SMUD Wins Partial Victory in Nuke Waste Case

By Published On: April 28, 2006

In a closely watched lawsuit against the federal government, the U.S. Court of Federal Claims concluded that the Department of Energy breached its contract with the Sacramento Municipal Utility District for nuclear waste storage. Judge Susan Braden ruled that the municipal power agency is eligible for much of what it claims in damages – $76.5 million. A conference was held April 10 to determine the information needed to decide exactly how much SMUD is owed after the late-March decision. This appears to be the first decision involving nuclear plant owners’ litigation against DOE for its lack of a permanent radioactive waste storage site. For more than two decades, nuclear plant owners have been sending the federal government ratepayer money to build the Yucca Mountain storage dump. At least 12 companies that own nukes are in various states of litigation, seeking $5 billion that they assert the federal government should return. SMUD claimed that the federal government owes it $76.5 million because the muni spent that amount building its own storage facilities for nuclear waste from the now-decommissioned Rancho Seco plant. The muni maintained that because DOE failed to build the Yucca Mountain waste storage facility, it breached their 1983 contract. SMUD said it had to undertake the on-site high-level radioactive waste project itself because a promised permanent waste facility has yet to materialize. The federal government maintained that there was no breach of contract. SMUD is not entitled to a refund, the government claimed, because it allegedly botched any return of funds when it transferred radioactive waste to dry-cask storage and the government could not remove the casks to a permanent storage facility (Circuit, Sept. 2, 2005). Although the judge largely sided with SMUD, she did not find it without fault. “This case presents a classic example of mutual mistake,” she wrote. “She tried to compromise,” said Steve Cohn, SMUD chief assistant general counsel. The court refused to disallow many of the government’s claims from a laundry list of line items. Those included the argument that SMUD was unreasonable to build the dry storage and should have left the spent fuel in pools to avoid the cost. The claim that SMUD had an obligation to lessen damages that it’s claiming against the government was also not dismissed. The court, however, found that SMUD’s decision to build the dry storage was reasonable. It added that SMUD should not be penalized for costs associated with delays caused by federal actions or inaction. Braden did rule, however, that the muni may not recover costs for a certain type of storage cask. In addition, it cannot recoup costs arising from contracts and leases executed prior to 1997, internal labor costs, or other line items. “There won’t be any appeals until we submit additional information and the court comes out with a final decision,” said Cohn. Case No. 98-488C. Edison Proceeds with Nuke DOE Case Southern California Edison notified the U.S. Court of Federal Claims this month that it will proceed with a complaint similar to the Sacramento Municipal Utility District’s suit against the Department of Energy. The lawsuit had been delayed until mid-April to allow some aspects of the case to be established. Edison maintains that DOE breached its contract for high-level nuclear waste disposal. “Edison customers pay $12.7 million per year into a DOE program for spent nuclear fuel” from San Onofre, noted the utility. “The objective of our legal action is to recover on behalf of our customers damages incurred as a result of the government’s failure thus far to begin taking spent fuel under the terms” of DOE’s contract, Edison spokesperson Gil Alexander stated.

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