United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 20, 2012 Decided June 1, 2012
No. 11-1066
NATIONAL ASSOCIATION OF REGULATORY UTILITY
COMMISSIONERS,
PETITIONER
v.
UNITED STATES DEPARTMENT OF ENERGY,
RESPONDENT
Consolidated with 11-1068
On Petitions for Review
of Final Actions of the Department of Energy
Jay E. Silberg argued the cause for petitioners. With him
on the briefs were Timothy J.V. Walsh, James Bradford Ramsay,
and Anne W. Cottingham. Michael A. Bauser entered an
appearance.
Joseph A. McGlothlin and Richard C. Bellak were on the
brief for amici curiae Florida Public Service Commission, et al.
in support of petitioners. Cynthia B. Miller entered an
appearance.
2
Harold D. Lester Jr., Assistant Director, U.S. Department
of Justice, argued the cause for respondent. With him on the
brief were Tony West, Assistant Attorney General, and Jeanne
E. Davidson, Director.
Before: SENTELLE, Chief Judge, BROWN, Circuit Judge, and
SILBERMAN, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
SILBERMAN.
SILBERMAN, Senior Circuit Judge: Petitioners, nuclear
power plant owners and operators, ask us to review a November
2010 determination by the Secretary of Energy finding that there
was no basis for suspending, or otherwise adjusting, annual fees
collected from them totaling some $750 million a year. Those
fees are intended to cover the full costs of the government’s
long-term disposal of civilian nuclear waste. But the
Administration has discontinued development of Yucca
Mountain, which was the designated location for the disposal of
the waste. According to petitioners, the Secretary’s 2010
determination, made subsequent to that decision, failed to
examine (or even mention) the anticipated costs of disposal, or
compare them to expected revenues from the fees (and
associated interest and investment income). The Secretary’s
determination is claimed, thereby, to have violated the 1982
Nuclear Waste Policy Act (“the Act”), which obliges the
Secretary to annually “evaluate whether collection of the fee
will provide sufficient revenues” to offset program costs. In the
absence of such evaluation, it is argued, the determination was
invalid, and because no future program has replaced Yucca
Mountain, petitioners contend that the Secretary is obliged to
suspend the fees and report his action to Congress.
3
We conclude that the Secretary has failed to perform a valid
evaluation, as he is obliged to do under the Act, but we do not
think it appropriate to order the suspension of the fee at this
time. Instead, we remand to the Secretary with directions to
comply with the statute within six months. The panel will retain
jurisdiction over this case so that any further review would be
expedited.1
I.
The Act made the federal government responsible for
permanently disposing of spent nuclear fuel and high-level
radioactive waste produced by civilian nuclear power generation
and defense activities. It provided that the government would
do so through geologic disposal, which involves constructing a
repository deep underground within a rock formation where the
waste would be placed, permanently stored, and isolated from
human contact. The Department of Energy was required to
begin disposal by January 31, 1998. Since 1987, when the Act
was amended, the Department has been directed to consider the
1
We also remind the parties that our Handbook of Practice and
Internal Procedures states that “parties are strongly urged to limit the
use of acronyms” and “should avoid using acronyms that are not
widely known.” Brief-writing, no less than “written English, is full of
bad habits which spread by imitation and which can be avoided if one
is willing to take the necessary trouble.” George Orwell, “Politics and
the English Language,” 13 Horizon 76 (1946). Here, both parties
abandoned any attempt to write in plain English, instead abbreviating
every conceivable agency and statute involved, familiar or not, and
littering their briefs with references to “SNF,” “HLW,” “NWF,”
“NWPA,” and “BRC” – shorthand for “spent nuclear fuel,” “high-
level radioactive waste,” the “Nuclear Waste Fund,” the “Nuclear
Waste Policy Act,” and the “Blue Ribbon Commission.”
4
suitability of one site only – Yucca Mountain, Nevada – for the
repository.2
Congress’s best-laid plans have been frustrated. In 1995,
the Department announced that it would be unable to meet the
1998 deadline; the earliest conceivable date for disposal was
2010.3 In early 2009, the Department said that construction at
Yucca Mountain would not begin until at least 2011, and that
transportation and disposal of waste would not occur until 2020.
Only a few months later the new Administration announced, in
an abrupt volte face, that Yucca Mountain “was not a workable
option.” Instead, it established a Blue Ribbon Commission to
reconsider “all alternatives” for permanently disposing of
nuclear waste. But the Commission’s 2011 Draft Report
conceded that geologic disposal was really the only viable
option. The Commissioners, however, were directed not to
consider any particular site – whether Yucca Mountain or
elsewhere. They estimated that selection and evaluation of a site
would take another 15 to 20 years (the cliché “kick the can down
the road” seems inadequate). Nevertheless, the Department has
reaffirmed its obligation to permanently (if eventually) dispose
of civilian nuclear waste. In the meantime, civilian nuclear plant
operators and owners have stored their waste themselves,
usually on-site.4
2
42 U.S.C. § 10101(18); id. § 10131(a)(4)-(5); id. § 10131(b); id.
§ 10132; id. § 10172; id. § 10222(a)(5).
3
See Ind. Mich. Power Co. v. Dep’t of Energy, 88 F.3d 1272,
1277 (D.C. Cir. 1996); Nuclear Waste Acceptance Issues, 60 Fed.
Reg. 21,793, 21,794 (May 3, 1995).
4
As a result of lengthy litigation before us and the Federal Circuit,
the government has paid them about $1 billion in retrospective
damages to cover some of the costs of storage since 1998, on claims
of $6.4 billion. Those claims are not at issue here.
5
The Act also made the generators of nuclear waste
responsible for the full costs of the disposal of civilian nuclear
waste. The owners and operators were to pay an initial fee to
cover the costs of disposing of pre-1983 waste, as well as an
annual fee of 1.0 mil (one-tenth of a cent) per kilowatt-hour of
nuclear-generated electricity to cover ongoing waste generation.
These funds are deposited in the government-managed Nuclear
Waste Fund, where they earn interest and investment income.
According to budget accounting rules, these funds also count
against the federal government’s budget deficit (“aye, there’s the
rub”). When this suit was filed in 2010, owners and operators
had paid the fees for nearly three decades (about $750 million a
year on top of the initial charge). With investment income, the
Fund’s balance exceeded $24 billion, and by the end of this
year, it will exceed $28 billion.
Although the Act mandates that the Fund cover the lifetime
costs of the civilian disposal program – estimated to last over a
hundred years – any excess funds must be returned to the
payors. Congress anticipated that costs would be uncertain and
could well change as the program progressed, so the Secretary
was obliged to “annually review the amount of the fees to
evaluate whether collection of the fee will provide sufficient
revenues to offset the costs as defined in subsection (d) herein.”
Those costs include the identification, development,
construction, operation, and maintenance of repositories for the
waste, as well as associated facilities; research and development;
and administration. “[I]n the event the Secretary determines that
either insufficient or excess revenues are being collected, in
order to recover the costs incurred by the Federal Government
. . . the Secretary shall propose an adjustment to the fee to insure
full cost recovery” and submit it to Congress. The Act – which
pre-dated INS v. Chadha, 462 U.S. 919 (1983) – provides that
the proposed adjustment shall become effective unless, within
6
90 days of submission, either house of Congress adopts a
resolution disapproving it.5
The Secretary has never proposed an adjustment to the fee.
Since at least 1990, the Department’s policy has been “to
conduct a thorough analysis annually and to recommend a
change in the fee when there is a compelling case for the
change.” Between 1983 and 2008, fee adequacy assessments
identified the expected costs of geologic disposal and compared
them to projected revenues from the fee (which were based on
projections of future nuclear power generation and interest
accumulation).6 Fee adequacy was calculated by creating
models that adjusted for different key variables – for instance
inflation, interest rates, future nuclear generation, program
timing and total life cycle estimates – and forecasting whether
the Fund would likely have a positive balance by the end of the
program.
Between 1983 and 1987, the governing assumption was that
two repositories would be used, but the Department had to
account for a number of uncertainties that dramatically affected
costs and revenues. It was unsure what type of rock – salt, tuff,
basalt, or crystalline rock – would host the waste, or where the
repositories would be located, and projected operational time
frames varied widely. Fee adequacy reports dealt with these
5
42 U.S.C.. § 10222(a)(4).
6
The Department did not consistently publish its fee adequacy
reviews, and in some years – for instance when the reference cost
estimate and other assumptions remained the same – apparently no
new fee adequacy assessment was completed. The Department also
completed a separate series of assessments, called “total system life
cost” estimates, to periodically reassess program costs in light of
recent developments. Fee adequacy assessments then used these cost
estimates and compared them to expected revenues.
7
uncertainties by using a range of bounding cases; while there
was tremendous variability among the different models, the
Department nonetheless generated rough estimates of the
expected margins of revenues over costs. The Secretary
concluded that no fee adjustment was warranted during this
period because under most, though not all, scenarios, the Fund
showed only a modest positive balance at the end of the
program’s expected life cycle, and there was great uncertainty
about future costs.
After Yucca Mountain was designated in 1987 as the only
site the Department could consider, the Department estimated
costs, and assessed fee adequacy, using assumptions specific to
that site. Thus, the FY 2008 assessment assumed a program life
cycle until 2129. The total estimated program cost was $97
billion, including historical costs since 1983; that also included
anticipated defense-generated waste disposal costs for which
petitioners are not responsible.7 Construction authorization was
anticipated in 2011, operations – the point when the greatest
expenditures would be incurred – were to start in 2020, and
emplacement of waste was to end in 2069, by which point 71
percent of all future costs would have been incurred.8 Using a
7
The Act originally provided that the federal government would
pay the costs of defense-generated nuclear waste directly into the
Nuclear Waste Fund. However, Congress in 1993 changed that
requirement to instead establish a separate Defense Nuclear Waste
Disposal appropriation. That appropriation is administered, and
counted, separately from the Nuclear Waste Fund; to date, it has a
balance of $3.7 billion. Since FY 2011, however, the federal
government has not made any requests for appropriations to cover the
costs associated with disposal of this waste.
8
After emplacement ends, the repository would remain in
operation for another fifty years for decommissioning and monitoring
in preparation for closing.
8
cash flow analysis (adding expected fee and investment income
and subtracting estimated costs for each year from 2008 to
2129), the assessment concluded that the fee was certainly
adequate because most scenarios showed the Fund would have
a positive balance in 2129. No downward adjustment was
deemed warranted, however, because the Secretary did not see
compelling evidence it was appropriate – the analysis from a
single year, the Secretary suggested, would not be enough to
make a judgment.
After the Administration abandoned Yucca Mountain in
2009, the Secretary apparently did not issue a fee evaluation or
determination that fiscal year, but the Department did announce
that all the fees being paid by civilian nuclear generators and
owners were still considered “essential” to meet the
government’s waste disposal obligations. The Secretary’s
inaction gave rise to an initial suit by petitioners dismissed as
moot only when, after briefs were filed, the Secretary issued the
2010 determination, the subject of this suit. It stated that the
Secretary would not propose an adjustment of the fee based on
an enclosed memorandum from the Director of the Office of
Standard Contract Management. That memorandum, although
affirming that the Department was committed to disposing of
civilian waste and that the fees needed to cover all future
program costs, did not identify any of those costs, nor did it
mention expected revenues. Instead, it stressed the Secretary’s
discretion in reviewing fee adequacy, and concluded that “we
are aware of no evidence that would provide a reasoned and
sound basis for determining that excess or insufficient revenues
are being collected for the costs for which the Department is
responsible.” It noted that the Blue Ribbon Commission had not
yet made any recommendations about future disposal methods.
The Director added that, in any event, the current fee was
adequate because, using Yucca Mountain as the best available
proxy, the most recent estimate of its life cycle cost (in the FY
9
2008 assessment) was “$97 billion,” and the fee had previously
been deemed adequate based on that estimate.
II.
Petitioners argue that the Secretary violated his statutory
obligation to annually “evaluate whether collection of the fee
will provide sufficient revenues to offset . . . costs” because he
neither conducted a cost evaluation nor accounted for the
disposal program’s uncertain schedule. They also object that the
Department’s alternative approach, using Yucca Mountain to
estimate future costs, was arbitrary and capricious (violating the
APA) in light of the Department’s unequivocal decision to
discontinue use of that site. Petitioners contend that any validly
conducted fee adequacy review would require the Secretary to
find the current fee excessive, and therefore it should be
adjusted to zero. Now that Yucca Mountain has been
terminated, the program’s future course is uncertain and no costs
can be quantified. Accordingly, petitioners seek an order
directing the Secretary to determine that the fees be suspended
pending development of a new waste disposal program and to
submit that determination to Congress.
The government responds that the Act’s only requirement
is that the Secretary review the fee annually; he has complete
discretion as to the manner in which he identifies and evaluates
costs. And if, in his judgment, there is insufficient information
available to determine the fee is either insufficient or excessive,
he is not obliged to call for an adjustment. According to the
government, that is the situation here. As a fallback, the
government insists that Yucca Mountain’s costs can be used as
a continuing proxy, and thereby justifies the Secretary’s failure
to make any new evaluations of potential costs juxtaposed
against revenues.
10
Although the government contends that its statutory
interpretation is the obvious one, it also asserts that even if we
regarded the language as ambiguous, we should afford it
Chevron deference, which leads to an argument as to whether
Chevron deference is warranted. We think it unnecessary to
resolve that issue because we believe the government’s
interpretation is unacceptable – whatever the degree of
deference afforded.
The government focuses on the statutory language requiring
the Secretary to propose an adjustment “if [he] determines that
either insufficient or excess revenues are being collected,”
arguing that this wording bestows discretion on the Secretary.
There is certainly some discretion given to the Secretary in the
manner in which he calculates costs, but the government’s
argument suggests the Secretary has no affirmative obligation to
conduct the sort of inquiry and analysis done in the past. He
may, like an ostrich, put his head in the sand; so long as he is
unaware of any information that questions the existing fee
structure, he is not obliged to propose an adjustment. That
interpretation is farfetched, almost absurd. It ignores the
preceding sentence, obliging the Secretary “to evaluate whether
the collection of the fee will provide sufficient revenues” to
offset program costs. That plain language utterly destroys the
Secretary’s claim that he can remain entirely passive and only
act if some deus ex machina were to bring him information.
The Secretary’s alternate justification, that he can continue
to rely on the FY 2008 assessment’s cost calculations for Yucca
Mountain as a proxy, fares no better. It is unreasonable
(therefore arbitrary and capricious) to so blithely rely on a proxy
that the Department itself has deemed unworkable. The
Secretary has not said why Yucca Mountain was rejected, nor
has he indicated what characteristics of Yucca Mountain might
make it typical of any site. Morever, to assume the validity of
11
Yucca Mountain’s cost estimate without taking into account the
enormous delay in even selecting a new site ignores what the
Department’s own previous estimates have regarded as a critical
aspect of fee adequacy – the timing of costs. The FY 2008
assessment assumed construction would begin in 2011 and
operations would start in 2020. That schedule would have
resulted in major near-term expenditures, and therefore a
reduction in interest earned by the Fund. If these expenditures
are to be pushed far back – which the Secretary must assume –
he must compare them against a likely significant increase in the
Fund through interest accumulation.
To add to the irrationality of the Department’s choice of
Yucca Mountain as a proxy is the 2010 determination’s
estimation of the life cycle costs of Yucca Mountain – i.e., $97
billion. The government’s brief emphasized that that cost is
“nearly four times” the balance in the Fund. Unfortunately, and
somewhat embarrassingly, this figure is obviously inflated. As
the Department’s FY 2008 determination explained, $97 billion
includes amounts that the Fund (and, therefore, petitioners) need
not cover. Those amounts include program costs already paid,
as well as the costs of disposing of waste the government
generated from defense-related activities. Indeed, expected
future costs are $82.5 billion, of which, according to the FY
2008 assessment, only 80 percent ($66 billion) stems from
expected civilian waste disposal costs. In other words, the
government submits to us a calculation that appears to be off by
$30 billion – which, even today, is real money. Assuming that
the Fund continues to accumulate interest at its present rate,
rudimentary calculations suggest the Fund could reach $66
billion in less than twenty years – i.e., well within the range of
time the Blue Ribbon Commission estimates it would take to
even designate a new site – even if no new fee revenues were
added after 2011.
12
Moreover, the 2010 determination is an unexplained
departure from long-standing Department policy and therefore
arbitrary and capricious on that ground as well. Long before the
Yucca Mountain program was chosen, the Secretary, as we have
noted, ran rather sophisticated evaluations of the potential costs
of a hypothetical repository as part of his policy of conducting
a “thorough analysis.” His 2010 determination falls far below
the Department’s own previous standard. Of course, it may well
be that, despite the public statements, the Department and the
Administration really believe that it will eventually turn back to
Yucca Mountain, but if that is so, it must be acknowledged.
* * *
In sum, we readily conclude that the Secretary’s
determination is legally inadequate. Which brings us to the
remedy. Petitioners ask us to order the Secretary to determine
that fees should be suspended unless and until a new disposal
program is commenced, and that, in accordance with the statute,
such a determination should be submitted to Congress.
As we have noted, the Act, as originally enacted, antedated
INS v. Chadha and provided that any fee adjustment by the
Secretary had to be submitted to Congress for 90 days, where it
could be defeated by a one-house veto. The Eleventh Circuit
held, as it was obliged, that that procedure was unconstitutional,
and that the remedy was to read the Act to say that if the
Secretary were to make a determination that the fee was either
excessive or inadequate, he should submit it to Congress, to
become effective within 90 days of submission (which is not
much different than any agency action). See Ala. Power Co. v.
U.S. Dep’t of Energy, 307 F.3d 1300, 1306-08 (11th Cir. 2002).
Interpreting an analogous statute, we have taken essentially the
same position on remedying similarly defective statutes. See
Alaska Airlines v. Donovan, 766 F.2d 1550 (D.C. Cir. 1985).
13
With the one-house veto no longer in the picture, we think
our authority to review the Secretary’s 2010 determination under
the Administrative Procedure Act includes the power to direct
the Secretary to suspend the fee.9 But it is premature to do so
now. It is appropriate for us simply to declare that the
Secretary’s determination is legally defective and to remand.
However, we are mindful that petitioners were obliged to first
file suit in October 2010, in light of the Secretary’s failure to
conduct any fee adequacy determination since FY 2008. It was
only after initial briefing was submitted that the Secretary issued
his 2010 determination, thereby rendering the initial case moot.
In light of that Departmental disposition to delay, we will order
the Secretary to respond to the remand within six months of the
issuance of the mandate and this panel will retain jurisdiction.
So ordered.
9
Of course, notwithstanding any decision we would make, the
Secretary, while complying with any order of the court, would also be
free to advise Congress as he wished.