NUCLEAR POWER COMPANIES SUING THE DEPARTMENT OF ENERGY: A LEGAL REMEDY MAGNIFYING NUCLEAR ENDS

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NUCLEAR POWER COMPANIES SUING THE DEPARTMENT OF ENERGY: A LEGAL REMEDY MAGNIFYING NUCLEAR ENDS Leah Ayala* I. INTRODUCTION Many of our nation's people would argue that progress must be made in the construction
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NUCLEAR POWER COMPANIES SUING THE DEPARTMENT OF ENERGY: A LEGAL REMEDY MAGNIFYING NUCLEAR ENDS Leah Ayala* I. INTRODUCTION Many of our nation's people would argue that progress must be made in the construction of a permanent nuclear waste repository.' We must ask ourselves, however, at what cost the present delays should end. Should we rely on contractual deadlines and politics rather than science? Should we forsake adequate environmental, geological, and engineering studies in our efforts to speed up the process? Should we hurry the process at the risk of construction defects? If there is not enough money to safely construct the facility, should the government merely do the best it can with what it has and move on with the process? While it may seem unlikely that anyone would answer these ques- * J.D., William S. Boyd School of Law (2002). Leah Ayala is currently and associate in the Las Vegas office of Lionel, Sawyer, & Collins. I While the State of Nevada, several environmental groups, and many scientists oppose the hastening of construction at Yucca Mountain, the only potential repository site currently being considered, many others, including Congress, the DOE, the nuclear power industry, and several other states where nuclear power is generated, are pushing for immediate construction of a repository. 42 U.S.C (a) (1997). Compare Scott Allen, If We Can't Bury Nuclear Waste in Nevada, Where Can We?, BOSTON GLOBE, May 17, 1993, at 25, available at 1993 WL (Nevadans oppose the Yucca Mountain repository 3-to-I and the state refused a $100 million per year offer from the federal government to give up their veto right against the plan.); David Lazarus, Diablo Canyon Quandary/Plans for open-air storage of spent fuel rods receive environmentalists' reluctant approval, SAN FRANCISCO CHRONICLE, Nov. 7, 2000, at A1, available at 2000 WL (Klaus Schumann, a Green Party activist and member of the San Luis Obispo County Nuclear Waste Management Committee, states that dry storage at the utility sites is safer than transporting the waste to a central repository.); Governors Push for Removal of Spent Fuel, BANGOR DAILY NEWS, Bangor, Me., Sept. 30, 2000, available at 2000 WL [hereinafter Governors Push] (governors of Connecticut, Massachusetts, and Maine pushing for removal of wastes from their states); Failure to Meet Nuclear Waste Storage Deadline: Hearing Before the Comm. On Energy & Natural Resources, 106th Cong. (2000) (statement of John W. Rowe, Chairman, Unicorn Corp. and Commonwealth Edison), available at 2000 WL [hereinafter Rowe Testimony] ( construction of the repository [must begin] so that it is opened at the earliest possible date ); Steve Cook, Radioactive Waste: Murkowski Says DOE Pact on Waste Will Deprive Permanent Facility of Funds, ENVT. RPTR. (BNA) No. 31, at 2135 (Oct. 6, 2000) [hereinafter Radioactive Waste] (Republican Senator Frank Murkowski of Alaska, Chairman of the Energy and Natural Resources Committee, encourages speeding up construction of the Yucca Mountain facility.). See infra notes for information on several scientists' views of the Yucca Mountain project. NEVADA LAW JOURNAL [Vol. 3:449 tions in the affirmative, these issues will likely arise in cases brought by nuclear power companies against the United States Department of Energy (DOE). The nuclear power companies are magnifying the already serious problem of nuclear waste disposal by asking for damages - damages that will take away from the funds necessary to build a nuclear waste repository. The power companies' claims are based on the DOE's failure to begin removal of nuclear waste from power company properties by the January 31, 1998 contractual deadline. 2 The potential liability arising from these cases is between $2 billion and $80 billion. 3 This liability could result in billions of dollars taken away from the Nuclear Waste Fund; billions of dollars unavailable for the construction of a permanent nuclear waste repository. 4 If there is less money available for construction, additional funding must be allocated from elsewhere. If additional funding is not allocated, either construction delays will continue or construction must be conducted below proposed standards. Governmental attempts to prevent additional damages from accruing will likely result in the government pushing forward with construction, not only with less funding than projected, but also on a tighter schedule. There is a risk that politics will win over science, with Congress discontinuing research and ignoring studies indicating Yucca Mountain is not an appropriate location for a permanent nuclear waste repository. 5 These lawsuits would result in a disastrous downward spiral: more delays causing greater damages, greater damages resulting in less money in the Nuclear Waste Fund, less money in the Nuclear Waste Fund creating 2 See Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336 (Fed. Cir. 2000); N. States Power Co. v. United States, 224 F.3d 1361 (Fed. Cir. 2000). 3 See, e.g., Radioactive Waste: DOE Reaches First Pact With Utility Over Possession of Spent Nuclear Fuel, ENVT. RPrR. (BNA) No. 31, at 1568 (July 28, 2000) [hereinafter Radioactive Waste] (Steve Unglesbee of the Nuclear Energy Institute estimated liability ranging up to $60 billion); Waste Ruling Blow to DOE, 20 MODERN POWER SYSTEMS 11 (2000), available at 2000 WL (estimates damages running as high as $50 billion); Tony Batt, Energy Official Says Liability Overstated, LAS VEGAS REv.-J., Sept. 21, 2000, at 4B, available at 2000 WL (citing nuclear industry estimates between $40 billion and $80 billion; government estimates provided by Mary Anne Sullivan, general counsel for the DOE, falling much lower at approximately $3 billion; and estimates of Senator Frank Murkowski (R-Alaska) reaching up to $80 billion); Tony Batt, Yucca Mountain Project: Budget cuts may delay license, LAS VEGAS REv.-J., Sept. 29, 2000, at 5B (citing Senator Murkowski estimating damages between $38 billion and $61 billion); Cook, supra note 1 (Senator Murkowski making lower estimates of damages, totaling only $60.9 billion); Mark Hand, The Saga of Yucca Mountain, PUB. UTHL. FORT., Mar. 1, 2002, at 38 (citing DOE estimates of around $2 billion and nuclear industry estimates of $50 billion). I Section 302(c) of the NWPA directed the U.S. Treasury to establish a Nuclear Waste Fund. Disposal fees paid by nuclear power companies to the DOE are required to be deposited into this fund, and can only be used for certain enumerated waste disposal activities. 42 U.S.C (c)-(d). As fees paid into the Nuclear Waste Fund are based directly on the amount of nuclear energy produced by the industry, reductions in input based on credits given to companies, or damages paid through settlement or judgments, would reduce the total available funding to construct a permanent repository or fulfill other enumerated purposes. - See, e.g., Failure to Meet Nuclear Waste Storage Deadline: Hearing Before the Comm. On Energy & Natural Resources, 106th Cong. (2000) (statement of Ivan Itkin, Director of DOE Office of Civilian Radioactive Waste Management), available at 2000 WL [hereinafter Itkin Testimony] (they are nearing completion of the scientific and engineering work ). See infra notes for explanation of how negative results are being ignored. Winter 2002/2003] NUCLEAR POWER COMPANIES SUING DOE 451 more delays and shifting the focus from safety and science to politics and deadlines. II. BACKGROUND FACTS AND LEGAL DOCTRINES A. Nuclear Energy: A Major Power Player in the United States As energy supply and cost concerns have increased in recent years in the United States, 6 the nuclear power industry's role as a significant provider of low cost energy has also increased. 7 In 1999, the nuclear power industry supplied approximately twenty percent of the nation's energy, 8 reaching record levels of production. 9 Nuclear Energy Institute figures show that nuclear energy production was 5.1 percent higher for the first nine months of 2000 than the same months in Industry leaders estimate that total 2000 production was four percent higher than the 1999 production levels. 11 Production increases have occurred despite a decline in the number of operational power plants. No new plants have opened in the United States since 1996,12 while four have shut down during this period. 13 These production increases have resulted because U.S. nuclear producers have steadily increased their actual level of production relative to production capacity since the 1980s, a figure known as the capacity factor. 14 Nuclear power producers could continue this trend, as plants reached only an 89.6 percent capacity factor in 2000.'5 Nuclear energy is the only major form of domestic energy that has not undergone substantial price increases in recent months. 16 Marvin Fertel, Senior 6 Neville Nankivell, Nuclear Renaissance... : As concern grows over rising fuel costs and reliable energy supplies, nuclear power is getting a second look. So are the arguments against it, NATIONAL POST, May 4, 2001, at C19, available at 2001 WL Id. 8 Rowe Testimony, supra note 1. John W. Rowe, as the Chairman, President, and CEO of Unicorn Corporation and Commonwealth Edison, reflects a nuclear industry view of the role of nuclear power in our nation's energy supply. See also Nuclear Energy Surpasses Coal- Fired Plants as Leader in Low-Cost Electricity Production, Nuclear Energy Institute, at (last visited Feb. 24, 2003) [hereinafter Nuclear Energy] (based on 1999 figures from the DOE's Energy Information Administration). 9 Nuclear Energy, supra note Id. 11 Id. 12 Nuclear Data: U.S. Nuclear Power Plants, Nuclear Energy Institute, at org/doc.asp?catnum=3&catid=13 (last visited Feb. 24, 2003) [hereinafter Nuclear 13] (A total of five plants opened in the 1990s: three in 1990, one in 1993, and one in 1996.). 13 Nuclear Data: Reactors Shut Down/Decommissioned, Nuclear Energy Institute, at (last visited Feb. 24, 2003) [hereinafter Nuclear 19] (Two plants were shut down in 1997 and two in A total of ten plants have shut down since 1989.). 14 Nuclear 13, supra note Id. 16 Rowe Testimony, supra note 1. See also Nuclear Energy, supra note 8 (Utility Data Institute figures show that nuclear energy was the lowest cost major fuel source for 1999 at 1.83 cents per kilo-watt hour (kwh). This was lower than 1998 production costs. These NEVADA LAW JOURNAL (Vol. 3:449 Vice President of the Nuclear Energy Institute, attributes the continuing low prices of nuclear energy to low production costs. 7 B. The Nuclear Waste Policy Act On January 7, 1983, Congress enacted the Nuclear Waste Policy Act of (NWPA) in an effort to dispose of the nation's nuclear waste while addressing the safety of the public and environment. 9 The NWPA makes the federal government responsible for disposal of the waste, and the nuclear industry responsible for disposal costs. 20 The NWPA effectively required nuclear power companies to enter into contracts with the DOE for the disposal of spent nuclear fuel and high-level nuclear waste. 2 1 Specifically, the contracts were required to provide that following commencement of operation of a repository, the Secretary of Energy was to take title of the waste. 22 Additionally, in exchange for payment of statutorily established fees, the Secretary was required to dispose of the waste beginning not later than January 31, ,23 These fees included a one-time payment based on energy produced before April 7, 1983, and on-going fees based on later energy production. 4 In 1983, the DOE created the Standard Contract for Disposal of Spent Nuclear Fuel. 25 The contract incorporated the disposal fees to be paid by the nuclear power companies, 26 the January 31, 1998 disposal date established by the NWPA, 7 and included delay and remedy provisions. 8 Under the delay provisions, neither party would be held liable for unavoidable delays. The contract defines unavoidable delays as those outside the control, fault, or neglifigures do not reflect the large increases in oil and gas prices that were experienced in 2000.). Nuclear Energy, supra note U.S.C (1994) U.S.C (a)(4) U.S.C (a)(4)-(5) U.S.C (a)(1) (authorizing the DOE to enter into nuclear waste disposal contracts); 42 U.S.C (b)(1)(A) (prohibiting the Nuclear Regulatory Commission from issuing licenses to nuclear power companies that fail to enter into waste disposal contracts with the DOE) U.S.C (a)(5)(A) U.S.C (a)(5)(B) U.S.C (a)(2) and (3) C.F.R (1983) C.F.R (VII.A) C.F.R (II) C.F.R (IX.A) (provides that neither party to the contract 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 ); 961. t 1 (IX.B) (provides that [i]n the event of any delay in the delivery, acceptance or transport of [Spent Nuclear Fuel] 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 ); (XI) (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 ). Winter 2002/2003] NUCLEAR POWER COMPANIES SUING DOE 453 gence of the non-performing party. 29 A non-performing party is, however, liable for an avoidable delay, a delay within its reasonable control. 30 The original NWPA provisions, as enacted in 1983, required the Secretary of Energy to recommend at least five possible nuclear repository sites to the President. 3 ' The Secretary then had to select three candidate sites from the recommendations, subject to the President's approval. 32 In 1986, the Reagan administration selected Hanford Reservation, Washington; Deaf Smith County, Texas; and Yucca Mountain, Nevada as the three candidate sites. 33 Texas and Washington had great political advantage over Nevada in the selection process, as top congressional leaders represented those two candidate states. 34 These representatives were influential in Congress's decision to concentrate on only one site. 35 In 1987, in what is commonly known as the Screw Nevada Bill, 36 Congress amended the NWPA to specify that Yucca Mountain was the favored repository location. 7 In response to the 1987 amendment to the NWPA, the Nevada legislature, in January 1989, enacted two resolutions opposing the construction of a nuclear waste repository in the state. 3 8 In June 1989, the legislature passed legislation making it illegal to store high-level radioactive waste in Nevada. 39 In an effort to object to the characterization of Nevada as a potential repository site, Nevada transmitted its resolutions and legislation to Congress and the President, 4 as permitted under the NWPA. 4 1 The Ninth Circuit held that these attempts at a legislative veto failed because they were preempted by C.F.R (IX.A) C.F.R (IX.B) U.S.C Id. 33 See generally Mark E. Rosen, Nevada v. Watkins: Who Gets the Shaft?, 10 VA. ENVTL. L.J. 239, (1991); James H. Davenport, The Federal Structure: Can Congress Commandeer Nevada to Participate in its Federal High Level Waste Disposal Program?, 12 VA. ENVTL. L.J. 539, 549 (1993). 34 The Speaker of the House and Vice President of the United States, who also serves as President of the Senate, were both from Texas. Washington's interests were advanced by the House Majority Whip, a representative from that state. At the time, Nevada had no highranking members of Congress. Michael Barone & Grant Ujifusa, ALMANAC OF AMERICAN POLITICS 1148, (1990). 15 See Press Release, Edward J. Markey, Chairman of the Subcommittee on Energy Conservation and Power of the Committee on Energy and Commerce, U.S. House of Representatives (Oct. 20, 1986). 36 See, e.g., Ed Vogel, Innocence Lost, LAS VEGAS REv.-J., July 10, 2002, at A9 (stating that [t]he [Yucca Mountain Amendments] became known in the Silver State as the 'Screw Nevada Bill ') U.S.C (a) (1997). See also Allen, supra note Assembly Joint Resolution 4 expressed the legislature's adamant opposition to placement of a high-level nuclear waste repository in the State of Nevada. Assembly Joint Resolution 6 provided that the federal government shall not place a repository in Nevada without the prior consent of the Nevada Legislature or cession of jurisdiction. AJR 6 went on to deny both consent to and cession of jurisdiction for the placement of a repository in the state. See Nevada v. Watkins, 914 F.2d 1545, (9th Cir. 1990), cert. denied, 111 S. Ct (1991). '9 NEV. REV. STAT (1989). 40 See Watkins, 914 F.2d at ' 42 U.S.C (b)(2) (1997). NEVADA LAW JOURNAL [Vol. 3:449 the NWPA, the very statute that granted Nevada the authority to object. The court found that Congress's intent to characterize Yucca Mountain as a potential repository, as expressed through the 1987 amendments, would be frustrated if Nevada was allowed to object. 42 C. Department of Energy's Breach of Contract The DOE announced, in 1994, that it would be unable to meet the January 1998 statutory and contractual deadline for disposal of nuclear waste, and that disposal would not begin until at least The DOE, in the Final Interpretation of Nuclear Waste Acceptance Issues, determined that in the absence of a permanent or interim storage facility, the government did not have an unconditional statutory or contractual duty to begin accepting waste by January 31, ' The DOE concluded that under the logic, language, and structure of the NWPA, the DOE's duty to take title to and dispose of nuclear waste arises only after a repository begins operation. 45 The agency reasoned that the DOE could not reasonably be required to take title to and dispose of waste in the absence of a functional repository. 46 The DOE noted the hurdles that must be faced before disposal could begin - determining that, with such burdens, the 1998 deadline could not be unconditional. 47 The United States Court of Appeals for the District of Columbia Circuit vacated the Final Interpretation in Indiana Michigan Power Co. v. United States, 4 8 finding the deadline was not conditioned on the availability of a repository. 49 The court held that dispose should be read under its common meaning - to get rid of; throw away; discard - rather than under the statutory definition of disposal, the interpretation advanced by the DOE. 5 The court further found that disposal could not be conditioned on the opening of a repository, as the Standard Contract provides for the DOE's services to commence with facility operations, and facility is defined to include facilit[ies] to which spent nuclear fuel and/or high-level radioactive waste may be shipped by DOE prior to its transportation to a disposal facility. '51 The court also observed that the NWPA included definitions of disposal broader than those advanced by the 42 See Watkins, 914 F.2d at Waste Acceptance Issues, 59 Fed. Reg. 27, (Dep't Energy May 25, 1994) (No. of Inquiry). 4 Nuclear Waste Acceptance Issues, 60 Fed. Reg. 21,793 (Dep't Energy May 3, 1995). Id. The DOE also notes that the Standard Contract conditions the DOE's provision of services on the commencement of facility operations. Id. (citing 10 CFR , Art. II). 46 Id. 47 Id. Some examples of hurdles the DOE must face in preparing a repository are: (1) the fact that Yucca Mountain is the only potential disposal site under the statute; (2) that Yucca Mountain may be found unsuitable as a disposal site; (3) conditions placed on the development of the site; and (4) numerous procedural steps that must be followed in the approval of the site. Id F.3d 1272 (D.C. Cir. 1996). 49 Id. 1o Id. at 1275 (citing WEBSTER's THIRD NEW INTERNATIONAL DIC
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