System Fuels, Inc. v. United States

73 Fed. Cl. 206, 2006 U.S. Claims LEXIS 288, 2006 WL 2831119
CourtUnited States Court of Federal Claims
DecidedSeptember 29, 2006
DocketNo. 03-2623C
StatusPublished
Cited by31 cases

This text of 73 Fed. Cl. 206 (System Fuels, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
System Fuels, Inc. v. United States, 73 Fed. Cl. 206, 2006 U.S. Claims LEXIS 288, 2006 WL 2831119 (uscfc 2006).

Opinion

OPINION AND ORDER

LETTOW, Judge.

This controversy involves a contract under which the United States Department of Energy (“DOE” or “the government”) undertook to collect and dispose of spent nuclear fuel and high-level radioactive waste that had been and would be generated in the course of production of electricity via nuclear means by System Fuels, Inc. and Entergy Arkansas, Inc., (collectively “System Fuels”). The case is similar to other so-called “spent nuclear [208]*208fuel” cases, including Indiana Michigan Power Co. v. United States, 422 F.3d 1369 (Fed.Cir.2005), and Tennessee Valley Authority v. United States, 69 Fed.Cl. 515 (2006). This court previously granted System Fuels a summary judgment on liability for a partial breach of contract. System Fuels, Inc. v. United States, 65 Fed.Cl. 163, 177 (2005).

Trial on damages in this case has been scheduled to commence on February 12, 2007, roughly four and one-half months from now. In preparing for trial, the parties have filed two sets of motions that bear on the scope and measure of damages at issue. By the first motion, plaintiffs seek to amend and supplement their complaint to address actual damages incurred by them through June 30, 2006. A second set of motions concerns proposed discovery by the government aimed at developing support for a setoff premised on plaintiffs’ deferral of a one-time fee payable to the government under the contract at issue. A hearing was held on the motions on September 13, 2006, and the last brief of the parties was filed September 26, 2006. The motions are being resolved expeditiously by the court in this opinion, such that the trial may proceed on schedule.

BACKGROUND

“Seeking to avoid the inefficient and potentially unsafe prospect of allowing individual utilities to recycle or dispose of their own [nuclear waste], Congress enacted the [Nuclear Waste Policy Act of 1982] to ‘establish the Federal responsibility, and a definite Federal policy, for the disposal of spent nuclear fuel.” Indiana Mich., 422 F.3d at 1372 (quoting Roedler v. Department of Energy, 255 F.3d 1347, 1350 (Fed.Cir.2001) (quoting 42 U.S.C. § 10131(b)(2) (2000))). The Nuclear Waste Policy Act of 1982 (“NWPA”), Pub.L. No. 97-425, 96 Stat. 2201 (Jan. 7, 1983) (codified as amended at 42 U.S.C. §§ 10101-10270) establishes a regime by which nuclear power generators contract with the Department of Energy for the government to accept, transport, and dispose of spent nuclear fuel and high-level radioactive waste. System Fuels, 65 Fed.Cl. at 165 (citing 42 U.S.C. § 10222(a)(1)).1 For this service, the NWPA provides that the contracts were to require the contracting utilities to pay a one-time fee for the electricity generated and sold prior to April 7, 1983, and a continuing fee based on electricity generated after that date. Id. (citing 42 U.S.C. § 42 U.S.C. 10222(a)(2)-(3)). The contracts were also to oblige the government to begin to dispose of spent nuclear waste no later than January 31, 1998. Id. (citing 42 U.S.C. § 10222(a)(5)(B)).2 The operators of nuclear power facilities necessarily had to enter into these contracts; otherwise they would lose their nuclear facility licenses. Id. (citing 42 U.S.C. § 10222(b)(1)(A)).

To implement the NWPA, the government promulgated a Standard Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste, codified at 10 C.F.R. § 961.11 (“Standard Contract”). See 48 Fed. Reg. 5,458 (Feb. 4, 1983). Among other things, the Standard Contract set forth three payment options available to utilities for the one-time fee and called upon the contracting utility to choose among the options within two years of contract execution. System Fuels, 65 Fed.Cl. at 166. Those options were payment in full by June 30, 1985 without interest, payment deferred over a period of 40 quarters with interest accruing on the unpaid portion, or payment prior to the first delivery of spent nuclear fuel with accrual of interest. Standard Contract, art. VIII.B.2. The Contract specified that the interest at[209]*209tendant to the latter two options was payable at “13-week Treasury bill rates.” Id. art. VIII.B.2.(a), (b).

On June 30, 1983, plaintiffs entered into a Standard Contract with DOE covering the spent nuclear fuel and high-level radioactive waste generated by the plaintiffs’ Arkansas Nuclear One power plant. System Fuels, 65 Fed.Cl. at 167. Plaintiffs chose the payment option under the Standard Contract that permitted them to defer payment of the onetime fee until “anytime prior to the first delivery” of nuclear waste. Id. at 167-68; Standard Contract, art. VIII.B.2.(b). Plaintiffs obligated themselves under this payment option to pay the one-time fee plus “[i]nterest calculated from April 7, 1983, to the date of the payment based upon the 13-week Treasury bill rate as reported on the first such issuance following April 7, 1983, and compounded quarterly thereafter by the 13-week Treasury bill rates as reported on the first such issuance of each succeeding assigned three-month period until payment.” Id. at 166 (quoting Standard Contract, art. VHI.B.2.(b)).

In December 1995, the plaintiffs submitted, and the government approved, a delivery commitment schedule that set 2001 as the first proposed delivery year for plaintiffs’ spent nuclear fuel. System Fuels, 65 Fed.Cl. at 168. Other deliveries were proposed for subsequent years. As with the other utilities party to a Standard Contract, the government has not collected any of the plaintiffs’ spent nuclear fuel for disposal. Plaintiffs allege that, as a result, they have been forced to mitigate damages by installing and operating on-site dry storage facilities for spent nuclear fuel. Pis.’ First Am. Comp. ¶ 21; Pis.’ Proffered Second Am. and Supp. Compl. ¶¶21, 37. The court’s prior grant of summary judgment in favor of plaintiffs on liability was premised on the lack of any genuine dispute of material fact respecting the government’s breach and plaintiffs’ resulting damage. System Fuels, 65 Fed.Cl. at 175-76.3 Determination of the quantum of plaintiffs’ allowable damages was remitted to trial.

In addition, the government had argued that its disposal responsibilities were conditioned on payment of both the one-time fee and the continuing fees and that the plaintiffs failed to satisfy the first condition although it had faithfully paid the continuing fee. System Fuels, 65 Fed.Cl. at 173. The court concluded, however, that the government’s delay in its performance under the Standard Contract had resulted in a temporary frustration of purpose which temporarily excused the plaintiffs’ fulfillment of the obligation to pay the one-time fee.

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Bluebook (online)
73 Fed. Cl. 206, 2006 U.S. Claims LEXIS 288, 2006 WL 2831119, Counsel Stack Legal Research, https://law.counselstack.com/opinion/system-fuels-inc-v-united-states-uscfc-2006.