs' damages claims grossly exceed the amounts that they actually incurred as a result of DOE's breach of the Standard Contract. Indeed, the Government established at trial that APC and GPC would have required significant additional storage at two of their facilities regardless of the Government's performance under the Standard Contract and that plaintiffs' damages claim fails properly to

In its April 7, 2004 order, the Court recognized that, although Southern Nuclear had asserted a "taking" claim in its complaint, "[n]o `taking' claim divorced from the contract derived rights is asserted" and that Southern Nuclear "has not pleaded any `taking' claim independent of the Standard Contracts executed by APC and GPC." Order, at 4 n.1 (Apr. 7, 2004). The Court dismissed the plaintiffs' takings claims for failure to state a claim upon which relief can be granted. Order, at 5 (Apr. 7, 2004). 3

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account for these significant additional costs. Moreover, the Government established that the plaintiffs failed to mitigate their damages at plant Hatch by overloading expensive dry casks from their wet pools to dry storage to maintain an unnecessarily high and historically unsupported dual full core reserve in Hatch's wet pool. With regard to plaintiffs' damages, those claims are meritless or overstated for numerous reasons, including the following: First, plaintiffs' damages theory is premised upon an SNF acceptance rate to which DOE expressly refused to obligate itself under the Standard Contract. At trial, plaintiffs contended that the "Standard Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste" ("Standard Contract") and the Nuclear Waste Policy Act of 1982 ("NWPA"), Pub. L. 97-425, 96 Stat. 2201 (codified at 42 U.S.C. §§ 10101-10270 (1982)), obligated DOE to accept SNF at a rate that eliminated the need for utilities to construct additional at-reactor storage after 1998 and that allowed for timely decommissioning of shutdown facilities. See Pl. Br. 37-39.3 However, the plaintiffs' litigation theory is belied by the text of the Standard Contract and the NWPA, as well as by the plaintiffs' comments in the administrative rulemaking leading to the promulgation of the Standard Contract terms. Indeed, during contract formation, not a single utility or industry representative requested the inclusion of language that tied DOE's performance to the construction of at-reactor storage and to timely decommissioning. Instead, the comments by APC and GPC, among others, sought inclusion of language in the Standard Contract that would have obligated DOE to implement an acceptance rate tied to the annual generation rate of operating reactors and to a reduction of the backlog of SNF stored at utilities nationwide in 1998 (not the need for at-reactor storage and timely decommissioning). The two-

3

"Pl. Br. __" refers to Plaintiffs' Post-Trial Brief, filed March 17, 2006. 4

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part requirement that the plaintiffs assert was the "intent of the parties" and upon which their damages claim hinges simply never was advanced by utilities during contract formation. In any event, during the process of contract formation, DOE rejected creating any "requirement" that was tied to the generation rate and backlog, the actual request that several utilities and industry groups, including APC and GPC, had made regarding contract terms. As a result, for the Court to find that the Standard Contract contained a qualitative two-part performance standard, this Court must impose upon DOE a contract term that was rejected during contract formation. Moreover, the plaintiffs' reliance upon a "whereas" clause as imposing their proposed two-part requirement as a contract obligation lacks support in fact and law. Likewise, DOE program documents generated after the period of contract formation that outline DOE's plans and goals fail to establish a contract obligation regarding the acceptance rate or the adoption of any two-part "requirement" as a contract right. The imposition of plaintiffs' two-part, qualitative requirement also is contradicted when analyzed in relation to plaintiffs' damages theory. While tying DOE's performance obligation to the two-part requirement, the plaintiffs argue that DOE would have met this alleged obligation by accepting SNF at a 3,000 MTU steady-state rate with a short four-year ramp-up period. However, had DOE performed under the rate advocated by the plaintiffs in the "but for" world, it would have been in breach of the plaintiffs' two-part test with respect to GPC and many other contract holders because the rate advocated by the plaintiffs is not high enough to preclude the need for additional storage and allow for timely decommissioning, as those concepts are defined by plaintiffs. Since the two-part test is the basis for the plaintiffs' assertions concerning the proper rate, any "but for" rate must satisfy DOE's alleged contractual obligations. If the rate

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fails to satisfy DOE's performance obligations, the plaintiffs have failed in their burden of proving the "but for" world, having instead established nothing more than a new and hypothetical breach world. In contrast to the plaintiffs' theory concerning the contractually-mandated rate of acceptance, the proper rate of acceptance for the Court to apply is that which was developed pursuant to the terms of the Standard Contract and in accordance with the constraints upon DOE's acceptance of SNF that Congress imposed. This rate was first set forth in the 1991 Annual Capacity Report ("ACR"), as required by the Standard Contract. Based upon the allocations available to the plaintiffs pursuant to this rate and the Standard Contract's oldestfuel-first ("OFF") acceptance queue requirement, the plaintiffs would have required dry cask storage at plant Hatch and would have been obligated to rack the Unit 1 spent fuel pool at plant Vogtle, even if DOE had begun accepting SNF on January 31, 1998. Applying the proper rate of acceptance to the "but for" world, among other adjustments, plaintiffs' claims for past costs properly are reduced to no more than $16,707,845 for the breaches to date. As we will discuss below, to the extent that the Court were to elect to ignore the schedule terms of the Standard Contract and to impose a greater rate than that to which DOE committed or, at best, was willing to commit itself, it would render the contract too indefinite to enforce. Second, plaintiffs seek reimbursement of the $8.5 million that they have paid for the licensing of the Private Fuel Storage ("PFS") facility in Utah. Pl. Br. 101-103. These costs are not recoverable for several reasons. As an initial matter, the United States Court of Appeals for the Federal Circuit decision in Indiana Michigan Power Co. v. United States, 422 F.3d 1369 (Fed. Cir. 2005), precludes recovery of plaintiffs' contributions PFS. Specifically, in

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considering a claim for PFS contributions, the Federal Circuit held that, "[w]hile DOE should have foreseen that its breach would force Indiana Michigan to find alternate storage for its SNF, it is not liable for such a speculative venture and unforeseeable costs." Id. at 1376. Additionally, the only record evidence shows that Southern Nuclear, and not APC or GPC, invested in PFS. Because Southern Nuclear lacks contractual privity with the United States, it has no basis upon which to recover these costs from the Government. Regardless of these defenses, the evidence at trial in this case confirmed the Federal Circuit's conclusion that PFS was a highly speculative venture; that, at the time that Southern Nuclear was deciding to invest in PFS, it should have realized that PFS had no chance of providing APC or GPC with an alternative option for the storage of SNF; and that PFS was not "foreseeable" at the time of contract formation. As early as 1994, the plaintiffs were aware that PFS would not be available in time to resolve storage issues at plants Hatch and Vogtle. Ultimately, Southern Nuclear's contributions to PFS were not foreseeable, merely increased the damages allegedly owing to plaintiffs, and did not constitute reasonable mitigation. Third, the Government established that the plaintiffs failed properly to account for every cost that they would have incurred in the "but for" world and that are, therefore, not attributable to DOE's breach. Additionally, the Government also demonstrated that certain other costs, such as plaintiffs' claim for prejudgment interest and charges associated with internal company labor and overhead, are not properly recovered here either as a matter of law or fact. Finally, this Court should eliminate additional costs based upon the plaintiffs' failure to properly mitigate damages. The plaintiffs ask the Court to make different assumptions regarding their operations in the actual and "but for" worlds, although the operating policies that it asks the

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Court to assume in the "but for" world existed from the beginning of operations through 2000. The application of these inconsistent operating assumptions results in additional costs of more than $17 million. Because these additional costs result from plaintiffs' failure employ the same mitigation measures in the actual world that it claims it would have employed in the "but for" world, plaintiffs' claim for these costs as damages should be denied. STATEMENT OF FACTS I. THE ORIGINAL PROVISIONS OF THE NUCLEAR WASTE POLICY ACT

On January 7, 1983, the Nuclear Waste Policy Act of 1982 ("NWPA"), Pub. L. 97-425, 96 Stat. 2201 (codified at 42 U.S.C. §§ 10101-10270 (1982)), was enacted. In its statement of the statutory purposes underlying the NWPA, Congress identified the following four objectives: (1) developing repositories to ensure the protection of the public and the environment from the hazards posed by SNF and high level radioactive waste ("HLW"); (2) establishing Federal responsibility and policy for the disposal of SNF and HLW; (3) defining the relationship between the Federal Government and state governments regarding SNF and HLW disposal; and (4) establishing "a Nuclear Waste Fund, composed of payments made by the generators and owners of such waste and spent fuel, that will ensure that the costs of carrying out activities relating to the disposal of such waste and spent fuel will be borne by the persons responsible for generating such waste and spent fuel." Id. § 10131(b). Importantly, the Act said nothing about any obligation to preclude nuclear utilities from having to construct additional at-reactor storage or to assist them with timely decommissioning. The NWPA sets forth a specific process by which the Secretary of Energy, the President of the United States, and the United States Congress would determine a site for a repository for 8

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the permanent deep geologic disposal of SNF. See 42 U.S.C. §§ 10132, 10134, 10135. In addition to this process for the siting of a repository, the Secretary was to "prepare a comprehensive report, to be known as the mission plan, which shall provide an informational basis sufficient to permit informed decisions to be made in carrying out the repository program and the research, development, and demonstration programs required under this chapter." 42 U.S.C. § 10221(a) (1982). The Secretary was to provide a draft mission plan to the states, affected Indian tribes, the NRC, and other Federal Government agencies within 15 months of the date of the NWPA's enactment. Id. § 10221(b)(1). The Secretary was to obtain those entities' comments, revise the draft mission plan in response to them, and, within 17 months of the NWPA's enactment, to provide the appropriate committees of Congress with the mission plan. Id. § 10221(b)(2)-(3). Congress also included in the NWPA provisions allowing the Secretary to study the possibility of creating Monitored Retrievable Storage ("MRS") facilities, with Congress finding that "long-term storage of high-level radioactive waste or spent nuclear fuel in monitored retrievable storage facilities is an option for providing safe and reliable management of such waste or spent fuel." 42 U.S.C. § 10161(a)(1) (1982). By July 1, 1985, the Secretary was to "complete a detailed study of the need for and feasibility of, and shall submit to the Congress a proposal for, the construction of one or more monitored retrievable storage facilities for highlevel radioactive waste and spent nuclear fuel." Id. § 10161(b)(1). The proposal was to "include, for the first such facility, at least 3 alternative sites and at least 5 alternative combinations of such proposed sites and facility designs . . . ." Id. § 10161(b)(4). However, the NWPA provided that any MRS facility that Congress might authorize in response to the

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Secretary's proposal could "be constructed in any State in which there is located any site approved for site characterization under section 10132 of this title." Id. § 10161(g). The SNF acceptance requirements of the NWPA were not self-executing. Instead, the NWPA provided that the Secretary would enter into contracts with the owners and generators of SNF of domestic origin for "the acceptance of title, subsequent transportation, and disposal of such [SNF]." 42 U.S.C. § 10222(a)(1) (1982). The contracts had to "provide for payment to the Secretary of fees . . . sufficient to offset expenditures" described elsewhere in the statute. Id. The NWPA also required that: Contracts entered into under this section shall provide that ­ (A) following commencement of operation of a repository, the Secretary shall take title to the high-level radioactive waste or spent nuclear fuel involved as expeditiously as practicable upon the request of the generator or owner of such waste or spent fuel; and (B) in return for the payment of fees established by this section, the Secretary, beginning not later than January 31, 1998, will dispose of the high-level radioactive waste or spent nuclear fuel involved as provided in this subtitle. 42 U.S.C. § 10222(a)(5). The NWPA did not identify any other contractual requirements for the contracts authorized by 42 U.S.C. § 10222(a)(5). More specifically, the NWPA contained no provisions concerning the specific rate of acceptance to be included in the contracts or concerning qualitative standards that DOE was obligated to include in the contract with respect to the rate of SNF acceptance. See generally 42 U.S.C. §§ 10101-10270; see also Tr. 549:15-19 (Hunt) (NWPA does not contain language the utilities will not have to pay for additional storage after 1998); Tr. 562:23-563:1 (Hunt) (NWPA does not contain a specific rate of acceptance).

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II.

THE "STANDARD CONTRACT FOR DISPOSAL OF SPENT NUCLEAR FUEL AND/OR HIGH-LEVEL RADIOACTIVE WASTE" WAS CREATED THROUGH NOTICE AND COMMENT RULEMAKING IN THE FEDERAL REGISTER A. The Proposed Rule

On February 4, 1983, DOE ­ in furtherance of its obligations pursuant to the NWPA, 42 U.S.C. § 10222 ­ published a notice of proposed rulemaking in the Federal Register, proposing terms for the "Standard Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste" ("Standard Contract") mandated by the NWPA, 42 U.S.C. § 10222. See 48 Fed. Reg. 5458 (Feb. 4, 1983). The proposed Standard Contract provided a mechanism for determining both the order in which, and the rate at which, the various contract holders' SNF would be accepted. As for the order of SNF acceptance, the Standard Contract proposed that DOE would issue an "acceptance priority ranking" ("APR") of SNF and/or HLW, through which SNF and/or HLW would receive acceptance priority based generally upon its age. Id. at 5464 (Art. VI.B.3). Although the proposed Standard Contract itself did not identify a specific rate by which DOE would accept contract holders' SNF, it provided for DOE's issuance of documents for planning purposes to assist in the eventual definitization of the specific rate and order of SNF acceptance and disposal. Id. at 5463 (Art. V.B.5 & Art. V.B.6). The proposed contract further provided that, following DOE's issuance of planning documents, rates of SNF acceptance, as well as the specific order of SNF acceptance from particular contract holders, would be defined through the contract holders' submission of, and DOE's approval of, delivery commitment schedules ("DCSs"). Id. at 5462. The proposed Standard Contract also provided for the contract holders' subsequent submission of Final Delivery Schedules ("FDSs"), which would serve to take the annual allocation defined in a DCS and further refine it to reflect as closely as possible 11

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the month(s) and day(s) upon which SNF acceptance would oc