Free Response - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS (Electronically Filed on August 12, 2005) __________________________________________ ) NEBRASKA PUBLIC POWER DISTRICT, ) ) Plaintiff, ) ) v. ) No. 01-116C ) (Judge Allegra) THE UNITED STATES, ) ) Defendant. ) __________________________________________) PLAINTIFF'S RESPONSE TO THE COURT'S JUNE 21, 2005 ORDER AND OPPOSITION TO DEFENDANT'S MOTION FOR PARTIAL RECONSIDERATION OF THE COURT'S MARCH 30, 2005 ORDER; PLAINTIFF'S REPLY IN SUPPORT OF ITS CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT ON THE ACCEPTANCE RATE; PLAINTIFF'S SUPPLEMENTAL BRIEF IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT ON LIABILITY; AND PLAINTIFF'S SUPPLEMENTAL BRIEF IN OPPOSITION TO DEFENDANT'S MOTION TO DISMISS COUNT III OF PLAINTIFF'S COMPLAINT

Alex D. Tomaszczuk PILLSBURY WINTHROP SHAW PITTMAN LLP 1650 Tysons Boulevard McLean, Virginia 22102 (703) 770-7940 (703) 770-7901 (fax) Counsel of Record for Plaintiff Nebraska Public Power District Of Counsel: Jay E. Silberg Daniel S. Herzfeld Jack Y. Chu PILLSBURY WINTHROP SHAW PITTMAN LLP 2300 N Street, N.W. Washington, D.C. 20037 (202) 663-8000 (202) 663-8007 (fax)

August 12, 2005

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TABLE OF CONTENTS TABLE OF AUTHORITIES......................................................................................................iii INDEX TO APPENDIX ..........................................................................................................viii NPPD'S RESPONSE ON THE "UNAVOIDABLE DELAYS" ISSUE....................................... 3 SUMMARY OF NPPD'S ARGUMENT ON THE ACCEPTANCE RATE ................................ 6 I. THE GOVERNMENT'S ARGUMENT THAT THE CONTRACT SHOULD BE INTERPRETED AS A REGULATION IS UNPERSUASIVE......................................................................................................... 11 A. The Government, The Courts, The Utilities, And Congress All Acknowledge That The Standard Contract Is A Contract And Not A Regulation...................................................................................................... 11 Application Of The Rule Of Contra Proferentum Is Appropriate In This Case........................................................................................................... 16

B. II.

THE "SCHEDULE TERMS" OF THE STANDARD CONTRACT, BY THEMSELVES, DO NOT YIELD AN APPROPRIATE AND BINDING ACCEPTANCE RATE ON WHICH THE COURT CAN RELY IN DETERMINING BREACH OF CONTRACT DAMAGES ........................................... 17 A. B. C. D. E. The Schedule Process Implemented By DOE Did Not Comply With The "Schedule Terms" Set Forth In The Standard Contract ....................... 18 DOE Did Not Consider Approved DCSs Binding Commitments........................ 21 The Standard Contract Does Not Have An "Agreement to Agree" ..................... 22 The Standard Contract Needs An Acceptance Rate ............................................ 24 The Standard Contract Does Not Contain Equivalent, BargainedFor, Alternate Means By Which DOE May Satisfy Its Acceptance Obligations To Utilities...................................................................................... 28

III.

THE DCS FORMS SUBMITTED BY UTILITIES OR THE ACRs ISSUED BY DOE CANNOT FAIRLY FORM THE BASIS FOR THE COURT'S DETERMINATION OF DAMAGES........................................................... 30 A. The ACRs And DCS Forms Reflect An Illegitimate Acceptance Rate ................................................................................................................... 31 1. The Government Misunderstands NPPD's Position ................................ 32

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2.

NPPD Did Not Waive The Right To Challenge The Government's Post-Hoc Characterization Of The ACR And DCS Process .......................................................................................... 35

B.

By Limiting The Damages Analysis To ACRs and DCSs, Many Utilities Will Not Be Fully Compensated For Their Losses From DOE's Breach.................................................................................................... 36

IV.

THE RECORD SUPPORTS NPPD'S CONTENTION THAT THE PARTIES' INTENT WAS THAT DOE WOULD ADOPT AN ANNUAL ACCEPTANCE RATE OF 3,000 MTU WHEN IT BEGAN TO DISPOSE OF SNF AND/OR HLW UNDER THE STANDARD CONTRACT ............................. 37 A. The NWPA's Findings Are Consistent With The Parties' Intent That The Utilities Would Not Have To Build Any Additional AtReactor Storage And That The Backlog Would Begin To Be Eliminated After 1998........................................................................................ 38 DOE's Pre-Litigation Conduct Is The Best Evidence Of Its Intent As To How It Planned To Implement An Acceptance Schedule And, Therefore, Such Conduct Is Significant To The Court's Interpretation Of The Standard Contract ............................................................ 40 The Acceptance Rates In The 1991, 1992, And 1995 ACRs Do Not Satisfy The Twin Objectives Of The NWPA And The Standard Contract ............................................................................................................. 43

B.

C.

V.

THE GOVERNMENT'S ARGUMENTS IN ITS SUPPLEMENTAL BRIEF ARE NOT PERSUASIVE ................................................................................. 44 A. Contrary To The Government's Assertions, There Is More Than Ample Evidence Indicating DOE's Intent To Accept SNF, Consistent With The NWPA's Objectives, At An Annual Rate of 3,000 MTU........................................................................................................ 45 The Court Of Federal Claims' Prior Decisions Do Not Render The Standard Contract Impossible To Perform.......................................................... 46 The 3,000 MTU Acceptance Rate Is Supported By The Record ......................... 51 This Court Is Obligated To Supply The Missing Acceptance Rate Term.................................................................................................................. 53

B. C. D.

NPPD'S SUPPLEMENTAL BRIEF ON LIABILITY............................................................... 57 NPPD'S SUPPLEMENTAL BRIEF ON TAKINGS................................................................. 62

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TABLE OF AUTHORITIES Cases & Decisions Alabama Power Co. v. U.S. Dep't of Energy, 307 F.3d 1300 (11th Cir. 2002) ................................................................................. 9, 11, 56 Alvin Ltd. v. United States Postal Serv., 816 F.2d 1562 (Fed. Cir. 1987) ........................................................................................... 42 Atacs Corp. v. Trans World Communications, Inc., 155 F.3d 659 (3d Cir. 1998) ................................................................................................ 55 Aviation Contractor Employees, Inc. v. United States, 945 F.2d 1568 (Fed. Cir. 1991) ..................................................................................... 23, 55 Blough v. United States, 17 Cl. Ct. 186 (1989)........................................................................................................... 16 Boston Edison v. United States, 64 Fed. Cl. 167 (2005) .............................................................................................. 4, 63, 65 Bowen v. Georgetown Univ. Hosp., 488 U.S. 204 (1988)............................................................................................................ 15 Brown v. United States, 195 F.3d 1334 (Fed. Cir. 2000) ........................................................................................... 15 Canal Elec. Co. v. United States, 65 Fed. Cl. 650 (2005) ........................................................................................................ 62 Commonwealth Edison Co. v. U.S. Dep't of Energy, 877 F.2d 1042 (D.C. Cir. 1989).................................................................................... passim Commonwealth Edison Co. v. United States, 56 Fed. Cl. 652 (2003) ................................................................................................. passim Coyle's Pest Control, Inc. v. Cuomo, 154 F.3d 1302 (Fed. Cir. 1998) ........................................................................................... 55 Crown Laundry & Dry Cleaners, Inc. v. United States, 29 Fed. Cl. 506 (1993) .................................................................................................. 42, 53 David Nassif Assocs. v. United States, 557 F.2d 249 (Ct. Cl. 1977)........................................................................................... 27, 53 Delmarva Power Co. v. United States, No. 04-34C, slip op. (Fed. Cl. Jul. 1, 2005) ......................................................................... 63

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Detroit Edison Co. v. United States, 56 Fed. Cl. 299 (2003) ............................................................................................ 62, 63, 64 Entergy Nuclear Generation Co. v. United States, 64 Fed. Cl. 336 (2005) .................................................................................................... 5, 51 Entergy Nuclear Indian Point 2, LLC v. United States, 64 Fed. Cl. 515 (2005) .................................................................................................... 5, 51 First Nationwide Bank v. United States, 48 Fed. Cl. 248 (2000) ........................................................................................................ 53 Florida Power & Light Co. v. United States, 64 Fed. Cl. 37 (2005) .................................................................................................... 13, 47 General Elec. Uranium Mgmt. Corp. v. U.S. Dep't of Energy, 764 F.2d 896 (D.C. Cir. 1985)............................................................................................... 4 Hansson v. Norton, 411 F.3d 231 (D.C. Cir. 2005)............................................................................................... 5 Hercules, Inc. v. United States, 292 F.3d 1378 (Fed. Cir. 2002) ........................................................................................... 53 Hills Materials Co. v. Rice, 982 F.2d 514 (Fed. Cir. 1992) ............................................................................................. 12 Honeywell, Inc. v. United States, 661 F.2d 182 (Ct. Cl. 1981)........................................................................................... 12, 14 Howell v. United States, 51 Fed. Cl. 516 (2002) ........................................................................................................ 53 Indiana Mich. Power Co. v. U.S. Dep't of Energy, 88 F.3d 1272 (D.C. Cir. 1996)...................................................................................... passim Indiana Mich. Power Co. v. United States, 57 Fed. Cl. 88 (2003) ................................................................................................... passim Ins. Co. v. Dutcher, 95 U.S. 269 (1877).............................................................................................................. 42 Instruments for Indus., Inc. v. United States, 496 F.2d 1157 (2d Cir. 1974) .............................................................................................. 12 Macke Co. v. United States, 467 F.2d 1323 (Ct. Cl. 1972)......................................................................................... 42, 53

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Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336 (Fed. Cir. 2000) .................................................................................... passim Massengill v. Guardian Mgmt. Co., 19 F.3d 196 (5th Cir. 1994) .................................................................................................. 55 Massie v. United States, 166 F.3d 1184 (Fed. Cir. 1999) ........................................................................................... 35 Nat'l By-Products, Inc. v. United States, 405 F.2d 1256 (Ct. Cl. 1969)......................................................................................... 40, 41 Northern States Power v. U.S. Dep't of Energy, 128 F.3d 754 (D.C. Cir. 1997)..............................................................................3, 33, 34, 56 Parker v. Office of Personnel Mgmt., 974 F.2d 164 (Fed. Cir. 1992) ............................................................................................. 15 Penn Central Transp. Co. v. New York City, 438 U.S. 174 (1978)............................................................................................................ 63 Retail Clerks Int'l Ass'n v. NLRB, 510 F.2d 802 (D.C. Cir. 1975)............................................................................................. 30 Ridge Runner Forestry v. Veneman, 287 F.3d 1058 (Fed. Cir. 2002) ........................................................................................... 30 Roedler v. U.S. Dep't of Energy, 255 F.3d 1347 (Fed. Cir. 2001) ........................................................................................... 12 S.W. Aircraft, Inc. v. United States, 551 F.2d 1208 (Ct. Cl. 1977)............................................................................................... 12 Sacramento Mun. Util. Dist. v. United States, 61 Fed. Cl. 438 (2004) .................................................................................................. 63, 65 Sacramento Mun. Util. Dist. v. United States, 63 Fed. Cl. 495 (2005) ............................................................................................ 47, 50, 51 Santa Fe Eng'rs, Inc. v. United States, 801 F.2d 379 (Fed. Cir. 1986) ....................................................................................... 12, 14 Schweigert, Inc. v. United States, 388 F.2d 697 (Ct. Cl. 1967)................................................................................................. 12 Semmes Motor, Inc. v. Ford Motor Co., 429 F.2d 1197 (2d Cir. 1970) .............................................................................................. 17

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S. Cal. Edison Co. v. United States, 226 F.3d 1349 (Fed. Cir. 2000) ..................................................................................... 15, 23 S. Nuclear Operating Co. v. United States, No. 98-614C, slip op. (Fed. Cl. Apr. 7, 2004)................................................................ 34, 43 Stearns Co. v. United States, 396 F.3d 1354 (Fed. Cir. 2005) ........................................................................................... 62 Sys. Fuels, Inc. v. United States, 65 Fed. Cl. 163 (2005) .................................................................................................... 5, 51 Sys. Fuels, Inc. v. United States, 2005 U.S. Claims LEXIS 224 (Fed. Cl. Jul. 29, 2005)......................................................... 51 Tenn. Valley Auth. v. United States, 60 Fed. Cl. 665 (2004) ............................................................................................ 34, 43, 47 Tex. Instruments, Inc. v. United States, 922 F.2d 810 (Fed. Cir. 1990) ............................................................................................. 23 United States v. Seckinger, 397 U.S. 203 (1970)...................................................................................................... 12, 16 Yankee Atomic Elec. Co. v. United States, 42 Fed. Cl. 223 (1998) ........................................................................................................ 63 Yankee Atomic Elec. Co. v. United States, 54 Fed. Cl. 306 (2002) ........................................................................................................ 35 Yankee Atomic Elec. Co. v. United States, No. 98-126C, slip op. (Fed. Cl. June 26, 2003)............................................................. passim Yuba Goldfields, Inc. v. United States, 723 F.2d 884 (Fed. Cir. 1983) ............................................................................................. 64 Statutes, Rules & Regulations 42 U.S.C. § 10222 (2000) ......................................................................................................... 11 42 U.S.C. § 10131 (2000) ......................................................................................................... 38 10 C.F.R. § 961.11 (2002)............................................................................................... 3, 19, 20 48 Fed. Reg. 5,458 (Feb. 4, 1983) ....................................................................................... 14, 16 48 Fed. Reg. 16,590 (Apr. 18, 1983) ................................................................................... 17, 26

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Other Authorities 11 A. Corbin, Corbin on Contracts, § 1079 (interim ed. 1979)............................................. 28, 55 128 Cong. Rec. 26,311 (1982)................................................................................................... 39 128 Cong. Rec. 27,775 (1982)................................................................................................... 39 H.R. Rep. No. 97-491, pt. 1, (1982), reprinted in, 1982 U.S.C.C.A.N. 3792 .............................. 38 Restatement (Second) of Contracts § 204 (1981).......................................................... 26, 41, 56

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INDEX TO APPENDIX

Description .......................................................................................................................... Page 2004 Instructions for Completing the Appendix C Delivery Commitment Schedule.................... 1 2004 Acceptance Priority Ranking & Annual Capacity Report (July 2004) (appendices omitted)........................................................................................................................... 7 Letter from Dave Zabransky to George Griffith (received December 1, 2004)........................... 14

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS __________________________________________ ) NEBRASKA PUBLIC POWER DISTRICT, ) ) Plaintiff, ) ) v. ) ) THE UNITED STATES, ) ) Defendant. ) __________________________________________)

No. 01-116C (Judge Allegra)

PLAINTIFF'S RESPONSE TO THE COURT'S JUNE 21, 2005 ORDER AND OPPOSITION TO DEFENDANT'S MOTION FOR PARTIAL RECONSIDERATION OF THE COURT'S MARCH 30, 2005 ORDER; PLAINTIFF'S REPLY IN SUPPORT OF ITS CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT ON THE ACCEPTANCE RATE; PLAINTIFF'S SUPPLEMENTAL BRIEF IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT ON LIABILITY; AND PLAINTIFF'S SUPPLEMENTAL BRIEF IN OPPOSITION TO DEFENDANT'S MOTION TO DISMISS COUNT III OF PLAINTIFF'S COMPLAINT Pursuant to the Court's June 21, 2005 Order, Plaintiff Nebraska Public Power District ("NPPD") respectfully submits, by its undersigned counsel, this Response to Defendant's (the "Government") July 8, 2005 brief on the "unavoidable delay issue." NPPD also submits, pursuant to RCFC 56 and the Court's June 21 Order, the Reply In Support Of Its Cross-Motion For Partial Summary Judgment On The Acceptance Rate, which cross-motion was filed on December 16, 2002. In particular, NPPD's Reply responds to the Government's April 11, 2003 Opposition To Plaintiff's Cross-Motion For Partial Summary Judgment On The Acceptance Rate1 and June 17, 2005 supplemental brief on the acceptance rate. The parties' briefing of the

In its April 11, 2003 reply brief, the Government responded not only to the arguments raised in NPPD's opposition and cross-motion, but to those arguments raised by other plaintiffs in their opposition briefs filed in similar suits before this Court. NPPD addresses the most significant of these additional arguments in this reply brief.

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acceptance rate issue was suspended as a result of the stay on "non-lead" spent nuclear fuel damages cases that the Chief Judge entered on April 16, 2003. This stay was lifted as a result of the Chief Judge's January 30, 2004 Order. Lastly, pursuant to the Court's June 21 Order, NPPD provides a short update to the completed briefing on its November 2002 Motion For Summary Judgment On Liability and the Government's November 2001 Motion To Dismiss Count III Of NPPD's Complaint (i.e., the takings issue).2

The Court's June 21, 2005 Order stated that NPPD's brief was "not to exceed 50 pages." On August 5, 2005, NPPD filed an unopposed motion to leave to exceed this page limit by 25 pages, which motion was granted by the Court on August 8.

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NPPD'S RESPONSE ON THE "UNAVOIDABLE DELAYS" ISSUE Following its March 30, 2005 Order and the May 3, 2005 telephonic status conference in this case, the Court issued an Order on May 4, 2005 directing the parties to submit briefs on the "unavoidable delay issue," specifically on whether the "Unavoidable Delays" provision3 of the Standard Contract For Disposal Of Spent Nuclear Fuel And/Or High Level Radioactive Waste (commonly known as the "Standard Contract") applies to the Department of Energy's ("DOE") failure to begin accepting spent nuclear fuel ("SNF") and high-level radioactive waste ("HLW") from this nation's utilities by January 31, 1998. In its July 8, 2005 brief ("Gov't Unavoidable Delays Brief"), the Government has conceded that it is barred from relying upon the "Unavoidable Delays" clause of the Standard Contract to excuse its breach of NPPD's contract. In particular, the Government cites the U.S. Court of Appeals for the District of Columbia Circuit's decision to grant, in part, the petition of NPPD (and that of several other utilities and state agencies) for writs of mandamus. Gov't Unavoidable Delays Brief at 3 (citing Northern States Power Co. v. United States, 128 F.3d 754 (D.C. Cir. 1997), cert. denied, 525 U.S. 1015 & 1016 (1998) ("Northern States")). The D.C. Circuit's writ of mandamus specifically precludes DOE from implementing "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.'" Northern States, 128 F.3d at 760. Similarly, the writ of mandamus precludes DOE "from excusing its own delay [in the acceptance of contract holders' SNF] on the grounds that it has not yet prepared a permanent repository or interim storage facility." Id. at 761. Article IX of the Standard Contract defines an unavoidable delay as a party's failure to perform obligations that arises "out of causes beyond the control and without the fault or negligence of the party failing to perform." 10 C.F.R. § 961.11, Art. IX.A.
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NPPD agrees that the D.C. Circuit's writ of mandamus in Northern States precludes the Government from relying on the "Unavoidable Delays" clause of the Standard Contract in this or any other SNF damages case. Furthermore, since the Government itself no longer relies upon the "Unavoidable Delays" clause, the Government has waived any defense based on that clause in this case. NPPD opposes, however, the Government's motion for partial reconsideration of the Court's March 30, 2005 Order regarding the basis for this Court's jurisdiction over the instant case. Gov't Unavoidable Delays Brief at 4-13. The Government's motion for partial reconsideration is without merit. This Court's jurisdictional holding in Boston Edison v. United States, 64 Fed. Cl. 167 (2005), does not "conflict" with the D.C. Circuit's decision in General Elec. Uranium Mgmt. Corp. v. U.S. Dep't of Energy, 764 F.2d 896 (D.C. Cir. 1985), where the D.C. Circuit concluded that it had jurisdiction to hear challenges to actions or inactions of the Secretary of Energy under section 302 of the NWPA pursuant to the judicial review provisions of the NWPA (section 119). Id. at 904. To the contrary, in Boston Edison, Judge Lettow expressly recognizes the holding in General Electric but distinguishes the case noting, "That case did not involve a breach of contract claim." See Boston Edison, 64 Fed. Cl. at 178 n.13 (distinguishing General Electric as "limited to its holding that the D.C. Circuit has exclusive jurisdiction to review DOE's rules regarding fee rates under the NWPA"). Thus, the Boston Edison decision is not contrary to General Electric. The Government also appears to worry that the Boston Edison decision will somehow impact the way in which this Court interprets holdings of several D.C. Circuit (and other federal appellate circuit) decisions that have addressed issues under section 302 of the NWPA. Gov't Unavoidable Delays Brief at 12-13. This is another red herring. This Court ­ Judge Lettow, in

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particular ­ has continued to rely on these D.C. Circuit decisions in subsequent decisions issued after Boston Edison, which cases involved breaches of the plaintiff utility's Standard Contract. See Sys. Fuels, Inc. v. United States, 65 Fed. Cl. 163, 168 n.7, 175-76 (2005) (relying on Boston Edison and D.C. Circuit decisions); Entergy Nuclear Indian Point 2, LLC v. United States, 64 Fed. Cl. 515, 518, 524 n.14 (2005) (same); Entergy Nuclear Generation Co. v. United States, 64 Fed. Cl. 336, 343 n.8, 345 (same). For its part, the D.C. Circuit has cited Boston Edison approvingly. Hansson v. Norton, 411 F.3d 231, 237 (D.C. Cir. 2005) (discussing Boston Edison in a case not involving the NWPA). Thus, contrary to the Government's concerns, no conflict appears to have resulted from the Boston Edison decision. The Government's motion for partial reconsideration should be denied.

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SUMMARY OF NPPD'S ARGUMENT ON THE ACCEPTANCE RATE On June 30, 1983, NPPD and DOE entered into the Standard Contract. The Standard Contract provided that, in return for NPPD's payment of substantial fees into a special fund (the Nuclear Waste Fund), DOE would begin to dispose of spent nuclear fuel and high level radioactive waste from nuclear utilities by January 31, 1998. In the Government's Reply, 4 the Government makes much of NPPD's and the other utilities' obligation under the Standard Contract and the Nuclear Waste Policy Act ("NWPA") to pay for the costs of DOE's civilian radioactive waste program. Indeed, to hear the Government tell it, the entire purpose of the NWPA was to collect money from NPPD and other nuclear utilities. The Government, however, ignores a significant and salient fact: NPPD and other utilities have fully satisfied their financial obligations under the Standard Contract. NPPD alone has paid over $135 million5 into the Nuclear Waste Fund over the last two decades. See NPPD Complaint ¶ 9 (March 2, 2001). More significantly, the Government's Reply essentially ignores the fact that, in return for the utilities' payment of billions of dollars to DOE, the Standard Contract and the NWPA impose a reciprocal obligation on DOE. Instead of acknowledging what the courts have termed the "quid pro quo" created by the Standard Contract, the Government in this litigation has advanced an interpretation of the Standard Contract that borders on the unconscionable: according to the Government, DOE was and is allowed to decide for itself the extent and nature of DOE's performance required under the Standard Contract.

"Government's Reply" refers to the Defendant's Reply to Plaintiff's Opposition to Defendant's Motion for Partial Summary Judgment Regarding the Rate of Spent Nuclear Fuel Acceptance and Opposition to Plaintiff's Cross-Motion For Partial Summary Judgment On The Acceptance Rate dated April 11, 2003. Since NPPD has continued to pay its quarterly fee into the Nuclear Waste Fund, this figure is greater than the $110 million originally alleged in NPPD's Complaint.
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The Government defends this extreme position by arguing that the language of the Standard Contract authorizes DOE to proceed in whatever manner it chooses. But, as NPPD demonstrated in its Opposition,6 the Annual Capacity Reports ("ACRs") and the Delivery Commitment Schedules ("DCSs") upon which the Government's argument is based, are not, by their very terms, "rate-setting" documents. As DOE expressly stated in the Standard Contract, in the ACRs and DCSs, and in depositions, the ACRs and DCSs were planning tools and were not intended to produce a binding acceptance rate. DOE itself has recognized that an acceptance rate is not contained within the four corners of the Standard Contract. While the Government asserts that the parties agreed to omit the acceptance rate from the Standard Contract, the evidence establishes that the reason an acceptance rate was not included in the Standard Contract was because the Government feared an impasse; specifically, attempting to include such a controversial term would have likely delayed execution of the Standard Contracts in violation of the deadline established by the NWPA. In any event, regardless of the reasons why the Standard Contract does not contain an acceptance rate, the Court is properly tasked with deriving a reasonable acceptance rate from extrinsic evidence included in the record. In its Reply, the Government also asks the Court to ignore the considerable and undisputed evidence demonstrating that the parties intended that DOE would adopt an annual acceptance rate of 3,000 MTU. As NPPD demonstrated, that rate is the rate most likely to achieve the NWPA's and the Standard Contract's twin objectives of (1) ensuring that utilities would not have to build any additional at-reactor storage after 1998, and (2) working off the backlog of SNF and/or HLW already stored on-site as of 1998. The Government contends that "Opposition" refers to NPPD's Opposition to Defendant's Motion for Partial Summary Judgment Regarding The Rate of Spent Nuclear Fuel Acceptance and Cross-Motion for Partial Summary Judgment on the Acceptance Rate, filed with the Court on December 16, 2002.
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all the evidence cited by NPPD in its Opposition should be discarded because the language of the NWPA does not contain an express finding stating these objectives. While the Government is correct that specific language addressing at-reactor storage is not included in the NWPA, the NWPA does contain findings regarding the "hazards of nuclear waste," "the national problem . . . created by the accumulation of" SNF and/or HLW, and the importance of protecting the "public and the environment." As is explained in greater detail herein, these references are wholly consistent with NPPD's contention that Congress intended that utilities would not need to provide additional at-reactor storage and that DOE would begin to reduce the amount of SNF stored at reactor sites after a date certain, specifically, January 31, 1998. Finally, the Government argues that the many DOE statements and DOE publications cited by NPPD in its Opposition should be disregarded by the Court because these representations, although fully consistent with NPPD's position on the parties' and the NWPA's intent with respect to the Standard Contract, cannot be considered contractually binding. Again, the Government misunderstands NPPD's point. NPPD is not advocating that the Court adopt an annual acceptance rate of 3,000 MTU because DOE statements and DOE documents themselves obligate DOE to take SNF and/or HLW from utilities at that rate. NPPD offers this extensive evidence to assist the Court in its task of determining an appropriate and reasonable acceptance rate. Courts have uniformly recognized that a party's pre-litigation plans, statements and conduct are often the best evidence of intent. Therefore, while NPPD does not contend that the evidence it offers is itself contractually binding, DOE's past statements and DOE's published documents are plainly relevant to the Court's determination of a reasonable acceptance rate. In short, the Court should reject the Government's interpretation that the only purpose underlying the NWPA and the Standard Contract was the collection of fees from utilities and 8

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ensuring that DOE's costs of running the nuclear waste program were borne by the nuclear utilities. As the United States Court of Appeals for the Eleventh Circuit remarked, in view of previous findings that DOE had breached the Standard Contract and consistent with the "quid pro quo" arrangement set forth therein, "the ultimate burden of the government's breach [should] fall on the government, not [the] other utilities." Alabama Power Co. v. U.S. Dep't of Energy, 307 F.3d 1300, 1314 (11th Cir. 2002). This Court, likewise, must select an acceptance rate that reflects the Standard Contract's quid pro quo arrangement. In order to adequately and fairly assess damages, the Court must determine the performance to which the utilities were entitled in return for their payment of billions of dollars to DOE. According to the Government, the Standard Contract left the rate of DOE's performance solely to the discretion of DOE. However, the very concept of "quid pro quo" means that NPPD and other utilities are entitled to a tangible, concrete and commensurate obligation on the part of DOE in return for the substantial sums of money that have been and continue to be paid by the utilities to DOE. There is no genuine dispute that DOE, in attempting to administer the Standard Contract consistent with the purposes of the NWPA, intended to implement a steady state acceptance rate of 3,000 MTU annually in return for the payment of substantial fees by NPPD and other utilities to DOE. Indeed, a number of DOE documents published over the last two decades ­ some as recently as July 2004 ­ demonstrate that DOE assessed the adequacy of the fees charged the utilities under the Standard Contract based on an assumption that DOE would take SNF and/or HLW from utilities at a steady-state rate of 3,000 MTU annually. Since NPPD and the utilities paid their fees under the Standard Contract based on this assumption, DOE's reciprocal obligation should similarly be to take SNF and/or HLW at this rate.

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As discussed throughout this brief, in each of the decisions in which the Court of Federal Claims has substantively addressed arguments identical to those raised by the Government here, this Court has rejected the Government's motion for partial summary judgment on the acceptance rate issue. On June 17, 2005, the Government submitted a supplemental brief ("Gov't Supp. Br.") which purports to address those decisions. According to the Government's supplemental brief, the Court of Federal Claims' prior decisions denying the Government's motions for partial summary judgment were improper because they rendered the ACR and DCS "schedule terms" meaningless, thereby making the Standard Contract "virtually impossible to perform." As set forth in detail below, these decisions, however, do not challenge the viability of the ACR and DCS procedures as a scheduling mechanism; rather, they recognize that DOE's manipulation of those procedures did not result in a reasonable basis upon which to establish an acceptance rate. Recent actions by DOE re-starting and then re-suspending the DCS process simply confirm the notion that this process cannot be used as a basis for determining NPPD's damages in this case. The other arguments in the Government's supplemental brief ­ that the 3,000 MTU rate is unsupported by the record and that this Court cannot supply a missing, essential contract term ­ also are flawed. Moreover, this Court has already granted a spent fuel plaintiff's cross-motion for summary judgment on the acceptance rate, establishing a 3,000 MTU annual acceptance rate as a matter of law. See Indiana Michigan Power Co. v. United States, 57 Fed. Cl. 88, 99-100 (2003) ("Indiana Michigan II"). Accordingly, the Court should grant NPPD's cross-motion for partial summary judgment on the spent nuclear fuel acceptance rate and should deny the Government's contrary motion for partial summary judgment on that issue. 10

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I.

THE GOVERNMENT'S ARGUMENT THAT THE CONTRACT SHOULD BE INTERPRETED AS A REGULATION IS UNPERSUASIVE A. The Government, The Courts, The Utilities, And Congress All Acknowledge That The Standard Contract Is A Contract And Not A Regulation

In the Government's Reply, the Government acknowledges that the Standard Contract executed by DOE and NPPD is a contract. Gov't Reply at 5 ("We completely agree that each Standard Contract executed by an individual utility contract holder . . . is a `contract' between those parties."); id. at 9 ("we are not arguing, and have never argued, that each Standard Contract that DOE and an owner or generator of SNF and/or HLW executed is not a `contract'"); id. at 14 ("The terms of the Standard Contract are contained in a contract, and the proper method of interpreting those terms . . . is, regardless of the terminology used, still a question of contract interpretation and a matter of contract law . . . ."). The Government's statements are consistent with the intent of Congress. The NWPA explicitly states that DOE must "enter into contracts" with utilities for the "payment of fees" and the disposal of SNF. 42 U.S.C. § 10222 (2000); see also Northern States, 128 F.3d at 758 (stating that the NWPA "clearly demonstrates a congressional intent that [DOE] assume a contractual obligation to perform"); Alabama Power, 307 F.3d at 1314 (commenting that Congress empowered DOE to negotiate contracts "rather than imposing top-down regulations"). The position taken by the Government in its Reply is also consistent with the arguments made by the Government in its original motion for partial summary judgment. In its original motion, the Government presented arguments that relied on the contract doctrines of "parol evidence," "integration" and "conditions precedent." Indeed, as NPPD pointed out in its Opposition, other than one anomalous case, Commonwealth Edison Co. v. U.S. Dep't of Energy, 877 F.2d 1042 (D.C. Cir. 1989), every court which has considered the Standard Contract, including the United States Court of Appeals for the Federal Circuit ("Federal

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Circuit"), has applied contract law principles in its interpretation. See, e.g., Roedler v. U.S. Dep't of Energy, 255 F.3d 1347, 1351 (Fed. Cir. 2001) ("[a]pplying the federal common law that governs the contracts of the United States" in interpreting the Standard Contract), cert. denied, 534 U.S. 1056 (2001) (citation omitted). Notwithstanding the great majority of courts' and the Government's prior affirmation of the Standard Contract as a contract, the Government argues in its Reply that the Standard Contract should be interpreted as a regulation. Citing a few select cases, the Government argues that, where a contract incorporates a regulation, that portion of the contract that is a regulation should nonetheless be interpreted as a regulation. Commonwealth Edison, 877 F.2d at 1045-46; see also Santa Fe Eng'rs, Inc. v. United States, 801 F.2d 379 (Fed. Cir. 1986); Honeywell, Inc. v. United States, 661 F.2d 182 (Ct. Cl. 1981). However, the principle espoused in Commonwealth Edison, Honeywell and Santa Fe, that regulations incorporated into contracts should be subject to a more deferential standard of interpretation than other contract terms, appears to be a minority view at best. The majority view is that contract terms incorporated in a regulation should be interpreted on the same basis as other terms in the contract.7

According to the Government, a major distinction between interpreting a contract provision under regulatory principles instead of contract principles is that regulations are not subject to the rule of contra proferentum advocated by NPPD in this case. Gov't Reply at 7 n.3, citing Santa Fe, supra. Under the rule of contra proferentum, ambiguities in contract language are construed against the drafter of the language ­ in this case, the Government. In many cases, however, the rule of contra proferentum is applied even when the contract provision subject to interpretation stems from a regulation. See, e.g., United States v. Seckinger, 397 U.S. 203, 216 (applying the rule of contra proferentum against Government and to interpretation of a standard procurement regulation included in government contract); Hills Materials Co. v. Rice, 982 F.2d 514, 516-17 (Fed. Cir. 1992) (same); S.W. Aircraft, Inc. v. United States, 551 F.2d 1208, 1212 (Ct. Cl. 1977) (same); Schweigert, Inc. v. United States, 388 F.2d 697, 700-01 (Ct. Cl. 1967) (same); Instruments for Indus., Inc. v. United States, 496 F.2d 1157, 1161 (2d Cir. 1974) (same).

7

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Moreover, in previous decisions in which the Court of Federal Claims has addressed the very question at issue here, this Court has interpreted the Standard Contract as a contract, not a regulation. For example, in Indiana Michigan II, the Court found: "Congress was free to set up an entirely different system to finance and to monitor nuclear waste collection, according to normal regulatory procedures. The system that Congress chose in this case created contractual relationships among the parties." Indiana Michigan II, 57 Fed. Cl. at 96. Accordingly, this Court held that the Standard Contract should be interpreted "according to established contract principles." Id. In fact, this Court pointed out that the D.C. Circuit's decision in Commonwealth Edison (on which the Government relies) was "an exceptional case," and that several years after it decided Commonwealth Edison the D.C. Circuit actually "rebuffed DOE's efforts to interpret the Standard Contract by regulation." Id. at 95 (citation omitted). Judge Hewitt likewise applied the law of contract interpretation to the Standard Contract in Commonwealth Edison Co. v. United States, 56 Fed. Cl. 652 (2003), finding that Federal Circuit decisions are "consistent with the view that the Standard Contract is to be interpreted as a contract rather than a regulation in a suit for damages for breach." Commonwealth Edison, 56 Fed. Cl. at 660. The principle that deference should be afforded the Government's interpretation of regulatory contract provisions, moreover, is inapplicable to this case. The Government, the courts, Congress, and the utilities all consider the Standard Contract a contract, not a regulation. 8

This Court's recent opinion in Florida Power & Light Co. v. United States, 64 Fed. Cl. 37 (2005), which also applied to NPPD's case, may represent the only exception in this Court to this uniform treatment of the Standard Contract. In her January 31, 2005 decision, Judge Sypolt seemed to conclude that either the Standard Contract was not a contract or that the utilities were challenging statutorily-prescribed contract terms and, therefore, the Court of Federal Claims lacked jurisdiction to hear breach-of-contract claims based on the Standard Contract. See id. at 40. The Court subsequently reconsidered and vacated Judge Sypolt's opinion as to NPPD. March 30, 2005 Order.

8

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The fact that DOE chose to publish the contract in the Federal Register and to invoke notice and comment procedures typically used for regulations does not convert the Standard Contract into a regulation. As the D.C. Circuit in Commonwealth Edison itself acknowledged, "the mere appearance of a standard form in the Code of Federal Regulations does not perforce eliminate its identity as a contract." Commonwealth Edison, 877 F.2d at 1045. DOE, too, has admitted that, given the short timeframe in which DOE had to execute contracts with all utilities,9 it used the notice and comment procedures for negotiation of the Standard Contract as a matter of convenience; that process presented "the best opportunity for interested persons, particularly the affected parties, to participate." 48 Fed. Reg. 5,458, 5,459 (Feb. 4, 1983); Appendix to Plaintiff's Opposition to Defendant's Motion For Partial Summary Judgment Regarding The Rate Of Spent Nuclear Fuel Acceptance And Cross-Motion For Partial Summary Judgment On The Acceptance Rate ("Pl. App.") at 166. Accordingly, the principle for which Honeywell and its progeny stand, that a regulation incorporated into a contract should be interpreted as a regulation, does not apply in this case as there is no "regulation" that qualifies for such deferential interpretation. In addition, the Government has blurred a major distinction between the facts of this case and the facts of cases such as Honeywell and Santa Fe. In Honeywell and Santa Fe, the contracts incorporated a portion of an established set of agency regulations that were promulgated separate and apart from the contract at issue. The provision in dispute in those cases, furthermore, was a subset of a larger set of regulations. In those circumstances, the courts' position that the regulatory provision should be interpreted consistently with the other regulatory provisions and

9

See NPPD Opposition at 23-24 n.5.

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with the purposes behind the regulatory scheme as a whole may have been reasonable since the regulations existed before and were issued without regard to the particular contract in question. In this case, the opposite is true. Every substantive provision of the Standard Contract was published in the Federal Register and, if the Government's argument is taken at face value, must be considered the "regulation." The regulatory contract provision at issue in this case, therefore, is not part of an external agency regulation that should be interpreted in a manner consistent therewith; instead, the regulation and the contract are one and the same. Deferential interpretation of the Government's promises, therefore, is not an objective exercise; rather it is tantamount to taking the side of the Government in the dispute. For this reason, most courts will not defer to the Government's interpretation of a regulatory contract provision where the Government has an "economic stake" in the outcome of or is an adverse party in the litigation at issue. See, e.g., S. Cal. Edison Co. v. United States, 226 F.3d 1349, 1357 (Fed. Cir. 2000) ("such deference could lead the courts to endorse [the Government's] self-serving post-hoc reinterpretation of contracts"); see also Brown v. United States, 195 F.3d 1334, 1340 (Fed. Cir. 2000) (applying de novo review rather than deference to interpretation of agency regulation incorporated in a contract); Parker v. Office of Personnel Mgmt., 974 F.2d 164, 166 (Fed. Cir. 1992) ("post-hoc rationalizations will not create a statutory interpretation deserving of deference"). As previously noted by the Supreme Court, a court's deference "to what appears to be nothing more than an agency's convenient litigating position" is entirely inappropriate. Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 213 (1988). For these reasons, this Court should interpret the Standard Contract as a contract, not a regulation.

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B.

Application Of The Rule Of Contra Proferentum Is Appropriate In This Case

NPPD noted in its Opposition that the Supreme Court has held that the principle of contra proferentum "is appropriately accorded considerable emphasis" in cases where the Government was the drafting party "because of the government's vast economic resources and stronger bargaining position in contract negotiations." Blough v. United States, 17 Cl. Ct. 186, 189 (1989) (quoting Seckinger, 397 U.S. at 216). As an argument of last resort, the Government contends that the application of the rule of contra proferentum is inappropriate in this case because the nuclear industry was involved in the development of the Standard Contract, "drafting many of the provisions that appear in the Standard Contract." Gov't Reply at 17. The Government's contention that the Standard Contract was a document jointly drafted by DOE and the nuclear industry is a gross exaggeration. Various industry groups did meet with DOE before the proposed terms of the Standard Contract were published in the Federal Register and did suggest alternate language. Defendant's Supplemental Appendix To Defendant's Reply To Plaintiff's Opposition To Defendant's Motion For Partial Summary Judgment Regarding The Rate Of Spent Nuclear Fuel Acceptance And Opposition To Plaintiff's Cross-Motion For Partial Summary Judgment On The Acceptance Rate ("Gov't Supp. App.") at 612-13. As is readily apparent by comparing the industry's written comments on the proposed rule with the proposed terms of the Standard Contract actually published in the Federal Register, DOE only incorporated a very small fraction of the suggestions submitted by industry advocates.10

Indeed, to the extent DOE accepted any suggestions from the nuclear industry, the suggestions accepted by DOE were almost purely editorial and rarely reflected any substantive departure from DOE's original language. Compare Letter from S.P. Kraft, Edison Electric Institute, to Robert J. Mullen (Jan. 24, 1983), Gov't Supp. App. at 622-64, with 48 Fed. Reg. 5458, 5458-71 (Feb. 4, 1983), Pl. App. at 165-78.

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Furthermore, while the nuclear industry also submitted numerous comments to and had countless discussions with DOE regarding the proposed terms of the Standard Contract after their publication in the Federal Register, when it published the final terms of the Standard Contract DOE itself admitted that the terms set forth in the "final rule [remained] essentially the same as that described in the proposed rule." 48 Fed. Reg. 16,590, 16,590 (Apr. 18, 1983); Pl. App. at 180. In fact, as the D.C. Circuit in Commonwealth Edison observed, the nuclear industry "had no real choice but to agree to whatever terms the federal government offered." Commonwealth Edison, 877 F.2d at 1045; see also Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336, 1337 (Fed. Cir. 2000) (noting that the NWPA made "the entry of [the Standard Contracts] mandatory for the utilities"). Accordingly, application of the rule of contra proferentum is more than warranted in this case. See Semmes Motor, Inc. v. Ford Motor Co., 429 F.2d 1197, 1207 (2d Cir. 1970) (stating that "the rule of `construction against the draftsman' applies with particular force `in cases of standardized contracts in cases where the drafting party has the stronger bargaining position'") (citation omitted). II. THE "SCHEDULE TERMS" OF THE STANDARD CONTRACT, BY THEMSELVES, DO NOT YIELD AN APPROPRIATE AND BINDING ACCEPTANCE RATE ON WHICH THE COURT CAN RELY IN DETERMINING BREACH OF CONTRACT DAMAGES The Government argues that the Court should not ascertain an acceptance rate from extrinsic evidence because the parties agreed in the Standard Contract to "schedule terms" that would yield a delivery acceptance schedule. Gov't Reply at 20-39. Instead, the Government concludes that NPPD's damages resulting from DOE's breach of the Standard Contract should be limited to the SNF identified in the Delivery Commitment Schedules that DOE had approved. Id. at 39-51. The Government's argument that the Court should rely on the approved DCSs

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produced in accordance with the "schedule terms" of the Standard Contract, however, is severely flawed. The "schedule terms" in the Standard Contract, as now identified by the Government, did not, in fact, yield the SNF quantities covered by the DCSs on which quantities the Government asserts NPPD's breach of contract damages should be assessed. Rather, DOE unilaterally imposed key schedule terms of its own. Similarly, the Government's contention that approved DCSs were binding commitments is false; the Government did not even consider approved DCSs to be binding on the Government. For this reason, the schedule terms also cannot be regarded as an "an agreement to agree," as now argued by the Government. Accordingly, the Government is incorrect that the "schedule terms" of the Standard Contract, in and of themselves, provide sufficient information from which the Court can ascertain the appropriate acceptance rate for calculating breach of contract damages in this case. In order to accurately assess damages, the Court must determine the acceptance rate, a term which both parties acknowledge is missing from and should be included in the Standard Contract. A. The Schedule Process Implemented By DOE Did Not Comply With The "Schedule Terms" Set Forth In The Standard Contract

The Government claims that the Standard Contract creates a "contractual mechanism" for development of a utility's specific acceptance schedule. Gov't Reply at 24. This "contractual mechanism" allegedly has two phases; the first phase includes the issuance of an Annual Capacity Report ("ACR") and an Acceptance Priority Ranking ("APR") by the Government and the second phase includes the submission and negotiation of DCSs and Final Delivery Schedules ("FDSs") by the utilities. Id. at 24-25. Again, because these "schedule terms" are allegedly

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spelled out clearly in the Standard Contract, the Government argues that the Court should not itself establish an acceptance rate for the purpose of determining damages. The principal flaw in the Government's position is that the process actually established by DOE did not, in fact, comport with the "contractual mechanism" described by the Government and supposedly set forth in the Standard Contract. While DOE initially issued ACRs annually that projected, for planning purposes, the receiving capacity of the facility that DOE intended would store SNF, DOE unilaterally stopped issuing ACRs in 1995. As of 1991, furthermore, the acceptance rates listed in the ACRs were counterfeit.11 Consistent with the Standard Contract, utilities began submitting DCSs in 1992. Contrary to the Standard Contract, however, utilities were not allowed to submit DCSs identifying "all SNF and/or HLW [they wished] to deliver to DOE" as provided by the Standard Contract. See 10 C.F.R. § 961.11, Art. V(B)(1). Instead, in an instruction form generated by DOE independently from the Standard Contract, DOE dictated the amount that the utilities could offer for acceptance to DOE in the DCS forms. Specifically, in the 1991 ACR, DOE stated quite firmly that DOE would only approve DCS forms submitted in 1992 that were limited to the allocations set forth in the 1991 ACR. PFUF ¶ 130. Shortly thereafter, DOE issued separate instructions to utilities regarding the completion of the DCS forms. PFUF ¶ 132. These instructions repeated the admonition As argued in NPPD's Opposition, the rates and allocations set forth in the ACRs published by DOE in 1991, 1992 and 1995 reflected acceptance of SNF at an MRS, as limited by the 1987 Amendments to the NWPA ("Amendments Act"). At the time DOE published the first ACR in 1991, however, DOE did not ­ and could not ­ satisfy the legal conditions required for construction of such a facility. DOE also improperly applied the Amendments Act MRS capacity limits over the twelve-year period of DOE's anticipated breach, rather than the nominal three to five years originally contemplated by Congress. See NPPD Opposition at 59-63; Proposed Findings of Fact ("PFUF") ¶ 74.
11

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contained in the 1991 ACR to the effect that DOE would not approve the DCS forms submitted unless the amounts identified for delivery to DOE reflected the annual allocations set forth in the most recent ACR, at that time, the 1991 ACR. Id. These instructions, however, were completely at odds with the procedures set forth in the Standard Contract. As the Court held in Indiana Michigan II, "[t]he Standard Contract does not permit defendant to limit plaintiff's substantive rights in the guise of `instructions.'" Indiana Michigan II, 57 Fed. Cl. at 98. Moreover, in Commonwealth Edison Judge Hewitt questioned how, in light of DOE's instructions requiring utilities to submit DCSs reflecting the same allocation set forth in the ACR, DOE "intended in good faith to carry out the negotiating and revising aspects of the DCS process." Commonwealth Edison, 56 Fed. Cl. at 665. Accordingly, Judge Hewitt found that "DOE's use of the 1991 ACR to limit the amount of SNF requested by the utilities in their DCS submissions may be a breach of defendant's duty of good faith and fair dealing." Id. The Standard Contract neither stated nor contemplated that the ACR would provide the basis for the DCS process; as noted in NPPD's Opposition, there is absolutely no link between the ACR process and the DCS process in the language of the Standard Contract.12 The Standard Contract expressly states that the information included in the ACR is for "planning purposes." DOE reiterated this view in each of the ACRs it published, emphasizing that the information contained therein was "for planning purposes only and, thus, [was] not contractually binding on either DOE or the Purchasers." PFUF ¶ 81. Indeed, DOE even conceded during oral argument that the ACRs were for planning purposes. See Commonwealth Edison, 56 Fed. Cl. at 666.

The Standard Contract does state that after DOE publishes its annual APR, the utilities were to submit the DCS forms. See 10 C.F.R. § 961.11, Art. V(B)(1) (2002); PFUF ¶ 126. The APR and the ACR, however, are two distinct documents.

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Accordingly, the "contractual mechanisms" and "schedule terms" described by the Government and allegedly contained in the Standard Contract do not, in and of themselves, result in the approved DCSs on which the Government argues NPPD's damages calculations should be based. Any approved DCSs for utilities were the product of the Government's manipulation of the unrelated ACR and DCS terms set forth in the Standard Contract and the Government's unilateral imposition of an unacceptable and counterfeit acceptance rate through its instructions to utilities. B. DOE Did Not Consider Approved DCSs Binding Commitments

According to the Government, once DOE approved the DCSs submitted by the utilities, the approved DCSs represented binding commitments by both parties. Most importantly, the Government contends that an approved DCS represented the Government's commitment to accept the amount of SNF identified in the approved DCS. For this reason, the Government argues the approved DCSs must serve as the basis for the computation of NPPD's breach of contract damages in this case. The Government's argument conveniently ignores the critical fact that not even DOE considered the approved DCSs to be binding. Every ACR issued by DOE expressly stated that the information contained therein "is not contractually binding on either DOE or the Purchasers." PFUF ¶ 81. Indeed, in its Reply the Government itself states: "[w]e agree that the ACRs were issued for planning purposes . . . ." Gov't Reply at 51 n.30. The Government also admits in its Reply that "DOE could issue new ACRs that contained different proposed acceptance schedules." Id. Similarly, in the instructions issued by DOE to utilities regarding the completion of the DCS forms, DOE again explicitly advised utilities that "all DCSs previously approved by DOE may need to be reevaluated by DOE and the Purchasers." PFUF ¶ 135. DOE, in fact, did

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take it upon itself to "reevaluate" previously approved DCS forms. In the first quarter of 1997, DOE unilaterally voided a number of utility DCS submissions that had already been approved by both the then-Contracting Officer, Beth Tomasoni, and her technical representative at that time, David Zabransky. PFUF ¶ 144. Moreover, the Court has recognized that DOE did not consider the ACR and DCS procedures to be binding: The Contract contemplated that DOE would use these reports for planning purposes only. The Capacity Reports disclaimed any other purpose, stating that they were not binding on either party. Indiana Michigan II, 57 Fed. Cl. at 98 (citation omitted). Accordingly, it is clear that "[t]he parties could not have expected that planning documents would create binding contractual obligations." Commonwealth Edison, 56 Fed. Cl. at 666. Thus, while the Government for litigation purposes claims that the "schedule terms" resulted in binding schedule commitments, it is apparent that DOE, in fact, did not consider them so.13 C. The Standard Contract Does Not Have An "Agreement to Agree"

According to the Government, the "contractual mechanism" and "schedule terms" included in the Standard Contract created a process by which the parties agreed to negotiate and agree later on a delivery commitment schedule. Gov't Reply at 26. This "agreement to agree" argument was raised for the first time in the Government's initial reply and should be considered

The Standard Contract also contemplated that the utilities would submit Final Delivery Schedules after the DCS submissions. As explained in NPPD's Opposition, the FDS submissions could reflect more or less SNF than that identified on the initial DCS forms as well as identify SNF from a completely different site or utility. See NPPD Opposition at 46-47.

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yet another one of the Government's "self-serving post-hoc reinterpretations" of the Standard Contract. See S. Cal. Edison, 226 F.3d at 1357. This eleventh hour argument must fail for a number of reasons. First, as discussed in greater detail below, the parties did not have a "meeting of the minds" on the issue of whether the Standard Contact would contain an acceptance rate or whether they would defer negotiation and resolution of the acceptance rate until a later time. Tex. Instruments, Inc. v. United States, 922 F.2d 810, 815 (Fed. Cir. 1990). Second, even if the parties had agreed to agree later, they, in fact, did not do so. As noted above, although many utilities had their submitted DCSs approved, DOE did not consider approved DCSs binding and actually voided some previously approved DCS forms. Finally, even if the Court considers the Standard Contract to include an "agreement to agree," here, too, DOE failed to comply with this "agreement." According to the Government, an "agreement to agree" is considered valid because it creates "an obligation, upon both parties, to attempt to agree in good faith upon specific delivery and acceptance commitments." Gov't Reply at 26 (emphasis in original). The Government further states that an "agreement to agree" will be upheld because it places an obligation "on the parties to negotiate in good faith." Id. (quoting Aviation Contractor Employees, Inc. v. United States, 945 F.2d 1568, 1572 (Fed. Cir. 1991)) (emphasis in original). DOE, however, did not allow, permit or engage in any negotiations regarding the amount of SNF identified for acceptance in submitted DCS forms. Instead, DOE instructed utilities to use the allocations set forth in the most recently issued ACR in submitting the DCS forms. In the instructions, moreover, DOE expressly stated that the total quantity of SNF designated for delivery in a DCS could not exceed the ACR allocation; "exceeding the allocation [will] result in disapproval of the DCS(s)." Government Appendix 23

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("Gov't App.") at 150. DOE, in fact, summarily rejected any DCS forms that did not reflect the ACR allocations. See, e.g., Gov't App. at 431 ("These DCSs were disapproved, in part, because the Department determined that Item 2.7 (Metric Tons Uranium) of each DCS was incorrectly completed; specifically NYPA exceeded its acceptance capacity allocations for each DCS."). The requirement that the quantity of SNF designated for delivery in a DCS could not exceed the ACR allocation was "inconsistent with plaintiff's justified expectation that the ACRs were negotiable . . . ." Commonwealth E