# United States Court of Appeals **for the Federal Circuit**

__________________________

ENTERGY NUCLEAR FITZ PATRICK, LLC,
ENTERGY NUCLEAR INDI AN POINT 3, LLC,

AND ENTERGY NUCLEAR OPER ATIONS, INC., Plaintiffs

- Appellees,

v.
UNITED STATES, Defendant

- Appellant.

__________________________

2012

- 5059

__________________________
Appeal from the United States Court of Federal

Claims in case no. 03

- CV

- 2627, Judge Edward J. Damich.

___________________________
Decided: April 2, 2013

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J AY E. S ILBERG , Pillsbury Winthrop Shaw Pittman, LLP, of McLean, Virginia, argued for the plaintiffs

appellees. With him on the brief w ere A LEXANDER D.

T OMASZCZUK and E VAN D. W ESSER

. Of counsel on the

brief was L. J AGER S MITH

, J R . Jager Smith LLC, of Jac kson, Mississippi.

A NDREW P. A VERBACH

, Senior Trial Counsel, Civil D ivision, United States Department of Justice, of Washin gton, DC, argued for defendant

- appellant. With him on theENTERGY NUCLEAR v. US 2

brief were S TUART F. D ELERY , Acting Assistant Attorney General, J EANNE E. D AVIDSON , Director, and H AROLD D.

L ESTER

, J R

., Assistant Director

, M ARIAN E. S ULLIVAN

, Senior Trial Counsel, L ISA L. D ONAHUE , and S COTT S LATER , Trial Attorneys

. Of counsel on the brief was

J ANE K. T AYLOR , Office of General Counsel, United States Department of Energy, of Washington, DC.

__________________________

Before R ADER

, Chief Judge

, L OURIE and R EYNA

, Circuit Judges

.
R ADER

, Chief Judge

. This interlocutory appeal is the latest in a line of a ttempts 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 Clai ms struck the government’s affirmative defense. Entergy Nuclear FitzPatrick, LLC v. United States , 93 Fed. Cl. 739, 745

– 46 (2010) ( Entergy FitzPatrick I ); Entergy Nuclear FitzPatrick, LLC v. United States , 101 Fed. Cl. 464,

472

– 74 (2011) ( Entergy FitzPatr ick II ). 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.

I.

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.
See 42 U.S.C. §§ 10101

– 10270. Addressing the “national problem” of storage and disposal of these materials, th e Act imposed on the government the responsibility to provide permanent disposal, while the costs of that di s-ENTERGY NUCLEAR v. US 3

posal “should be the responsibility of the generators and owners of such waste and spent fuel.” Id. § 10131(a). 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 accordance with the provisions of this chapter.” Id. § 10131(a)(5).

The NWPA authorized the Secretary of Energy to e nter into contr acts with nuclear utilities for the acceptance, transportation, and disposal of SNF in return for payment of fees by the utilities. Id. § 10222(a)(1). The Act set specific requirements for these contracts, including when DOE was to start accepting the SN F and other radioa ctive waste. Section 302(a)(5) of the NWPA requires:

Contracts entered into under this section shall pr ovide that

— (A) following commencement of operation of a r epository, the Secretary shall take title to the high

level radioactive wast e or spent nuclear fuel i nvolved as expeditiously as practicable upon the request of the generator or owner of such waste or spent fuel; and

(B) in return for the payment of fees established by this section, the Secretary, beginning not later than January 31, 1998 , will dispose of the high

level radioactive waste or spent nuclear fuel i nvolved as provided in this subchapter.

42 U.S.C. § 10222(a)(5) (emphasis added).

Later, DOE promulgated a regulation containing a contract, known as the Standard Contract. Standard Contract for Disposal of Spent Nuclear Fuel and/or High

Level Radioactive Waste, 48 Fed. Reg. 16,590 (Apr. 18, 1983) (codified at 10 C.F.R. § 961.11). In compliance with the statute, the Standard Contract states that DOE will begin acceptance o f SNF “not later than January 31,ENTERGY NUCLEAR v. US 4

1998,” in exchange for fees paid by the utilities. 10 C.F.R. § 961.11, Art. II.

The NWPA also provided that the Nuclear Regulatory Commission “shall not issue or renew a license” to any nuclear utility unless the utility has entered into a co ntract with DOE, or DOE certifies that good faith negoti ations to enter such a contact are ongoing. 42 U.S.C. § 10222(b)(1)(A). As this court noted in Maine Yankee

, the NWPA “effectively made entry into such contracts mandatory for t he utilities.” Maine Yankee Atomic Power
Co. v. United States , 225 F.3d 1336, 1337 (Fed. Cir. 2000) ( Maine Yankee ). As a result, the nation’s nuclear util ities— including the Power Authority of the State of New York, the original owner of the Entergy nucl ear power stations at issue here

— entered into contracts with DOE and began making payments to DOE.

By 1994, DOE knew it would be unable to accept SNF by the January 31, 1998 deadline. It initiated a notice

and

- comment proceeding to address its obligat ions under the NWPA. DOE opened the proceeding with its “Notice of Inquiry” on “Waste Acceptance Issues” stating its “preliminary finding” that DOE had “no statutory oblig ation to accept [SNF] beginning in 1998 in the absence of an operational repository or other facility constructed under the [NWPA].” 59 Fed. Reg. 27,007, 27,008 (May 25, 1994); Indiana Michigan Power Co. v. Dep’t of Energy

, 88 F.3d 1272, 1274 (D.C. Cir. 1996) ( Indiana Michigan ) . In April 1995, DOE issued its “Final Interpretation” that acknowledged it would not begin accepting SNF by the January 31, 1998 deadline and took the position that it did not have an unconditional obligation to begin perfo rmance on that date. 60 Fed. Reg. 21,793, 21,794

– 95 (May 3, 1995). A number of parties pet itioned the United States Court of Appeals for the District of Columbia for review of the Final Interpretation.ENTERGY NUCLEAR v. US 5

The D.C. Circuit held “that section 302(a)(5)(B) [of the NWPA] creates an obligation in DOE, reciprocal to the utilities’ obligation to pay, to start disposing of the SNF no later than January 31, 1998.” Indiana Michigan , 88
F.3d at 1277. The D.C. Circuit found that DOE’s statut ory obligation to meet the 1998 deadline was “without qualification or condition.” Id. at 1276; Northern States

Power Co. v. Dep’t of Energy , 128 F.3d 754, 757 (D.C. Cir. 1997) ( Northern States ). Contrary to that ruling, and without seeking rehearing or further review by the S upreme Court, DOE informed the utilities that it would not begin accepting nuclear waste by the 1998 statutory
deadline. Northern States , 128 F.3d at 757. The utilities returned to the D.C. Circuit seeking a writ of mandamus compelling DOE to begin accept ing SNF on time. While that case was pending, DOE asserted that under the Standard Contract’s “Unavoidable Delays” clause, it was not obligated to provide a financial remedy for the delay in performance. Id. Article IX of the Standard Contract
contains provisions for “Delays.” Section A covers “Un avoidable Delays by Purchaser or DOE” and precludes a party’s liability for “damages caused by failure to perform its obligations hereunder, if such failure arises out of causes beyond the control and without the fault or negl igence of the party failing to perform.” 10 C.F.R. § 961.11, Art. IX(A).

The D.C. Circuit denied the specific writ requested by the utilities. While acknowledging that DOE’s approach
toward contractual remedies was inconsistent with th e NWPA and the court’s holding in Indiana Michigan , the D.C. Circuit found that the Standard Contract “provides a potentially adequate remedy if DOE fails to fulfill its obligations by the deadline.” Northern States , 128 F.3d at 756. In doing so, the D.C . Circuit rejected DOE’s arg ument that it was not obligated to accept nuclear waste because its failure was “unavoidable” within the meaningENTERGY NUCLEAR v. US 6

of the unavoidable delays clause. Id. at 757. Reaffirming that “the NWPA imposes an unconditional duty on DOE

to take the materials by 1998,” the D.C. Circuit issued a writ of mandamus “precluding DOE from advancing any
construction of the Standard Contract that would excuse its delinquency on the ground that it has not yet esta blished a permanent repository or an in terim storage program.” Id. at 756. Accordingly, our sister circuit ordered DOE “to proceed with contractual remedies in a
manner consistent with NWPA’s command that it unde rtake an unconditional obligation to begin disposal of the SNF by January 31, 199 8.” Id. at 760. The D.C. Circuit also issued a post

- judgment order clarifying the scope of
its Northern States decision. Northern States Power Co. v. Dep’t of Energy , No. 97

- 1064, 1998 WL 276581 (D.C. Cir. May 5, 1998). The court explained that it had “barred the DOE from interpreting the [Standard] Contract as impo sing only a contingent disposal obligation; such an inte rpretation, we ruled, would place the DOE in violation of its statutory duties under the [NWPA], which required it

to undertake an unco nditional obligation.” Id. at *1.

To date, the utilities continue to make payments t ota l ing 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 go vernm ent in the Court of Federal Claims seeking damages for DOE’s delay in accepting SNF. This court has a ddressed 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 bre ach of the

contract. See, e.g.

, Maine Yankee , 225 F.3d at 1342

– 43.

This court, sitting en banc, addressed the D.C. Ci rcuit’s Indiana Michigan and Northern States decisions in

2010. Nebraska Public Power Dist. v. United States , 590 F.3d 1357 (Fed. Cir. 2010) (en banc) ( Nebraska Public

Power ). In Nebraska Public Power , the governmentENTERGY NUCLEAR v. US 7

asserted the unavoidable delays defense against a claim for damages resulting from DOE’s failure to accept nucl ear waste as of January 31, 1998. First, this court co nfirmed t he D.C. Circuit’s jurisdiction over the utilities’ statutory claim arising under section 302 of the NWPA.
Id. at 1376. The D.C. Circuit’s mandamus order focused on statutory interpretation and did not impermissibly trespass upon the jurisdiction of the C ourt of Federal Claims to determine the parties’ contractual rights. Id. Accordingly, the D.C. Circuit’s mandamus order was afforded res judicata effect. Id.

The Nebraska Public Power opinion characterized the D.C. Circuit’s opinion as precluding the government’s use of the unavoidable delays defense to nullify its statutory obligations. This court explained that as “a matter of statutory construction, the D.C. Circuit interpreted DOE’s obligation to begin accepting nuclear waste in 1998 as
unconditio nal.” Id. at 1375. Thus, the D.C. Circuit’s holding that “the government’s failure to have a reposit ory ready by January 31, 1998, could not be excused as unavoidable delay,” was based on its interpretation of the
NWPA. Id.

In 2003, Entergy Nuclear FitzPatrick, LLC, Entergy Nuclear Indian Point 3, LLC, and Entergy Nuclear Ope rations, Inc. (collectively Entergy) sued the United States asserting that DOE partially breached contracts through its failure to accept SNF beginning on January 31, 1998.

Ente rgy FitzPatrick I , 93 Fed. Cl. at 741. Similar to other utilities, Entergy claimed the government’s breach caused
it to “incur substantial additional costs” associated with their SNF storage. Id. After a five year stay, the go vernment answered Entergy’s complaint with an affirm ative defense based upon the unavoidable delays clause in
the Standard Contract.ENTERGY NUCLEAR v. US 8

The Court of Federal Claims granted Entergy’s m otion to strike this defense based on the writ of mandamus issued by the D.C. Circuit in Northern Sta tes , which this court previously held was entitled to res judicata effect in
Nebraska Public Power

. Id. at 745

– 46. The Energy Department sought reconsideration based on this court’s
later decision in Southern Nuclear Operating Co. v. Uni ted States , 637 F.3d 1297 (Fed. Cir. 2011) ( Southern Nuclear ). According to the government, Southern Nuclear
held that the Northern States writ of mandamus does not bar assertion of the unavoidable delays defense to limit damages in the Court of Federal Claims. Entergy FitzPatrick II , 101 Fed. Cl. at 469. The trial court denied the
motion for reconsideration and sua sponte certified the question for interlocutory appeal pursuant to 28 U.S.C. § 1292(d)(2). Id. at 472

– 74. This court granted the petition for interlocutory appeal. Entergy Nuclear Fitzpatrick,
LLC v. United States , 449 F. App’x 947 (Fed. Cir. 2012).

II.

This court reviews legal conclusions of the Court of Federal Claims, including contract interpretation, de

novo. Yankee Atomic Elec. Co. v. United States , 536 F.3d 1268, 1272 (Fed. Cir. 2008). This court reviews the trial
court’s decision on reconsideration for an abuse of discr etion. Yuba Natural Resources, Inc. v. United States , 904 F.2d 1577, 1583 (Fed. Cir. 1990).

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 da mages for failing to accept SNF starting i n 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.ENTERGY NUCLEAR v. US 9

In Southern Nuclear , this court affirmed a Court of
Federal Claims’ holding that the government waived the unavoidable delays defense by raising it post

- trial.
Southern Nuclear , 637 F.3d at 1306. In Southern Nucl ear , the government argued that it reasonably believed it was barred by the Northern States mandamus order fr om raising the unavoidable delays defense, thus it could not have voluntarily or knowingly waived the defense at trial.
Id. at 1305. This court found that argument unpersuasive

and stated:

In our en banc decision in Nebraska Public Power

, we did not sugg est that the District of Columbia Circuit’s decisions in any way foreclosed arguing
in favor of the defense in the Claims Court. I ndeed, we considered the government's argument
and held that the District of Columbia Circuit had jurisdiction to enter the ma ndamus order and that
its decision in Northern States was entitled to res judicata effect on the issue of liability but that it did not “direct the implementation of any rem edy.”

Id. at 1306 (citation omitted). Yet, on the merits, the panel concluded that the argument was waived:

Because the government failed to raise the un avoidable delays clause here and because this fai lure was not compelled by the District of Columbia
Circuit’s mandamus in Northern States , it has
waived the defense. We need not reach the que stion posed by the Nebraska Public Power concu rrence as to whether the ‘unavoidable delays’ clause could provide a defense to expectancy da mages.

Id. at 1306.ENTERGY NUCLEAR v. US 10

In this case, the government argues that Southern
Nuclear interpreted Nebraska Public P ower and “expres sly held that, notwithstanding the mandamus order issued by the [D.C. Circuit] in Northern States , the United States has the right to invoke the [unavoidable delays] clause as a defense to damages.” Appellant’s Br. at 14.

The government’s argument is an extension of the
Nebraska Public Power concurrence, which responded to the lone dissent in that opinion. The Nebraska Public

Power dissent interpreted “the order in mandamus [to be] clearly directed to the interpretation of the Standard
Con tract (not the NWPA) and is thus not only outside the jurisdiction of the D.C. Circuit, but also infringes upon the Court of Federal Claims’s exclusive Tucker Act jurisdi ction over the administration of contract disputes.” Nebraska Public Power , 590 F.3d at 1377 (Gajarsa, J., dissenting). The dissent further elaborated that “the majority cannot avoid the obvious legal conclusion that this affects the damages imposed upon the United
States.” Id. at 1381. Put another way, “the D.C. Circuit
ordered what is , in effect, compensatory relief.

. . . The D.C. Circuit exceeded its jurisdiction in [precluding the DOE from relying on the unavoidable delays clause] and by its writ thus obligated the DOE to pay compensatory damages in a subsequent breach of contract action.” Id. at 1384. Nonetheless, the remainder of the en banc court upheld the mandamus order based on the D.C. Circuit’s authority to construe the NWPA and to direct DOE to comply with its statutory obligations. Id. at 1376.

In response, the Nebras ka Public Power concurrence, without citing to specific language in either the majority opinion or Northern States , contended that these cases do not “order[] the government to pay money damages (e xpectancy damages) for breach of the agreement.” Id. at

13 77 (Dyk, J., concurring). “Although I read the majority as establishing government liability, it remains open forENTERGY NUCLEAR v. US 11

the government to argue that the Unavoidable Delays clause bars a damages award (as opposed to some other contractual remedy such as restitut ion).” Id.

In contrast, the Nebraska Public Power majority held that the D.C. Circuit’s “order did not address any issue of contract breach, direct the implementation of any remedy, or construe any contract defense, except to the extent that the proposed interpretation of the contract would conflict with the statutory directive in section 302(a)(5).” Id. at 1376. That statutory directive is the performance co mmencement date of “not later than January 31, 1998.” See 42 U.S.C. § 10222 (a)(5)(B). “Beyond that implementation of its statutory ruling, the D.C. Circuit properly left all issues of contract breach, enforcement, and remedy to be determined in the litigation before the Court of Federal
Claims.” Nebraska Public Power , 590 F.3d at 1376.

In this case, the trial court recognized in its motion for reconsideration that “[i]mplicit in the [ Southern Nuclear] panel’s holding is that the unavoidable delays defense could have been raised despite the mandamus (but it wasn’t, so therefore it was waived).” Entergy
FitzPatrick II , 101 Fed. Cl. at 469. Nonetheless, the trial court concluded that under the controlling Nebraska
Public Power en banc decision, the government may not invoke an unavoidable delays defense.

The government differentiates between asser ting the unavoidable delays clause as a defense to liability and asserting this clause as a defense to damages . It does not dispute that Nebraska Public Power and the Northern
States mandamus preclude the clause as a defense to liability for failing to begin accepting SNF on January 31, 1998. Instead, the government contends it is not preclu ded from asserting the clause as a defense to monetary damages arising from that breach. Appellant’s Br. at 1.ENTERGY NUCLEAR v. US 12

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

- fre e card” concerning liability. Entergy Fit zPatrick II , 101 Fed. Cl. at 465. Rather, the government intends to use the defense to “circumscribe[ ] the amount of expectation damages.” Id. In particular, it argues that costs incurred by Entergy from the st ate of Nevada’s efforts to prevent licensing of a repository are covered by the unavoidable delays clause. “[Entergy’s] recovery should be reduced only by the amount that [Entergy] would have expended had the United States accepted SNF on a schedule delayed only by the length of time attributable to Nevada’s dilatory conduct.” Id. The go vernment 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
accept ance by at least 31 months, or from January 30, 1998 through at least August 2000.” Id. (emphasis in original). 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.” Id.

The government’s attempt to separate liability and damages highlights the reason that Northern States and
Nebraska Public Power clearly control the issue. By the government’s admission, the functional result of the unavoidable delays clause releases the government from its statutory burden of performance by January 1998. This it may not do.

In Nebraska Public Power , this co urt held that the D.C. Circuit had jurisdiction to review the government’s compliance with the NWPA and that the Northern StatesENTERGY NUCLEAR v. US 13

writ of mandamus should be afforded res judicata effect.
Nebraska Public Power , 590 F.3d at 1376. In Northern
States , the D.C . Circuit ordered:

DOE to proceed with contractual remedies in a
manner consistent with NWPA’s command that it
undertake an unconditional obligation to begin disposal of the SNF by January 31, 1998 . More specifically, we 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.

Northern States , 128 F.3d at 760 (emphasis added). For the second time, the D.C. Circuit expressly rejected DOE’s argument that “it does not have responsibility for the costs resulting from its failure to [begin accepting SNF by January 31, 1998] because it does not have an operational repository or other facility.” Id. The Northern States
court furth er elaborated “DOE cannot now render its obligation contingent, and free itself of the costs caused by its delay , by advancing the same failed position that we rejected [in Indiana Michigan ].” Id. (emphasis added).
The D.C. Circuit’s mandamus order was u nmistakably directed at both liability for and damages resulting from DOE’s failure to meet its statutory obligation. The ma ndamus order “preclude[d] DOE from advancing any co nstruction of the Standard Contract that would excuse its delinquency on the ground that it has not yet established a permanent repository or an interim storage program.”

Id. at 756.

This court addressed the scope of the Northern States
mandamus order in Nebraska Public Power . This court explained that “based on its interpretation o f the NWPA, the D.C. Circuit held that the government’s failure to have a repository ready by January 31, 1998, could not beENTERGY NUCLEAR v. US 14

excused as unavoidable delay .” Nebraska Public Power

, 590 F.3d at 1383 (emphasis added). This court further held, “[t]he D.C. Cir cuit’s order prohibited the government from using contract interpretation as a means of avoiding its statutory obligations under section 302, which the D.C. Circuit was authorized to do as a means of enforcing the statutory claim that was brought before it in the Indiana Michigan case.” Id. at 1365. As this court en banc elab orated, the D.C. Circuit issued its mandamus order to “bar DOE from doing under the rubric of contract interpret ation what section 302(a)(5)(B) prohibited as a matter of
statutory com pulsion.” Id. at 1372. Moreover, the en banc court expressly acknowledged that, although the D.C. Circuit’s writ was not itself “an award of damages,” the relief granted “could affect subsequent contract litig ation that in turn could result in an award for damages,”
id. at 1371 n.7, and that “the D.C. Circuit’s remedial order would affect later litigation over contract

- based rights.”
Id. at 1376. The mandamus order’s application to dama ges was thus contemplated in this court’s Nebraska Public

Power de cision.

In sum, Nebraska Public Power’s holding that the D.C. Circuit’s mandamus order is entitled to res judicata effect precludes use of the unavoidable delays clause as a defense to both liability and damages resulting DOE’s failure to meet the January 1998 deadline. Even if there were a contrary “implicit” finding in Southern Nuclear

, the en banc Nebraska Public Power decision controls. See Texas Am. Oil Corp. v. Dep’t of Energy , 44 F.3d 1557, 1561 (Fed. Cir. 1995) (en banc). The government had an u nconditional statutory obligation to accept SNF beginning by January 31, 1998. 42 USC § 10222 (a)(5)(B); Nebraska
Public Power , 590 F.3d at 1375

– 76; Northern States , 128
F.3d at 760.

Additionally, the government’s acceptance of liability for breaching its statutory obligation to accept SNF isENTERGY NUCLEAR v. US 15

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 un avoidable delays clause until a date after January 1998, then there is no basis for determining liability for partial breach beginning January 31, 1998.
See Entergy FitzPatrick II , 101 Fed. Cl. at 471

– 472; see also Portland Gen. Elec. Co. v. United States , 100 Fed. Cl. 46, 51 (2011) (“The two concepts are mutually exclusive; if damages do not accrue, it is because performance is excused, i.e., there is no breach.”).

III.

For the forgoing reasons, the trial court’s denial of the
motion to reconsider is affi rmed.

AFFIRMED