09-16-2000

ENVIRONMENT: Costly Cleanup for Energy?

The nuclear power industry has long argued that the Energy Department is
sitting on a nuclear-waste powder keg that could have expensive
consequences for taxpayers. And in late August, industry officials say,
their hand was strengthened when the U.S. Court of Appeals for the Federal
Circuit ruled that the owners of four nuclear power plants have the right
to sue the Energy Department to recover damages caused when the department
failed to remove nuclear waste from the plant sites by the Jan. 31, 1998,
deadline set by Congress.


The plant owners are asking for a total of $1.3 billion to recover the
costs of building extra nuclear-waste storage facilities and running them,
as well as other costs. But the true level of federal liability could be
several times higher, industry lawyers note. They say the ruling could
apply to more than 60 other nuclear power plants in 31 states, which could
cause serious budget headaches for lawmakers. "If I were on the
Senate Finance or the House Appropriations Committee, I'd be extremely
concerned about the potential liability," said Gary Johnson, general
counsel of Xcel Energy Co.(formerly Northern States Power Co.), which is a
party in the lawsuit.


But Mary Anne Sullivan, general counsel for the Energy Department, said
that the utilities' damage estimates are inflated. "We think some of
the estimates that have been thrown around are unfounded," she said.
Sullivan said that the department has estimated its total liability at
$1.4 billion.


The appeals court ruling in August was the latest in a series of legal
confrontations that began in late 1997, when Energy officials announced
that the federal government wouldn't begin hauling nuclear waste away from
the plant sites by the 1998 deadline. Citing a revised interpretation of
the law that set the deadline, regulators reasoned they didn't need to act
until work was completed on a permanent waste repository at Nevada's Yucca
Mountain. That facility won't be ready until 2010, at the
earliest.


Angry utility company executives headed to court, where they protested
that the department had breached its contract with the firms. In December
1998, the U.S. Supreme Court sided with the industry, letting stand a
lower-court ruling that the government had an "unconditional
obligation" to accept spent nuclear fuel by the 1998
deadline.


At the same time, Xcel and three companies that own now-closed nuclear
power plants in New England filed separate lawsuits in the U.S. Court of
Federal Claims seeking damages from the department. In April 1999, the
claims court ruled that, before the utilities could seek legal damages,
they must negotiate a damage settlement with Energy's contracting officer.
That ruling was overturned by the August appeals court decision, which
returned the case to the claims court for trial. Lawyers at the Energy and
Justice departments have not yet decided whether to ask the appeals court
to rehear the case.


Meanwhile, the court decision has hurt Energy Secretary Bill Richardson's
attempts to cajole power plant owners to settle their differences with the
department. So far only one company, PECO Energy, has taken that route,
although Sullivan said the department is negotiating with other utilities.
Lawyers for the nuclear power industry say that, at the very least, the
August court decision will give utility companies greater leverage in
negotiations with the government. "If I were a utility going in to
talk to DOE, this strengthens my hand," said Robert Bishop, general
counsel at the Nuclear Energy Institute, an industry trade group.
"Now the DOE won't be able to argue that theirs is the only
assessment of damages the companies will get. Now there is another
forum."


Margaret Kriz

National Journal