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NEW YORK STATE ENERGY RESEARCH & DEV. AUTH. v. NUC

August 15, 1986

NEW YORK STATE ENERGY RESEARCH AND DEVELOPMENT AUTHORITY, Plaintiff,
v.
NUCLEAR FUEL SERVICES, INC., GETTY OIL COMPANY, COMMONWEALTH EDISON COMPANY, GENERAL PUBLIC UTILITIES CORPORATION, GENERAL PUBLIC UTILITIES SERVICE CORPORATION, JERSEY CENTRAL POWER & LIGHT COMPANY AND WISCONSIN ELECTRIC POWER COMPANY, Defendants


John T. Elfvin, U.S.D.J.


The opinion of the court was delivered by: ELFVIN

MEMORANDUM and ORDER

This decision marks a near-conclusion, at least at the trial level, to long-standing and often arduous efforts by the New York State Energy Research and Development Authority ("NYSERDA") to establish and enforce its rights pertaining to the storage of nuclear fuel wastes by five public utility companies -- General Public Utilities Service Corporation and Jersey Central Power and Light Company (sometimes hereafter collectively referred to as "the GPU defendants"), their parent, General Public Utilities Corporation, Commonwealth Edison Company ("Commonwealth"), and Wisconsin Electric Power Company ("WEPCO") -- at the nuclear fuels disposal and reprocessing center at West Valley, N.Y. ("the Center"), owned by NYSERDA. In N.Y. St. Energy R & D. Auth. v. Nuclear Fuel Serv., 561 F. Supp. 954 (W.D.N.Y. 1983), this Court decided inter alia that NYSERDA could recover for the utility defendants' unjust enrichment which arose from storage of their spent nuclear fuel at the Center for the period beginning February 25, 1982. A non-jury trial on the issue of quantum meruit damages was held before this Court June 17-21 and August 14-16 and 19-21, 1985. *fn1" Thereafter the parties submitted proposed findings of fact and conclusions of law together with supporting memorandums of law; oral argument was had June 4, 1986. Having reviewed the testimony and considered the credibility of the various witnesses in this case as well as the documentary evidence presented by the parties, this Court finds the pertinent facts as follows. *fn2"

 NYSERDA is a public benefit corporation organized and created pursuant to section 1852 of New York's Public Authorities Law. NYSERDA is the successor to the New York State Atomic Research and Development Authority ("ARDA") and the New York State Atomic and Space Development Authority ("ASDA"). NYSERDA maintains its principal place of business in Albany, N.Y. The utility defendants are organized under the laws of and have their principal places of business in states other than New York. The case is before this Court pursuant to diversity jurisdiction.

 The Center has been held by NYSERDA in the name of the people of New York since March 21, 1963 when it was acquired for approximately $500,000. It occupies some 3,345 acres, roughly thirty miles south of Buffalo in Cattaraugus County. In 1963 defendant Nuclear Fuel Services, Inc. ("NFS") and ARDA entered into three contracts concerning the Center. These contracts, collectively known as the West Valley Agreements, consisted of a Lease (P1), a Waste Storage Agreement (P3) and a Facilities Contract (P2), each dated May 15, 1963. The agreements generally authorized NFS to construct, operate and manage a commercial spent nuclear fuel facility and related facilities at the Center.

 Pursuant to the Facilities Contract NFS constructed, among other facilities, a Fuel Receiving and Storage Facility ("FRF") containing a spent fuel storage pool at which spent fuel was received and temporarily stored pending reprocessing. The items constructed, their components and each item's allocated portion of the overall cash payment by ARDA to NFS pursuant to the Facilities Contract, as agreed upon between NFS and ARDA prior to construction, are set forth in Exhibits A and B to the Facilities Contract. Title to each of these facilities is, and has at all times been, vested in ARDA, ASDA and NYSERDA.

 The Lease provided for the letting to NFS of the Center and the facilities constructed for ARDA under the Facilities Contract. The Lease further provided that NFS would construct a spent nuclear fuel reprocessing plant ("the Plant") and related facilities and authorized NFS to conduct nuclear fuel reprocessing at the Center. Upon expiration or other termination of the Lease, title to the Plant and related facilities constructed by NFS (other than those facilities constructed under the Facilities Contract) was to vest in NYSERDA. The Waste Storage Agreement generally provided the terms and condition governing NFS's operation, maintenance and responsibility for certain radioactive waste and facilities used for the storage of such waste. From 1966 to 1971 spent nuclear fuel containing approximately 625 metric tons *fn3" of uranium ("MTUs") was reprocessed by NFS at the Center. In 1972 NFS discontinued reprocessing to accommodate a planned enlargement and modification of the Plant and other facilities. NFS never resumed reprocessing of spent nuclear fuel at the Center. See, N.Y. St. Energy R. & D. Author. v. Nuclear Fuel Serv., supra, at 961.

 Two actions relating to the West Valley Agreements (New York State Energy Research and Development Authority v. Nuclear Fuel Services. Inc., CIV-81-18E, and Nuclear Fuel Services Inc. v. New York State Energy Research and Development Authority, CIV-81-683E) were ultimately resolved by a Settlement Agreement, Stipulation and Order approved by this Court February 19, 1982. Pursuant to the Settlement Agreement, the Lease was deemed to have expired according to its terms December 31, 1980, NFS agreed to make payments to NYSERDA totaling $9,4 million, the actions were suspended and later dismissed and the parties exchanged certain releases. NFS also agreed to pay NYSERDA certain charges for the storage of spent nuclear fuel owned by NFS and then in storage in the FRF and to remove such spent nuclear fuel and other materials from the Center.

 The West Valley Demonstration Project Act ("the Act"), Pub.L. 96-368, enacted October 1, 1980, directs the United States Department of Energy ("the DOE") to carry out a radioactive waste management demonstration project ("the Project") at the Center. The Act also directs the DOE to enter into a Cooperative Agreement with New York under which New York will make available to the DOE the facilities at the Center and the high-level liquid radioactive waste to be solidified and which will provide for New York to pay 10% of the cost of the Project as determined by the DOE.

 As has previously been noted by this Court, N.Y. St. Energy R. & D. Auth. v. Nuclear Fuel Serv., supra at 964, the DOE and NYSERDA, pursuant to the Act, entered into a Cooperative Agreement October 1, 1980, delineating the rights and responsibilities of the parties with respect to the Project and the Center. Section 4.11 of the Cooperative Agreement provides that the DOE will,

 
"in connection with its responsibility for operation and maintenance of the Fuel Storage and Receiving Area at the Center for use in the Project, be responsible as agent of NYSERDA for the management, maintenance and surveillance of the irradiated nuclear fuel elements now stored therein ***." *fn4"

 The "incremental cost" of such services by the DOE is under section 4.11 of the Cooperative Agreement, the financial responsibility of NYSERDA.

 Pursuant to the statute, NYSERDA agreed to pay 10% of the costs of the Project ("the Project Costs"). NYSERDA's share of the Project Costs can be paid in one of three ways. First, NYSERDA can pay all or a portion of its annual share by expending funds for the provision of services ("Authority Services") which it and the DOE agree support the Project. Second, NYSERDA can pay for its share of the annual Project Costs by expending a portion of a negotiated credit for the value of the use of the Center for carrying out the Project. Finally, NYSERDA can pay any remaining balance of its share directly to the DOE. Also pursuant to the Cooperative Agreement, NYSERDA receives certain credits against its 10% costs obligation. These credits include: (1) $12 million for making the Center available to the DOE for the Project; and (2) up to $900,000 annually (in 1980 dollars adjusted for inflation) for services provided to the the DOE in connection with the Project.

 On February 25, 1982 the DOE assumed exclusive use and possession of a portion of the Center and related facilities, *fn5" including the FRF, for use in carrying out the Project. West Valley Nuclear Services, Inc. ("WVNS") operates and maintains those premises and facilities and implements the Project pursuant to a contract with, and subject to the discretion of, the DOE. Pursuant to the Cooperative Agreement, the DOE's possession of and responsibility for all of the premises and facilitates at the Center will conclude when the Project is completed. In order to carry out the Project, the DOE's plans required that the spent fuel be removed from the FRF.

 As of February 25, 1982 there were 163.5 MTUs of spent nuclear fuel located in the FRF. The capacity of the pool was 250 MTUs. Of this spent nuclear fuel, approximately 20.4 MTUs were owned by Commonwealth, 43 MTUs by WEPCO, 42.8 MTUs by the GPU defendants. The defendants originally had shipped their spent fuel to the Center pursuant to agreements that NFS would provide reprocessing services. Additionally, NFS and a non-party utility had 166 spent fuel assemblies containing 42.2 MTUs in storage at the FRF at times pertinent to this action. The process leading up to and including the defendants' acknowledgment of responsibility for their spent fuel and attempts between the parties to negotiate long-term storage agreements, is set forth in N.Y. St. Energy R. & D. Auth. v. Nuclear Fuel Serv., supra at 962-964. Such negotiations were unavailing. In a Memorandum and Order filed June 30, 1983 this Court declared the utility defendants to be under a duty to remove their spent fuel from NYSERDA's property "as expeditiously as reasonably possible," failing which, implicitly, they would be held liable as trespassers. There is no disagreement as to the nature and sequence of the defendants' efforts promptly to remove the spent fuel, and most of ...


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