Free Response - District Court of Federal Claims - federal

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No. 98-488C (Judge Braden)

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

SACRAMENTO MUNICIPAL UTILITY DISTRICT,

Plaintiff,

v.

UNITED STATES OF AMERICA,

Defendant.

SACRAMENTO MUNICIPAL UTILITY DISTRICT'S RESPONSE TO MEMORANDUM OPINION AND ORDER TO SHOW CAUSE DATED APRIL 21, 2005

OF COUNSEL: David S. Neslin Timothy R. Macdonald ARNOLD & PORTER LLP 370 Seventeenth Street, Suite 4500 Denver, CO 80202 (303) 863-1000 July 7, 2005

Howard N. Cayne ARNOLD & PORTER LLP 555 Twelfth Street, N.W. Washington, D.C. 20004 (202) 942-5899

Counsel of Record for Plaintiff Sacramento Municipal Utility District

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TABLE OF CONTENTS Page INTRODUCTION ...........................................................................................................................1 BACKGROUND .............................................................................................................................5 ARGUMENT.................................................................................................................................10 I. There Is No Basis For Voiding The Contract Based On Mutual Mistake Of Fact............10 A. B. II. The Doctrine Of Mutual Mistake Of Fact Is Inapplicable To This Case...............10 SMUD, As The Adversely Affected Party, Has Not Elected To Void The Contract..................................................................................................................14

There Is No Basis For Voiding The Contract Based On Impracticability Of Performance. ......................................................................................................................16 A. The Government's Performance Under The Contract Has Not Been Rendered Impracticable By Some Supervening Event..........................................17 1. 2. 3. B. C. The Absence Of A Repository Or Interim Storage Facility Cannot Form The Basis For A Claim Of Impracticability. ....................................18 The Government Has The Resources And Physical Capability To Perform Its Obligations Under The Contract.............................................19 The Transfer Of Spent Nuclear Fuel To Canisters Has Not Rendered The Government's Performance Impracticable.........................26

The Delay Is Attributable To The Fault Of The Government. ..............................33 The Government Assumed The Risks Of Delay And Knew That Difficulties Were Likely. .......................................................................................36

III.

A Court Order Voiding The Contract And Ordering Restitution Would Prejudice SMUD's Interests...............................................................................................................39 A. B. An Order Voiding The Contract Could Take Away SMUD's Right To Have The DOE Dispose Of Its Fuel. .....................................................................39 An Order Of Restitution Would Not Compensate SMUD For Its Damage And Would Likely Increase SMUD's Overall Costs.............................................41

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C. IV. V.

An Order Voiding The Contract Could Jeopardize SMUD's Licensing With The Nuclear Regulatory Commission...........................................................43

Any Order Awarding Restitution Should Direct That The Funds Be Awarded From The Judgment Fund And Not The Nuclear Waste Fund..........................................45 Any Order Awarding Restitution Should Include The Profits Accrued On The $40 Million While In The Nuclear Waste Fund. ......................................................................49 A. B. SMUD Is Entitled To Receive The Direct Profits Of Its Funds. ...........................50 SMUD Is Entitled To Receive The Interest On Its Funds If The Court Orders Restitution ..................................................................................................54

CONCLUSION..............................................................................................................................55

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TABLE OF AUTHORITIES Page(s) Cases Alabama Power v. U.S. Department of Energy, 307 F.3d 1300 (11th Cir. 2002) .......................................................................................... 47, 48 Atlas Corp. v. United States, 895 F.2d 745 (Fed. Cir. 1990) .................................................................................................. 10 Centex v. United States, 395 F.3d 1283 (Fed. Cir. 2005) ................................................................................................ 20 Consumers Energy Co. v. United States, 65 Fed. Cl. 364 (2005) ................................................................................................................ 6 Dairyland Power Coop. v. United States, 16 F.3d 1197 (Fed. Cir. 1994) ...................................................................................... 10, 11, 13 Economy Plumbing & Heating Co. v. United States, 470 F.2d 585 (Ct. Cl. 1972) ...................................................................................................... 55 Edwards v. E.I. Du Pont De Nemours & Co., 183 F.2d 165 (5th Cir. 1950) .................................................................................................... 15 Fidelity Const. Co. v. United States, 700 F.2d 1379 (Fed. Cir. 1983) ................................................................................................ 54 Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002).................................................................................................................. 50 Harriscom v. Svenska, 3 F.3d 576 (2d Cir. 1993) ......................................................................................................... 16 Hooper-Mankin Fuel Co. v. Chesapeake & O. Ry. Co., 30 F.2d 500 (4th Cir. 1929) ...................................................................................................... 15 Indiana Michigan Power Co. v. U.S. Dep't of Energy, 88 F.3d 1272 (D.C. Cir. 1996).................................................................................. 3, 18, 21, 38 Jennie-O Foods, Inc. v. United States, 217 Ct. Cl. 314 (1978) .............................................................................................................. 26 Land Grantors v. United States, 64 Fed. Cl. 661 (2005) .................................................................................................. 11, 40, 50

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Landmark Land Co., Inc. v. F.D.I.C., 256 F.3d 1365 (Fed. Cir. 2001) ................................................................................................ 51 Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336 (Fed. Cir. 2000) ......................................................................................... passim Nevada v. Herrington, 827 F.2d 1394 (9th Cir. 1987) .................................................................................................. 47 Northern States Power Co. v. U.S. Dep't of Energy, 128 F.3d 754 (D.C. Cir. 1997)........................................................................................... passim Northern States Power Co. v. United States, 224 F.3d 1361 (Fed. Cir. 2000) ............................................................................................ 6, 34 Orlandi v. Goodell, 760 F.2d 78 (4th Cir. 1985) ...................................................................................................... 14 Raytheon Co. v. White, 305 F.3d 1354 (Fed. Cir. 2002) ................................................................................................ 19 Rochester Gas & Elec. Corp. v. United States, 65 Fed. Cl. 431 (2005) .............................................................................................................. 52 Roth Steel Prods. v. Sharon Steel Corp., 705 F.2d 134 (6th Cir. 1983) .................................................................................................... 17 Scott Timber Co. v. United States, 40 Fed. Cl. 492 (1998) .............................................................................................................. 20 Seaboard Lumber Co. v. United States, 308 F.3d 1283 (Fed. Cir. 2002) .......................................................................................... 16, 25 System Fuels, Inc. v. United States, 65 Fed. Cl. 163 (2005) ................................................................................................................ 6 Transatlantic Fin. Corp. v. United States, 363 F.2d 312 (D.C. Cir. 1966).................................................................................................. 16 U.S. Shoe Corp. v. United States, 296 F.3d 1378 (Fed. Cir. 2002) ................................................................................................ 54 Underwater Devices Inc. v. Morrison-Knudsen Co., Inc., 717 F.2d 1380 (Fed. Cir. 1983) ................................................................................................ 17

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United States v. N.Y. Rayon Importing Co., 329 U.S. 654 (1974).................................................................................................................. 55 United States v. S.W. Elec. Coop., Inc., 869 F.2d 310 (7th Cir. 1989) .................................................................................................... 10 United States v. Winstar, 518 U.S. 839 (1996)................................................................................................ 20, 36, 37, 38 Univ. of Colo. Found., Inc. v. Am. Cyanamid Co., 342 F.3d 1298 (Fed. Cir. 2003) ................................................................................................ 51 Yankee Atomic Elec. Co. v. United States, 42 Fed. Cl. 223 (Fed. Cl. 1998) ................................................................................................ 47 Statutes 42 U.S.C. § 10101........................................................................................................................... 7 42 U.S.C. § 10132......................................................................................................................... 11 42 U.S.C. § 10134..................................................................................................................... 8, 11 42 U.S.C. § 10161......................................................................................................................... 18 42 U.S.C. § 10163......................................................................................................................... 18 42 U.S.C. § 10165......................................................................................................................... 18 42 U.S.C. § 10168......................................................................................................................... 18 42 U.S.C. § 10172......................................................................................................................... 35 42 U.S.C. § 10198......................................................................................................................... 14 42 U.S.C. § 10222.................................................................................................................. passim Other Authorities 10 C.F.R. § 50.100 ........................................................................................................................ 44 10 C.F.R. § 50.92 .......................................................................................................................... 44 10 C.F.R. Part 72............................................................................................................................. 7 30 Williston on Contracts § 77:56 (4th ed.)...................................................................... 20, 33, 36

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61 Fed. Reg. 25,092 (May 17, 1996) ............................................................................................ 23 61 Fed. Reg. 9,441 (Mar. 8, 1996)................................................................................................ 23 62 Fed. Reg. 1,782 (Jan. 13, 1997) ............................................................................................... 24 64 Fed. Reg. 32,069 (June 15, 1999) ............................................................................................ 24 64 Fed. Reg. 68,005 (Dec. 6, 1999) .............................................................................................. 44 66 Fed. Reg. 31,260 (June 11, 2001) ............................................................................................ 23 69 Fed. Reg. 69,901 (Dec. 1, 2004) .............................................................................................. 23 Corbin on Contracts § 1.7 (rev. ed.).............................................................................................. 14 Dobbs Law of Remedies § 1.7 (2d ed. 1993) ............................................................................... 15 Fed. R. Civ. P. 8............................................................................................................................ 17 H.R. Rep. No. 97-491 (1982), reprinted in 1982 U.S.C.C.A.N. 3792 (96 Stat. 3792) ............................................................. 46 Restatement (First) of Restitution § 150 (1937) ........................................................................... 49 Restatement (First) of Restitution § 156 (1937) ..................................................................... 51, 54 Restatement (First) of Restitution § 157 (1937) ............................................................... 50, 51, 52 Restatement (Second) of Contracts § 151 (1981) ............................................................. 10, 11, 12 Restatement (Second) of Contracts § 152 (1981) ............................................................. 10, 14, 15 Restatement (Second) of Contracts § 236 (1981) ........................................................................... 2 Restatement (Second) of Contracts § 261 (1981) ....................................................... 16, 17, 19, 33 Restatement (Second) of Contracts § 344 (1981) ......................................................................... 49 Restatement (Second) of Contracts § 354 (1981) ......................................................................... 54 Restatement (Second) of Contracts § 371 (1981) ......................................................................... 49 Restatement (Second) of Contracts § 7 (1981) ............................................................................. 14

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INDEX TO APPENDIX Pl. Ex. No. 44 50 59 68 69 70 82 97 113 185 320 325 327 429 Description Page

Contract for the Disposal of Spent Nuclear Fuel No. DE-CR01-83NE44415.000, June 14, 1983 .....................................1 Memorandum from R. Williamson, Sept. 15, 1983 ...............................15 Draft OCRWM Mission Plan Vol. I, Dec. 20, 1983...............................18 Draft Mission Plan Vol. I, Apr. 1984 ..................................................... 20 Draft Mission Plan Vol. II, Apr. 1984 .................................................... 24 Memorandum from T. Overcast & S. Carney to E. Moore, Apr. 26, 1984 ............................................................................. 27 Letter from DOE D. Hodel to J.B. Johnson, Sept. 7, 1984.....................29 Nuclear Waste Fund Fee Adequacy: An Assessment, March 1986.............................................................................................31 Monitored Retrievable Storage Submission to Congress, Mar. 1987 ...............................................................................................36 Nuclear Waste Fund Fee Adequacy: An Assessment, Nov. 1990 ...............................................................................................44 Letter from L. Barrett to J. Shetler, Sept. 2, 1993 ..................................51 Letter from J. Shetler to L. Barrett, Sept. 28, 1993 ................................53 Letter from L. Barrett to N. Dicks, Oct. 4, 1993 ....................................55 Analysis of the Total System Life Cycle Cost of the Civilian Radioactive Waste Management Program, Sept. 1995 ...............................................................................................57 Letter from J. Schori to B. Tomasoni, Mar. 13, 1997.............................62 Letter from W. Kane to R. Grenier, Sept. 10, 1998................................66 Letter from L. Barrett, Sept. 11, 1998 ....................................................73

527 596 597

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603

Analysis of the Total System Life Cycle Cost of the Civilian Radioactive Waste Management Program, Dec. 1998................................................................................................76 Plan For Transportation Cask Fabrication And The Deployment of Waste Acceptance Capabilities, Dec. 2000................................................................................................83 Letter from I. Itkin to D. Obey and accompanying Plan For Transportation, Jan. 19, 2001...........................................................88 Analysis of the Total System Life Cycle Cost of the Civilian Radioactive Waste Management Program, May 2001................................................................................................94 Nuclear Waste Fund Fee Adequacy: An Assessment, May 2001................................................................................................99 Final Yucca Mountain EIS, Feb. 2002 ...................................................102 Letter from S. Abraham to The President, Feb. 14, 2002.......................105 Statement of L. Barrett, Mar. 14, 2002...................................................109 Strategic Plan For The Safe Transportation of Spent Nuclear Fuel and High-Level Radioactive Waste To Yucca Mountain, Nov. 18, 2003 ............................................................114 Letter from D. Zabransky to J. Hastings, July 28, 2004.........................119 "Canister Considerations for Commercial Spent Nuclear Fuel", T. Pollog.........................................................................121 Letter from W. Brach to S. Redeker, Jun. 30, 2000 ...............................124 System Requirements Document Rev. 06, Sept. 2004 ...........................128 Project Operational Thermal Management Strategy, Feb. 9, 2005 ............................................................................................132 Yucca Mountain Science and Engineering Report, May 2001................................................................................................134 Written Direct Testimony of I. Stuart.....................................................136 Written Direct Testimony of E. Supko ...................................................139

665

669 680

681 721 724 730 757

780 820 962 981 997 998 1001 1002

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Attachment No. A B C D E F G H I J K L M N O P

Description

Page

Statement by T. Garrish, Mar. 10, 2005 .................................................141 OCRWM Annual Report to Congress, Dec. 2004..................................149 Pre-Hearing Questions, Subcommittee on Nuclear Regulation, United States Senate, Apr. 23, 1987 ...................................154 Indiana Michigan Trial Transcript, Mar. 10, 2004 .................................157 GAO, DOE Should Provide More Information on Monitored Retrievable Storage, June 1987 ............................................ 162 OCRWM, Why Yucca Mountain?, Frequently Asked Questions ................................................................................................167 DOE Cooperative Agreement No. DE-FC01-92NE37990, dated Nov. 27, 1991, amended Mar. 19, 1992........................................170 Inside INEEL, Fall 2001.........................................................................177 GAO Report, Yucca Mountain Project Management and Funding Issues, July 1, 1993............................................................179 GAO Report, Yucca Mountain Project Behind Schedule and Facing Major Scientific Uncertainties, May 1993...........................181 GAO Report, Quarterly Report on DOE's Nuclear Waste Program as of June 30, 1987, dated Aug. 1987...........................184 GAO Report, Quarterly Report on DOE's Nuclear Waste Program as of Sept. 30, 1986, dated Nov. 1986 .......................... 188 GAO Report, Quarterly Report on DOE's Nuclear Waste Program as of Dec. 31, 1985, dated Jan. 1986 ............................190 GAO Report, Status of the DOE's Implementation of the NWPA as of Dec. 31, 1984, dated Jan. 31, 1985 .............................193 GAO Report, Institutional Relations Under the Nuclear Waste Policy Act of 1982, Feb. 1987 .......................................198 OCWRM Program Financial and Budget Information, Feb. 28, 2005 ..........................................................................................200

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

SACRAMENTO MUNICIPAL UTILITY DISTRICT, Plaintiff, v. THE UNITED STATES OF AMERICA, Defendant.

) ) ) ) ) ) ) ) ) ) ) )

No. 98-488 C (Judge Braden)

SACRAMENTO MUNICIPAL UTILITY DISTRICT'S RESPONSE TO MEMORANDUM OPINION AND ORDER TO SHOW CAUSE DATED APRIL 21, 2005 INTRODUCTION On April 21, 2005, this Court issued a Memorandum Opinion And Order To Show Cause ordering the parties to "show cause why the court should not hold that the June 14, 1983 Standard Contract with plaintiff is void and the Government be ordered to refund all monies paid to date by plaintiff into the Nuclear Waste Fund as restitution." Memorandum Opinion and Order to Show Cause at 4 (Apr. 21, 2005) ("Order"). The Court requested the parties to address whether the Contract was void under the doctrines of mutual mistake of fact or impracticability. This Court also requested Plaintiff Sacramento Municipal Utility District ("SMUD") to show cause "how such an order could prejudice its interest," "why restitution is not an appropriate remedy in this case," and "if restitution is the appropriate remedy, why it should not be paid from the Nuclear Waste Fund, rather than the Judgment Fund." Id. at 4-5.

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SMUD has carefully considered the Court's Order, but has concluded that releasing the government from performing its contractual obligation to take title to and remove SMUD's spent fuel would cause SMUD greater damage over the long term. Accordingly, SMUD respectfully requests that the Court refrain from entering such an order. SMUD believes that there is no basis for finding the June 13, 1983 Contract between the Department of Energy ("DOE") and SMUD void based on either mutual mistake of fact or impracticability. See generally Contract for the Disposal of Spent Nuclear Fuel No. DE-CR01-83NE44415.000 between DOE & SMUD (June 14, 1983) (Pl. Ex. 44) ("Contract" or "Standard Contract"). Specifically, SMUD respectfully requests that this Court not take any action that would have the effect of releasing the government from its binding obligation of performance under the Contract. SMUD filed this claim for partial breach of contract to recover the damages it incurred as a result of the government's delay in performance. SMUD has chosen to pursue a partial breach remedy, rather than declaring the Contract at an end, because it remains of utmost importance to SMUD to have DOE accept its fuel in the future. SMUD, as the non-breaching party, is entitled to choose this remedy. See Restatement (Second) of Contracts § 236 (1981) ("Restatement") (noting a party's ability to elect between damages for a total and partial breach). Furthermore, an order of restitution would prejudice SMUD's interests in multiple ways. It would deprive SMUD of its current right to have the government dispose of its nuclear fuel; it could allow the government to seek larger payments and more onerous terms for such disposal in the future; it would subject SMUD to additional delay and associated fuel storage costs before such disposal occurs; it would not fully compensate SMUD for the damages it has incurred to

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date; and it would potentially jeopardize SMUD's licensing with the Nuclear Regulatory Commission ("NRC"). Prior cases demonstrate that there is no basis to void the contract on the grounds of mutual mistake of fact or impracticability. In enacting the Nuclear Waste Policy Act ("NWPA"), Congress established that the government would have an "unconditional," "unqualified," and "unequivocal" obligation to begin acceptance of fuel from utilities by January 31, 1998 and that such obligation would be a contractual duty. See Northern States Power Co. v. U.S. Dep't of Energy, 128 F.3d 754, 758-61 (D.C. Cir. 1997) ("Northern States I"); Indiana Michigan Power Co. v. U.S. Dep't of Energy, 88 F.3d 1272, 1274-77 (D.C. Cir. 1996). Although Congress and DOE recognized that there could be difficulties in developing interim or permanent storage facilities, the government's contractual obligations were not premised on the availability of Yucca Mountain or any other site. Rather, by requiring an "unconditional" contractual obligation, Congress required that the government assume the risk of failing to meet the required start date. See Indiana Michigan, 88 F.3d at 1276 ("The only limitation placed on the Secretary's duties under [Section 302(a)(5)(B)] is that that duty [to begin disposing of SNF by January 31, 1998] is `in return for the payment of fees established by this section.'"); Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336, 1342 (Fed. Cir. 2000) ("Congress found [the January 1, 1998 start date] so important when it promulgated the Act that it took the unusual action of specifying that all the contracts must contain this explicit requirement."). Therefore, the doctrines of mutual mistake of fact and impracticability have no application to the government's binding obligation under this congressionally-mandated contract.

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In addition, the D.C. Circuit expressly rejected the government's argument that its failure to perform its obligations "arises out of causes beyond the control and without the fault or negligence of the party failing to perform." Contract Art. IX.A; Northern States I, 128 F.3d at 757-60 (delay not "unavoidable" under the Contract). In Northern States I, DOE had identified six factors that "supposedly support the conclusion that DOE experienced an unavoidable delay in this case: technical problems; regulatory delays; roadblocks to implementation of interim or monitored retrievable storage; funding restrictions; litigation delays; and consultation requirements." 128 F.3d at 760. The D.C. Circuit rejected this argument, explaining that "[u]nder the Department's interpretation of the contractual provisions, however, the government can always absolve itself from bearing the costs of its delay if the delay is caused by the government's own acts. This cannot be a valid interpretation, as it would allow the Executive Branch to void an unequivocal obligation imposed by Congress." Id. (emphasis added) The D.C. Circuit accordingly issued a writ of mandamus precluding the government from excusing its own delay "on the ground that it has not yet prepared a permanent repository or interim storage facility" or "on the grounds of acts of Government in either its sovereign or contractual capacity." Id. at 760, 761 (internal citations omitted); see also Maine Yankee, 225 F.3d at 1339 (noting that the D.C. Circuit "issued a writ of mandamus prohibiting the Department from relying on the unavoidable delays provision of the contract."). Accordingly, these decisions have rejected DOE's prior claims of impossibility based on the absence of a repository or interim storage facility.

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Pursuant to the express mandate of Congress, the government's obligation to begin performance by January 31, 1998 is unconditional. Given this background, the common law doctrines of mistake of fact and impracticability have no application in this case. For the Court to allow "the Executive Branch to void an unequivocal obligation imposed by Congress" would not be a proper interpretation of the NWPA or the Contract. The government clearly understood the obligation it was undertaking when it entered into contracts with utilities for performance by a date certain. Given this unconditional obligation and the government's subsequent breach, SMUD is entitled to recover the resulting damages caused by the government's partial breach. If the Court does nonetheless order restitution, SMUD submits that any such restitution should be awarded from the Judgment Fund because of the restrictions in the NWPA on the use of Nuclear Waste Fund monies and the inequities that would result from an award from that Fund. In addition, such award should include the substantial profit earned on SMUD's funds while in the government's possession. BACKGROUND SMUD filed this lawsuit on June 6, 1998. On January 19, 2005, this Court entered an order concluding that the government's failure to begin accepting SNF and HLW constituted a breach of the SMUD Contract, ruling that "the Government was obligated under the June 14, 1983 DOE Standard Contract to begin accepting SNF and/or HLW from utilities no later than January 31, 1998." Memorandum Opinion at 14 (Jan. 19, 2005). This decision followed the Federal Circuit's prior decisions holding that the government's failure to begin accepting SNF by January 31, 1998 constituted a breach of contract. See Maine Yankee, 225 F.3d at 1343;

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Northern States Power Co. v. United States, 224 F.3d 1361, 1367 (Fed. Cir. 2000) ("Northern States II"). It was also consistent with numerous other orders from the Court of Federal Claims that have recognized this breach and found liability against the government for breach of contract. See, e.g., Consumers Energy Co. v. United States, 65 Fed. Cl. 364 (2005); System Fuels, Inc. v. United States, 65 Fed. Cl. 163 (2005). Following the entry of its liability order, the Court held a two week trial to determine the damages to which SMUD is entitled as a result of the breach. The trial and witness testimony focused on issues related to damages. The government's pre-trial brief did not raise mutual mistake of fact or impracticability and none of its witnesses testified that its performance was or ever has been "impracticable" for any reason. The government presented no evidence that the Contract is "void," has never identified any fact that it believes constituted a mutual mistake of fact, and has never argued during the seven year duration of this case that performance of the Contract has become impracticable or impossible.1 In the Show Cause Order, this Court stated that, during the damages trial in this case, "the court became aware of facts that seriously call into question the viability and vitality of the Standard Contract in this case." Order at 2. The Court first identified the fact that "[a]s of March 1, 2001, 17 sites, including plaintiff's site, in 13 states had licensed commercial dry storage facilities and 15 additional sites were then under contract" and that "[a]s of December 9, 2002, there were 27 spent fuel dry storage sites projected for 2003 and 36 projected by 2006." To the contrary, DOE officials have repeatedly announced to the public, testified in this and other SNF cases, and represented to Congress that DOE would be able to begin accepting spent fuel from utilities in 2010, a date that was recently moved back to 2012. See pp. 22-23.
1

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Id. The Court then referenced the testimony of DOE witness David Zabransky for the conclusion that DOE does not consider the fuel stored in dry storage canisters to be standard fuel subject to the Standard Contract "because it is not compatible with the environmental and safety requirements for Yucca Mountain." Id. The dual-purpose canisters at SMUD and other utility sites, however, were not designed to be used as DOE's waste "disposal package" for final emplacement at the eventual repository. See 42 U.S.C. § 10101(10) (defining the terms "disposal package" and "package" to mean "the primary container that holds, and is in contact with, solidified high-level radioactive waste, spent nuclear fuel, or other radioactive materials, and any overpacks that are emplaced at a repository") (emphasis added). SMUD's dual-purpose canisters were intended and designed for two different purposes ­ temporary storage of the fuel at SMUD's on-site dry storage facility or Independent Spent Fuel Storage Installation ("ISFSI") and subsequent transport of the fuel on the public highways inside a separate container called a transportation cask.2 Under the

The fact that the canisters can be used for two purposes ­ storage and then transportation ­ has led them to be called "dual-purpose canisters" or DPCs. For transport on the public highways, the canisters still must be placed inside a separate transportation cask. The difference between the canisters and the cask is that the cask is a more robust design, has thicker metal walls, includes substantial impact limiters in case of potential drops, and is significantly more expensive to design and construct. Tr. at 499-00, 504-09. SMUD initially considered procuring an entire fleet of casks that could be used for both storage at the ISFSI and then direct transportation to a DOE facility. Tr. at 457-58. SMUD, however, like nearly every utility, opted for the less expensive design that includes dual-purpose canisters for storage on-site and only one transportation cask for transportation from the pool to the ISFSI. At the ISFSI, the canisters are stored in thick concrete overpacks called Horizontal Storage Modules or HSMs. The NRC licensed SMUD's dry storage system under 10 C.F.R. Part 71 (for transportation) in 1998 (Pl. Ex. 596) and under 10 C.F.R. Part 72 (for storage) in 2000 (Pl. Ex. 962). SMUD has 21 dualpurpose canisters at its dry storage facility, each containing 24 separate fuel assemblies (except for one canister that holds only 13 assemblies), and one transportation cask that was used to move each of the canisters from the wet pool to the dry storage facility. Tr. at 144-46, 496-00.

2

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Contract, when it begins performance, DOE is obligated to provide the necessary transportation casks and arrange for transport of the fuel from the utility site to the DOE facility. See Contract Art. IV.B.2. The fact that SMUD's and other utilities' dual-purpose canisters were not designed to be the "disposal package" in which DOE would finally emplace fuel in Yucca Mountain (or any other site) is a red herring. It has no bearing on the claims in this lawsuit or the doctrines of mutual mistake of fact or impracticability. It is DOE's responsibility under the NWPA and the Contract to design and construct the final waste disposal package in which it will place the spent fuel in the repository or an interim storage facility. See 42 U.S.C. § 10134(a)(1)(B); Contract Art. IV.B.1 ("DOE shall accept title to all SNF and/or HLW, of domestic origin, generated by the [Purchaser], provide subsequent transportation for such material to the DOE facility, and dispose of such material in accordance with the terms of this contract."), Art. VII ("DOE shall be solely responsible for control of all material upon passage of title. DOE shall have the right to dispose as it sees fit of any SNF and/or HLW to which it has taken title.") (emphasis added). As this Court noted in its Order, DOE must seek a construction license for the repository from the NRC, which will include, among many other things, criteria for the final waste package.3 Whatever those criteria are for the final waste package and permanent emplacement at
3

DOE is currently finalizing its license application for submittal to the NRC and has stated that it intends to submit the license application to the NRC in late 2005. Statement of T. Garrish at 11 (Mar. 10, 2005) (included in appendix as Attachment A, hereinafter Att. A); Tr. at 2203-04; see also OCRWM Annual Report to Congress at 9 (Dec. 2004) (Att. B) The license application is "expected to be about 5,500 pages long, with several hundred key supporting references, approximately 400 engineering drawings, and 33 system description documents describing how individual systems will work. . . . The license application and its supporting references also will include design information for the three major site elements ­ the underground repository, the surface facilities, and the waste package ­ as well as descriptions of key repository programs, Footnote continued on next page

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the repository, they will not affect how DOE transports the spent fuel from the utility sites to the surface facilities at the repository. See Contract Art. IV.B.2 (Contract requires DOE to transport the fuel from the utility site and provide transportation casks "suitable for use at the Purchaser's site"). The overwhelming documentary evidence (see infra at pp. 26-33) demonstrates that DOE has been planning to and anticipates transporting spent fuel in its canistered form from the utility sites to the surface facilities at the repository. DOE's representations to Congress, the utilities, and the public during the past decade establish unequivocally that DOE encouraged the utilities to use dual-purpose canisters for temporary storage of fuel at reactor sites during the period of DOE's delay and that DOE would accept such canisters for transportation at the time it developed a facility. Notably, DOE did not disclose or assert in its statutorily-required Environmental Impact Statement for Yucca Mountain (Pl. Ex. 721) ("EIS") that there would be any problems or difficulties with transporting fuel stored in dual-purpose canisters; DOE's System Requirement Document requires that DOE be able to accept all types of dual-purpose canisters for transportation (Pl. Ex. 981); DOE's analysis for the Total System Life Cycle Costs of the program and the adequacy of the fees paid by the utilities for those costs assumes that DOE will accept dual-purpose canisters for transportation from the utility site to the repository (Pl. Ex. 680); and DOE has never informed Congress or the NRC that the existence of fuel in dual-

Footnote continued from previous page such as quality assurance, radiation protection, performance confirmation, and the total system performance assessment." OCRWM Annual Report to Congress at 9 (Dec. 2004) (Att. B).

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purpose canisters presents any type of impediment to the development of the repository program. See infra at pp. 26-33. ARGUMENT I. There Is No Basis For Voiding The Contract Based On Mutual Mistake Of Fact.

The Court has ordered SMUD to show cause why the Standard Contract should not be held void based on a mutual mistake of fact. See Order at 3-4. The doctrine of mutual mistake of fact is inapplicable to the facts of this case and rescission is not, in any event, a remedy that has been requested by SMUD. A. The Doctrine Of Mutual Mistake Of Fact Is Inapplicable To This Case.

Section 152(1) of the Restatement provides that "[w]here a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of mistake." Restatement § 152(1). A mistake is defined as "a belief that is not in accord with the facts." Restatement § 151. The Federal Circuit has explained that any such mistake must be regarding a fact in existence at the time of contracting, not a prediction regarding future events. Dairyland Power Coop. v. United States, 16 F.3d 1197, 1202-03 (Fed. Cir. 1994) ("The mistake doctrine does not apply to predictions or promises of future conduct.") (internal citations omitted); see also Atlas Corp. v. United States, 895 F.2d 745, 750 (Fed. Cir. 1990); United States v. S.W. Elec. Coop., Inc., 869 F.2d 310, 3156 (7th Cir. 1989) (noting that the "rules governing rescission for either mutual mistake or singular mistake are inapplicable where, as here, a party's erroneous

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prediction or judgment as to future events is involved"). The Restatement similarly notes that "a party's erroneous belief must relate to the facts as they exist at the time of the making of the contract;" thus a "party's prediction or judgment as to events to occur in the future, even if erroneous, is not a `mistake' as that word is defined here." Restatement § 151, cmt. a; see also Dairyland, 16 F.3d at 1203 (noting that there is agreement "among the circuit court of appeals and the commentators that mutual mistake of fact cannot lie against a future event"); Land Grantors v. United States, 64 Fed. Cl. 661, 703 (2005) (quoting Restatement and finding mutual mistake regarding absence of coal, gas, oil, and other mineral deposits under land at time of contracting). Accordingly, any beliefs or predictions at the time of contracting regarding the future of the nuclear waste disposal program cannot form the basis for voiding the Contract based on mutual mistake of fact. The parties could not have held a mistaken belief regarding any aspect of Yucca Mountain at the time of contract formation because Yucca Mountain as a waste storage site did not exist at the time of contracting. Neither the Standard Contract nor the 1983 NWPA mention Yucca Mountain. Instead, the NWPA contained a statutory scheme for DOE to identify, characterize, and then study multiple sites that would lead to DOE's development of a storage facility by January 31, 1998. See 42 U.S.C. §§ 10132(b), § 10134(a)(2)(A), 10134(b). Any

belief in 1983 regarding whether there would be a repository or interim storage facility operating in 1998 was not an erroneous belief as to facts existing in 1983, but rather an implicit prediction or judgment regarding the government's future performance. To the extent this prediction or

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judgment was erroneous, such an error in judgment cannot constitute a "mistake" under this doctrine. See Restatement § 151, cmt. a. In addition, while the government did not present any testimony at the recent trial from DOE officials employed at DOE at the time of contract formation in 1983, the documentary record demonstrates that DOE understood from the outset of the program that there could be a delay in repository operations, and that, if so, DOE would need to take other actions to carry out the purpose of the Contract. For example, shortly after the Contract was signed in 1983, DOE stated that it "does not intend to delay or postpone the acceptance of civilian radioactive wastes even if a permanent geologic repository is not completed by 1998." Draft OCRWM Mission Plan Vol. I at 2-1 (Dec. 20, 1983) (Pl. Ex. 59). Again in 1983, DOE stated that "the lack of existence of particular type of facilities will not delay or postpone the acceptance of spent fuel." Memorandum from R. Williamson at 1 (Sept. 15, 1983) (Pl. Ex. 50); see also Letter from DOE D. Hodel to J.B. Johnson at 1 (Sept. 7, 1984) (Pl. Ex. 82) ("[I]t is my intention that this commitment in the contracts, together with the overall structure of the Act, will create an obligation for the Department to accept spent fuel in 1998 whether or not a repository is in operation."). Thus, there was not a mistaken belief about the repository in any event. The fact that many utilities, including SMUD, have recently transferred some of their spent fuel into dry canisters for temporary storage at their reactor sites, see Order at 2, also cannot form the basis for a mutual mistake of fact. SMUD did not transfer its fuel from its wet pool into dual-purpose canisters until 2001 and 2002, three years after the government was obligated to begin performance and eighteen years after the Contract was signed. The vast

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majority of utilities are planning to move fuel into dry storage after 2000. These are not facts that were in existence at the time of contracting in 1983.4 As noted, a party's prediction as to future events cannot constitute a mutual mistake under the doctrine. Dairyland, 16 F.3d at 1203. In addition, the form in which fuel would reside at a utility's site at the time of DOE's performance (e.g., in the wet pool, in dual-purpose canisters, in storage-only canisters, etc.) is not the basis of a "mistake" and was not a basic assumption upon which the Contract was made. Indeed, the Contract does not address in any way the form in which the utility would store its fuel prior to acceptance by DOE. Instead, the Contract requires that DOE "shall arrange for, and provide, a cask(s) and all necessary transportation of the SNF and/or HLW from the Purchaser's site to the DOE facility." Contract Art. IV.B.1. The Contract further specifies that "[s]uch cask(s) shall be suitable for use at the Purchaser's site." Id. (emphasis added). Nothing about this contractual arrangement has changed as a result of the fact that some fuel is stored in dualpurpose canisters. Just as SMUD itself procured a suitable transportation cask for moving its fuel, DOE still can and is planning to provide a transportation cask "suitable for use at Purchaser's site." See supra n.2 & infra at pp. 27-33. DOE's obligation is not dependent on whether the utility has stored its fuel in a wet versus dry form. Nowhere does the Contract or the statute require the utility to maintain its fuel in "bare" form or in the wet pool. To the contrary, the NWPA contemplated that some utilities may develop dry storage and required DOE to establish, by January 1984, a demonstration The same is true regarding the fact that DOE has not finalized its waste disposal package. DOE's plans for its final disposal package were not intended to and cannot be finalized until the NRC issues a license for the repository. See supra n.3.
4

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program(s) with utilities "for the dry storage of spent nuclear fuel . . . with the objective of establishing one or more technologies that [the NRC] may, by rule, approve for use at the sites of civilian nuclear power reactors." 42 U.S.C. § 10198(a) (emphasis added). Since the advent of commercial dry storage systems, DOE has been actively involved in and has supported utilities' efforts in developing such systems and has included plans for the acceptance of dual-purpose canisters at Yucca Mountain. Thus, the way the fuel is currently stored cannot be the basis for a mistake of fact. B. SMUD, As The Adversely Affected Party, Has Not Elected To Void The Contract.

The Restatement § 152 provides that where there is a mutual mistake of fact, the contract "is voidable by the adversely affected party unless he bears the risk of mistake." The doctrine of mutual mistake of fact does not, "as a matter of law, void [the] contract." Orlandi v. Goodell, 760 F.2d 78, 80 (4th Cir. 1985). Rather, the contract is only "voidable." A "voidable" contract "is one where one or more parties have the power, by a manifestation of election to do so, to avoid the legal relations created by the contract, or by ratification of the contract to extinguish the power of avoidance." Restatement § 7. "The propriety of calling a transaction a voidable contract rests primarily on the traditional view that the transaction is valid and has its usual legal consequences until the power of avoidance is exercised." Id. § 7, cmt. e.5 Thus where a mutual

Under the tenets of contract law, there is a difference between "void" contracts and "voidable" contracts. A "void" contract is not really a contract at all, as it "has no legal operation whatever." Corbin on Contracts § 1.7 (rev. ed.). In the case of voidable contracts, the contract is legally operable until a party to the contract exercises its right to void the contract. Restatement § 7, cmt. e. There is no basis for voiding the contract absent such an election on the part of the aggrieved party.

5

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mistake of fact exists, the contract is valid and enforceable until this power of avoidance is exercised. In the case of mutual mistake of fact, by definition this power lies with the "adversely affected party." Restatement § 152. Here, SMUD is the adversely affected party. It has performed all of its obligations under the Contract, the government has more than $16 billion of the utilities' funds, and this Court, like the Federal Circuit, already ruled that the government breached its contractual obligations when it failed to begin performance on January 31, 1998. Given that SMUD has neither plead nor pursued avoidance of the Contract, there is no basis for voiding the Contract based on the doctrine of mutual mistake of fact. This express delegation of the power of avoidance to the adversely affected party merely emphasizes SMUD's existing right as plaintiff to elect its remedies. A plaintiff has a right of an election, or choice, between available remedies. No one "can take away such right of election of remedies after it has been exercised." Edwards v. E.I. Du Pont De Nemours & Co., 183 F.2d 165, 168 (5th Cir. 1950). Thus, "[w]here one or more remedies are available, a party is not to be deprived of his right to elect which remedy he will pursue." Hooper-Mankin Fuel Co. v. Chesapeake & O. Ry. Co., 30 F.2d 500, 502 (4th Cir. 1929). Rather, a "plaintiff's choice of remedy should be respected." Dobbs Law of Remedies § 1.7 (2d ed. 1993). Given that SMUD has elected to pursue a partial breach and has not pursued avoidance of the contract in this case because of the extreme importance of receiving the performance it has paid for, this Court should refrain from independently voiding the contract and terminating the government's obligations.

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II.

There Is No Basis For Voiding The Contract Based On Impracticability Of Performance.

The doctrine of discharge by supervening impracticability applies only in those limited situations where "a party's performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made." Restatement § 261. This doctrine is the modern version of the traditional doctrine of impossibility. See Transatlantic Fin. Corp. v. United States, 363 F.2d 312, 315 (D.C. Cir. 1966). While the modern doctrine does not require that performance be made "absolutely impossible," nevertheless "`impracticability' means more than `impracticality.'" Restatement § 261, cmt. d. In order for the government's performance to be discharged under the doctrine of impracticability, the government must prove that: (a) (b) (c) a supervening event made the government's performance impracticable; the occurrence of the event was not the government's fault; the non-occurrence of the event was a basic assumption upon which the contract was made; and (d) the government did not assume the risk of the occurrence.

See Seaboard Lumber Co. v. United States, 308 F.3d 1283, 1294-95 (Fed. Cir. 2002). The government cannot meet any of these requirements. First, the government has not identified any supervening event that made performance impracticable.6 Indeed, there is no evidence that performance is impracticable; to the contrary,
6

A claim of commercial impracticability is an affirmative defense to liability. See Harriscom v. Svenska, 3 F.3d 576, 580 (2d Cir. 1993); Roth Steel Prods. v. Sharon Steel Corp.,705 F.2d 134, Footnote continued on next page

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the government has repeatedly represented to Congress, the public, the courts, and the utilities that it will perform its obligations, albeit delayed by many years. Second, to the extent the government asserts its performance has been rendered impracticable due to a delay in the development of a permanent repository or interim storage facility, such impracticability would be attributable to the fault of the government. Third, in creating an unconditional and unqualified obligation to begin performance by January 31, 1998, Congress required that the risk of delay be assumed by the government. For all these reasons, there is no basis in fact or law for voiding the contract based on impracticability. A. The Government's Performance Under The Contract Has Not Been Rendered Impracticable By Some Supervening Event.

Because "[c]ontractual liability is strict liability," and it is "an accepted maxim that . . . contracts are to be kept," this doctrine of impossibility applies only where an "extraordinary circumstance" arises that makes performance "so vitally different from what was reasonably expected so as to alter the essential nature of that performance." Restatement § 261, ch. 11, int. note. The government's own pronouncements and the documentary record establish that no supervening event has occurred since Contract formation that would make performance impossible.

Footnote continued from previous page 149-50 (6th Cir. 1983). Federal Rule of Civil Procedure 8(c) requires such affirmative defenses to be set forth in the defendant's responsive pleadings, and "[f]ailure to plead an affirmative defense is a waiver of that defense." Underwater Devices Inc. v. Morrison-Knudsen Co., Inc., 717 F.2d 1380, 1388 (Fed. Cir. 1983). During the seven year duration of this case, the government never once raised the defense of commercial impracticability. Based on this record, there is waiver of the defense of impracticability.

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1.

The Absence Of A Repository Or Interim Storage Facility Cannot Form The Basis For A Claim Of Impracticability.

The absence of a repository or interim storage facility7 cannot form the basis for a claim of impracticability, as the government's obligation is not dependent on the existence of such facilities. Indiana Michigan, 88 F.3d at 1274-77; Northern States I, 128 F.3d at 758-61. The D.C. Circuit has explicitly recognized that the "NWPA directs DOE to undertake the duty to begin taking the SNF by January 31, 1998, whether or not it has a repository or interim storage facility." Northern States I, 128 F.3d at 760. The court went on to preclude DOE "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." Id. The government thus has an unconditional obligation per Congress's directive to begin performance by a date certain.8

The NWPA as originally enacted required that DOE study and submit a proposal to Congress for the construction of one or more Monitored Retrievable Storage facilities by June 1, 1985. 42 U.S.C. § 10161. DOE prepared such a study in March 1987. See Monitored Retrievable Storage Submission to Congress (Mar. 1987) (Pl. Ex. 113). In the Nuclear Waste Policy Amendments Act of 1987, Pub. L. 100-120, 101 Stat. 1329-1401, 1329-121 ("1987 Amendments"), Congress authorized DOE to construct an MRS, subject to certain restrictions. 42 U.S.C. §§ 10163(b), 10165(b), 10168(d). To prevent the MRS from becoming the de-facto repository, the 1987 restrictions linked the opening of an MRS to the opening of a geologic repository. Id.
8

7

Several statements by DOE during the early and mid 1980s illustrate DOE's own belief that it had an obligation to perform independent of the existence of a repository. Then­DOE Secretary Donald Hodel sent a letter to Senator Benett Johnston in September 1984 stating that DOE had an obligation to accept fuel in 1998 "whether or not a repository is in operation." Letter from D. Hodel to J.B. Johnson at 1 (Sept. 7, 1984) (Pl. Ex. 82). Similarly, in promulgating the Contract in 1983, and responding to utility concerns about possible nonperformance, DOE stated that "we believe we should be consistent with the language of the Act. The 1998 date is called for in the Act, and we believe it to be a reasonable date. Our performance will be judged by meeting this date." Final Rule on Standard Contract, 48 Fed. Reg. 16,590, 16,598 (Apr. 18, 1983). In 1987, then-DOE Secretary Herrington reiterated that DOE had an obligation, as set forth explicitly in the Contract, to begin performance by January 31, 1998. Pre-Hearing Questions, Subcommittee on Nuclear Regulation, United States Senate, Answer to Question 1 at 2 (Apr. 23, 1987) (Att. C).

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Because the government's obligation to perform is absolute and statutorily derived, any delay or difficulty in the development of a repository or interim storage facility cannot give rise to a claim of impracticability. For this reason alone, the doctrine of impracticability cannot apply in this case. 2. The Government Has The Resources And Physical Capability To Perform Its Obligations Under The Contract.

The Restatement explains that "[a] mere change in the degree of difficulty or expense due to such causes as increased wages, prices of raw materials, or costs of construction, unless well beyond the normal range, does not amount to impracticability since it is this sort of risk that a fixed-price contract is intended to cover." Restatement § 261, cmt. d. "A contract is said to be commercially impracticable when, because of unforeseen events, it can be performed only at an excessive and unreasonable cost." Raytheon Co. v. White, 305 F.3d 1354, 1367 (Fed. Cir. 2002) (internal citations omitted). Here, the Standard Contract is a "full cost recovery" contract in which the fees paid by utilities must cover the entire cost of performance for the program. See 42 U.S.C. § 10222(a)(4). The government today holds approximately $16 billion in unspent utility fees reserved solely for DOE's eventual performance. See Statement by T. Garrish at 6 (March 10, 2005) (Att. A). Because the Contract is "full cost recovery," there is no sense in which performance could cause "excessive and unreasonable cost" to the government. Raytheon Co., 305 F.3d at 1367. Furthermore, as required by the NWPA, from 1983 to the present, DOE has prepared periodic "Fee Adequacy Reports" to analyze whether the billions in fees being paid by the

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utilities will be sufficient to cover the life cycle costs of the program. See Pl. Exs. 97, 185, 681 (Fee Adequacy Reports); 42 U.S.C. § 10222(a)(4). DOE also has prepared detailed "Total System Life Cycle Cost" ("TSLCC") reports to analyze what the full costs of the life of the program will be. See Pl. Exs. 429, 603, 680 (TSLCC Reports). In every one of the Fee Adequacy and TSLCC Reports, including the most recent reports prepared in 2001 and updated in 2003, DOE has concluded that the fees paid by the utilities will be sufficient to cover the life cycle costs of the program. Thus, the government has no basis to assert a lack of resources made performance of its obligations under the Contract impracticable.9 Deputy Director of the Program, Theodore Garrish, recently testified before Congress regarding the status of the Program, stating that "the Program is well situated for the future. We are moving ahead deliberately, step-by-step, toward development of a geologic repository at Yucca Mountain." Statement by T. Garrish at 11 (Mar. 10, 2005) (Att. A). He also elaborated
9

The government has never asserted in this case that a lack of funding made performance impracticable, and, in any event, there is no support for such a claim. Deputy Director Theodore Garrish testified to Congress in March of 2005 that, "[u]ntil recently, the repository program's requirements were substantially below the annual fee revenues." See Statement by T. Garrish at 6 (Mar. 10, 2005) (Att. A). The Department's current focus on the need for adequate funding is based on the anticipated increased cost of the program over the next few years. Both "DOE and Congress have been aware for many years that funding requirements for the Program would increase substantially as it approached construction and transportation system development." OCRWM Annual Report to Congress at 16 (Dec. 2004) (Att. B). As DOE witness Christopher Kouts testified at trial, with regard to performance, it would be difficult to say if increased funding "would have made a difference." Tr. at 2142. If the government did limit DOE's access to funds, and such limitation did prevent the government from carrying out its contractual obligations, any such limitation would be the government's fault and could not provide a defense to non-performance. See United States v. Winstar, 518 U.S. 839, 896 (1996); Centex v. United States, 395 F.3d 1283, 1311 (Fed. Cir. 2005); Scott Timber Co. v. United States, 40 Fed. Cl. 492, 507 (1998). "Impracticability is not available as a defense when a law is enacted that only serves to undermine the government's contract obligations." 30 Williston on Contracts § 77:56 (4th ed.).

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on several "reasons why this Program is poised for success." Id. Then-Deputy Director Lake Barrett made similar representations to Congress in 2002, noting all the ways in which DOE had made "significant" progress toward the development of a repository during 2002 and would continue to develop a program in 2003 to ensure performance by the end of the decade. Statement of L. Barrett at 1-2 (Mar. 14, 2002) (Pl. Ex. 730). DOE similarly has assured utilities of performance. In December 2003, OCRWM's Director, Margaret Chu, distributed to utilities OCRWM's strategic plan for the transportation of spent nuclear fuel from commercial utility sites. Strategic Plan For The Safe Transportation of Spent Nuclear Fuel and High-Level Radioactive Waste To Yucca Mountain (Nov. 18, 2003) (Pl. Ex. 757). DOE stated it "plans to begin operating the repository under a license from the Nuclear Regulatory Commission . . . in 2010," and that OCRWM would develop the necessary transportation system to support such operations over the next six years. Id. at 1. In a letter to SMUD in July of 2004, DOE contracting officer David Zabransky assured SMUD that it "plans to begin operation of the repository at Yucca Mountain beginning in 2010." Letter from D. Zabransky to J. Hastings (July 28, 2004) (Pl. Ex. 780). DOE witness Christopher Kouts pointed to such statements and documents at trial in Indiana Michigan to support his assertions that DOE was actively engaged in moving toward meeting its obligations under the NWPA and the Standard Contract. Indiana Michigan Tr. at 1952-1961 (Att. D). From the inception of the program through today, the government also has had the physical capability to begin acceptance of spent nuclear fuel as required under the Contract. In fact, the government has admitted on several occasions that it has the physical capacity to

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remove and store spent nuclear fuel. For example, DOE witness Thomas Pollog admitted at trial that, in 1995, while DOE was in the process of developing a truck cask, "if we really wanted to do something, we probably could have issued contracts for currently other available systems that were out there." Tr. at 2054. Mr. Pollog further clarified that "[i]f we needed to move fuel, we probably could have procured other casks that were currently certified." Id.;