Opinion ID: 209714
Heading Depth: 1
Heading Rank: 4

Heading: Brief History of the Standard Contract

Text: On January 7, 1983, Congress enacted the Nuclear Waste Policy Act of 1982, Pub.L. No. 97-425 (codified at 42 U.S.C. §§ 10101-10270) (NWPA or Act). The Act set forth four objectives: 1) to develop repositories to protect the public and the environment from SNF and HLW; 2) to establish federal responsibility and a definite federal policy for the entire project; 3) to define the relationship between the federal government and the states and tribes with respect to SNF/HLW disposal; and 4) to establish a Nuclear Waste Fund, financed by the nuclear utilities, to pay for the waste disposal. 42 U.S.C. § 10131(b) (2000). The Act assigned DOE the obligation to begin acceptance and disposal of the utilities' SNF and HLW not later than January 31, 1998. Id. § 10222(a)(5)(B). In return, the Act obligated the utilities to pay fees in an amount equivalent to an average charge of 1.0 mil per kilowatt-hour for electricity generated by ... [SNF], or ... [HLW] derived therefrom. Id. § 10222(a)(3). The NWPA also required DOE to take title to the SNF and HLW as expeditiously as practicable. Id. § 10222(a)(5)(A). To accomplish these tasks, the Act required DOE to enter into contracts with the nuclear utilities no later than June 30, 1983. Id. § 10222(b)(2)(A). The utilities had little choice but to enter into these contracts, because the Act also precluded the Nuclear Regulatory Commission (NRC) from issuing licenses to utilities that had not contracted with DOE for SNF/HLW disposal or were not in the process of good-faith negotiations for doing so. See id. § 10222(b)(1)(A); Me. Yankee, 225 F.3d at 1337. In April 1983, DOE promulgated the Standard Contract for Disposal of Spent Nuclear Fuel and/or High Level Radioactive Waste (Standard Contract) after a lengthy notice and comment process. Various utilities and industry groups, among others, provided specific suggestions to DOE during this process. Although numerous commentators advocated the inclusion of a firm commitment from DOE on its rate of disposal, DOE instead agreed to take title to SNF/HLW as expeditiously as practicable following commencement of operation of a repository. 10 C.F.R. § 961.11 (1984). The Standard Contract also included provisions setting priority for acceptance of waste (generally through an oldest fuel first (OFF) scheme) and allowed utilities to swap approved delivery commitment schedules (the Exchanges provision). In lieu of a firm rate for SNF/ HLW acceptance and disposal, the Standard Contract required DOE to issue annual capacity reports (ACRs) beginning no later than July 1, 1987. These reports set forth projected annual receiving capacity for DOE facilities and annual acceptance rankings, including projected capacity information for the first ten years of operation for the repository. In addition to the annual reports, the Standard Contract also required DOE to issue annual acceptance priority rankings beginning April 1, 1991. In response to these priority reports, the Standard Contract obligated each utility to submit a delivery commitment schedule to DOE to identify the SNF/HLW ready for delivery to DOE beginning sixty-three months after the DCS submission. This court refers to this entire process as the acceptance capacity schedule or ACS process. On December 20, 1983, DOE set forth its plan for a firm schedule for waste acceptance and removal beginning no later than the statutorily-mandated date (January 31, 1998). Specifically, the schedule was designed to provide an acceptance rate in the first five years such that no utility will have to provide additional storage capacity after January 31, 1998. Subsequently, the acceptance rate will be equal to or greater than the actual discharge rate of spent fuel each year. PG & E I, 73 Fed.Cl. at 355 (quoting 1983 Mission Plan). The preliminary schedule in this plan envisioned that DOE would begin accepting waste in 1998 at a rate of 1,800 metric tons of uranium (MTU) per year until 2003, when DOE would begin accepting 3,000 MTU/year. This 1983 plan also cautioned that completion of a geologic repository by 1998 was optimistic, requiring resolution of several regulatory, institutional, and technical challenges. As a contingency in case the permanent repository would not be available to meet the 1998 deadline, the plan stated that DOE would request congressional authorization to build a monitored retrievable storage (MRS) facility as an interim solution. See, e.g., id. at 354-56. The trial court found in effect that the nuclear industry, in the guise of Edison Electric Institute Vice President Loring Mills, understood the preliminary schedule in the 1983 plan as aspirational, not binding. Indeed, the trial court quoted Mr. Mills' public announcement from 1983 that [w]e really were never under an illusion that we would get a fair and equitable contract with DOE, with firm commitments and detailed performance standards, with penalties for non-performance. Id. at 358. In June 1985, the DOE issued another plan with two different schedules, one assuming an MRS facility, and one not. The schedule contemplating an MRS called for a pre-1998 acceptance rate of 2,200 MTU/ year, and 3,000 MTU/year starting in 1998. The non-MRS schedule called for 400 MTU/year beginning in 1998, ramping up to 3,000 MTU/year within five years. This 1985 plan noted that these schedules were illustrative ... only, and underscored the possibility of considerable variation. Id. at 359 (quoting 1985 Mission Plan). In 1987, DOE submitted an amendment to its 1985 plan to Congress. This 1987 plan informed Congress that opening a permanent geologic repository by 1998 was no longer a realistic goal and recommended authorization for DOE to use an MRS facility to meet its obligations to accept SNF/HLW as specified by the Act. The 1987 amended plan also revised the waste acceptance schedule, estimating acceptance at a rate of 1,200 MTU/year in 1998, assuming availability of an MRS facility, and ramping up to 2,000 MTU/year in 2003 and eventually to 2,650 MTU/year in 2004. These numbers matched DOE's annual capacity report (ACR) process numbers for that year. To dispel doubts about DOE's commitment to a permanent repository, DOE proposed that the MRS facility would accept no waste until the NRC authorized construction of a permanent repository. Commenting on the draft of this 1987 plan, the Edison Electric Institute opposed this linkage because it would raise a significant question whether DOE will be able to meet its statutory and contractual commitment to begin to accept spent fuel in January 1998. Id. at 361 (quoting EEI comments regarding 1987 Mission Plan Amendment). On December 22, 1987, Congress amended the NWPA by passing the Nuclear Waste Policy Amendments Act of 1987 (1987 Amendments Act), Pub.L. No. 100-203, §§ 5001-65, 10 Stat. 1330 (codified in scattered sections of the NWPA, 42 U.S.C. §§ 10101-10270). The 1987 Amendments Act directed DOE to develop a single permanent geologic repository at Yucca Mountain, and to cease activities at other sites. The 1987 Amendments Act also included a linkage provision. But unlike DOE's proposed linkage between MRS facility operation (i.e. acceptance of waste) and permanent storage authorization, the Act precluded MRS facility construction until the NRC authorized a permanent storage repository. The 1987 Amendments Act also capped the total storage at an MRS facility at 10,000 MTU. Because of these provisions, the industry quickly realized that DOE would be unable to get an MRS facility in place in time to meet its 1998 acceptance obligation. While appealing to Congress to reconsider the linkage provisions of the 1987 Act, DOE issued additional ACRs in 1988, 1990, and 1991. In 1991, DOE issued another amendment to its plan. This amended plan proposed an MRS facility, but acknowledged that repeal of the 1987 linkage provision would have to occur first. The 1991 plan set forth a projected waste acceptance schedule that matched DOE's 1991 ACR process numbers. Assuming an MRS facility in place, the plan set the acceptance rate at 300 MTU/year in 1998, ramping up to 875 MTU/year in 2001. After 2001, this plan held the acceptance rate steady until a permanent repository would come online in 2010, at which time the MRS would begin accepting 1,800 MTU/year. Like the earlier plans and amendments, this schedule was not guaranteed. Instead, DOE explained that the projected capacity would provide enough Federal storage, between the start of operations at the MRS facility and at the repository, to substantially reduce the need for utilities to add new storage capacity at existing facilities after 1998. PG & E I, 73 Fed.Cl. at 363 (quoting 1991 Draft Mission Plan Amendment) (emphasis added). Congress has not modified the linkages in the 1987 Amendments to the NWPA. Without a licensed permanent repository, DOE has never built an MRS facility. In 1995, DOE issued a final interpretation of waste acceptance issues, concluding that DOE had no statutory or contractual obligation to accept SNF/HLW beginning on January 31, 1998 in the absence of a facility constructed under the NWPA and its 1987 amendments. Several utilities challenged this interpretation. The United States Court of Appeals for the District of Columbia Circuit vacated DOE's Final Interpretation, holding that DOE does have a statutory obligation reciprocal to the utilities' obligation to pay to dispose of waste beginning January 31, 1998. Ind. Mich. Power Co. v. Dep't of Energy, 88 F.3d 1272, 1277 (D.C.Cir.1996). Because DOE's failure to perform constituted a partial breach of the Standard Contract, PG & E's suit in the Court of Federal Claims focused on damages owed to PG & E by the United States to compensate for the expenses incurred as a result of DOE's partial breach.