Thursday, April 28, 2005
Copyright © Las Vegas Review-Journal

Utility contract may be voided

Judge criticizes repository delays

WASHINGTON -- In an opinion highly critical of government delays at Yucca Mountain, a federal judge said she wants to void a California public utility's nuclear waste contract and give ratepayers their money back.

Judge Susan Braden said she has tentatively concluded that a 1983 contract signed by the Sacramento Municipal Utility District should be rescinded.

She proposed the customer-owned utility get a refund for the $40 million it has paid to build a repository and to have radioactive spent fuel moved from the mothballed Rancho Seco Nuclear Power Station.

The opinion and show cause order marked the first time a judge has proposed going so far as to dismantle contracts stemming from Energy Department delays in developing a Nevada disposal site for nuclear waste.

In essence, the judge is asking the parties to convince her why she shouldn't take such action.

Following a two-week trial last month in the U.S. Court of Federal Claims, the judge said "there is no evidence in the record that the government had reason to believe in 1983, 1989 or at present that Yucca Mountain ever will be licensed to store spent fuel and high level radioactive waste."

She further questioned whether a nuclear waste transportation system to the Nevada nuclear waste repository site will ever be authorized and licensed. Braden said the government and the utility could sign a new contract when the repository is ready.

The judge's opinion was dated April 21 and began circulating this week, creating a buzz among lawyers and policymakers.

Repository critics seized on the six-page opinion.

Sen. John Ensign, R-Nev., declared it evidence of a "changing Washington culture" that he said is growing skeptical about storing nuclear waste at Yucca Mountain.

"This opens up more avenues for the state legally," Ensign said.

"The evidence from the court order reads like a death sentence for Yucca Mountain," said Sen. Harry Reid, D-Nev. "Declaring the original nuclear waste contracts void is one step short of declaring the end of Yucca Mountain."

If the judge follows through, her ruling would apply directly only to the Rancho Seco plant, said Joe Egan, an attorney who represents Nevada in nuclear waste litigation.

But Egan said it also would limit the Energy Department's ability to defend itself in other nuclear waste cases.

The government is facing more than 60 lawsuits from utilities charging the Energy Department breached 1983 contracts by failing to have a repository open by Jan. 31, 1998.

Braden, who was appointed by President Bush in 2003, gave attorneys for the government and the Sacramento utility a June 20 deadline to weigh in on her opinion. She also invited briefs from other interests, which are lining up to comment.

"The judge is suggesting maybe DOE go back to the drawing board," Egan said, adding Nevada plans to file a brief encouraging the judge to finalize her ruling.

Apart from Nevada, attorneys interviewed Wednesday said the Sacramento district and other utilities, and the nuclear power industry, plan to argue against the judge's view.

A $40 million refund won't fully compensate the Sacramento Municipal Utility District, which also spent $30 million to build 22 concrete nuclear waste storage bunkers at the Rancho Seco plant that was shut down in 1989, said Steve Cohn, the district's assistant general counsel.

According to court papers, bunker maintenance costs $1.5 million annually, and the utility spent more than $10 million to keep spent fuel stored in pools for a period.

"The immediate problem we see is that simply refunding the money from what we paid in over 20 years doesn't make us whole," Cohn said.

The utility has been seeking about $78 million in partial damages, he said.

Attorney Jay Silberg said no utility has ever requested nullifying its contracts. Rather, he said, nuclear plant operators want their nuclear waste taken away and to be reimbursed for their costs of keeping it on-site in the meantime.

"The utilities want the contract to be performed sooner rather than later. It is not in our interest for the contracts to disappear," said Silberg, who represents utilities in 19 cases.

Michael Bauser, associate general counsel for the Nuclear Energy Institute, said Braden's opinion is flawed in light of earlier court rulings that upheld the contracts and Congress ordering the government to enter into them in the first place.

"It appears to me that she's based this tentative conclusion that the contracts might be void on a misunderstanding of the facts, the law and indeed other court decisions at the appellate level," Bauser said.

One lawyer who asked not to be identified for fear of crossing the judge said Braden "shoots from the hip and this is her stream of consciousness rather than any lengthy deliberation on her part."

"I don't think any of us believe if Braden makes this decision the federal (appeals) circuit would uphold her," the lawyer said.