The U.S. Court of Appeals for the Federal Circuit shot down the federal government’s latest attempt to deflect blame for breaching its contracts with utility companies to store spent nuclear fuel.
The Department of Energy was supposed to begin storing spent fuel in 1998, and has collected billions of dollars in fees from utility companies to do so. However, the government has yet to build a storage repository or accept any waste, giving rise to a series of successful breach-of-contract suits by utilities.
The Federal Circuit in an April 2 decision rejected the government’s argument that a clause in the contracts covering "unavoidable delays" should limit its damages, ruling in favor of plaintiff Entergy Corp.’s nuclear subsidiaries.
Entergy was represented by Pillsbury Winthrop Shaw Pittman partner Jay Silberg.
It’s not the first time the government tried this defense. In earlier cases, the U.S. Court of Appeals for the D.C. Circuit didn’t buy the argument, ruling that the failure to take the fuel was not "unavoidable" within the meaning of the clause.
In 2010, the Federal Circuit in an en banc ruling also rejected the argument, pointing to the D.C. Circuit decision "as precluding the government’s use of the unavoidable delays defense to nullify its statutory obligations."
Still, the government—which last year paid about $1.3 billion to utilities to settle breach-of-contract suits for failing to accept spent fuel—tried again.
In supplemental briefing before the trial court, the government argued that "the United States does not propose to use the unavoidable delays defense as a get-out-of-jail-free card" concerning liability.
Rather, it argued that Entergy’s eligibility for damages dates from September 2000—31 months after the government was supposed to begin taking the waste. The government argued that costs during those 31 months, which stemmed from Nevada’s efforts to prevent licensing of a repository, should count as unavoidable delay.
The court said no. "The government has an unconditional statutory obligation to accept [spent nuclear fuel] beginning by January 31, 1998," according to chief judge Randall Rader.