Maine Yankee Atomic Power Co. v. US, PLAINTIFFS-APPELLEE

• Decision Date: 31 August 2000
• Docket Number: DEFENDANT-APPELLANT,PLAINTIFFS-APPELLEE,5140,5139,V,No. 99-5138,99-5138
• Citation: 225 F.3d 1336
• Parties: (Fed. Cir. 2000) MAINE YANKEE ATOMIC POWER COMPANY, CONNECTICUT YANKEE ATOMIC POWER COMPANY, AND YANKEE ATOMIC ELECTRIC COMPANY,UNITED STATES,
• Court: U.S. Court of Appeals — Federal Circuit

Page 1336

225 F.3d 1336 (Fed. Cir. 2000)

MAINE YANKEE ATOMIC POWER COMPANY, CONNECTICUT YANKEE ATOMIC POWER COMPANY, AND YANKEE ATOMIC ELECTRIC COMPANY,PLAINTIFFS-APPELLEES,

V.

UNITED STATES,DEFENDANT-APPELLANT.

No. 99-5138,-5139,-5140

U.S. Court of Appeals, Federal Circuit

August 31, 2000

Appealed from: United States Court of Federal Claims Senior Judge James F. Merow

Jerry Stouck, Spriggs & Hollingsworth, of Washington, Dc, argued for plaintiffs-appellees. Of counsel on the brief were Robert L. Shapiro, Peter J. Skalaban, Jr., and Michael R. Miner. Of counsel was Glenn S. Greene.

Harold D. Lester, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, Dc, argued for defendant-appellant. With him on the brief were David W. Ogden, Assistant Attorney General; and David M. Cohen, Director; and Marian E. Sullivan, Attorney. Of counsel on the brief were Marc Johnston, L. Dow Davis, IV, and Jane K. Taylor, Attorneys, Office of General Counsel, Department of Energy, of Washington, Dc.

Before Mayer, Chief Judge, Friedman, Senior Circuit Judge, and Newman, Circuit Judge.

The opinion of the court was delivered by: Friedman, Senior Circuit Judge.

In this appeal the United States challenges a decision of the United States Court of Federal Claims that three electric utilities may maintain a damage suit based on the government's alleged breach of a 1983 contract with the utilities by which the government agreed, beginning no later than January 1, 1998, to dispose of the nuclear waste that had been produced at the utilities' nuclear power plant. The government has announced that it will not be able to begin such disposal until at least 2010. The government moved to dismiss the complaint on the ground that the only way the utilities could proceed was by filing an administrative claim with a contracting officer under the contract's disputes provision. The Court of Federal Claims denied the motion, and we affirm.

I.

A. In 1982, recognizing the need to protect the public and the environment by providing for the disposal of the nuclear waste accumulating at civilian nuclear power plants around the country, Congress enacted the Nuclear Waste Policy Act of 1982 ("the Act"), 42 U.S.C. 10101-10270 (1994). Congress recognized that "the Federal Government has the responsibility to provide for the permanent disposal of high-level radioactive waste . . . in order to protect the public health and safety." Id. 10131(a)(4). Congress also provided that the "generators and owners" of the nuclear waste should bear "the costs of such disposal" and "have the primary responsibility to provide for [and] to pay the costs of, the interim storage of such waste." Id. 10131(a)(4), (5).

The Act authorized the Secretary of the Department of Energy ("the Department") to enter into contracts with utilities for the disposal of spent nuclear fuel ("SNF") and high-level radioactive waste. See 42 U.S.C. 10222(a)(1) (1994). The Act effectively made entry into such contracts mandatory for the utilities by prohibiting the Nuclear Regulatory Commission from issuing licenses to any operator who has not "entered into a contract with the Secretary" or who "is [not] actively and in good faith negotiating with the Secretary for a contract." 42 U.S.C. 10222(b)(1)(A) (1994). The Act required that all such contracts "shall provide that" the Department will dispose of the waste "beginning not later than January 31, 1998." Id. 10222(a)(5)(B).

The Department implemented that requirement by promulgating a Standard Contract for Disposal of Spent Nuclear Fuel, 10 C.F.R. 961.11 (1983).

The three appellants-Maine Yankee Atomic Power Company, Connecticut Yankee Atomic Power Company, and Yankee Atomic Electric Company (collectively "Yankee")-owned and operated a nuclear power plant. They have shut down this plant and begun to dismantle it. The main remaining part of this process is the disposal of spent nuclear fuel currently stored on the site.

The standard contract established the fees the utilities were to pay for the disposal service. These included a one-time fee, based on the amount of electricity generated prior to April 7, 1983, and an ongoing fee, based on the amount of electricity generated thereafter. Because it had closed its reactor prior to that date, Yankee had to pay only the one-time fee-more than twenty-two million dollars-which it did upon execution of the contract.

As the Act required, the contract (article II) obligated the Department to take title to, transport, and dispose of the nuclear waste stored at Yankee's facility beginning "not later than January 31, 1998."

The contract also contains several provisions dealing with delays, remedies and disputes, which are described in detail in part II, below. In brief, they provide that neither the government nor the utility "shall be liable under this contract 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 negligence of the party failing to perform" (article IX.A); that in the case of "any delay in the delivery, acceptance or transport of SNF . . . to or by DOE caused by circumstances within the reasonable control of either the Purchaser or DOE or their respective contractors or suppliers, the charges and schedules specified by this contract will be equitably adjusted to reflect any estimated additional costs incurred by the party not responsible for or contributing to the delay" (article IX.B); and that "[e]xcept as otherwise provided in this contract, any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Contracting Officer" (article XVI). The contract also provides that "[n]othing in this contract shall be construed to preclude either party from asserting its rights and remedies under the contract or at law" (article XI).

B. In 1994, the Department announced that it could not begin disposing of nuclear waste by January 31, 1998, as the contract required, because the repository it planned to build to store the waste would not be available until at least 2010. See Notice of Inquiry, 59 Fed. Reg. 27,007, 27,007-08 (1994). Even that date, the government has admitted, is "up in the air." One year later, in its "Final Interpretation of Nuclear Waste Acceptance Issues," the Department stated that "it does not have an unconditional statutory or contractual obligation to accept nuclear waste beginning January 31, 1998 in the absence of a repository or interim storage facility constructed under the Act." 60 Fed. Reg. 21,793 (1995). The Department has not yet accepted any waste from Yankee or any other utility.

Several utilities, not including Yankee, filed suit under the Act, 42 U.S.C. 10139, challenging this Final Interpretation in the United States Court of Appeals for the District of Columbia Circuit. That court held that the January 31, 1998 deadline was not conditioned on the availability of a repository, and vacated the Final Determination. See Indiana Michigan Power Co. v. United States, 88 F.3d 1272 (D.C. Cir. 1996). In response to this decision, the Department notified the utilities that it would not begin disposing of waste by the deadline. Citing the lack of a permanent repository or temporary storage facility, the Department characterized this failure to perform as an "unavoidable delay" under the contract, which was therefore not compensable.

A group of utilities, including Yankee, filed in the District of Columbia Circuit a petition for mandamus ordering the Department to meet the contractual deadline. The court refused to so order, stating that, if there were a delay, the utilities "must pursue the remedies provided in the Standard Contract in the event that DOE does not perform its duty to dispose of the SNF by January 31, 1998." Northern States Power Co. v. Department of Energy, 128 F.3d 754, 760 (D.C. Cir. 1997). The court, however, issued a writ of mandamus prohibiting the Department from relying on the unavoidable delays provision of the contract:

[W]e 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.

This necessarily means, of course, that DOE not implement 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." 10 C.F.R. 961.11, Art. IX.A.

Id. at 760.

C. Shortly after the court of appeals took that action, Yankee filed the present suit in the Court of Federal Claims. Count I of Yankee's four-count complaint alleged a "Partial Breach of Contract" by the Department's "default on its contractual obligation to promptly dispose of Yankee Atomic's SNF. . . , [a]s a result [of which], Yankee Atomic has incurred and will continue to incur additional costs associated with its extended storage of Yankee Atomic's SNF." Count II alleged that the Department had "breached" its "implied duty of good faith and fair dealing . . . by failing and refusing to dispose of Yankee Atomic's SNF, by failing and refusing to take appropriate steps to ensure that DOE would be able to dispose of Yankee Atomic's SNF, by failing and refusing to approve Yankee Atomic's delivery commitment schedules as proposed or to give priority to SNF from Yankee Atomic's shutdown plant, and by otherwise unreasonably failing to perform its duties under the contract." Count III asserted that the Department's "failure to dispose of Yankee Atomic's SNF" constituted a taking of Yankee's property for which it was entitled to just compensation. Count IV alleged that "[b]y requiring Yankee Atomic to bear costs that are the government's statutory financial responsibility, the government has caused an illegal exaction of those costs from Yankee...