Contract Liability Arising from the Nuclear Waste Policy Act (NWPA) of 1982

Summary

Almost 30 years ago, Congress addressed growing concerns regarding nuclear waste management by calling for the federal collection of spent nuclear fuel (SNF) and high-level waste for safe, permanent disposal. To this end, the Department of Energy (DOE) was authorized by the Nuclear Waste Policy Act (NWPA) to enter into contracts with nuclear power providers to gather and dispose of the provider’s SNF in exchange for payments into the statutorily established Nuclear Waste Fund (NWF). Under the terms of the NWPA, these contracts were to require that the federal government begin disposal of the nation’s nuclear waste no later than January 31, 1998. Over 10 years ago, DOE breached these nuclear waste contracts by failing to begin the acceptance and disposal of SNF by the statutory deadline established in the NWPA. As a result, nuclear utilities have spent billions of dollars on temporary storage for toxic SNF that DOE was contractually and statutorily required to collect for disposal. The breach has triggered a prolonged series of suits by nuclear power providers, many of which continue unresolved to this day.

Approximately 78 breach of contract claims have been filed against DOE since 1998, resulting in over $2 billion in damage awards and settlements thus far. In 2010 alone, the U.S. Court of Federal Claims awarded nuclear utilities approximately $507 million in contract damages. DOE predicts that damages stemming from partial breach of contract claims will measure close to $20.8 billion if the government is able to begin accepting SNF by 2020. Approximately $500 million in additional legal damages will continue to build with each year beyond 2020 that DOE is unable to begin accepting SNF. All paid legal damages are drawn from the DOJ Judgment Fund rather than the DOE budget.

DOE’s liability for breach of contract was first established in 1996 by the U.S. Court of Appeals for the District of Columbia in Indiana Michigan Power Co. v. U.S. After DOE hesitated to act on its legal obligations, citing the absence of a completed SNF storage facility (Yucca Mountain), the court issued a writ of mandamus mandating that DOE “proceed with contractual remedies in a manner consistent with NWPA’s command that it undertake an unconditional obligation to begin disposal of SNF by January 31, 1998.” The mandamus, issued in Northern States Power Co. v. U.S., may prohibit DOE from deflecting liability by arguing that the lack of an existing storage facility constitutes an “unavoidable delay.”

This report will present a brief overview of the NWPA and its subsequent amendments; provide a survey of key issues that have emerged during the protracted waste storage litigation; and consider the potential for future liability arising from further delays in the storage and disposal of nuclear waste.