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State v. United States

United States District Court, D. South Carolina, Aiken Division

June 7, 2018

State of South Carolina, Plaintiff,
United States; United States Department of Energy; Rick Perry, in his official capacity as Secretary of Energy; National Nuclear Security Administration; and Lisa E. Gordon-Hagerty, in her official capacity as Administrator of the National Nuclear Security Administration and Undersecretary for Nuclear Security, Defendants.


         This matter is before the court pursuant to Plaintiff State of South Carolina's (“the State”) Motion for Preliminary Injunction to prevent the Department of Energy (“DOE”) and the National Nuclear Security Administration (“NNSA”) and their officials (collectively, “the Federal Defendants”) from terminating the mixed oxide fuel fabrication facility project (“MOX Facility” or “Project”) currently under construction at the Savannah River Site (“SRS”) in Aiken County, South Carolina until this case can be decided on its merits. (ECF No. 5.) On June 4, 2018, the Federal Defendants filed a response in opposition (ECF No. 19). For the reasons set forth below, the court GRANTS the State's Motion for Preliminary Injunction (ECF No. 5).


         Following the end of the Cold War and the collapse of the Soviet Union, significant quantities of nuclear weapons, including large amounts of weapons grade plutonium, became surplus to the defense needs of the United States and Russia. Control of these surplus materials became an urgent U.S. foreign policy goal, with a particular focus on nuclear weapons. In an effort to consolidate and reduce surplus weapons-grade plutonium, the United States and Russia jointly developed a plan for the nonproliferation of weapons of mass destruction worldwide.[1]

         After extensive study, including an environmental impact statement (“EIS”) conducted pursuant to National Environmental Policy Act, 42 U.S.C.A. §§ 4321-4370h (“NEPA”) in 1996, DOE concluded that the “preferred alternative” for plutonium disposition consisted of a dual-path strategy that proposed (1) immobilization of a portion of the surplus plutonium in glass or ceramic materials and (2) irradiation of the remaining plutonium in MOX fuel. DOE also analyzed the environmental impacts of various alternatives for the “long term” storage of plutonium and other nuclear materials for up to fifty years.[2] The following year, DOE announced its intention to pursue this dual-path strategy, including the construction and operation of a MOX fuel fabrication facility.

         In November 1999, after further evaluating the alternatives for surplus plutonium disposition, DOE issued the Surplus Plutonium Disposition Final EIS (“SPD EIS”).[3] DOE also analyzed a “No Action Alternative” that did not involve disposition of any surplus plutonium but rather addressed storage of the plutonium in accordance with its previous analysis of the impacts of continued storage of the surplus plutonium for a period up to 50 years.[4] DOE again concluded that the “Preferred Alternative” was the hybrid approach to immobilize surplus weapons-grade plutonium in glass and ceramic materials and to irradiate the remaining plutonium in MOX fuel in existing domestic, commercial reactors.[5] DOE selected SRS as the preferred site to implement both of these approaches and upon which to construct and operate the MOX Facility.

         In 1999, DOE signed a contract with a consortium, now CB&I AREVA MOX Services, LLC (“MOX Services”), to design, build, and operate the MOX Facility.[6] On or about February 28, 2001, MOX Services submitted a request to the U.S. Nuclear Regulatory Commission (“NRC”) for a license to construct the MOX Facility at SRS.[7] In late 2001, Congress directed DOE to provide, not later than February 1, 2002, a plan for the disposal of surplus defense plutonium located at SRS and to be shipped to SRS in the future. Congress also required the Secretary of Energy to:

• Consult with the Governor of South Carolina regarding “any decisions or plans of the Secretary related to the disposition of surplus defense plutonium and defense plutonium materials located at [SRS];”
• Submit a report to the congressional defense committees providing notice for each shipment of defense plutonium and defense plutonium materials to SRS;
• If DOE decides not to proceed with construction of the immobilization facilities or the MOX Facility, prepare a plan that identifies a disposition path for all defense plutonium and defense plutonium materials; and
• Include with the budget justification materials submitted to Congress in support of DOE's budget for each fiscal year “a report setting forth the extent to which amounts requested for the [DOE] for such fiscal year for fissile materials disposition activities will enable the [DOE] to meet commitments for the disposition of surplus defense plutonium and defense plutonium materials located at [SRS]….”[8]

         In 2002, DOE decided not to proceed with the immobilization portion of the hybrid strategy, leaving the construction and operation of the MOX Facility as the only strategy to dispose of surplus plutonium in the United States. In 2003, Congress enacted statutory requirements for DOE's construction and operation of the MOX Facility.[9] Specifically, Section 2566 provides the Congressional mandate for the “construction and operation of [the MOX Facility]” and requires DOE to achieve the “MOX production objective” by producing mixed-oxide fuel from defense plutonium and defense plutonium materials at an average rate of no less than one metric ton of mixed-oxide fuel per year.[10]

         In 2005, DOE began transferring plutonium to SRS for conversion into MOX fuel.[11] This plutonium was in addition to the several tons of plutonium that already existed at SRS. On or about March 30, 2005, after its own evaluation and analysis, NRC issued a license for construction to MOX Services finding, among other things, that radiation exposure to the public is greater in a “no action” alternative than with the Project and noting that “continued storage would result in higher annual impacts” of public radiation exposure than implementation of the Project.[12] Construction began on the MOX Facility on or about August 1, 2007.

         In 2014, the Federal Defendants sought to abandon the Project by trying to place the MOX Facility into “cold standby.” The State filed a lawsuit before the court, and the Federal Defendants then agreed to continue construction of the Project in compliance with law. The case was resolved through a stipulation of dismissal and dismissed without prejudice.[13] Since then, DOE's budget requests have all requested funding to terminate construction of the MOX Facility. However, Congress has specifically required the DOE and NNSA to utilize any MOX-specific appropriations for the construction of the MOX Facility, denying and rebuffing the attempts by DOE and NNSA to utilize Congressional appropriations to terminate the Project. Nevertheless, DOE has continuously sought termination of the MOX Project and has advocated for its proposed “Dilute and Dispose” alternative (also referred to as “downblending”), under which DOE would prepare surplus non-pit plutonium at SRS for disposal at the Waste Isolation Pilot Plant (“WIPP”) near Carlsbad, New Mexico.

         On December 20, 2017, the court issued an Injunction Order instructing the Federal Defendants that within two years from the entry of the Order, they “must remove from the State of South Carolina, for storage or disposal elsewhere, not less than one metric ton of defense plutonium or defense plutonium materials, as defined by 50 U.S.C. § 2566.” (See State of South Carolina v. United States et al, C/A No. 1:16-cv-00391-JMC (ECF No. 109.) On February 2, 2018, the Federal Defendants appealed the court's Injunctive Order. (See id. at ECF No. 113.)

         Despite the Federal Defendants' new preferred alternative, Congress has continued to require DOE to pursue construction of the MOX Facility. Congress specified that the Secretary can avoid this mandate only if the Secretary submits to the Congressional defense committees:

(A) the commitment of the Secretary to remove plutonium intended to be disposed of in the MOX facility from South Carolina and ensure a sustainable future for the Savannah River Site;
(B) a certification that-
(i) an alternative option for carrying out the plutonium disposition program for the same amount of plutonium as the amount of plutonium intended to be disposed of in the MOX facility exists, meeting the requirements of the Business Operating Procedure of the National Nuclear Security Administration entitled ‘Analysis of Alternatives' and dated March 14, 2016 (BOP-03.07); and
(ii) the remaining lifecycle cost, determined in a manner comparable to the cost estimating and assessment best practices of the Government Accountability Office, as found in the document of the Government Accountability Office entitled ‘Government Accountability Office (“GAO”) Cost Estimating and Assessment Guide' (GAO-09-3SP), for the alternative option would be less than approximately half of the estimated remaining lifecycle cost of the mixed oxide fuel program; and
(C) the details of any statutory or regulatory changes necessary to complete the alternative option.[14]

         In making the certification under Section 3121(b)(1)(B), the Secretary also must ensure that the estimates used “are of comparable accuracy.” National Defense Authorization Act (“NDAA”) FY18, § 3121(b)(2).[15]

         On or about May 10, 2018, DOE notified Congress of the Federal Defendants' decision to terminate and cease construction of the MOX Facility and its intent to pursue the “Dilute and Dispose approach to plutonium disposition.”[16] The Secretary further stated that the requirements of Section 3121 of NDAA FY 18 and Section 309 of the Consolidated Appropriations Act (“CAA”) FY18[17] had been met and that he therefore was exercising his authority to “cease MOX construction.” DOE and NNSA issued a Partial Stop Work Order on May 14, 2018 that halted any new contracts or new hires at SRS for the MOX Project.[18] DOE and NNSA intend to issue a full stop work order to begin the wind-down of the MOX Project and termination of employees on the MOX Project on or about Monday, June 11, 2018. (ECF No. 19-1 ¶ 10.)

         The State's present Motion requests that the court, by way of a preliminary injunction, bar the Federal Defendants and those under their supervision from terminating or stopping work on the Project. (See ECF No. 5). On June 4, 2018, the Federal Defendants filed a response in opposition (ECF No. 19), and on June 6, 2018, the State filed a reply (ECF No. 21). A hearing on this matter occurred on June 5, 2018 (ECF No. 20).


         A. Standing

         Standing is established where (1) there is an injury in fact; (2) the injury is “fairly traceable to the challenged action, ” and (3) it is likely that the alleged injury “will be redressed by a favorable decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). Further, standing is established when a plaintiff's legal action arguably falls within the “zone of interests” Congress intended to protect. See, e.g., Clarke v. Sec. Indus. Ass'n, 479 U.S. 388, 399 (1987) (“The “zone of interest” test is a guide for deciding whether, in view of Congress' evident intent to make agency action presumptively reviewable, a particular plaintiff should be heard to complain of a particular agency decision.”).

         1. Injury in Fact

         The State has alleged three separate injuries. (ECF No. 21 at 3.) The State alleges an economic injury, a procedural injury, and an environmental injury. (Id.) The Federal Defendants challenge the sufficiency of each of these injuries to fulfil the injury in fact requirement to support standing.

         The State asserts two forms of economic injury. First, the State argues that it will suffer an economic injury as a result of the decreased tax revenue stemming from the termination of the MOX Project. (ECF No. 5 at 26.) In short, the State's argument is that the employees at the MOX Project pay taxes to the State, and the termination of the MOX Project would lead to their unemployment, which would decrease the State's tax revenues. However, a state cannot bring a parens patriae action on behalf of its citizens to protect them from actions by the federal government. Massachusetts v. Mellon, 262 U.S. 447, 485-86 (1923).

         Further, the State's assertion that it is injured because individuals who are no longer employed on the construction of the MOX Facility will not pay the same amount of income taxes to the State fails to constitute an injury in fact. If a state is allowed to sue the federal government any time any federal action causes a generalized economic harm, such suits would dramatically expand the circumstances under which state governments are able to sue the United States. The courts that have considered such theories have accordingly rejected the notion that a state government can sue the United States based on such harm. See Pennsylvania v. Kleppe, 533 F.2d 668, 672 (D.C. Cir. 1976) (“the unavoidable economic repercussions of virtually all federal policies suggest[s] to us that impairment of state revenues should not, in general, be recognized as sufficient injury in fact to support state standing.”); Iowa ex rel. Miller v. Block, 77 F.2d 347, 353 (8th Cir. 1985).

         Secondly, the State posits that the termination of the Project would result in an economic injury because it was supposed to be an economic benefit to the State. (ECF No. 21 at 3.) The State quotes the Bob Stump National Defense Authorization Act for Fiscal Year 2003, which states that the MOX Project “will also be economically beneficial to the State of South Carolina, and that economic benefit will not be fully realized unless the MOX facility is built.” Pub. L. No. 107-314, 116 Stat. 2458, Subtitle E, § 3181. It is true that the MOX Project would have economic benefit for the State. However, the court does not equate a statement of purpose with the creation of a cause of action. Therefore, this theory also fails to satisfy the injury in fact requirement.

         The State also argues that it suffered two procedural harms as a result of the May 10, 2018 decisions. First, the State alleges that the Federal Defendants failed to adequately consult the Governor of South Carolina, as required by 50 U.S.C. § 2567(a), prior to making a decision “related to the disposition of surplus defense plutonium and defense plutonium materials located at the Savannah River Site, Aiken, South Carolina, ” § 2567(a). (ECF No. 21 at 3.) Courts have held that while it is difficult to quantify the exact effect of a failure to consult, the party is clearly injured. See Cal. Wilderness Coal. v. U.S. Dep't of Energy, 631 F.3d 1072, 1087 (9th Cir. 2011) (“[W]e note that although the nature of consultation makes it difficult to determine the precise consequences of its absence, the prejudice to the party excluded is obvious.”). Thus, the Federal Defendants' failure to consult with the Governor prior to making a decision regarding the MOX Project creates an injury in fact.

         Additionally, the State argues that it has suffered an injury in fact because of the Federal Defendants' failure to conform with the requirements of NEPA. (ECF No. 21 at 2.) “[I]ndividuals living next to [a federal project requiring NEPA analysis] possess standing to challenge a failure to comply with NEPA.” Hodges v. Abraham, 300 F.3d 432, 444-45 (4th Cir. 2002) (citing Lujan, 504 U.S. at 572 n.7). Similar to Governor Hodges, the plaintiff in Hodges, the State has standing here to challenge the Federal Defendants' failure to comply with NEPA because the State owns extensive property adjoining, and one road traversing, the impacted area. (See ECF No. 1 at ¶ 5.)

         Lastly, the State argues that it has suffered an environmental injury as a result of the May 10, 2018 decisions. “[W]hen a decision to which NEPA obligations attach is made without the informed environmental considerations that NEPA requires, the harm that NEPA intends to prevent has been suffered.” W. N.C. All. v. N.C. Dep't of Transp., 312 F.Supp.2d 765, 778 (E.D. N.C. 2003). It is the State's environment that is placed at risk as a result of the Federal Defendants' failure to comply with NEPA. Therefore, the State has suffered an injury in fact.

         Accordingly, the State has suffered procedural and environmental harms such that it has satisfied the injury in fact requirement.

         2. Causation and Redressability

         The procedural and environmental injuries discussed above are directly traceable to the Federal Defendants' decision to terminate the MOX Facility. The court is able to redress the procedural and environmental injuries. Accordingly, the State has satisfied the standing requirements to sue for violations of NEPA and NDAA FY 18.

         B. Administrative Procedure Act (“APA”) Jurisdiction

         The APA, 5 U.S.C.A. §§ 701 et seq., provides judicial review of final agency actions for which there is no other adequate remedy in a court. 5 U.S.C.A. § 704. A reviewing court shall hold unlawful and set aside agency action found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law, or in excess of statutory jurisdiction or authority, or without observance of procedure required by law. 5 U.S.C.A. § 706. An agency decision is:

arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.

Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983); Ohio River Valley Envtl. Coalition, Inc. v. Kempthorne, 473 F.3d 94, 102 (4th Cir. 2006) (same) (quoting Motor Vehicle Mfrs.). Accordingly, “the agency must examine the relevant data and articulate a satisfactory explanation for its action including a ‘rational connection between the facts found and the choice made.'” Motor Vehicle Mfrs., 463 U.S. at 43 (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962)).

         The Federal Defendants contend that the May 10 decision did not constitute the final agency action to terminate the MOX Facility, but instead was only “information reporting” to Congress, and thus, the State's claims are not justiciable or subject to judicial review under the APA. (ECF No. 19 at 20-22.) This assertion is directly refuted by the Federal Defendants' own affidavits. In support of their Response, the Federal Defendants submitted the declaration of Robert Raines, the DOE official responsible for MOX construction (and MOX termination), who testified:

The Secretary exercised the authorities given to him by the Congress on May 10, 2018 and on May 14, 2018 a partial stop work order was issued to minimize cos[t] to the government during the 30 day period leading up to an eventual full stop work order and the termination letter expected to be issued on June 11, 2018.

(ECF No. 19-1 ¶ 10) (emphasis added). Mr. Raines further testified regarding the “issuance of the NNSA Contract Termination Notice [for June 11, 2018, ]” (id. ¶ 18), the “termination notice date, ” (id. ¶ 19), and the “termination of the MOX Project, ” (id. ¶ 20). In addition, the Federal Defendants submitted the declaration of William Harris Walker, NNSA Director of Intergovernmental Affairs, who testified about “the execution of the MOX termination waiver.” (ECF No. 19-9 ¶ 7) (emphasis added). Accordingly, the Federal Defendants' contention that there has not been a final agency action to terminate the MOX Facility is directly refuted by the evidence submitted by the Federal Defendants and the practical reality that the full stop work order that is planned for June 11, 2018 will shut down the MOX Facility.

         Moreover, because the Federal Defendants' purported commitments and certifications set forth in the May 10 termination letter have legal consequences-namely leaving plutonium at SRS indefinitely and without the required environmental analysis under NEPA to determine the environmental consequences on the State and the potential alternatives-they consequently are reviewable by the court under the APA. “For an action to be “final” under the APA, it should (1) mark the conclusion of the agency's decision-making process; and (2) be an action by which rights or obligations have been determined or from which legal consequences flow.” Bennett v. Spear, 520 U.S. 154, 177-78 (1997). A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof. 5 U.S.C.A. §§ 702, 704, 706. Deciding whether the Federal Defendants' May 10 termination letter constituted final agency action therefore is based on “whether the agency has completed its decision-making process, and whether the result of that process is one that will directly affect the parties.” Franklin v. Massachusetts, 505 U.S. 788, 792 (1992).

         In Chamblee v. Espy, 100 F.3d 15 (4th Cir. 1996), the Fourth Circuit recognized this exact framework and that it is proper to consider the legal consequences that flow from the “practical effects” of an agency action. There, the Farmers Home Administration suspended a loan servicing request and argued that no final agency action had occurred because the suspension was “simply a pause in the decision-making process, which [would] be reactivated” at a later date. Chamblee, 100 F.3d at 18. The court held, however, that “[t]his argument overlooks the effect of the agency's decisions”whichwas to denythe request and, thus, “amounts to final agency action [that is] subject to judicial review according to the APA.” Id.; see Kershaw v. Resolution Tr. Corp., 987 F.2d 1206, 1208 (5th Cir.1993) (“In determining the finality of agency action a court should consider the “practical effect of the [agency's] determination.”).

         In the context of the Federal Defendants' actions, Section 3121 of the NDAA FY 2018 sets forth the general rule that the Secretary “shall carry out construction relating to the MOX facility” and can avoid this mandate only if he makes certain commitments and certifications. If the DOE action is allowed to stand, the contract with the MOX construction contractor will be terminated and the substantial labor force currently constructing the MOX Facility will be disbanded. At that point, the court's decision becomes irrelevant as there would be no feasible way to revive the MOX Project, there is no remedy for the NEPA violation, and no feasible alternative to plutonium removal.

         In making the contention that the State's claims are not justiciable, the Federal Defendants primarily rely upon the holding in Nat'l Res. Def. Council, Inc. v. Hodel, 865 F.2d 288 (D.C. Cir. 1988) to argue “[t]he sufficiency of [an] agency's response to Congress is . . . not justiciable pursuant to the APA.” (ECF No. 19 at 20) (emphasis added). In Hodel, the statute at issue directed the Secretary of the Interior to “indicate in detail to the President and Congress” its reasons for rejecting lease proposals under an Outer Continental Shelf gas and oil leasing program. Hodel, 865 F.2d at 316 (internal quotations omitted). The plaintiffs contended that the Secretary failed to provide adequate explanations for the rejection of certain proposals. In rejecting plaintiffs' claims, the Hodel court determined that the report was a “commonplace requirement” where “the designated Executive Branch officer is simply reporting back to the source of its delegated power in accordance with the Article I branch's instructions.” Id. at 317, 318. Moreover, the courtfound that there was no basis “for formulating judicially manageable standards by which to gauge the fidelity of the Secretary's response to the strictures of” the statute. Id. at 318.

         Despite the Federal Defendants attempt to characterize their obligations as mere “notifications, ” “responses, ” and “reports, ” the commitments and certifications required by NDAA FY18 are much more than a “purely informational” report that is “primarily a tool for [Congress'] own use without cognizable legal consequences.” Guerrero v. Clinton, 157 F.3d 1190, 1195, 1197 (9th Cir. 1988). Nor do they amount to simple “federal reporting requirements” with “no standards which this court could ...

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