United States v. Energy Solutions, Inc., Civ. No. 16–1056–SLR

• Decision Date: 13 July 2017
• Docket Number: Civ. No. 16–1056–SLR
• Citation: 265 F.Supp.3d 415
• Parties: UNITED STATES of America, Plaintiff, v. ENERGY SOLUTIONS, INC., Rockwell Holdco, Inc., Andrews County Holdings, Inc., and Waste Control Specialists LLC, Defendants.
• Court: U.S. District Court — District of Delaware

265 F.Supp.3d 415

UNITED STATES of America, Plaintiff,

v.ENERGY SOLUTIONS, INC., Rockwell Holdco, Inc., Andrews County Holdings, Inc., and Waste Control Specialists LLC, Defendants.

Civ. No. 16–1056–SLR

United States District Court, D. Delaware.

Signed July 13, 2017

Jennifer Hall, Esquire, United States Department of Justice, Wilmington, Delaware. Counsel for Plaintiff. Of Counsel: Julie Elmer, Esquire, R. Cameron Gower, Esquire, Bindi Bhagat, Esquire, Travis Chapman, Esquire, and John Lindermuth, Esquire of United States Department of Justice Antitrust Division, Washington, D.C.

Paul J. Lockwood, Esquire, Joseph O. Larkin, Esquire, and Veronica B. Bartholomew, Esquire of Skadden, Arps, Slate, Meagher & Flom LLP, Wilmington, Delaware. Counsel for Defendants EnergySolutions, Inc. and Rockwell Holdco. Inc. Of Counsel: Tara L. Reinhart, Esquire, Steven C. Sunshine, Esquire, Tiffany Rider, Esquire, and Steven Albertson, Esquire.

Donald E. Reid, Esquire and William M. Lafferty, Esquire of Morris Nichols Arsht & Tunnell, Wilmington, Delaware. Counsel for Defendants Andrews County Holdings, Inc. and Waste Control Specialists LLC.

ROBINSON, Senior District Judge

I. INTRODUCTION

The Department of Justice, Antitrust Division (the "government"), seeks to enjoin Rockwell Holdco, Inc. and its wholly owned subsidiary Energy Solutions, Inc. ("Energy Solutions") from acquiring Andrews County Holding, Inc. and its wholly owned subsidiary Waste Control Specialists LLC ("WCS," and collectively with the other defendants, the "defendants"). The government alleges that the acquisition would substantially lessen competition for disposal of low-level radioactive waste in violation of Section 7 of the Clayton Act, 15 U.S.C. § 18.

There is no dispute that the court has personal jurisdiction over all of the defendants. The court has subject matter jurisdiction pursuant to 15 U.S.C. § 25 and 28 U.S.C. §§ 1331, 1337(a), and 1345. The court held a bench trial from April 24 to April 28 and May 1 to May 5, 2017. Having considered the documentary evidence and testimony, the court makes the following findings of fact and conclusions of law pursuant to Fed. R. Civ. P. 52(a).

II. FINDINGS OF FACT

As an initial matter, this case is limited to radioactive waste generated by commercial entities, not the federal government. The commercial generators of radioactive waste include nuclear power plants, hospitals, and research facilities. (D.I. 203–1 ¶ 17; https://www.nrc.gov/reading-rm/doc-collections/fact-sheets/radwaste.html (last visited May 19, 2017)) Because nuclear power plants generate over 90% of commercial radioactive waste, the bulk of the evidence presented focused on those customers. (PTX 185 at -102; DTX 323 at -235). This case is further limited to low-level radioactive waste ("LLRW") which will be described in more detail below.

The facts are organized in the following manner: (1) a brief description of the defendants; (2) a description of the external factors that shape the disposal options available to commercial generators, which include the waste classification criteria, compact state agreements, and processing; (3) an explanation of the decommissioning process, which is not necessarily an external factor but does raise certain issues about radioactive waste disposal not present during normal operations; (4) findings regarding the customer self-help measures defendants argue should be considered an alternative to disposal, including storage, on-site burial, and waste minimization; and (5) a description of the various disposal options available to commercial generators. Finally, WCS has asserted a failing firm defense, so the court must make findings of fact regarding WCS's financial situation and efforts to find a buyer.

A. The Defendants

Energy Solutions is a Delaware corporation headquartered in Salt Lake City, Utah and wholly owned by Energy Capital Partners II, LP through its subsidiary Rockwell Holdco, Inc. (D.I. 203–1 ¶ 1; D.I. 212 at 345:6–12; D.I. 215 at 940:17–941:2) It offers generators of nuclear waste a wide range of services, including the decommissioning and remediation of nuclear sites and facilities, management of spent nuclear fuel, transportation of nuclear material, and processing and disposal of radioactive waste. (D.I. 203–1 ¶ 2) Energy Solutions' disposal facility is in Clive, Utah (the "Clive facility" or "Clive"). (D.I. 203–1 ¶¶ 39–44)

WCS is a Delaware limited liability company headquartered in Dallas, Texas that owns and operates radioactive waste disposal facilities in Andrews County, Texas. (Id. at ¶¶ 7 & 48) WCS is wholly owned by Valhi Inc. ("Valhi") through its subsidiary Andrews County Holding, Inc. ("ACH") (Id. at; PTX 608 at -468) Valhi owns a number of other companies in unrelated industries including NL Industries, Inc., Kronos Worldwide, Inc., CompX International, Inc., Tremont LLC, Basic Management Inc., and The LandWell Company. (Id. ) Valhi, in turn, is an indirect subsidiary of Contran Corporation ("Contran"). (Id. ) All of Contran's outstanding voting stock is held by a family trust established for the benefit of Lisa K. Simmons and Serena Simmons Connelly and their children. (Id. ) WCS owns and operates: (1) a commercial radioactive waste disposal cell (the "compact waste facility"); (2) a federal radioactive waste disposal cell; (3) a byproduct waste cell; and (4) a Resource Conservation and Recovery Act Subtitle C hazardous waste facility (the "exempt cell"). (D.I. 203–1 ¶ 48) Only the compact waste facility and exempt cell are relevant to this case.

B. External Factors

Certain external factors shape a generator's disposal options. Waste classification and compact state agreements create the outer-limits of where a commercial generator can dispose of radioactive waste. In contrast, processing expands a commercial generator's options by transforming waste in ways that allow it to go to a different disposal facility. Finally, decommissioning presents unique logistical challenges that eliminate certain disposal options not out of preference but economic feasibility. Each of these factors are discussed in turn.

1. Waste classification

The Nuclear Regulatory Commission ("NRC") regulates the disposal of radioactive waste. (D.I. 203–1 ¶ 22) The NRC may also delegate responsibility to regulate the radioactive waste within its borders to individual states with which it has entered into agreements ("agreement states"). (Id. at ¶ 35) There are currently 37 agreement states, including Texas, where WCS is located. (Id. at ¶¶ 35–36)

NRC regulations divide radioactive waste into two broad categories: high level radioactive waste ("HLRW") and low level radioactive waste ("LLRW"). (Id. at ¶ 10) HLRW consists of spent uranium fuel or waste materials remaining after spent fuel is reprocessed. (Id. at ¶ 11) LLRW is any waste that is not HLRW, and can take a variety of forms. (Id. at ¶¶ 12 & 13) During normal operations, LLRW generated by nuclear power plants primarily consists of resins, filters, and dry active waste (such as personal protective clothing). (D.I. 211 at 144:24–145:10; D.I. 216 at 1281:24–1283:4) During decommissioning, LLRW primarily consists of construction debris, soil, and large metal components like steam generators. (D.I. 211 at 145:3–10)

NRC regulations further divide LLRW into four classes: Class A; Class B; Class C; and Greater Than Class C. (Id. at ¶ 32) The boundaries of these classes are determined by the level of radionuclide concentration per cubic meter expressed as a sum of fractions ("SOF"). ( 10 C.F.R. § 61.55 ; D.I. 211 at 140:8–15) Class A has the lowest activity level and Greater Than Class C has the highest activity level. 10 C.F.R. § 61.55. Although the NRC sets different boundaries for different radionuclides, Class A usually has an SOF of less than one ("SOF<1") and Class B/C usually has an SOF greater than one ("SOF>1").¹ (Id. ; D.I. 211 at 140:8–15)

For each class of waste, NRC regulations impose different requirements governing the construction, operation, and closure of a disposal facility and the manner and method of disposal. 10 C.F.R § 61.55. The higher the class of waste, the more rigorous (and expensive) the requirements. Id. For example, waste disposed of at a Class A facility can be dumped directly on the ground and driven over by a bulldozer, whereas waste disposed of at a Class B/C facility must be sealed in steel-reinforced high-density concrete containers and buried at greater depths. (D.I. 215 at 1113:15–1114:21)

2. Compact state agreements

Pursuant to the Low–Level Radioactive Waste Policy Act enacted by Congress in 1980, each state is responsible for the disposal of LLRW generated within its borders. (D.I. 203–1 ¶ 23) A state can meet this obligation by establishing a licensed LLRW disposal facility in-state, or by entering into a compact agreement with another state that has a licensed LLRW disposal facility. 42 U.S.C. §§ 2021a – 2021j. In addition, compact states are allowed to exclude LLRW from non-compact states. Id. Therefore, under the compact system, a commercial generator's disposal options depend on its location.

Today, there are four active licensed LLRW disposal sites in the United States: (1) a Barnwell, South Carolina facility that belongs to the Atlantic Compact; (2) a Richland, Washington facility that belongs to the Northwest and Rocky Mountain Compacts; (3) Energy Solutions' Clive facility; and (4) WCS's compact waste facility. (D.I. 203–1 ¶¶ 39–44) Both Barnwell (as of 2008) and Richland exclude out-of-compact waste. (Id. at ¶¶ 39–40) This means that Energy Solutions' Clive facility and WCS's compact waste facility are the only licensed LLRW disposal sites that accept waste from the thirty-six states that do not belong to the Atlantic, Northwest, or Rocky Mountain Compacts (the "relevant states").² Although both Clive and the compact waste facility accept Class A waste, only the compact waste facility accepts Class B/C waste. (Id. at ¶¶ 41–42) As a...