Entergy Nuclear FitzPatrick, LLC v. U.S.

Wednesday, April 3, 2013

Entergy Nuclear FitzPatrick, LLC v. U.S.

Apr 2: In the U.S. Court of Appeals, Federal Circuit, Case No. 2012-5059. Appeal from the United States Court of Federal Claims. The Appeals Court summarizes indicating that the interlocutory appeal is the latest in a line of attempts by the government to raise the "unavoidable delays" defense in breach of contract actions stemming from its failure to accept Spent Nuclear Fuel (SNF) from the nation's nuclear utilities. In a combination of two decisions, the United States Court of Federal Claims struck the government's affirmative defense. The Appeals Court said, "Because the Court of Federal Claims correctly applied the Nebraska Public Power rule, this court affirms the decision to strike the government's unavoidable delays defense."

The Appeals Court reminds that in early 1983, the Nuclear Waste Policy Act (NWPA) established a comprehensive scheme to accept and dispose of SNF and other high-level radioactive waste (HLW) generated from the operation of nuclear power plants. Addressing the "national problem" of storage and disposal of these materials, the Act imposed on the government the responsibility to provide permanent disposal, while the costs of that disposal "should be the responsibility of the generators and owners of such waste and spent fuel." The Act also made the utilities responsible to provide and pay for SNF storage until the United States Department of Energy (DOE) accepts the material. In compliance with the statute, the Standard Contract states that DOE will begin acceptance of SNF "not later than January 31, 1998," in exchange for fees paid by the utilities. By 1994, DOE knew it would be unable to accept SNF by the January 31, 1998 deadline.

To date, the utilities continue to make payments totaling hundreds of millions of dollars each year, even though DOE has yet to accept any nuclear waste. So far, dozens of Standard Contract holders have sued the government in the Court of Federal Claims seeking damages for DOE's delay in accepting SNF. The Federal Circuit has addressed the Standard Contract on numerous occasions and held that the government's failure to begin accepting SNF as of January 31, 1998 is a partial breach of the contract.

The Appeals Court indicates, "The government's appeal challenges the scope of this court's en banc Nebraska Public Power decision. The government avers it may raise the Standard Contract's unavoidable delays clause as a defense limiting its damages for failing to accept SNF starting in January 1998. It argues, based on this court's later Southern Nuclear panel decision, that Nebraska Public Power only prevents the unavoidable delays clause as a defense to liability. . . In supplemental briefing before the trial court in this

case, the government outlined its intended use of the defense. It indicated that 'the United States does not propose to use the unavoidable delays defense as a get-out-of-jail-free card' concerning liability. . .

"The government specifically asserts, 'the unavoidable delays that DOE has encountered as a result of the [sic] Nevada's conduct would have delayed the commencement of SNF acceptance by at least 31 months, or from January 30, 1998 through at least August 2000.' . . . For that reason, the government contends that Entergy's damages for SNF storage resulting from the government's delay in performance 'did not commence until September 2000 -- the earliest that performance could have begun given the Unavoidable Delays that DOE encountered.'"

In sum, the Appeals Court concludes, "The government had an unconditional statutory obligation to accept SNF beginning by January 31, 1998. Additionally, the government's acceptance of liability for breaching its statutory obligation to accept SNF is inconsistent with its contention that the unavoidable delays clause allows a reduction in damages resulting from its failure to begin acceptance of SNF in January 1998. This court has expressly established that breach of the Standard Contract began on January 31, 1998. Maine

Yankee, 225 F.3d at 1341–42. In contrast, as the Court of Federal Claims has noted, if performance is excused under the unavoidable delays clause until a date after January 1998, then there is no basis for determining liability for partial breach beginning January 31, 1998. . . the trial court's denial of the motion to reconsider is affirmed."

Access the complete opinion (click here). [#Haz/Nuclear, #Energy/Nuclear, #CAFed]

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