Opposition Brief — Delmarva Power & Light Co. v. United States, 129 S. Ct. 2050 (2009) (No. 08-790)

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No. 08-790

Supreme Court of the Bnited

DELMARVA POWER & LIGHT COMPANY AND

ATLANTIC CITY ELECTRIC COMPANY,

Petitioners,

UNITED STATES AND

PSEG NUCLEAR, LLC AND

PUBLIC SERVICE ELECTRIC AND GAS COMPANY,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Federal Circuit

BRIEF FOR PSEG NUCLEAR, LLC AND

PUBLIC SERVICE ELECTRIC AND GAS

COMPANY IN OPPOSITION

JAY E. SILBERG

Counsel of Record

ALEX D. TOMASZCZUK

DANIEL S. HERZFELD

PILLSBURY WINTHROP

SHAW PITTMAN LLP

2300 N Street, NW

Washington, DC 20037

(202) 663-8000

Counsel for Respondents

PSEG NUCLEAR, LLC AND

PUBLIC SERVICE ELECTRIC

March 23, 2009 AND GAS COMPANY

Sota eer cetia cesarean Bo wear CE A AE SRP PON ROMO

WILSON-EPES PRINTING Co., INC. — (202) 788-0096 — WASHINGTON, D.C. 20002

QUESTIONS PRESENTED

1. Where the Assignment of Claims Act is intended

to protect the interests of the Respondent the United

States (“the Government”), may the Government

waive the requirements of that Act and accept an as-

signment of claims that a duly-constituted arbitra-

tion panel determined had been transferred to Res-

pondent PSEG Nuclear, LLC (“PSEG”) in connection

with PSEG’s purchase of Petitioners’ interests in the

nuclear plants?

2. Given the Government’s written consent to the

assignment of Petitioners’ takings claims and its

knowing waiver of the requirements of the Assign-

ment of Claims Act, were the U.S. Court of Federal

Claims, the U.S. Court of Appeals for the Federal

Circuit, the arbitration panel, and the New Jersey

state courts correct in recognizing the assignment as

valid, where the Purchase Agreements transferred

any takings claims to PSEG and gave PSEG complete

control over any litigation regarding those claims,

where Petitioners failed to notify PSEG that any

takings claims existed as required by the Purchase

Agreements, and where PSEG itself has pleaded a

takings claim against the Government, thereby

leaving PSEG as the sole claimant against the Gov-

ernment?

CORPORATE DISCLOSURE STATEMENT

PSEG Nuclear, LLC is a wholly-owned subsidiary

of PSEG Power, LLC. PSEG Power, LLC is a wholly-

owned subsidiary of Public Service Enterprise Group,

Incorporated, a publicly-traded holding company.

Public Service Electric and Gas Company is the pre-

decessor in interest to PSEG Nuclear, LLC; Public

Service Electric and Gas Company has issued no

shares to the public and is a wholly-owned subsidiary

of Public Service Enterprise Group, Incorporated, a

publicly-traded holding company.

TABLE OF CONTENTS

QUESTIONS PRESENTED

CORPORATE DISCLOSURE STATEMENT

CONSTITUTIONAL AND

PROVISIONS INVOLVED

STATEMENT OF THE CASE

REASONS FOR DENYING THE PETITION. ....

I. THIS COURTS PRECEDENT ALLOWS

THE GOVERNMENT TO WAIVE THE

REQUIREMENTS OF THE ASSIGN-

MENT OF CLAIMS ACT

. THE FEDERAL CIRCUITS CONCLU-

SION NEITHER CONFLICTS WITH

DOW NOR EXTINGUISHES A FIFTH

AMENDMENT TAKINGS CLAIM

. THIS CASE IS MOOT, BECAUSE ACE

AND DELMARVA ARE NO LONGER

THE REAL PARTIES IN INTEREST

AND HAVE NO FURTHER CAUSE OF

ACTION

CONCLUSION

APPENDIX CONTENTS

Arbitration Decision, PSEG Power LLC &

PSEG Nuclear LLC v. PEPCO Holdings,

Inc., Atlantic City Elec. Co., & Delmarva

FE Sa Gs. ticivernccteeecnutavininaavibtibicains

(iii)

TABLE OF CONTENTS—Continued

PSEG Power, LLC & PSEG Nuclear, LLC uv.

Atlantic City Elec. Co. & Delmarva Power

& Light Co., No. C-59-07, order and slip

op. (N.J. Super. Ct. June 20, 2007)

PSEG Power v. Atlantic City Elec., No. A-

002559-07T3, Order (N.J. Super. Ct. App.

Div. Oct. 6, 2008)

Contract for Disposal of Spent Nuclear Fuel

and/or High-Level Radioactive Waste for

Salem Generating Station (Excerpt)

Contract for Disposal of Spent Nuclear Fuel

and/or High-Level Radioactive Waste for

Hope Creek Generating Station (Excerpt) ..

Purchase Agreement By and- Between

Delmarva Power & Light Company and

PSEG Power LLC (Sept. 27, 1999)

(Excerpts)

Federal Arbitration Act,

9 U.S.C. § 9 (2006)

9 U.S.C. § 10 (2006)

9 U.S.C. § 13 (2006)

28 U.S.C. § 1738 (2006)

U.S. CONST.,

art. III, § 2

Page

TABLE OF AUTHORITIES

CASES Page

Bailey v. United States, 109 U.S. 432

(1883) 12, 13, 14, 15

Bail v. Halsell, 161 U.S. 72 (1896) 13

Boston Edison Co. v. United States, 80

Fed. Cl. 468 (2008). 17

Caldeira v. County of Kauai, 866 F.2d

1175 (9th Cir. 1989) 20

Centron Corp. v. United States, 585 F.2d

982 (Ct. Cl. 1978) 14

Delmarva Power & Light Co. v. United

States, 79 Fed. Cl. 205 (2007) 3, 7,8, 9,18

Delmarva Power & Light Co. v. United

States, 542 F.3d 889 (Fed. Cir. 2008)... 3, 4, 9, 10

Freedman’s Savs. & Trust Co. v. Shepherd,

127 U.S. 494 (1888) .

Goodman v. Niblack, 102 U.S. 556 (1880)... 10, 15

Hall St. Assocs., LLC v. Mattel, Inc., 128 S.

Ct. 1396 (2008)

Hobbs v. McLean, 117 U.S. 567 (1886)

In re Atlantic City Elec. Co., 90 F.E.R.C.

{| 61,268 (2000)

In re Atlantic City Elec. Co, No. EM9910870,

2000 WL 1273700 (N.J.B.P.U. July 21,

Keydata Corp. v. United States, 504 F.2d

1115 (Ct. Cl. 1974)

Martin v. Nat'l Surety Co., 300 U.S. 588

(1937)

McKenzie v. Irving Trust Co., 323 U.S. 365

TABLE OF AUTHORITIES—Continued

Page

Migra v. Warren City Schl. Dist. Bd. of

Ed., 465 U.S. 75 (1984)

Nat'l Bank of Commerce v. Downie, 218

U.S. 345 (1910)

North Carolina v. Rice, 404 US.

(1971)

Nutt v. Knut, 200 U.S. 12 (1906)

Patterson v. United States, 354 F.2d 327

(Ct. Cl. 1965)

Powell v. McCormack, 395 U.S. 486 (1969). 19

Rochester Gas & Elec. Co. v. United States,

65 Fed. Cl. 431 (2005)

Segal v. Rochelle, 382 U.S. 375 (1966)

Spofford v. Kirk, 97 U.S. 484 (1878)

United States v. Alaska S.S. Co., 253 U.S.

113 (1920)

United States v. Dow, 357 U.S. 17 (1958).... 11, 16

United States v. Gillis, 95 U.S. 407 (1877).. 15

Vt. Yankee Nuclear Power Corp. v. United

States, 84 Fed. Cl. 339 (2008)

Volt Info. Sciences, Inc. v. Bd. of Trs.,

U.S. CONSTITUTION & STATUTES

U.S. CONST.,

Assignment of Claims Act, 31 U.S.C.

§ 3727 (2006) .

Assignment of Contracts Act, 41 U.S.C.

§ 15 (2006)

vii

TABLE OF AUTHORITIES—Continued

Federal Arbitration Act,

9 U.S.C. § 9 (2006)

9 U.S.C. § 10 (2006)

9 U.S.C. § 13 (2006)

Nuclear Waste Policy Act, 42 U.S.C.

§ 10222 (2006) |

OTHER AUTHORITIES

15 JAMES WM. MOORE ET AL., MOORE’S

FEDERAL PRACTICE (3d ed. 2008)

183B CHARLES ALAN WRIGHT ET AL.,

FEDERAL PRACTICE & PROCEDURE (3d ed.

IN THE

Supreme Court of the Anited States

No. 08-790

DELMARVA POWER & LIGHT COMPANY AND

ATLANTIC CITY ELECTRIC COMPANY,

Petitioners,

, *

UNITED STATES AND

PSEG NUCLEAR, LLC AND

PUBLIC SERVICE ELECTRIC AND GAS COMPANY,

Respondents.

On Petition for a Writ ot Certiorari to the

United States Court of Appeals

for the Federal Circuit

BRIEF FOR PSEG NUCLEAR, LLC AND

PUBLIC SERVICE ELECTRIC AND GAS

COMPANY IN OPPOSITION

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

In addition to those provisions set forth in Petition-

ers’ appendix (“Cert App.”), Respondents PSEG Nuc-

lear, LLC and Public Service Electric and Gas Com-

pany (together “PSEG”) submit the pertinent

provisions of Article III and Article IV, Section 1 of

the U.S. Constitution, 28 U.S.C. § 1738 (2006), and the

Federal Arbitration Act, 9 U.S.C. §§ 9, 10, & 13 (2006)

in the attached Appendix at 73a-78a (“PSEG App.”).

STATEMENT OF THE CASE

PSEG built, and since their completion, has oper-

ated the Hope Creek and Salem nuclear generating

plants. Initially, PSEG owned 95% of the Hope

Creek unit, with Petitioner Atlantic City Electric

Company (“ACE”) owning the remaining 5%. With

respect to the Salem facility, PSEG initially owned

42.59%, Philadelphia Electric Company’ owned

42.59%, and ACE and Petitioner Delmarva Power &

Light Company (“Delmarva”) each owned 7.41%. See

generally In re Atlantic City Elec. Co., 90 F.E.R.C.

{@ 61,268, at 61,897-98 (2000) (discussing ownership

percentages of ACE, Delmarva, and PSEG before and

after sale).

In 1983, as required by the Nuclear Waste Policy

Act, 42 U.S.C. § 10222 (2006), PSEG entered into

contracts on its behalf and on behalf of its co-owners

with the U.S. Department of Energy (“DOE”) for the

disposal of the spent nuclear fuel generated by Hope

Creek and Salem. PSEG App. at 59a-60a. As a re-

sult of the DOE’s breach of its obligation to begin ac-

cepting spent nuclear fuel by 1998, all nuclear utili-

ties filed breach of contract lawsuits in the U.S.

Court of Federal Claims (“CFC”) against the United

States. PSEG filed its lawsuit in 2001. The Petition-

ers filed their lawsuits in 2004. The Petitioners’ law-

suits initially alleged that the Government’s failure

to perform caused a Fifth Amendment taking, but

they later added “protective” claims for breach of con-

1 Philadelphia Electric Company is now known as PECO

Energy Company and is a subsidiary of Exelon Corporation.

tract. See Delmarva Power & Light Co. v. United

States, 79 Fed. Cl. 205, 207 (2007) (“Delmarva I”),

Cert App. at 15a-16a.

Petitioners’ brought their lawsuits five years after

they sold their small, minority interests in the Hope

Creek and Salem facilities to PSEG for $30 million.

See Delmarva Power & Light Co. v. United States,

542 F.3d 889, 891 (Fed. Cir. 2008) (“Delmarva II”),

Cert App. at 3a. The 1999 sale was made “to comply

with state and federal regulatory policies,” Cert Pet.

at 6. The sale was reviewed and approved by the

New Jersey Board of Public Utilities, which con-

cluded that ACE and Delmarva received fair market

value for the sale of their interests, the position put

forward by ACE and Delmarva before that regulatory

agency. See In re Atlantic City Elec. Co., No. EM

99110870, 2000 WL 1273700, at *11-14 (N.J.B.P.U.

July 21, 2000).*

The purchase agreements between PSEG and Peti-

tioners for the sale of Petitioners’ minority interests

in the Salem and Hope Creek plants (“Purchase

Agreements”) set out in great detail the rights that

* The Board of Public Utilities’ decision directly contradicts

the claim in the National Association of Regulatory Utility

Commissioners’ (“NARUC”) brief Amicus Curiae that ACE and

Delmarva did not receive fair market value for their small

shares of the Hope Creek and Salem stations. See NARUC Brief

at 3-5; In re Atlantic City Elec. Co., 2000 WL 1273700, at *14

(“Based on the foregoing factors, the Board concludes that the

sale of the Company’s interest in its nuclear generating assets

to PSEG Power and PECO reflects the full market value of the

assets.”). NARUC’s support for its claim was the assertion by

the New Jersey Ratepayer Advocate which the Board of Public

Utilities did not adopt. See NARUC Brief at 4 n.7; In re Atlantic

City Elec. Co., 2000 WL 1273700, at *12-13. Notably, Petitioners

did not make the claim advanced by NARUC.

PSEG purchased for value, as well as the rights re-

tained by ACE and Delmarva. The Purchase Agree-

ments provided that PSEG “shall have all rights of

recovery from third parties and the Department of

Energy relating to, arising from or in connection with

the Department of Energy’s failure to take Spent

Nuclear Fuel.” Purchase Agreements § 2.6, PSEG

App. at 70a.° The Purchase Agreements expansively

defined the assets that PSEG was purchasing.

Purchase Agreements § 2.1, PSEG App. at 61a-63a.

Among the purchased assets were ACE and Del-

marva’s claims against the Government relating to

the Government’s failure to remove spent nuclear fuel:

All claims of Seller [Delmarva or ACE] relating

to or pertaining to the Department of Energy’s

defaults under the Department of Energy Stan-

dard Contract (including all claims for failure by

the Department of Energy to take Spent Nuclear

Fuel) accrued prior to, on or after the Closing

Date, whether relating to periods prior to, on or

after the Closing Date, and all other claims of

Seller against the Department of Energy with re-

spect to, arising out of or in connection with the

Purchased Assets....

Purchase Agreements § 2.1(1), PSEG App. at 63a;

Delmarva IT, 542 F.3d at 892, Cert App. at 4a-5a.

More broadly, the Purchase Agreements assigned all

of ACE and Delmarva’s claims against any third-

parties to PSEG and recognized this assignment as

part of PSEG’s purchased assets:

* For ease of reference, PSEG includes excerpts of only one of

the Purchase Agreements in the appendix because of the mate-

rially identical terms of the Agreements as pertinent to this case.

The rights of Seller [Delmarva or ACE] in, to and

under all causes of action against third parties

with respect to, arising out of or in connection

with Seller’s rights, title and interests in and to

the Purchased Assets or the Assumed Liabilities,

or any portion thereof, whether accruing prior to,

on or after the Closing Date....

Purchase Agreements § 2.1(m), PSEG App. at 63a.

Significantly, ACE and Delmarva also agreed that

PSEG “shall be entitled exclusively to control, defend

and settle any suit, action or proceeding, and any in-

vestigation arising out of or related to any Purchased

Assets or Assumed Liabilities ....” Id. § 2.5(b), PSEG

App. at 69a.

In addition to the $30 million purchase price,

PSEG assumed a long list of Petitioners’ liabilities as

part of the consideration for PSEG’s purchase, in-

cluding “all on-site environmental liabilities” and “all

decommissioning liabilities associated with the Nuc-

lear assets.” See, e.g., In re Atlantic City Elec. Co,

2000 WL 1273700, at *9. ACE and Delmarva did not

have to provide any funds toward the decommis-

sioning trust fund as would normally be the case in

the sale of nuclear assets. See, e.g., id. PSEG assumed

“lajll liabilities and obligations of [ACE and Delmarva]

in respect of Spent Nuclear Fuel” with only a single

exception not relevant to this case. Purchase

Agreements § 2.3(f), PSEG App. at 68a.

The Purchase Agreements specifically defined the

assets that were excluded from the sale in fourteen

specific asset categories. Id. § 2.2, PSEG App. at 64a-

68a. ACE and Delmarva point to no provision that

even suggests that the takings claims that ACE and

Delmarva assert that they retained were among the

assets that ACE and Delmarva did not sell to PSEG.‘

Additionally, the Purchase Agreements required

Delmarva and ACE to disclose to PSEG any eminent

domain or takings claims that existed prior to closing

the sale of their interests: Id. § 6.8, PSEG App. at

70a-71a.

(lf before the Closing Date, all or any portion of

the Purchased Assets is . . . condemned or taken

by eminent domain or is the subject of a pending

or threatened condemnation or taking which has

not been consummated .. . Seller shall notify

Buyer promptly in writing of such fact, and .. . in

the case of a condemnation or taking, Seller

shall assign or pay, as the case may be, any

proceeds thereof to Buyer at the Closing ....

Id., PSEG App. at 70a. ACE and Delmarva never no-

tified PSEG of any pending or threatened taking by

the Government prior to the closing of the sale of

their Hope Creek and Salem minority shares to

PSEG.

One of the most material events impacting this

case—and one that is nowhere to be found in the Pe-

tition—is the parties’ arbitration as to the assign-

ment of Petitioners’ takings claims. In view of law-

suits that Petitioners filed notwithstanding the

provisions of the Purchase Agreements, in January

2007 PSEG invoked the Purchase Agreements’ arbi-

tration provision based on Petitioners’ assignment of

* The Excluded Assets explicitly identified other litigation

claims that ACE and Delmarva retained. Purchase Agreements

§ 2.2(1), PSEG App. at 66a-67a (claims relating to the DOE De-

commissioning and Decontamination fees); id. § 2.2(m), PSEG App.

at 67a (pending action against Westinghouse Electric Corporation).

their takings claims against the United States to

PSEG. See Delmarva I, 79 Fed. Cl. at 208-09, Cert

App. 17a-18a.5 Shortly thereafter, Delmarva and

ACE filed their own arbitration demand pursuant to

the Purchase Agreements, asserting that no such as-

signments had been made. The CFC stayed ACE and

Delmarva’s cases pending the resolution of the arbi-

tration. Thereafter, Delmarva, ACE, and PSEG en-

tered binding arbitration to determine whether Peti-

tioners had assigned their takings claims against the

Government to PSEG.

On June 20, 2007, a three-person arbitration panel

that included retired-Judge Michael Mukasey (and

later Attorney General of the United States) issued a

decision concluding that “ACE/Delmarva assigned

the takings claims at issue here to PSEG, and that

ACE/Delmarva’s initiation of its takings litigation

and its refusal to dismiss the litigation breached the

[Purchase Agreements].” PSEG App. at 24a. Look-

ing at the language in the Purchase Agreements

(quoted above, in pertinent part), the arbitration

panel ruled:

These broad assignments make no exceptions for

particular kinds of claims, and the detailed Ex-

cluded Assets list in the [Purchase Agreements]

make no mention of any takings claims... . It is

hard to imagine a more comprehensive assign-

ment of claims. On their face, the [Purchase

Agreements] leave no doubt that the takings

claims at issue here were assigned to PSEG and

®° The Purchase Agreements’ arbitration mechanism provides

“the sole remedy available to either Party” in the event of a dis-

pute “relating to or arising out of any provisions of” the Pur-

chase Agreements. Purchase Agreements § 8.3(a), PSEG App.

at 71la-72a.

that PSEG received the exclusive right to control

the litigation over the claims.

* *£ * *

The Purchased Assets explicitly include [spent

nuclear fuei (“SNF”)], and the takings claims in-

disputably arise out of or are in connection with

[the Department of Energy’s! failure to take

SNF. Accordingly, it is irrelevant whether the

takings claims arise from the Standard Contract

or from some other source—in either case, they

are covered by the [Purchase Agreements] as-

signment clauses.

Id. at 18a-19a.

On June 22, 2007, PSEG filed a complaint in the

Superior Court of New Jersey (“Superior Court”) to

confirm the arbitration award. Delmarva I, 79 Fed.

Cl. at 210, Cert App. at 20a. As PSEG pursued con-

firmation of the arbitration award in the Superior

Court, ACE and Delmarva moved -to vacate the arbi-

tration ruling before the CFC, which denied the mo-

tion for lack of jurisdiction. Delmarva I, 79 Fed. Cl.

at 210, 213, Cert App. at 20a, 29a (“[T)his court does

not possess the power to disturb an arbitration

created by an agreement between private parties and

involving those private parties. For this reason,

plaintiffs’ motion to vacate the arbitration ruling is

denied.”). In the course of the CFC’s proceedings on

ACE and Delmarva’s motion to vacate the arbitration

decision, the Government accepted Delmarva and

ACE’s assignment of their takings claims to PSEG.

Cert App. at 5la-54a.

On December 19, 2007, the Superior Court con-

firmed the arbitration award to PSEG over Delmarva

and ACE’s objections. The New Jersey court ruled

that whether the arbitration panel’s ruling “will re-

lieve the United States from its obligation to pay just

compensation for its taking is irrelevant towards de-

termining the scope of the arbitration clause in the

[Purchase] Agreements.” PSEG App. at 48a. The

New Jersey court further noted:

The arbitration panel’s function was not to de-

termine the ultimate result from the assignment

of [Delmarva and ACE’s] takings claims, but

whether [Delmarva and ACE’s] takings claims

were in fact transferred to [PSEG] as part of the

Purchased Assets under the [Purchase] Agree-

ments. Nor did the arbitration panel decide

what would become of [Delmarva and ACE’s]

takings claims; rather it simply found that the

Agreements’ assignment language included

[Delmarva and ACE’s] takings claims and that

the Assignment of Claims Act did not act as an

absolute prohibition of [Delmarva and ACE’s] as-

signment of their takings claims to Plaintiffs.

Id. The Superior Court confirmed the arbitration

award. Delmarva and ACE appealed the decision

confirming the award to the Superior Court of New

Jersey—Appellate Division, but withdrew their ap-

peal after the U.S. Court of Appeals for the Federal

Circuit (“Federal Circuit”) in Delmarva II affirmed

the CFC’s decision in Delmarva I regarding the Gov-

ernment’s ability to waive the Assignment of Claims

Act. The New Jersey appellate couri then dismissed

the appeal. PSEG App. at 54a.

REASONS FOR DENYING THE PETITION

The Fed>ral Circuit’s decision is correct—the Gov-

ernment tay waive the requirements of the Assign-

ment of Claims Act. Contrary to ACE and Del-

marva’s contentions, the Federal Circuit decision is

consistent with Supreme Court precedent, the Fifth

Amendment, and the Assignment of Claims Act. The

Federal Circuit properly applied the law to the facts

of this unremarkable case. Even aside from the As-

signment of Claims Act issue, the Federal Circuit

also could have simply upheld the CFC’s determina-

tion that it lacked jurisdiction to overturn the arbi-

tration decision, which conclusively determined that

ACE and Delmarva had no right to pursue their

takings claims. Thus, ACE and Delmarva can re-

ceive no further relief rendering this appeal moot.

I. THIS COURT'S PRECEDENT ALLOWS

THE GOVERNMENT TO WAIVE THE

REQUIREMENTS OF THE ASSIGNMENT

OF CLAIMS ACT

Contrary to Petitioners’ attempt to turn the Gov-

ernment’s Assignment of Claims Act shield into Peti-

tioners’ sword, the Federal Circuit properly concluded

that the Government may recognize an assignment

and waive the application of the Assignment of

Claims Act. See Delmarva II, 542 F.3d at 893, Cert

App. at 8a (“We see no valid reason why the govern-

ment should not ... be able to waive the Anti-

Assignment Act’s prohibition in section 3727(a)

against the assignment of claims.”). This Court has

reguiazly noted that the Act’s “sole purpose was to

protect the government, and not the parties to the as-

signment.” Goodman v. Niblack, 102 U.S. 556, 560

(1880); see also Martin v. Natl Surety Co., 300 U.S.

588, 594 (1937) (“The provisions of the statute mak-

ing void an assignment or power of attorney by a

Government contractor are for the protection of the

Government.”).

This Court (and lower courts) have repeatedly

stated that the Assignment of Claims Act protects the

Government, among other ways, by assuring that the

Government will not have to face multiple claimants.

See United States v. Dow, 357 U.S. 17, 26 (1958) (“To

require the Government to deal with more than one

party, particularly when division of the condemna-

tion award would entail a complex apportionment,

might severely impede the orderly progress of con-

demnation proceedings and would conflict with the

policies underlying the Anti-Assignment Act.”);

Hobbs v. McLean, 117 U.S. 567, 576 (1886) (stating

that the Assignment of Claims Act, among other acts,

was “passed in order that the government might not

be harassed by multiplying the number of persons

with whom it had to deal”); Keydata Corp. v. United

States, 504 F.2d 1115, 1118 (Ct. Cl. 1974) (“Over the

years [the Assignment of Claims Act] has consis-

tently been recognized by the courts to have two pur-

poses-—primarily, to prevent fraud; and secondarily,

to avoid multiple litigation.”) (quoting Patterson uv.

United States, 354 F.2d 327, 329 (Ct. Cl. 1965)). ACE

and Delmarva’s lawsuit flies in the face of this fun-

damental purpose of the Act. They seek here to void

an assignment and employ the Act to assure that the

Government will face multiple litigants. ACE and

Delmarva effectively request that this Court turn the

Act upside down by requiring the Government to de-

fend claims by multiple litigants—Delmarva, ACE,

and PSEG—involving the same two power plants

(Salem and Hope Creek). The lower courts’ conclu-

sions better comport with the purpose of the statute

by allowing the Government to recognize the assign-

ment of the takings claims, thus leaving PSEG as the

sole claimant.®

Because the Act is for the sole benefit of the Gov-

ernment and its purpose is to allow the Government

to avoid facing multiple litigants, the Government

may waive the Act’s protection to face only one liti-

gant. This Court has long held that the Government

may recognize a claim, even where an assignment vi-

olates an explicit requirement of the Act. In Bailey v.

United States, 109 U.S. 432, 435-436 (1883), an as-

signor that had executed a power of attorney at-

tempted to recover an amount from the Government,

which paid the assignes attorney-in fact. The as-

signment of claims in Bailey occurred prior to the

Government allowing the claim and before a warrant

issued for payment—both requirements of the Act

that ACE and Delmarva incorrectly assert may never

be waived.’ See id. at 438-39 (“The question is

whether payment to one who has been authorized to

receive it, by the power of attorney executed before

the allowance of the claim by act of Congress, was

® In their Cert Petition at 16, ACE and Delmarva complain

that the Federal Circuit relied on cases relating to the Assign-

ment of-Contracts Act, 41 U.S.C. § 15 (2006) and that the Fed-

eral Circuit mistakenly treated the Assignment of Contracts Act

and the Assignment of Claims Act as being essentially inter-

changeable. However, this Court has similarly discussed both

statutes interchangeably and recognized that the two statutes

have the same goal of protecting the Government. See Hobbs,

117 U.S. at 574, 576 (“The sections under consideration [in-

cluding the Assignment of Claims Act and the Assignment of

Contracts Act] were passed for the protection of the government.”).

7 See 31 U.S.C. § 3727(b) (2006) (“An assignment may be

made only after a claim is allowed, the amount of the claim is

decided, and a warrant for payment of the claim has been is-

sued.”), Cert. App. at 42a.

good as between the government and claimant,

where, at the time of payment, such power of attor-

ney was unrevoked.”) (emphasis added); see also Ball

v. Halsell, 161 U.S. 72, 79 (1896) (discussing Bailey

and noting that the Assignment of Claims Act did not

“enable the original claimant to recover of the United

States a sum once paid by the United States to his

attorney in fact, holding a power of attorney, made

before allowance of the claim and the issue of the war-

rant, and remaining unrevoked”) (emphasis added);

Freedman’s Savus. & Trust Co. v. Shepherd, 127 U.S.

494, 505-06 (1888) (noting that the Government could

have refused to recognize an assignment because it

failed to comply with the Assignment of Claims Act,

but “[hjere, the officers of the government chose to

recognize the assignment”). In Bailey, the Govern-

ment paid the assignee attorney-in-fact and recog-

nized the assignment; this Court approved the prac-

tice. See Bailey, 109 U.S. at 440 (“It seems to us—

looking at the mischiefs intended to be remedied by

these statutes and giving the words of Congress a

reasonable interpretation—that the claimants were

not at liberty, as between the government and them-

selves, to question the right of the officers of the trea-

sury to recognize the unrevoked authority which the

latter had given [the agent assignee], without restric-

tion as to time, to receive from any one whom it

might concern to pay all sums of money due or to be-

come due and payable... .”). Thus, this Court has

approved the Government’s practice of recognizing

assignments that fail to meet the requirements of the

Assignment of Claims Act.*®

® ACE and Delmarva assert that McKnight v. United States,

98 U.S. 179 (1878) concluded that the Government “could not

waive” the Assignment of Claims Act on an “unascertained”

Moreover, ACE and Delmarva seek to invoke the

Assignment of Claims Act to protect their interests to

the detriment of the Government and PSEG. Yet,

this Court has stated that private parties may not in-

voke the Assignment of Claims Act to void an as-

signment as against the United States or other pri-

vate parties. Bailey, 109 U.S. at 439 (reasoning that

where Government “officers chose to make payment

to the person whom the claimant, by formal power of

attorney, has accredited to them as authorized to re-

ceive payment, the claimant cannot be permitted to

make his own disregard of the statute the basis for

impeaching the settlement had with his agent”) (em-

phasis added); see also McKenzie v. Irving Trust Co.,

323 U.S. 365, 369 (1945) (“The provisions of the sta-

tute governing assignments of claims against the

Government are for the protection of the Government

and not for the regulation of the equities of the clai-

mants as between themselves.”); Centron Corp. v.

United States, 585 F.2d 982, 986 n.3 (Ct. Cl. 1978)

(“The Act .. . does not invalidate any contractual

rights or equities as between the private parties to an

assignment that does not satisfy the Act.”). ACE and

Delmarva have cited to no cases, and we know of

none, where a private party successfully invoked the

claim. Cert Pet. at 12. However, McKnight actually concluded

that the Government may waive the Act by paying an assignee.

McKnight, 98 U.S. at 185-86 (“It is true the assignment was

contrary to law, and therefore a nullity, but there was nothing

contrary to good morals or conscience in the payment or receipt

of the money.”). Also, McKnight did not involve an “unascer-

tained” portion of a claim. The unpaid amounts in McKnigit

were not “unascertained,” but instead related to the Govern-

ment’s decision to set off a debt owed by the assignor from the

payment made to the assignees. See id. at 186. .

Assignment of Claims Act to challenge the Govern-

ment’s waiver of the Act’s requirements.

In contrast to the precedent discussed above, ACE

and Delmarva seek to rely on the construction of the

Assignment of Claims Act found in Spofford v. Kirk,

97 U.S. 484, 489-90 (1878), United States v. Gillis, 95

U.S. 407 (1877), Nutt v. Knut, 200 U.S. 12 (1906), and

National Bank of Commerce v. Downie, 218 U.S. 345

(1810). See Cert Pet. at 12-16. Yet, the Federal Cir-

cuit was correct to limit the reach of this line of cases.

This Court itself did so over 70 years ago. In 1937,

this Court reviewed these exact four cases, noted that

they strictly construed the Act, but also noted that

“falnother line of cases exhibit an opposing ten-

dency.” Martin, 300 U.S. at 596 (citing, inter alia,

Goodman, Bailey, and Freedman’s Savings).®° The

Court expressed its preference for the second line of

cases, which “teach us that the statute must be in-

terpreted in the light of its. purpose to give protection

to the Government.” Id.; see also id. at 597 (“To the

extent that the two lines of cases are in conflict, the

second must be held to be supported by the better

reason.”). Thus, this Court rejected ACE and Del-

marva’s primary contention over 70 years ago.*°

® Long before Martin, in Bailey this Court distinguished Spof-

ford’s construction of the Assignment of Claims Act to void an

assignment between two private parties. Spofford, 97 U.S. at

489-90. In Bailey, this Court acknowledged that “[n]o question

arose in that case [Spofford v. Kirk] as to what would have been

the effect upon the rights of the claimant had the officers of the

government recognized the assignment to Spofford.” Bailey, 109

USS. at 437.

10 ACE and Delmarva failed to mention Martin, much less

distinguish it in their petition.

Il, THE FEDERAL CIRCUIT’S CONCLUSION

NEITHER CONFLICTS WITH DOW NOR

EXTINGUISHES A FIFTH AMENDMENT

TAKINGS CLAIM

Contrary to Petitioners’ assertion, Cert Pet. at 9-

11, the Government may recognize an assignment of

a takings claim and waive the Assignment of Claims

Act just as it may do so for any other type of assigned

claim. The Federal Circuit’s conclusion below does

not conflict with United States v. Dow, 357 U.S. 17

(1958). Nor do the decisions below extinguish any

takings claims under the Fifth Amendment, because

PSEG has pled a takings claim against the Govern-

ment (albeit under a different theory of recovery).

In United States v. Dow, the Government actively

opposed an assignment of a takings claim and moved

for summary judgment, seeking dismissal of the as-

signee-plaintiffs untimely claim as filed outside the

statute of limitations. See, e.g., Dow, 357 U.S. at 19.

The Government did not waive the Assignment of

Claims Act; quite the opposite. The Government ac-

tively opposed the assignee’s right to make a claim.

Here, the Government has recognized the assignment

consistent with the conclusion of a confirmed arbitra-

tion decision between PSEG, ACE, and Delmarva.

ACE and Delmarva also misread the import of

Rochester Gas & Elec. Co. v. United States, 65 Fed.

Cl. 431 (2005). See Cert Pet. at 11. The Government

never recognized the assignment of the takings claim

involved in Rochester. See generally Rochester, 65

Fed. Cl. at 441-42. Moreover, unlike here, the buyer

in Rochester did not previously own and operate the

nuclear plant at issue. See id. at 433. Additionally,

the sale in Rochester only involved a partial assign-

ment, leaving the seller with future obligations to the

Government such as the “one-time fee payment”

owed to the Government when performance even-

tually begins under the Standard Contracts. See id.

Here, the assignment was complete, not partial; and,

in fact, the arbitration panel noted that “[i]t is hard

to imagine a more comprehensive assignment of

claims.” PSEG App. at 18a.”

Also, ACE and Delmarva exaggerate the effect of

the Federal Circuit’s ruling, claiming it will “extin-

guish” a takings claim here and allow the Govern-

ment “to prevent any property owner from receiving

just compensation for a taking” under the Fifth

Amendment in numerous other cases. Cert Pet. at

11, 19 (emphasis in original). Here, however, PSEG

is pursuing a takings claim against the Government

regarding the Hope Creek and Salem plants, albeit

under a different theory of recovery. The Govern-

ment’s recognition of the assignment to PSEG has

not extinguished the takings claim merely because

PSEG is pursuing the takings claim under a different

theory than ACE and Delmarva intended to pursue.

There is no danger in this case (or in similar suits in-

" In view of Petitioners’ reliance on Rochester, it is notewor-

thy that the trial judge in Rochester later dealt with the as-

signment issue in another spent nuclear fuel case—Boston Edi-

son Co. v. United States, 80 Fed. Cl. 468 (2008)—in which he

emphasized the importance of looking at the specific assignment

language in a purchase agreement. In Boston Edison, the trial

judge recognized the comprehensive nature of the assignment

language in the agreements between Delmarva, ACE, and

PSEG. See Boston Edison, 80 Fed. Cl. at 496 (discussing Del-

marva, 79 Fed. Cl. at 216 and noting that ACE and Delmarva

“had no cause of action after assigning their claims against the

DOE”). Ultimately, Rochester and Boston Edison support

PSEG’s position that each case requires a fact-intensive review

and, because of this, the resolution of this case will have little

effect on other spent fuel cases currently pending.

volving competing claims by an assignor and assig-

nee) that takings will go uncompensated. As oc-

curred here, the Government will have the discretion

(as it always has) to recognize an assigned takings

claim and litigate with the assignee alone. No tak-

ings claim has been extinguished, just the assignors’

ability to recover a share of any just compensation

after they had bargained away these claims when

they sold their minority interests in the nuclear

plants.

The case law does not support ACE and Delmarva’s

characterization that the assignment of a takings

claim is somehow unique and different from other as-

signments subject to the Assignment of Claims Act;

or, that the Government’s recognition of an assign-

ment somehow extinguishes a right to just compensa-

tion. Regardless of the type of claim involved, the

law allows the Government to recognize an assign-

ment that fails to comply with the various technical

requirements of the Act.

Ill, THIS CASE IS MOOT, BECAUSE ACE

AND DELMARVA ARE NO LONGER THE

REAL PARTIES IN INTEREST AND

HAVE NO FURTHER CAUSE OF ACTION

While the Federal Circuit properly concluded that

the Government could recognize ACE and Delmarva’s

assignment of their claims to PSEG, the Federal Cir-

cuit would have been equally justified in concluding

that ACE and Delmarva no longer constitute the real

parties in interest and have no further cause of action

due to the assignment. The CFC, in fact, concluded

that it lacked jurisdiction to invalidate the arbitra-

tion award. See Delmarva I, 79 Fed. Cl. at 210, 213,

Cert App. at 27a-29a. Given this finding, coupled

with Petitioners’ withdrawal of their appeal chal-

lenging the confirmation of the arbitration award in

the New Jersey courts, the instant appeal no longer

states a viable cause of action. The appeal is moot.

Under Article III of the Constitution, this Court

only has power to render a decision based on an ac-

tual case or controversy; and federal courts are not

“empowered to decide moot questions or abstract

propositions ....” North Carolina v. Rice, 404 US.

244, 246 (1971) (quoting United States v. Alaska S.S.

Co., 253 U.S. 113, 116 (1920)). A parallel proceeding

in another court may render a case moot by deciding

an issue central to the litigation. See Powell v.

McCormack, 395 U.S. 486, 496 (1969) (“Simply

stated, a case is moot when the issues presented are

no longer ‘live’ or the parties lack a legally cognizable

interest in the outcome.”); see also 15 JAMES WM.

MOORE ET AL., MOORE’S FEDERAL PRACTICE § 101.93[3],

at 101-176.1 (3d ed. 2008) (“When pending litigation

involves a legal issue that is later disposed of in

another forum, the resolution of the issue or claim

may render the pending lawsuit moot, provided that

the resolution of the claim in the other forum is con-

clusive.”); 13B CHARLES ALAN WRIGHT ET AL., FEDERAL

PRACTICE & PROCEDURE § 3533.2.1, at 825-26 (3d ed.

2008) (“Mootness may result from action by the same

tribunal or another one that forecloses relief rather

than grants it.”).

Here, the arbitration decision conclusively deter-

mined that ACE and Delmarva have no right to bring

the claims in the instant case based on their assign-

ment of those claims to PSEG. This Court has noted

that a state court can enforce the transfer of claims

between parties even if the assignment violates the

Assignment of Claims Act. See Segal v. Rochelle, 382

U.S. 375, 384-85 (1966). The arbitration decision has

been confirmed in New Jersey Superior Court and

ACE and Delmarva withdrew their appeal, which

makes it final.

The confirmation of the arbitration decision in New

Jersey state court should be accorded full faith and

credit by this Court under Article IV, Section 1 of the

U.S. Constitution and its implementing statute, 28

U.S.C. § 1738. See Migra v. Warren City Schl. Dist.

Bd. of Ed., 465 U.S. 75, 81 (1984) (“It is now settled

that a federal court must give to a state-court judg-

ment the same preclusive effect as would be given

that judgment under the law of the State in which

the judgment was rendered.”); Caldeira v. County of

Kauai, 866 F.2d 1175, 1178 (9th Cir. 1989) (“The

state court’s confirmation of the arbitration award

constitutes a judicial proceeding for purposes of [28

U.S.C.] section 1738, and thus must be given the full

faith and credit it would receive under state law.”);

see also 9 U.S.C. § 13(c) (2006) (an arbitration award

confirmed in court “shall have the same force and ef-

fect, in all respects, as, and be subject to all the pro-

visions of law relating to, a judgment in an action;

and it may be enforced as if it had been rendered in

an action in the court in which it is entered”), PSEG

App. at 75a. As between Petitioners and PSEG,

Petitioners can no longer assert ownership of the

claims and should be precluded from pursuing their

claims. Ultimately, ACE and Delmarva are no longer

the real parties in interest under Rule 17(a) of the

Court of Federal Claims, which requires that “[e]very

action shall be prosecuted in the name of the real

party in interest.” This case is moot, because ACE

and Delmarva are no longer the real parties in

interest to pursue these claims and are precluded

from asserting otherwise.”

Also, because ACE and Delmarva no longer own

the claim, they no longer have a cause of action to

pursue in the CFC. In another spent nuclear fuel

case interpreting similar language in another pur-

chase agreement for a nuclear station, the CFC con-

cluded that the selling utility retained no claim and

its case should be dismissed with prejudice. Vt. Yan-

kee Nuclear Power Corp. v. United States, 84 Fed. Cl.

339, 340 (2008) (“Lacking any actionable claims that

were not transferred to [the purchaser] in the sale of

the Power Station, {the seller’s] Complaint and First

Amended Complaint are dismissed with prejudice.”).

The same conclusion applies here. ACE and Del-

marva assigned their claims to PSEG and no longer

have a cause of action to pursue (regardless of the ef-

fect of the Assignment of Claims Act). Even if this

case were somehow returned to the CFC, the CFC

will ultimately dismiss this case based on this alter-

native ground. Thus, this appeal is moot and ACE

and Delmarva can receive no further relief.

12 Also, allowing ACE and Delmarva to continue their cases

despite the arbitration decision would undermine the Federal

Arbitration Act, 9 U.S.C. §§ 9 & 10, and the strong federal pol-

icy, which favors arbitration “to ensure the enforceability, ac-

cording to their terms, of private agreements to arbitrate.” Volt

Info. Sciences, Inc. v. Bd. of Trs., 489 U.S. 468, 476 (1989). - The

Federal Arbitration Act limits review of arbitration decisions to

the explicit grounds stated ir the FAA and may not be expanded

“to the point of evidentiary and legal review generally.” See

Hall St. Assocs., LLC v. Mattel, Inc., 128 S. Ct. 1896, 1404 (2008).

ACE and Delmarva’s continued pursuit of their cases in the

federal courts undermines the binding arbitration award and

constitutes a naked attempt to forum shop and re-litigate the

unfavorable decision of the arbitration panel, which decision was

reviewed, affirmed, and is final for all purposes in New Jersey.

CONCLUSION

For the foregoing reasons, ACE and Delmarva’s

Ce:c Petition should be denied.

Respectfully submitted,

JAY E. SILBERG

Counsel of Record

ALEX D. TOMASZCZUK

DANIEL S. HERZFELD

PILLSBURY WINTHROP

SHAW PITTMAN LLP

2300 N Street, NW

Washington, DC 20037

(202) 663-8000

Counsel for Respondents

PSEG NUCLEAR, LLC AND

PUBLIC SERVICE ELECTRIC

March 23, 2009 AND GAS COMPANY

APPENDIX

APPENDIX A

IN THE MATTER OF THE ARBITRATION OF:

PSEG PowWER LLC, and PSEG NUCLEAR LLC,

Claimants,

Vv.

PEPCO HOLDINGS, INC., ATLANTIC CITY ELECTRIC Co.,

and DELMARVA POWER AND LIGHT Co.,

Respondents.

ATLANTIC CITY ELECTRIC Co., and

DELMARVA POWER AND L‘GHT Co.,

Claimants,

PSEG POWER LLC, and PSEG NUCLEAR LLC,

Respondents.

Opinion and Order

The parties have filed reciprocai arbitration de-

mands seeking this Panel’s consideration of whether

PSEG Power LLC and PSEG Nuclear LLC (collec-

tively, “PSEG”) waived its right to arbitrate its

claim that Atlantic City Electric Co. (“ACE”) and

Delmarva Power and Light Co. (“Delmarva,” and,

collectively with ACE, “ACE/Delmarva”)' assigned

Fifth-Amendment-based takings claims against the

United States to PSEG, and, if not, whether such

assignments were made. For the reasons outlined

1 Although PEPCO Holdings, Inc. (“PEPCO”), the parent of

ACE and Delmarva, is named as a respondent in PSEG’s de-

mand, it is not a claimant in ACE/Delmarva’s demand and ap-

parently is not being represented by ACE/Delmarva’s lawyers

(according to the signature blocks on the briefs). Because there

has been no attempt by PEPCO to object to the arbitration, it

should be bound by this decision.

below, we find that PSEG did not waive or otherwise

lose its right to arbitrate, and that the takings claims

at issue were assigned to PSEG.

FACTS & PROCEDURAL POSTURE

The factual background is largely undisputed and

is set forth in material part below.

I. SPENT NUCLEAR FUEL REGULATION

Spent nuclear fuel (“SNF”) is fuel that has been

withdrawn from a nuclear reactor following irradia-

tion, the constituent elements of which have not been

separated by reprocessing. 42 U.S.C. § 10101(23).

Under the Nuclear Waste Policy Act of 1982

(“NWPA”), “the Federal Government has the respon-

sibility to provide for the permanent disposal of...

[SNF] as may be disposed of in order to protect the

public health and safety and the environment.” Id.

§ 10131(aX4). However, “the costs of such disposal

should be the responsibility of the generators and

owners of such... [SNF].” Id.

Pursuant to the above mandate, the Department of

Energy (“DOE”) was tasked with constructing a fa-

cility for the long-term storage of SNF. See id.

§ 10131(b). In order to cover the costs of building and

maintaining a facility to house SNF, among other

materials, the NWPA authorized DOE “to enter into

contracts with any person who generates or holds

title to. . . [SNF] of domestic origin for the acceptance

of title, subsequent transportation, and disposal of

such waste or spent fuel.” 42 U.S.C. § 10222(a\1).

Renewal of nuclear facilities’ licenses tu operate was

conditioned on entering into such contracts. Id.

§ (b)(1)(A).

DOE adopted a form contract—the Standard Con-

tract for Disposal of Spent Nuclear Fuel and/or High-

Level Radioactive Waste (the “Standard Contract” or

“Contract”)—that nuclear facilities were required to

execute. 10 C.F.R. § 961.11. Under the Standard Con-

tract, nuclear facilities pay a one-time fee for past

nuclear energy production and a continuing fee for

on-going production, id. art. VIII.B, and DOE was re-

quired to complete its storage facility by January 31,

1998. The nuclear facilities upheld their end of the

bargain, but DOE did not. DOE projects that a fed-

eral storage facility will be available at the earliest

by 2010, if then. 59 Fed. Reg. 27007, 27008 (May 25,

1994).

Il. THE PURCHASE AGREEMENTS

On September 27, 1999, PSEG purchased ACE/

Delmarva’s minority interests in three facilities:

Hope Creek Station (“Hope Creek”), Salem Station

(“Salem”) and Peach Bottom Station (“Peach Bottom,”

and, collectively with the other facilities, the “Facili-

ties”) pursuant to three purchase agreements (the

“PAs”).* See Opening Jurisdictional Brief of ACE/

Delmarva at 2. PSEG also purchased the majority

interests in Hope Creek and Salem from Public

Service Electric & Gas Co. (“PSE&G”).

The PAs define the Purchased Assets to include

SNF. PAs § 2.1(c) (including Nuclear Materials, a term

defined in § 1.1(91) to include SNF). Section 2.6 gives

PSEG “all rights of recovery from third parties and

the Department of Energy relating to, arising from or

in connection with the [DOE’s] failure to take [SNF].”

Similarly, Section 2.1(1) includes in the purchased

assets:

? The PAs govern different facilities, but their substantive

terms are identical. Opening Merits Br. of PSEG at 3.

All claims of Seller [ACE/Delmarva] relating to

or pertaining to the Department of Energy’s de-

faults under the Department of Energy Standard

Contract (including all claims for failure by the

Department of Energy to take Spent Nuclear

Fuel) accrued prior to, on or after the Closing

Date, whether relating to periods prior to, on or

after the Closing Date, and all other claims of

Seller against the Department of Energy with re-

spect to, arising out of or in connection with the

Purchased Assets, other than the claims describe

in Section 2.2(1).°

Section 2.1(m) adds:

[t]he rights of Seller in, to and under all causes of

action against third parties with respect to,

arising out of or in connection with Seller's

rights, title and interests in and to the Pur-

chased Assets or the Assumed Liabilities, or any

portion thereof, whether accruing prior to, on or

after the Closing Date, other than any such

causes of action as constitute Excluded Assets or

Excluded Liabilities, whether received ss pay-

ment or credit against future liabilities, in each

case, relating to any period prior to, on or after

the Closing Date, other than the claims described

in Section 2.2(m).‘

PSEG also bargained for the right “exclusively to

control, defend and settle any suit, action or pro-

ceeding, and any investigation arising out of or related

3 The § 2.2(1) carve-out is for DOE refunds for decontamina-

tion and decommissioning costz.

*The § 2.2(m) carve-out is for particular litigations of no

relevance here. The other Excluded Assets are also not perti-

nent to the present issues.

to any Purchased Assets or Assumed Liabilities ... .”

PAs § 2.5(b).

The PAs have a standard no-waiver clause, pro-

viding that “[t]he failure of a Party to this Agreement

to assert any of its rights under this Agreement or

otherwise shall not constitute a waiver of such

rights.” PAs § 10.5.

The PAs are governed by New Jersey law, PAs

§ 10.10, and provide for arbitration under the Ameri-

can Arbitration Association rules of “any dispute be-

tween Seller and Buyer... relating to or arising out

of any provision of” the PAs, PAs § 8.6.

Oil. THE LITIGATIONS

The current arbitration concerns separate actions

brought against DOE by PSEG and ACE/Delmarva,

respectively. The first was brought by PSEG to re-

cover for, among other things, DOE’s breach under

the Standard Contracts in failing to take SNF by

1998. Later, ACE/Delmarva sued DOE for failure to

provide just compensation pursuant to the Fifth

Amendment in exchange for the “taking” that resulted

from its failure to take SNF.

A. PSEG’s Suit Against DOE

PSEG filed its suit in the Court of Federal Clams

(“CoFC”) on September 26, 2001. That suit contains

claims for breach of the Standard Contracts, for

breach of the implied covenant of good faith and fair

dealing, and to recover compensation for a taking.

Sellers’ Appendix (“SA”), Tab 2 at 8-11. The facts un-

derlying all claims are that DOE promised to take

SNF from Hope Creek and Salem Station, but failed

to do so, and also kept the money paid to DOE under

the Standard Contracts.° On January 6, 2004, PSEG

amended its complaint to add PSE&G as a plaintiff,

presumably in case DOE argued that the takings

claims were not transferable by PSE&G.

On January 31, 2005, the CoFC dismissed PSEG’s

breach of contract claims on jurisdictional grounds

and stayed the remaining claims pending appeal.

PSEG’s Appendix (“PA”) at Al6. On November 20,

2006, some 22 months later, the Federal Circuit re-

versed the CoFC’s jurisdictional ruling. PA at A37.

On January 5, 2007, DOE moved to consolidate

PSEQ’s case with ACE/Delmarva’s, and PSEG’s case

was subsequently stayed on PSEG’s motion for stay

pending completion of binding arbitration. PA at A46.

B. ACE/Delmarva’s Suit Against DOE

On September 26, 2003, representatives of ACE/

Delmarva met with representatives of PSEG to discuss

5 PSEG did not sue DOE with respect to Peach Bottom be-

cause its contract claims against the DOE were settled prior to

the filing of the PSEG suit by Peach Bottom’s majority owner

Exelon. While the settlement-was rejected by the Eleventh Cir-

cuit for certain reasons regarding the source of the funds, a sub-

sequent settlement was reached after the rejection. Transcript

of Arbitration Proceedings of May 24, 2007 (“Tr.”) at 157:8-

158:22. Counsel for ACE/Delmarva argued that the Peach Bot-

tom settlement shows that the government is open to settling

SNF contract claims without settling the takings claims. Id. at

107:24-108:6. But Counsel for PSEG responded that the gov-

ernment’s current insistence that PSEG settle its contract

claims with all associated takings claims comes from the gov-

ernment’s experience in settling Peach Bottom; as, while it be-

lieved it was ending the entire matter with the settlement, it

found itself facing takings claims notwithstanding the settle-

ment. Jd. at 135:18-136:14. Whether the government is willing

to settle the SNF contract claims in the absence of the takings

claims is not relevant here; we must simply decide who owns the

takings claims.

ACE/Delmarva’s intention to sue DOE based on

takings claims that ACE/Delmarva believed it could

bring arising from DOE’s failure to take SNF from

the Facilities. Opening Jurisdictional Br. of ACE/

Delmarva at 3. PSEG asserted that any such lawsuit

would contravene the PAs, as all claims were

assigned to PSEG. Jd. ACE/Delmarva apparently ex-

plained why it believed the takings claims were dis-

tinct from the assigned claims, and PSEG offered no

response. /d. (citing Affidavit of Nicholas W. Mattia,

at SA Tab 1 JZ 4-10); see also Declaration of Harold

W. Borden at A3-A5 in 2-8.

ACE and Delmarva filed separate takings actions

in the CoFC on January 13, 2004. On December 2,

2004, both ACE and Delmarva added “protective”

breach of contract and breach of the implied cove-

nants of good faith and fair dealing claims (making

the suits essentially identical to the PSEG suit). The

ACE and Delmarva cases were consolidated on

January 21, 2005. The CoFC denied DOE’s motion

for summary judgment in the consolidated case on

July 1, 2006.

ACE/Delmarva then subpoenaed documents from

PSEG on September 29, 2005. In response, on

October 6, 2005, PSEG again asserted that ACE/

Delmarva had no right to pursue the takings claims

under the PAs and requested that those claims be

voluntarily dismissed forthwith. Documents Relating

to ACE/Delmarva—PSEG Arbitration (“Documents”),

Tab II.C. PSEG also threatened to initiate arbitration

under the PAs if ACE/Delmarva continued to press

the takings claims. Jd. ACE/Delmarva replied by

letter (from an officer of Pepco Holdings, Inc.) that it

would not dismiss those claims because it did not

believe that they overlapped PSEG’s claims and it did

not intend to and could not have transferred them in

the PAs. Documents, Tab II.D. PSEG replied with a

letter reiterating its position regarding assignment

of the claims and another letter objecting to the

subpoena. Documents, Tabs I.E & ILF.

ACE/Delmarva moved on January 12, 2006 to com-

pel production. PSEG responded by again asserting

that the takings claims did not belong to ACE/

Delmarva in light of the PAs. The CoFC granted the

motion to compel (without ruling on PSEG’s assign-

ment claims), SA, Tab 5; SA, Tab 8 at 7 (noting that

the CoFC “has not addressed the issue of the impact

of the assignment of claims directly”), and PSEG

produced the requested documents.

On January 5, 2007, DOE moved to consolidate the

ACE/Delmarva and PSEG cases. ACE/Delmarva op-

posed consolidation (as did PSEG). See PA at A43;

Opening Jurisdictional Brief of PSEG, at 11; Tr. at

47:13-48:11. PSEG followed this with a Notice of Dis-

pute under the PAs to ACE/Delmarva. Pursuant to

the Notice of Dispute, on April 5, 2007, PSEG served

ACE/Delmarva with the arbitration demand that re-

sulted in this proceeding. ACE/Delmarva responded

on April 16, 2007 with its own arbitration demand,

which was superseded by an amended demand served

April 23, 2007.

Judge Miller issued an order on April 12, 2007 de-

nying in part without prejudice and granting in part®

DOE’s consolidation motion and stayed the case tem-

porarily pending this arbitration. SA, Tab 8 at 2.

* It is not clear what part of the motion was granted. See Tr.

at 130:5-10.

C. The Arbitration Claims

PSEG’s arbitration demand seeks declarations

that: (1) ACE/Delmarva assigned all claims including

the takings claims to PSEG under the PAs; (2) PSEG

received the right to control all litigations concerning

SNF including the takings claims under the PAs; (3)

ACE/Delmarva breached the PAs by initiating the

Delmarva litigation and by refusing to dismiss; (4)

ACE/Delmarva breached the PAs by not giving PSEG

pre-closing notice of the existence of the takings

claims; (5) ACE/Delmarva breached the PAs by fail-

ing to attempt to secure the government’s consent to

assign the takings claims to PSEG; and (6) the PAs

obligate ACE/Delmarva to assign to PSEG all earn-

ings from the takings claims.

ACE/Delmarva’s demand seeks: (1) consideration of

ACE/Delmarva’s claim that PSEG’s Notice of Dispute

and demand for arbitration are invalid; (2) a declara-

tion that the Notice of Dispute and arbitration de-

mand are barred by laches or contain claims not

subject to arbitration; and (3) a dismissal of the

claims set forth in PSEG’s arbitration demand.

ANALYSIS

I, THE CLAIMS AT ISSUE ARE ARBITRABLE

ACE/Delmarva contends that the present dispute

over whether it assigned the SNF takings claims to

PSEG is beyond the scope of the arbitration clauses

in the PAs. Opening Jurisdictional Br. of ACE/

Delmarva at 18. Although ACE/Delmarva recognizes

that the clauses are broad enough to encompass any

dispute arising out of any provision of the PAs,

it contends that, because the takings claims are not

assignable and cannot provide PSEG with any

benefit, they cannot arise out of any provision of the

10a

PAs. Id. This argument is essentially a recasting of

ACE/Delmarva’s arguments as to why the claims

were not assigned by the PAs. But it seems to us

logical to the point of being tautological that, if the

PAs confer on this Panel jurisdiction to decide

whether certain claims were assigned, we must also

have jurisdiction to decide whether the same claims

were not assigned. ACE/Delmarva does not appear

to contend that the Panel lacks jurisdiction over the

former question, only over the latter. Accordingly,

ACE/Delmarva’s contention that the present disputes

are beyond the scope of the arbitration clause is

without merit.

Ill. PSEG’s CLAIMS HAVE Not BEEN WAIVED

ACE/Delmarva’s more serious objection to arbitra-

bility is that PSEG lost its right to arbitrate this dis-

pute due to its litigation conduct in the ACF/

Delmarva case and its delay in bringing this ar-

bitration. Initially, we must decide whether this

question is more properly addressed by the CoFC.

A. This Panel May Resolve the Waiver/

Laches/Estoppel Question

“The Arbitration Act establishes that, as a matter

of federal law, any doubts concerning the scope of ar-

bitrable issues should be resolved in favor of arbitra-

tion, whether the problem at hand is the construction

of the contract language itself or an allegation of

waiver, delay, or a like defense to arbitrability.” Moses

H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460

U.S. 1, 24-25 (1983). ACE/Delmarva asserts that this

general rule does not apply to its allegation here that

PSEG waived arbitration through litigation conduct,

relying principally on the Third Circuit’s recent

decision in Ehleiter v. Grapetree Shores, Inc., 482

lla

F.3d 207 (3d Cir. 2007), in which the court. stated

that it “has long decided questions of waiver based on

litigation conduct instead of referring the issue to an

arbitrator.” Id. at 217.

Ehleiter and the cases discussed therein involve

parties litigating before a particular court when one

of those parties moves for a stay in order to arbitrate,

and the other objects based on the movant’s waiver of

the arbitration right through litigation conduct.

Those cases hold that, as is apparent, a court is both

in a better position and more suited than arbitrators

to determine whether the litigation conduct at issue

evinces a waiver, and to control its own proceedings

and address abuses of the judicial system. See, e.g.,

Ehleiter, 482 F.3d at 218.

Here, cn the other hand, the parties have not been

litigating the merits of their cases before the same

Judge, and there continues to be no court case to

whicl. both ACE/Delmarva and PSEG are parties.

Indeed, ACE/Delmarva has opposed DOE’s consolida-

tion motions that would put both parties before the

same Judge. Thus, no court is in any better position

than this Panel to determine whether PSEG’s litiga-

tion conduct waived its arbitration rights. Judge

Miller, when given the opportunity to deny a stay in

the ACE/Delmarva case based on PSEG’s litigation

conduct, declined to do so.’ SA, Tab 7 at 8. Moreover,

7 ACE/Delmarva’s assertion that Judge Miller “retained juris-

diction of [sic] the question whether [PSEG] by its delay and

litigation conduct has waived the right to arbitrate,” Opening

Jurisdictional Br. of ACE/Delmarva at 11, is actually contra-

dicted by the statement by the court upon which it relies. The

court said that “should the arbitrators fail to consider delay in

the arbitration proceeding, the court cautions [the] parties that

it will address the issue.” SA, Tab 7 at 8-9. This implies that

12a

ACE/Delmarva itself submitted the litigation waiver

issue to this Panel in its arbitration demand, and did

not suggest that this Panel did not have jurisdiction

to decide the issue until weeks later.®

In sum, we do not believe that Ehleiter stands for

the proposition that only a court may decide issues of

waiver of arbitrability based on litigation conduct.

See Ehleiter, 482 F.3d at 221 (“[Wle hold that waiver

of the right to arbitrate based on litigation conduct

remains presumptively an issue for the court to

decide. . . .”) (emphasis added). This is especially true

in a case, such as this, in which both parties have

submitted the issue to arbitration and there is no

single court before which both parties’ litigation

conduct took place. Accordingly, we have jurisdiction

to consider ACE/Deimarva’s litigation waiver defense

to arbitration.

B. PSEG Did Not Forfeit its Right to

Arbitration

ACE/Delmarva relies on three related theories to

contend that PSEG forfeited its rights to arbitration:

waiver through litigation conduct, laches and equita-

this Panel can decide the issue, and if it does, then the court

need not do so.

To the extent that ACE/Delmarva is contending that Judge

Miiler erred in granting the stay because she did not rule on the

litigation conduct waiver question, that is an issue for the Fed-

eral Circuit, not this Panel.

® ACE/Delmarva’s contention that it “can hardly [be] fault[ed]

for the fact that the [Ehleiter] issue was raised on May 9th;

Ehleiter was raised by the Panel at the outset of the prehearing

conference,” Responsive Jurisdictional Br. of ACE/Delmarva at

3, is puzzling. Ehleiter did not establish new law in the Third

Circuit and ACE/Delmarva could have raised the issue before

Judge Miller or in an answer to PSEG’s arbitration demand.

13a

ble estoppel. ACE/Delmarva has the burden of

proving these defenses. See Great Western Mortgage

Corp. v. Peacock. 110 F.3d 222, 233 (3d Cir. 1997)

(“Given the burden that Peacock bears in demon-

strating waiver, end her lack of evidence in support

of her assertions, we are satisfied that Great Western

clearly preserved the right to refer Peacock’s claim to

arbitration. As we have stated, waiver is not to be

lightly inferred.”).

1. Waiver by Litigation Conduct

In order to show that PSEG waived its right to ar-

bitrate the question whether the takings claims at

issue were assigned under the PAs, ACE/Delmarva

must show, among other things, that the conduct

caused it prejudice. “[P]rejudice is the touchstone for

determining whether the right to arbitrate has been

waived’ by litigation conduct.” Ehleiter, 482 F.3d at

222 (quoting Hoxworth v. Blinder, Robinson & Co.,

Inc., 980 F.2d 912, 925 (38d Cir. 1992)). A “nonexclu-

sive list of factors relevant to the prejudice inquiry”

with respect to litigation conduct includes: “[1] the

timeliness or lack thereof of a motion to arbitrate . . .

[; 2] the degree to which the party seeking to compel

arbitration for to stay court proceedings pending ar-

bitration] has contested the merits of its opponent’s

claims; [3] whether that party has informed its ad-

versary of the intention to seek arbitration even if it

has not yet filed a motion to stay the district court

proceedings; [4] the extent of its non-merits motion

practice; [5] its assent to the [trial] court’s pretrial

orders; and [6] the extent to which both parties have

engaged in discovery.” Jd. at 222-23 (quoting Hox-

worth, 980 F.2d at 926-27).

Here, the first factor—timeliness—is offset by the

third—notice of intent to seek arbitration. Although

14a

PSEG delayed in filing this arbitration after being on

notice that ACE/Delmarva was litigating the takings

claims, it made clear to ACE/Delmarva from the out-

set its objections and intention to arbitrate. The re-

maining factors are difficuit to assess; PSEG’s litiga-

tion conduct has not been as a party to ACE/

Delmarva’s suit, but rather as a third-party opposing

a document subpoena in that case. Indeed, the factors

listed above measure the voluntary actions in the

litigation at issue by the party seeking arbitration.

Such action is absent here. All of PSEG’s actions

taken in ACE/Delmarva’s suit identified by ACE/

Delmarva—“opposing amotion to compel discovery,

later producing 38,500 pages of documents [under

court order] and more recently responding to the >

Court’s Order to Show Cause,” Opening Jurisdic-

tional Br. of ACE/Delmarva at 13—were involuntary.

ACE/Delmarva has failed to carry its burden of

showing that PSEG actively participated in the tak-

ings litigation so as to waive its right to arbitration of

the present claims.

Z. Laches And Equitable Estoppel

For ACE/Delmarva to prevail on the defense of

laches, it must show both an unexpiained and inex-

cusable delay by PSEG in asserting its rights, and

resulting prejudice. Mitchell v. Alfred Hofmann Inc.,

48 N.J. Super. 396, 403 (App. Div. 1958); see also

Kepner-Tregoe, Inc. v. Executive Dev., Inc., 79 F. Supp.

2d 474, 487 (D.N.J. 1999).

ACE/Delmarva argues that PSEG delayed over

three years in filing this arbitration after being given

notice of ACE/Delmarva’s intention to file takings

claims, and also acquiesced in ACE/Delmarva’s asser-

tion of those claims by adding PSE&G to its own suit

containing takings claims for Hope Creek and Salem.

15a

However, the latter point suggests that PSEG agreed

with ACE/Delmarva that PSEG itself might not be

able to bring the takings claims—and has nothing to

do with whether PSEG thought that the claims were

assigned under the PAs.

There is no dispute that PSEG waited over three

years from the filing of ACE/Delmarva’s suit to file

its dispute notice that initiated this arbitration. But

ACE/Delmarva must show that this delay was inex-

plicable and unreasonable—that it “lull[ed] [it] into a

false sense of security or belief that [PSEG] ac-

quiesced in what [ACE/Delmarva] [was] doing.”

Murphy v. Trapani, 255 N.J. Super. 65, 75 (App. Div.

1992). It has not made this showing. PSEG objected

repeatedly to ACE/Delmarva proceeding with the

takings claim, based on the PAs’ assignment of the

claims and its rights to arbitrate over the objections.

See id. (rejecting laches defense despite two-year

delay in filing as plaintiffs immediately complained

about defendants actions when they were taken); see

also King v. Innovation Books, 976 F.2d 824, 832-33

(2d Cir. 1992) (rejecting laches when plaintiff had

timely warned defendants of his claims). All of

PSEG’s actions were consistent with its belief that

ACE/Delmarva assigned all of its rights to PSEG, in-

cluding the takings claims.” ACE/Delmarva was on

® The dissent points to a letter from PSEG to ACE/Delmarva

dated April 20, 2005 in which PSEG stated that it “simply has

no interest or desire to prosecute or defend” the sort of claims

ACE/Deimarva was pressing in the ACE/Delmarva litigation,

and suggests that statement is irreconcilable with PSEG’s posi-

tion here. We disagree. It is one thing to have no interest in

pursuing a particular legal theory or claim, perhaps for strategic

or valuation reasons, but quite another to yield to another the

right to pursue that theory or claim. PSEG’s April 20 letter sug-

gests only the former, and its communications both before and

16a

notice of PSEG’s objections, and knew as well their

basis in the clear language of the PAs discussed be-

low. Nonetheless, it proceeded to litigate. If ACE/

Delmarva wanted to resolve PSEG’s stated objections

sooner, it could have filed for arbitration. ACE/

Delmarva’s litigation was undertaken with a clear-

eyed awareness of the risks, including the cost of

legal fees.

We also observe that the PAs themselves plainly

state that non-assertion of rights shall not be con-

strued as a waiver of those rights. Although the pre-

vailing view is that such clauses themselves may be

waived by agreement or conduct, see 13 Williston on

Contracts § 39:36 (4th ed. 2007 supp.), here PSEG’s

conduct was consistent with the non-waiver clause.

PSEG’s delay in bringing an arbitration while its

own claims before the CoFC were dismissed is per-

haps undersiandable. During the period before its

claims were resurrected, PSEG stood to gain little if

anything from expending its efforts and money in ar-

bitrating against ACE/Delmarva over claims it could

not bring without DOE’s consent. Accordingly, it was

logical for PSEG to stand by during the pendency of

its appeal after having already made its objections

and their basis clear to ACE/Delmarva.

Because of PSEG’s repeated assertions of its rights

under the PAs and the PAs’ non-waiver clause, we

find on balance that PSEG’s delay was not unreason-

able and should not have led ACE/Delmarva to con-

clude that PSEG acquiesced in its takings suit; there-

after the April 20 letter (orally in September 2003 and by a let-

ter dated October 6, 2005) explicitly deny the latter.

17a

fore we reject the laches defense.*° For the same rea-

sons, we reject ACE/Delmarva’s equitable estoppel

defense.

Iii. ACE/DELMARVA ASSIGNED THE TAKINGS

CLAms To PSEG

Having rejected ACE/Delmarva’s jurisdictional and

equitable defenses, we now reach the merits of the

dispute—whether ACE/Delmarva assigned the tak-

ings claims to PSEG in the PAs.

A. The Takings Claims Are Clearly

Covered by the Assignments in the PAs

Under the PAs, ACE/Delmarva assigned “[a]ll

claims of Seller [ACE/Delmarva] relating to or per-

taining to the Department of Energy’s defaults under

the Department of Energy Standard Contract (in-

cluding all claims for failure by the Department of

Energy to take Spent Nuclear Fuel) . . . and all other

‘claims of Seller against the Department of Energy

with respect to, arising out of or in connection with

the Purchased Assets.” PAs § 2.1(1). The PAs also

grant PSEG “ali rights of recovery from third parties

prejudice—we note in passing that ACE/Delmarva’s proof of

prejudice appears to be thinner.than ACE/Delmarva suggests.

ACE/Delmarva contended at argument that prejudice should be

measured hypothetically, in that, had PSEG brought its arbitra-

tion claim in the fall of 2003, it likely would have included

Peach Bottom and, had PSEG won, ACE/Delmarva never would

have brought its suit at all. Tr. at 80:5-81:5. However, we be-

lieve that prejudice should be measured based on what actually

happened. In other words, the proper question is, in light of the

delay, what did ACE/Delmarva do that would be to its detriment

if it now loses this arbitration. ACE/Delmarva is not contending

that the Peach Bottom settlement was contrived in bad faith to

rebut its prejudice argument here. Tr. at 107:8-10.

18a

and the Department of Energy relating to, arising

from or in connection with the [DOE?’s] failure to take

[SNF].” Id. § 2.6. PSEG further received the right

“exclusively to control, defend and settle any suit, ac-

tion or proceeding, and any investigation arising out

of or related to any Purchased Assets {which include

SNF.” Id. § 2.5(b).

These broad assignments make no exceptions for

particular kinds of claims, and the detailed Excluded

Assets list in the PAs make no mention of any tak-

ings claims. See PAs § 2.2. It is hard to imagine a

more comprehensive assignment of claims. On their

. face, the PAs leave nc doubt that the takings claims

at issue here were assigned to PSEG and that PSEG

received the exclusive right to control the litigation

over the claims.

In the face of this unmistakable language, ACE/

Delmarva makes two principal arguments as to why

the takings claims were not assigned: (1) they arise

independent of the Standard Contract, and (2) they

could not have been assigned as a matter of law.

The first argument ignores the second half of

§ 2.1(1), which goes beyond claims arising out of the

Standard Contract and covers “all other claims of

Seller against the Department of Energy with respect

to, arising out of or in connection with the Purchased

Assets,” as well as § 2.6, which confers to PSEG “all |

rights of recovery from third parties and the Depart-

ment of Energy relating to, arising from or in connec-

tion with the Department of Energy’s failure to take

Spent Nuclear Fuel.” The Purchased Assets explicitly

include SNF, and the takings claims indisputably

arise out of or are in connection with DOE’s failure to

take SNF. Accordingly, it is irrelevant whether the

takings claims arise from the Standard Contract or

19a

from some other source—in either case, they are cov-

ered by the PAs assignment clauses.”"*

As to the second argument, ACE/Delmarva con-

tends that the Assignment of Claims Act (or Anti-

Assignment Act)” bars an assignment of the claims

and, alternatively, that takings claims are “personal”

and cannot be assigned in any event.’** We need not

™ We note that, while ACE/Delmarva quotes Judge Miller’s

opinion denying summary judgment in stating that “(t]he court

also noted that Sellers’ takings claim ‘is not predicated upon any

rights emanating from the Standard Contract,” Opening Juris-

dictional Br. of ACE/Delmarva at 5, this is a distortion of the

actual statement. The opinion was simply describing another

opinion in stating that a takings claim might be viable “insofar

as the takings claim is not predicated upon any rights emanat-

ing from the Standard Contract.” SA; Tab 4 at 4 (emphasis

added). This is hardly an actual finding that the claim does not

arise from the rights in the Standard Contract. Indeed, the very

opinion that Judge Miller was describing—Boston Edison Co. v.

United States, 64 Fed. Cl. 167 (2005)—found that, if both a tak-

ings claims and a contract claim simultaneously existed, the

contract claim would provide the preferable basis for recovery.

Id. at 187; cf. Slack v. McDaniel, 529 U.S. 473, 485 (2000)

(“[T]he ‘Court will not pass upon a constitutional question al-

though properly presented by the record, if there is also present

some other ground upon which the case may be disposed of. . . .”)

(quoting Ashwander v. TVA, 297 U.S. 288, 347 (1936) (Brandeis,

J., concurring)).

#2 While. ACE/Delmarva points out that the Assignment of

Claims Act, 31 U.S.C. § 3727 is different from the Anti-

Assignment Act, 41 U.S.C. § 15, courts have often referred to

the Assignment of Claims Act as the Anti-Assignment Act (for

obvious reasons) and we use the terms interchangeably to refer

to the former statute.

18To the extent that ACE/Delmarva’s position is that the

anti-assignment statute should be considered by the Panel in

determining whether ACE/Delmarva intended to assign the

takings claims, it must be rejected. The PAs are unambiguous

20a

dwell on the latter point, as ACE/Delmarva offers no

authority in support of it nor any rationale to distin-

guish takings claims from any other claim with re-

spect to assignability.'*

The Anti-Assignment Act argument fails for two

independent reasons: (1) the Act is not absolute, and

therefore cannot render an assignment void ab initio,

and (2) the Act may not be invoked by a party other

than the United States.

It is undisputed that the government may consent

to an assignment of a claim that would otherwise vi-

olate the Anti-Assignment Act. See, e.g., Vt. Yankee

Nuclear Power Corp. v. United States, 73 Fed. Cl. 236,

240 (2006) (“The prohibitions of the Anti-Assignment

Acts notwithstanding, ‘assigned contracts are valid

when the assignment takes place by operation of law,

or when the government consents to and recognizes

the assignment.”) (quoting Rochester Gas and Elec.

Corp. v. United States, 65 Fed. Cl. 431, 437 (2005)).

Accordingly, ACE/Delmarva’s contention that it could

not have assigned the takings claims at issue rings

on this point, and therefore intent is irrelevant. Counsel for

ACE/Delmarva recognized as much at argument, and it appears

that the parties have agreed that the PAs are unambiguous and

are not presenting evidence as to intent. See, e.g., Tr. at 21:12-

17; 109:20-110:18; 140:14-17.

14 ACE/Delmarva’s argument is essentially that the claims

are per se unassignable because the buyer of such a claim would

be doubly benefiting—both from the depreciated value of the

subject of the sale and from the takings claim. But this presup-

poses that none of the purchase price is attributable to the claim

itself. Because that assumption is not a necessary one, ACE/

Delmarva’s justification for the assignment bar is unconvincing.

Even if the assumption were correct, it could simply reflect the

parties’ views of the merits of the claim at the time the PA’s

were executed.

2la

hollow; although it may be true that the government

generally would not agree to such an assignment, that

does not change the fact that, it is at least possible for

the assignment to take place.

Moreover, even if the Anti-Assignment Act does

bar PSEG from asserting the claim, that Act may not

be invoked by ACE/Delmarva to void the assignment.

“The Anti-Assignment Act is for the government’s

protection and only the United States may assert it.”

United States v. Certain Space in Property Known as

Chimes Bldg., 320 F. Supp. 491, 496 (N.D.N.Y. 1970),

ajffd, 435 F.2d 872 (2d Cir. 1970). While “[aln invalid

attempted assignment does not forfeit the claim [(Jit

leaves it as it was before the purported assignmentf[),]

.. . the assignment remains enforceable as between

the parties to the assignment.” Saint John Marine

Co. v. United States, 92 F.3d 39, 45 (2d Cir. 1996); see

also 91 Sonja Larsen et al., Corpus Juris Secundum:

United States § 196 (“[T]he invalidity of the assign-

ment will not enable the assignor to recover from the

United States after it has paid the claim to the assig-

nee.”). ACE/Delmarva does not point to any cases in

which the Act has been used to invalidate an assign-

ment as between private parties.

ACE/Delmarva argues that it must be able to bring

the takings claims if PSEG may not bring them. As-

suming that DOE would not consent to the assign-

ment and that PSEG may not bring the takings

claims, ACE/Delmarva’s argument still relies on the

incorrect assumption that some party has to be able

to bring the claims. Indeed, ACE/Delmarva goes so

far as suggesting that it would be unconstitutional

for a governmental taking to go uncompensated. See,

e.g., Responsive Merits Br. of ACE/Delmarva at 2-3.

That is simply an overstatement. Indeed, if the fail-

22a

ure to take SNF actually does constitute a taking, it

could go uncompensated if neither ACE/Delmarva

nor PSEG actually sought compensation from DOE.

It is not reasonable to interpret the Anti-Assignment

Act, which exists solely to protect the government, to

force the government to answer for claims against it.

In sum, we find that the PAs’ comprehensive as-

signment language included the takings claims at is-

sue and:-that the Assignment of Claims Act does not

alter that conclusion or void the assignment as be-

tween ACE/Delmarva and PSEG. Accordingly, PSEG

was assigned both the claims themselves and the

right to control litigation over them.

B. ACE/Delmarva’s Judicial Estoppel

Argument Is Without Merit

ACE/Delmarva contends that PSEG’s “pursu[it] [of]

a sellers takings claim on behalf of one of its sellers

[PSE&G]” is flatly inconsistent with its position that

ACE/Delmarva has no right to pursue its takings claim.

This argument suffers from multiple weaknesses.

The doctrine of judicial estoppel bars a party from

asserting a position contrary to a position that the

party has successfully asserted in previous litigation.

Murray v. Silberstein, 882 F.2d 61, 66 (3d Cir. 1989);

Wein v. Morris, 388 N.J. Super. 640, 658 n8 (App.

Div. 2006). Here, the allegedly inconsistent positions

identified by ACE/Delmarva are not in fact inconsis-

tent at all. PSEG is not asserting in this proceeding

that the takings claims at issue are not legitimate; it

is asserting that they were assigned under the PAs.

Moreover, PSEG has not prevailed on any position

with respect to this claim, and therefore cannot be

judicially estopped.

23a

IV. AcCE’s WINDFALL ARGUMENTS CANNOT

OVERCOME THE PLAIN LANGUAGE OF THE PAS

The theme behind ACE/Delmarva’s arguments on

the merits is that a finding that PSEG acquired the

takings claims would lead to a windfall in favor of

PSEG. As the argument goes, ACE/Delmarve sold its

interests in the plants for less than they were worth

because of DOE’s failure to take SNF, and, if PSEG

may assert the claims for this diminished value, it is

recovering twice for the value—once in the discount

and again in the recovery. Whatever rhetorical force

this argument may have, it does not give the Panel

license to rewrite the PAs, which plainly state (mul-

tiple times) that all claims relating to SNF are as-

signed to PSEG. See generally St. Pius X House of

Retreats, Salvatorian Fathers v. Diocese of Camden,

88 N.J. 571 (1982).

Moreover, ACE/Delmarva and, as importantly, the

Board of Public Utilities, thought ACE/Delmarva was

getting fair value for the facilities regardless of any

takings claims. See PA at A108-A133. In explaining

its findings, the Board of Public Utilities noted, in

particular, the major risks that PSEG assumed under

the PAs for the “operational risks of the units” which

were “particularly significant” because the facilities

“have historically experienced substantial perfor-

mance and cost uncertainty,” and also for “all of the

responsibility and risk associated with unforeseen es-

calation in the cost of decommissioning of the plant.”

PA at A20. The amount of the liabilities assumed by

PSEG under the PAs remains uncertain. It is also

uncertain whether the takings theory under which

the claims are being brought will prove to be viable

and to what extent ACE/Delmarva would be able to

show any significant loss as a minority owner. Fur-

24a

ther, assuming the sellers were able to proceed with

the takings claims, it is unclear whether and to what

extent any takings damages would remain for the

sellers in these cases after the buyer’s contract claims

were resolved. See Boston Edison, 64 Fed. Cl. at 187.

Thus, the idea that recognition of ACE/Delmarva’s

assignment to PSEG of the takings claims is against

the public interest is speculative and may also be ex-

aggerated. It appears that ACE/Delmarva is asking

this Panel to ignore the deal reached in the PAs and

the Board of Public Utilities’ findings and apply the

medieval doctrine of the just price. We cannot do so,

and, to the extent that the doctrine could possibly be

applied here, cf. In re Busy Beaver Bldg. Centers, Inc..,

19 F.3d 833, 854 n.32 (3d Cir. 1994) (“[I]t is not the

function of judges in fee litigation to determine the

equivalent of the medieval just price.”) (quoting In re

Continental Ill. Sec. Litig., 962 F.2d 566, 568 (7th

Cir. 1992) (Posner, J.), it already has been applied by

the Board of Public Utilities.

x * *

We find that ACE/Delmarva assigned the takings

claims at issue here to PSEG, and that ACE/

Delmarva’s initiation of its takings litigation and its

refusal to dismiss that litigation breached the PAs.

Accordingly, PSEG’s other claims regarding (1) ACE/

Delmarva’s failure to give notice of the takings

claims; (2) ACE/Delmarva’s failure to make efforts to

assign the claims; and (3) assignment by ACE/

Delmarva to PSEG of the proceeds of the ACE/

Delmarva takings case are moot.

/s/ Michael Mukasey

C. Michael Loftus

Dated: June 20, 2007

25a

SEPARATE OPINION OF JOHN D. ALDOCK

I respectfully dissent. In my opinion PSEG’s more

than three-year delay in bringing this arbitration

was inexcusable and the more than $3.5 million in

legal and expert fees and other company resources

expended in litigating those claims over that period

constituted substantial prejudice.” I would find that

PSEG has forfeited its claim to arbitration through

litigation conduct and laches.

ACE/Deimarva filed suit against the U.S. Govern-

ment on January 14, 2005. PSEG issued its arbitra-

tion demand on April 5, 2007. While PSEG disputed

ACE/Delmarva’s right to bring its suit against the

‘Government I believe it was incumbent on PSEG to

do more.** I do not believe the burden was on ACE/

Delmarva to initiate an arbitration solely to de-

termine its right to litigate against the U.S. Govern-

ment

Moreover, I find PSEG’s letter of April 20, 2005 to

counsel for ACE/Delmarva and the U.S. Government

difficult to reconcile with its position in this arbitra-

tion. In that letter PSEG asked that Judge Miller be

advised as follows: “PSEG Nuclear understands that

While PSEG speculates that ACE/Delmarva may have

brought the Peach Bottom claim even if the other claims had

been assigned, I do not believe hindsight speculation on that

point removes the substantial prejudice ACE/Delmarva have

incurred in litigating these claims against the U.S. Government

for more than three years.

161 do not see PSEG’s inaction during the period while its

claim against the Government was dismissed as a justification

for delay. Judge Miller clearly treated that dismissal as tempo-

rary and urged the parties to do the same. (See April 7, 2005

Hearing transcript at p. 23 attached to PSEG’s prehearing

brief.)

26a

Delmarva is pursuing various legal theories, such as

diminution in value, which PSEG Nuclear simply has

no interest or desire to prosecute or defend. PSEG

Nuclear is also opposed to consolidating its pending

case, No. 01-551C (J. Futey), with the Delmarva case

because the cases are in completely. different proce-

dural postures.” (April 20, 2005 letter from Alex D.

Tomaszczuk to Richard J. Conway and Harold D.

Lester.)

PSEG apparently had no interest in the ACE/

Delmarva claims against the Government until the

Government conditioned settlement of PSEG’s

separate claims against the Government on settle-

ment or extinguishment of the ACE/Delmarve claims

(PSEG’s Arbitration Demand at pp. 2 and 3). While

this may in part explain PSEG’s delay I do not be-

lieve it justifies it.’

Finally, I believe that Judge Miller, who has pre-

sided over the ACE/Delmarva litigation against the

U.S. Government for more than three years, and who

has pending a renewed motion for consolidation of

the PSEG case against the Government, is in a better

position than this panel to evaluate the

waiver/laches/prejudice arguments. See Ehleiter v.

Grapetree Shares, Inc., 482 F.3d 207 (3d Cir. 2007).

/s/ John D. Alcock

Dated: June 20, 2007

17 Whether PSEG had no interest in the ACE/Delmarva

claims because it believed them to be without merit, or because

it could not benefit from claims that ACE/Delmarva was bring-

ing on behalf of state rate payers is. not material. PSEG clearly

had no interest in the claims at issue here other than as a chip

in its negotiations of ita separate claims against the U.S.

Government.

27a

APPENDIX B

SUPERIOR COURT OF NEW JERSEY

MERCER COUNTY

CHANCERY DIVISION — GENERAL EQUITY

[Filed Dec. 19, 2007]

Docket No. C-59-07

PSE&G Power, L..C, and PSE&G NUCLEAR, LLC,

Plaintiffs,

ATLANTIC Ciry ELECTRIC Co. and

DELMARVA POWER and LIGHT Co.

Defendants.

ORDER

This matter having been opened to the Court by

way of an Order to Show Cause seeking to confirm

the arbitration award entered by the arbitration

panel on June 20, 2007 pursuant to N.J.S.A. 2A:23B-

22 filed py Plaintiffs; and opposition having been filed

by Defendants; and the Court having reviewed the

submissions of the parties; and having heard oral

argument on November 13, 2007; and for the reasons

set forth in the Statement of Reasons attached; and

for good cause having been shown;

IT IS ON THIS 19th DAY OF DECEMBER, 2007,

ORDERED that the Order to Show Cause filed by

Plaintiffs seeking to confirm the arbitration award

rendered on June 20, 2007 pursuant to N.J.S.A

2A:23B-22 is GRANTED and JUDGMENT is entered

accordingly in favor of Plaintiffs.

/s/ Neil H. Shuster, P.J., Ch.

28a

PSEG POWER, LLC and PSEG NUCLEAR, LLC

Vv.

ATLANTIC CIry ELECTRIC Co. and .

DELMARVA POWER & LIGHT Co.

Docket No. C-59-07

PLAINTIFFS’ REQUEST FOR THE ISSUANCE OF

AN ORDER TO SHOW CAUSE SEEKING RELIEF

BY WAY OF SUMMARY ACTION

This matter arises from a verified complaint and

order to show cause to proceed summarily filed on

June 25, 2007 by PSEG Power, LLC and PSEG Nuc-

lear, LLC (“Plaintiffs”) against Atlantic City Electric

Company (“ACE”) and Delmarva Power and Light

Company (“Delmarva”) (collectively “Defendants”)

seeking to confirm an arbitration award entered on

June 20, 2007. On July 2, 2007, the Court signed

Plaintiffs’ order to show cause to proceed summarily

to confirm the arbitration award. On July 11, 2007,

Defendants filed a cross-motion to stay Plaintiffs’

order to show cause pending the outcome of a motion

by Defendants before the United States Court of Fed-

eral Claims (“Court of Federal Claims”) to vacate the

June 20, 2007 arbitration award. On July 24, 2007,

Defendants filed an answer counterclaim and affir-

mative defenses. On August 20, 2007, this Court

denied Defendants’ motion for the entry of a stay of

all proceedings in this matter. On August 30, 2007,

the Court of Federal Claims denied Defendants’

request to vacate the arbitration award, on the

grounds that it lacked jurisdiction to entertain the

issue. On September 18, 2007, this Court set oral

29a

argument on Plaintiffs’ order to show cause for Octo-

ber 15, 2007, later rescheduled to November 13, 2007.

On November 13, 2007, the Court of Federal ‘Claims

granted summary judgment for the United States

against Defendants on the issue of whether Defen-

dants had takings claims they could bring against the

United States. Oral argument on Plaintiffs’ applica-

tion seeking to confirm the arbitration award took

place on November 13, 2007; however, the decision by

the Court of Federal Claims issued on November 13,

2007 was not known to this Court or to the parties at

the time of oral argument.

‘The facts reveal that Plaintiffs are the operator

and sole owner of the Hope Creek Nuclear Generat-

ing Station (“Hope Creek”) and the operator and

majority owner of the Salem Nuclear Generating

Station (“Salem”) (collectively the “Stations”). On or

around September 27, 1999, Plaintiffs purchased the

minority interests of Defendants in those stations

pursuant to purchase agreements (the “Agree-

ments”). According to Plaintiffs, the Agreements

provide that Defendants were to sell Plaintiffs their

entire minority interests in the Stations’ including

all claims related to the assets being sold. Plaintiffs

also assert that the Agreements give Plaintiffs the

exclusive control over any litigation related to any of

the assets being sold, as well as assigning to Plain-

tiffs the right of recovery associated with such

litigation.

Specifically, Section 2.1 of the Agreements provides

those assets to be transferred as a part of the sale of

the Stations, and states, in pertinent part:

' According to Plaintiffs, at the time ui the sale, ACE owned

7.41% of Salem and 5% of Hope Creek and Delmarva owned

7.41% of Salem.

30a

Upon the terms and subject to the conditions set

forth in this Agreement, at the Closing, Seller

shall sell, assign, convey, transfer and deliver to

Buyer, and Buyer shall purchase, assume and

acquire from Seller . . . those assets listed below,

each as in existence on the Closing Date

(collectively the “Purchased Assets”):

(1) All claims of Seller relating to or pertaining to

the Department of Energy Standard Contract

(including all claims for failure by the

Department of Energy to take Spent Nuclear

Fuel) accrued prior to, on or after the Closing

Date, whether relating to periods prior to, on or

after the Closing Date, and all other claims of

Seller against the Department of Energy with

respect to, arising out of or in connection with

the Purchased Assets. . .

(m) The rights of Seller in, to and under ail

causes of action against third parties with

respect to, arising out of or in connection with

Seller’s rights, title and interests in and to the

Purchased Assets or the Assumed Liabilities, or

any portion thereof, whether accruing prior to, on

or after the Closing Date, other than any such

causes of action as constitute Excluded Assets or

Excluded Liabilities.

Additionally, Section 2.5 of the Agreements covers

the control of litigation and provides that Plaintiffs

“shall be entitled exclusively to control, defend and

settle any suit, action or proceeding and any inves-

tigation arising out of or related to any Purchased

Assets or Assumed Liabilities . . .” See Cert. of

Christopher J. McAuliffe, Exh. A.

3la

The Agreements also contain an arbitration cl~use

and a provision stating the proper forum to hear any

disputes arising out of the subject matter of the

Agreements. Specifically, Section 8.3 of the Agree-

ments, entitled “Arbitration,” provides, in pertinent

part:

(a) Notwithstanding any provision hereof to

the contrary, in the event of any dispute between

Seller and Buyer arising after the Closing .. .

and relating to or arising out of any provision of

this Agreement... the sole remedy available to

either Party is the dispute resolution process set

forth in this Section 8.3.

(b) The chief executive officers . . . of each of

the Parties shall meet at a mutually acceptable

time and place to attempt to settle any dispute in

good faith.

held in accordance with Section 8.3(b) and

(ii) any such dispute of the kind referred to in

Section 8.3(a) shall have not been resolved at

such meeting, then, upon the written request of

any Party, the Parties shal! submit such dispute

to binding arbitration pursuant to the Commer-

cial Arbitration Rules of the American Arbitra-

tion Association. The decision, judgment and

order of the arbitration tribunal shall be final,

binding and conclusive as to the Parties involved

in such dispute, and their respective Representa-

tives, and may be entered in [a] court of

competent jurisdiction.

Section 10.10 of the Agreements provides some

guidance as to the “court of competent jurisdiction.”

Specifically, it provides, in pertinent part:

32a

This Agreement shall be governed by and

construed in accordance with the laws of the

State of New Jersey ... as to all matters,

including validity, construction, effect, perform-

ance and remedies. Venue in any and all suits,

actions and proceedings related to the subject

matter of this Agreement shall be in the state

and federal courts located in and for the State of

New Jersey (the “Courts”) which shall have

exclusive jurisdiction for such purpose, and the

Parties hereby irrevocably submit to the exclu-

sive jurisdiction of such Courts and irrevocably

waive the defense of an inconvenient forum to

the maintenance of any such suit, action or

proceeding.

The current litigation arises out of separate actions

filed by both Plaintiffs and Defendants against the

Department of Energy (“DOE”) in the Court of

Federal Claims. In 1982, Congress passed the Nuc-

lear Waste Policy Act which authorized the DOE to

enter into contracts with utilities to accept title to,

transport and dispose of spent nuclear fuel (“SNF”).

The DOE subsequently created a standard contract

that required it to commence acceptance of SNF no

later than January 31, 1998 in exchange for a one

time fee for SNF generated prior to 1983 and an on-

going fee assessed by the DOE for SNF generated

thereafter. However, according to Plaintiffs, the DOE

failed to meet its obligations to begin removing SNF

and may not start this performance until the year

2017 at the earliest. Because of this delay, utilities

that own and operate nuclear generating stations

have been required to incur substantial costs for

being forced to continue to store SNF. In this case,

Plaintiffs entered into contracts with the DOE for the

removal of SNF from the Stations. The DOE has

33a

failed to do so, and in 2004, Plaintiffs filed suit

against the United Siates for breach of contract in

the Court of Federal Claims.

Defendants also filed claims against the United

States in January 2004 seeking just compensation

for the taking of private property by the federal

government under the Takings Clause of the Fifth

Amendment. The takings claims arose from the

DOE’s failure to remove SNF from the Stations

which, at the time, were owned in part by Defen-

dants. Defendants sought the losses they suffered

prior to the sale of the Stations to Plaintiffs under

the Agreements, which Defendants allege includes a

substantially reduced sale price for the sold interests.

The Court of Federal Claims initially denied the

DOE’s motion for summary judgment on Defendants’

takings claim originally filed on April 28, 2005, and

had granted another motion by Defendants seeking

to subpoena documents from Plaintiffs. Plaintiffs

have asked Defendants to dismiss their litigation

because in Plaintiffs’ suit against the DOE, the DOE

stated that any recovery by Defendants in their

litigation must directly offset any recovery by Plain-

tiffs in their litigation. The DOE also informed

Plaintiffs that it will not settle its litigation with

Plaintiffs without also resolving the claims advanced

in Defendants’ litigation. Because Defendants refused

to dismiss their litigation, Plaintiffs triggered the

dispute resolution procedures in Section 8.3. How-

ever, these procedures failed to resolve the dispute

between the parties.

As a result, Plaintiffs subsequently filed an arbitra-

tion demand on April 5, 2007, essentially seeking a

declaration that, under the Agreements, Defendants

assigned to Plaintiffs all rights in the Purchased

34a

Assets, including all claims related to the DOE’s

failure to remove SNF (including the takings claims),

that Plaintiffs hold the right to control any litigation

concerning the failure to remove SNF, and that De-

fendants are required to dismiss their litigation at

Plaintiffs’ request. In response, on April 16, 2007,

Defendants filed their own separate arbitration

demand. On April 23, 2007, Defendants filed an

amended arbitration demand which sought to invali-

date Plaintiffs’ arbitration demand, a declaration

that Plaintiffs’ claims were not subject to arbitration,

and a dismissal of Plaintiffs’ arbitration claims.

On June 20, 2007, the arbitration panel in a 2-1

decision entered an award in favor of Plaintiffs. The

majority opinion stated that the dispute was arbitra-

ble, and held that the Agreements’ comprehensive

assignment language included the takings claims at

issue; accordingly, Plaintiffs were assigned both the

claims themselves and the right to control litigation

over them. Additionally, it found that Defendants’

refusal to dismiss their litigation against the United

States in the Court of Federal Claims violated the

Agreements. The separate opinion of Arbitrator John

D. Aldock stated that Plaintiffs forfeited their claim

to arbitration through litigation conduct and under

the doctrine of laches, but additionally, that the

Court of Federal Claims was in a better position to

address these arguments. See Verified Complaint,

Exh. 4. Pursuant to Section 10.10 of the Agreements,

Plaintiffs then: filed their verified complaint and

order to show cause seeking the confirmation of the

June 20, 2007 arbitration award on June 25, 2007.

On July 2, 2007, the same day that the Court

signed Plaintiffs’ order to show cause to proceed

summarily to confirm the arbitration award, Defen-

35a

dants filed a motion to vacate the arbitration ruling

in the Court of Federal Claims. On July 11, 2007,

Defendants filed a cross-motion in this Court to stay

Plaintiffs’ order to show cause pending the outcome of

this motion to vacate the arbitration ruling. On July

24, 2007, Defendants filed an answer, counterclaim

and affirmative defenses in response to Plaintiffs’

verified complaint.

On August 20, 2007, this Court denied Defendants’

motion for the entry of a stay of all proceedings in

this matter. This Court denied the motion because it

found that the Court of Federal Claims is not the

appropriate jurisdiction to entertain Defendants’

motion to vacate. This Court stated that the Court of

Federal Claims has the power to only hear claims

against the United States for monetary relief. This

Court found instead that Defendants’ motion to

vacate should be heard as part of this state court

proceeding. On August 30, 2007, the Court of Federal

Claims found that it lacked jurisdiction to vacate an

arbitration award. However, the Court of Federal

Claims requested supplemental briefing on several

issues in light of the United States’ acceptance of

Defendants’ assignment of claims to Plaintiffs. The

United States had filed a notice on August°22, 2007

stating that the Government had:

accepted the assignment of those claims that

[Defendants] purported to make to PSEG Nuc-

lear, to the extent that we have been made aware

of those claims through [Defendants] complaint

in this action and through the assignment provi-

sions in the purchase and sale agreements that

have been included in the appendices to some of

the briefing in this case.

36a

On November 13, 2007, the Court of Federal

Claims ruled on Defendants’ motion to vacate the

June 20, 2007 arbitration award and on the United

States’ renewed motion for summary judgment. It

reiterated that it would deny Defendants’ motion to

vacate the arbitration award because it lacked juris-

diction over disputes between private parties. Fur-

thermore, and perhaps more importantly, it granted

the United States’ summary judgment motion

against Defendants. Specifically, the Court of Federal

Claims found that the United States had expressly

consented to the assignment of claims from Defen-

dants to Plaintiffs, and this acceptance vitiated the

provisions of the Assignment of Claims Act that

otherwise would have barred Defendants’ assignment

of claims against the United States to Plaintiffs.

Therefore, because Defendants had assigned all of

their claims against the United States related to the

failure to remove SNF to Plaintiffs, the Court of

Federal Claims granted summary judgment against

Defendants in favor of the United States.

In the motion presently before the Court, Plaintiffs

argue that the June 20, 2007 arbitration award

should be confirmed because of New Jersey’s strong

public policy in support of arbitration as a method of

resolving disputes. Additionally, Plaintiffs maintain

that there is no evidence of any impropriety, wrong-

doing, or significant mistakes in the arbitration

process and order that would justify the correction,

modification or vacation of the award. Defendants

contend that the Court should not confirm the award

because the award exceeded the arbitrators’ powers,

the arbitrators refused to consider pertinent evi-

dence, and the arbitration concerned a question for

which there was no agreement to arbitrate. Addition-

ally, Defendants argue that the award exhibited a

37a

manifest disregard of relevant law and therefore

must be vacated.

The issue before the Court is whether to confirm

the June 20, 2007 arbitration award. The Court will

first discuss whether it is appropriate for Plaintiffs to

have brought this action as a summary proceeding.

R. 4:67-1 governs summary actions and provides that

a summary action may be bought where the court is

permitted by rule or by statute to proceed in a sum-

mary manner. R. 4:67-2 provides that those litigants

proceeding summarily shall proceed by filing a veri-

fied complaint with an order to show cause.

Plaintiffs seek to move summarily under N.-/.S.A.

2A:23B-22, entitled “Confirmation of Award,” which

provides:

After a party to an arbitration proceeding re-

ceives notice of an award, the party may file a

summary action with the court for an order

confirming the award, at which time the court

shall issue a confirming order unless the award

is modified or corrected pursuant to section 20 or

24 of this act or is vacated pursuant to section 23

of this act.

Hence, it is clear that Plaintiffs may bring this action

as an order to show cause seeking to proceed summa-

rily.

Next the Court must determine whether it should

analyze the validity of the arbitration award under

federal or state law. There is a strong federal policy

in favor of arbitration and arbitrators’ decisions.

Congress enacted the Federal Arbitration Act

(“FAA”), also known as the United States Arbitration

Act, in 1925 to abrogate the then-existing common

law rule disfavoring arbitration agreements “and to

38a

place arbitration agreements upon the same footing

as other contracts.” Martindale v. Sandvik, Inc., 173

N.J. 76, 83-84 (2002) (quoting Gilmer v. Interstate /

Johnson Lane Corp., 500 U.S. 20, 24 (1991)). Section

2 of the FAA provides that it applies to all contracts

involving interstate commerce. See 9 U.S.C. 2. In

enacting Section 2, “Congress declared a national

policy favoring arbitration and withdrew the power of

the states to require a judicial forum for the resolu-

tion of claims which the contracting parties agreed to

resolve by arbitration.” Martindale, supra, at 84

(quoting Southland Corp. v. Keating, 465 U.S. 1, 10

(1984)).

Section 10 of the FAA provides the grounds upon

which a court may vacate an arbitration award:

(1) where the award was procured by corruption,

fraud, or undue means;

(2) where there was evident partiality or corrup-

tion in the arbitrators, or either of them;

(3) where the arbitrators were guilty of miscon-

duct in refusing to postpone the hearing, upon

sufficient cause shown, or ‘a refusing to hear

evidence pertinent and material to the contro-

versy; or of any other misbehavior by which the

rights of any party have been prejudiced; or

(4) where the arbitrators exceeded their powers,

or so imperfectly executed them that a mutual,

final, and definite award upon the subject matter

submitted was not made

See 9 U.S.C. 10.

Additionally, under federal law, as a matter of last

resort, an arbitration award may be vacated if it

evidences a manifest disregard for law. St. John’s

39a

Mercy Med. Ctr. v. Delfino, 414 F.3d 882, 884, 884 n.1

(8th Cir. 2005) (citing Wallace v. Buttar, 378 F.3d 182,

189 (2d Cir. 2004)). It must be emphasized however

that this doctrine is “extremely narrow,” and should

be reserved only for “those exceedingly rare instances

where some egregious impropriety on the part of

the arbitrators is apparent, but where none of the

provisions of the FAA apply.” Ibid. Put another way,

a successful challenge to an arbitration award, apart

from 9 U.S.C. 10, depends upon the challenger’s

ability to show that the award is “(1) unfounded in

reason and fact; (2) based on reasoning so palpably

faulty that no judge, or group of judges, ever could

conceivably have made such a ruling; or (3) mista-

kenly based on a crucial assumption that is con-

cededly a non-fact.” Advest. Inc. v. McCarthy, 914

F.2d 6, 8-9 (1st Cir. 1990) (quoting Local 1445,

United Food and Commercial Workers v. Stop & Shop

Cos., 776 F.2d 19, 21 (1st Cir. 1985)).

New Jersey shares this strong public policy favor-

ing arbitration as a means to resolve disputes. It is a

well-accepted principle that New Jersey supports the

settlement of disputes by arbitration. Singer uv.

Commodities Corp., 292 N.J. Super. 391, 400 (App. Div.

1996). See also Stigliano v. Saint Rose High School,

198 N.J. Super. 520, 529 (App. Div 1984) (stating

that New Jersey courts have long favored the settle-

ment of disputes by arbitration). Under the New

Jersey Arbitration Act (“NJAA”), pursuant to N.J.S.A.

2A:23B-23(a), a court shall vacate an arbitration

award under any of the following circumstances:

(1) the award was procured by corruption, fraud,

or other undue means;

(2) the court finds evident partiality by an

arbitrator; corruption by an arbitrator; or mis-

40a

conduct by an arbitrator prejudicing the rights of

a party to the arbitration proceeding;

(3) an arbit ator refused to postpone the hearing

upon showing of sufficient cause for post-

ponement, refused to consider evidence material

to the controversy, or otherwise conducted the

hearing contrary to section 15 of this act, so as to

substantially prejudice the rights of a party to

the arbitration proceeding;

(4) an arbitrator exceeded the arbitrator's

powers;

(5) there was no agreement to arbitrate, unless

the person participated in the arbitration pro-

ceeding without raising the objection pursuant to

subsection c. of section 15 of this act not later

than the beginning of the arbitration hearing; or

(6) the arbitration was conducted without proper

notice of the initiation of an arbitration as re-

quired in section 9 of this act so as to substan-

tially prejudice the rights of a party to the

arbitration proceeding.

Usually, however, the FAA preempts state laws

concerning arbitration agreements. It is firmly es-

tablished that the FAA preempts state laws that in-

validate arbitration agreements. Martindale, supra,

at 85. See also B & S Lid. Inc. v. Elephant & Castle

Int'l, Inc., 388 N.J. Super. 160, 172 (Ch. Div. 2006)

(quoting Doctor’s Assocs., Inc. v. Hamilton, 150 F.3d

157, 162 (2d Cir. 1998)) (stating that the “Supreme

Court has declared that the FAA preempts all state

laws that impermissibly burden arbitration agree-

ments”). Nothing in the FAA indicates the broad

principle of enforceability of arbitration agreements

is subject to any additional limitations under state

4la

law. B & S Ltd, supra, at 172 (citing Southland Corp.,

supra, at 11).

However, the FAA’s preemption does not com-

pletely encompass state laws. The FAA specifically

permits states to regulate contracts, including con-

tracts containing arbitration agreements under gen-

eral contract principles; therefore, an arbitration

clause may be invalidated upon such grounds as exist

at law or in equity for the revocation of any contract.

Martindale, supra, at 85. Nor does the FAA always

preempt state laws. The FAA, while possessing some

preemptive force, does not entirely displace state ar-

bitration law, and will be found to be preemptive only

when state law prevents parties from fully arbi-

trating their disputes. Del Piano v. Merrill Lynch,

Pierce, Fenner & Smith, Inc., 372 N.J. Super. 503,

508-09 (App. Div. 2004). See also ASW Allstate Painting

& Constr. Co. v. Lexington Ins. Co., 188 F.3d 307, 310

(5th Cir. 1999) (stating that the FAA does not pre-

empt state arbitration rules as long as the state rules

do not undermine the goals and policies of the FAA).

The Del Piano court found that where New Jersey’s

conflict of interest statute was identical in its

language to the conflict of interest provision of the

FAA, New Jersey’s statute could not be found to

stand as an obstacle to the purposes of the FAA and

thus be preempted by it. Del Piano, supra, at 509.

Similarly, the Court finds here that the language

of Section 23 of the NJAA mirrors the language of

Section 10 of the FAA. The first four grounds of

vacation under the NJAA are nearly identical to

those grounds listed under the FAA. The NJAA does

list two additional grounds; however, the Court does

not find that these last two grounds would “imper-

missibly burden arbitration agreements.” Rather, the

42a

first of these two grounds simply states an arbitra-

tion award cannot be confirmed when no arbitration

agreement existed in the first place, and the second

of the two grounds speaks to giving proper notice of

initiating an arbitration proceeding and does not

concern the substance of the arbitration agreement or

proceeding. Therefore, the Court finds that the NJAA

does not prevent the parties here from fully arbitrat-

ing their disputes, nor does it undermine the policies

of the FAA which strongly support the resolution of

disputes by arbitration.

Furthermore, in Volt Info. Sciences, Inc. v. Bd. of

Trustees of Leland Stanford Junior Univ., 489 U.S

468 (1989), the United States Supreme Court was

presented with a dispute over an arbitration agree-

ment entered in to by the parties. The agreement

contained a provision stating that all disputes “aris-

ing out of or relating to this contract or the breach

thereof” were subject to arbitration. Jd. at 470. The

agreement also had a clause providing that “[t]he

Contract shall be governed by the law of [California].”

Ibid. At issue was whether application of the Califor-

nia Arbitration Act was preempted by the FAA in a

case where the parties agreed that their arbitration

agreement was governed by the laws of California.

The United States Supreme Court held that the

California Arbitration Act was not preempted by the

FAA in that matter. It found that the FAA does not

prevent the enforcement of agreements to arbitrate

under different rules than those set forth in the FAA

itself where the parties agreed to abide by state rules

of arbitration. Id. .* 479. The Court declared that

were this not the case, the FAA’s primary purpose of

ensuring that private agreements to arbitrate are

enforced according to their terms would be frus-

43a

trated. Ibid. Rather, arbitration. under the FAA is a

matter of consent, not coercion, and parties should be

generally free to structure their arbitration agree-

ments as they see fit. Ibid.

In this matter, Section 10.10 of the Agreements

provides that they will be “governed by and construed

in accordance with the laws of the State of New

Jersey (without giving effect to conflicts of law princi-

ples) as to all matters, including validity, construc-

tion, effect, performance and remedies.” Therefore,

because the parties have agreed to resolve their dis-

putes under New Jersey law, the Court shall apply

the NJAA to the facts of this case in determining

whether the June 20, 2007 arbitration award should

be confirmed.

Finally, the Court must determine whether to con-

firm the June 20, 2007 arbitration award pursuant to

the NJAA. Defendants’ primary contentions raised in

support of their position that the arbitration award

must be vacated are that (1) the Assignment of

Claims Act was not complied with, and (2) numerous

cases stand for the proposition that a private party

cannot assign or transfer a takings claim against the

United States to another private party. The Assign-

ment of Claims Act, 31 U.S.C. 3727 (formerly 31

U.S.C. 203), provides that an assignment of any part

of a claim against the United States Government or

of an interest in the claim may be made only after a

claim is allowed, the amount of the claim is decided,

and a warrant for payment of the claim has been

issued. Defendants contend that these requirements

have not been satisfied by the parties in this matter.

Defendants also state that case law is clear in

holding that private parties cannot by mutual agree-

ment assign takings claims against the United

44a

States. Defendants cite to Dow v. United States, 357

U.S. 17 (1958) which states that the Assignment of

Claims Act prohibits the voluntary assignment of a

compensation claim against the Government for the

taking of property and that the owner of the property

at the time of the taking, not the owner at an earlier

or later date, receives the payment. Id. at 20-21.

Additionally, the Government has an obligation to

provide just compensation for. takings. Id. at 24.

Defendants cite to Argent v. United States, 124 F.3d

1277 (Fed. Cir. 1997) which states that absent a

valid voluntary assignment of a compensation claim

against the Government for the taking of property,

the general rule is that the owner at the time of the

taking is the party who has the claim and is to

receive payment. Jd. at 1287. Defendants additionally

cite to Rochester Gas & Electric Corp. v. United

States, 65 Fed. Cl. 431 (2005) as a case that is “on ail

fours with” the present matter. In Rochester Gas, the

plaintiff sold its nuclear plant to a third party and

executed a contract with the third party which as-

‘signed its takings claims, related to the DOE’s failure

to remove SNF, to the third party. The United States

challenged this assignment under the Assignment of

Claims Act. The Rochester Gas court held that the

plaintiff could not assign its takings claims to the third

party. Id. at 441. It stated that a party must own the

‘property at the time that the alleged taking occurred

in order for it to be able to allege that its property

right had been taken. Jbid. Defendants thus conclude

that these cases affirm that, under the Assignment of

Claims Act, the assignment of takings claims against

the Government to a third party is absolutely null

and void unless certain requirements, none of which

were met here, are satisfied.

45a

Based on these contentions, Defendants have made

four arguments pursuant to state and federal arbitra-

tion law in asserting that the June 20, 2007 arbitra-

tion award must be vacated. First, Defendants con-

tend that the arbitrators exceeded their powers by

depriving Defendants of their fundamental con-

stitutional right to just compensation. See N.J.S.A.

2A:23B-23(aX4). Second, Defendants argue that the

arbitrators failed to consider evidence which preju-

diced the rights of Defendants. See N.J.S.A. 2A:23B-

23(aX3). Third, Defendants maintain that the arbi-

tration clause of the Agreements is not applicable to

Defendants’ takings claims because the claims do not

arise under the Agreements, but rather under the

‘Fifth Amendment of the United States Constitution.

See N.J.S.A. 2A:23B-23(a)(5). Finally, Defendants

argue that the arbitrators acted in manifest disre-

gard of the law by disregarding the above mentioned

case law.

In addressing these arguments, the Court first dis-

cusses the general purview of the review of arbitra-

tion awards by New Jersey courts. Notwithstanding

the apparently broad scope of a court’s powers to

alter an arbitrator's award as described in the statu-

tory language, our courts have not traditionally

interpreted the statutory language broadly. Kimm uv.

Blisset, LLC, 388 N.J. Super. 14, 29-30 (App. Div.

2006), cert. den., 189 N.J. 428 (2007) (citing Tretina

Printing, Inc. v. Fitzpatrick & Assocs., Inc., 135 N.J.

349, 355 (1994)). Arbitration is a favored remedy in

New Jersey, Faherty v. Faherty, 97 N.J. 99, 105

(1984), and a strong judicial presumption exists in

favor of the validity of an arbitration award. Del

Piano, supra, at 510. Thus, it is rather difficult for a

party to successfully move a New Jersey court to

amend or vacate an arbitration award. With this in

46a

mind, the Court now addresses each of Defendants’

arguments inturn. ~

1. Did the Arbitrators Exceed Their Powers?

Defendants argue that the arbitrators exceeded

their powers, pursuant to N.J.S.A. 2A:23B-23(a)(4)

because the arbitrators decided a constitutional issue

incorrectly. Defendants argue that the arbitration

panel ignored three different rules: (1) that when the

Government takes property, it must pay for it; (2)

that only the owner of property at the time of the

taking is entitled to recover from the Government;

and (3) that if the assignment is to an assignee who

can’t bring the claim against the United States, the

claim reverts back to the assignor. Defendants assert

that because the arbitration panel assigned Defen-

dants’ takings claims to Plaintiffs who, as the subse-

quent owners of the minority interests, are not

entitled to bring those claims, the takings claims are

in effect extinguished and the United States no

longer is obligated to pay just compensation for these

takings. Defendants also claim that this ruling has

deprived them of their fundamental right to just

compensation. Defendants conclude that because this

is in contravention of the law that prohibits the

forfeiture of takings claims, the arbitrators exceeded

their powers, and therefore the arbitration award

should be vacated.

Plaintiffs respond that the arbitration panel’s au-

thority is derived from the Agreements. Therefore,

the arbitrators could have only exceeded their powers

if they decided an issue that was outside the scope of

the Agreements. Plaintiffs argue that the arbitrators

did not decide a constitutional issue as Defendants

allege, but rather decided a contractual issue based

on the language of the Agreements. Piaintiffs main-

47a

tain that because the Agreements establish that any

dispute regarding the assignment of Defendants’ tak-

ings claims is covered under the arbitration clause’s

broad scope in Section 8.3(a), the arbitrators did not

step outside the bounds of their authority and thus

did not exceed their powers.

An arbitrator’s authority to resolve a dispute is

based upon the contract between the parties. High

Voltage Eng’g Corp. v. Pride Solvents & Chemical

Co. of New Jersey, Inc., 326 N.J. Super. 356, 361-62

(App. Div. 1999) (citing Communications Workers of

America, Local 1087 v. Monmouth County Bd. of Soc.

Servs., 96 N.J. 442, 448 (1984)). Thus, the jurisdiction

and authority of the arbitrator are circumscribed

by and limited to the powers delegated to him.

Communications Workers, supra, at 448. If an arbi-

trator ignores the limited authority that the contract

confers, the arbitrator has exceeded his powers and

the court may not defer to the arbitrator’s decision.

Zervos v. Freedman Properties, 223 N.J. Super. 599,

603 (Ch. Div. 1987) (citing County College of Morris

Staff Ass’n v. County College of Morris, 100 N.J. 383,

391 (1985)). Therefore, in determining whether the

arbitration panel had the authority to resolve the

dispute as to the transfer of the takings claims from

Defendants to Plaintiffs, the Court must look to’the

language of the Agreements.

The Court finds that it is clear that the arbitration

panel had the power and authority to rule on whether

the takings claims had been assigned to Plaintiffs.

‘Section 2.1(1) of the Agreements states that the Pur-

chased Assets include any of Defendants’ claims

relating to the failure of the DOE to remove SNF

from the Stations. Section 2.1(m) provides that

the Purchased Assets also include all of Defendants’

48a

rights under any cause of action against third parties

related to their’ former interests in the Stations.

Thus, the dispute here over whether Defendants’

takings claims were assigned to Plaintiffs is based on

the language of Section 2.1(1) and Section 2.1(m).

Section 8.3 of the Agreements provides that any

dispute related to any provision in the Agreements is

subject to arbitration. Because this dispute is based

on Sections 2.1(1) and (m), it is subject to arbitration

under Section 8.3.

Moreover, the Court finds that Defendants’ argu-

ment that the arbitration panel’s ruling will relieve

the United States from its obligation to pay just com-

pensation for its taking is irrelevant towards deter-

mining the scope of the arbitration clause in the

Agreements. The arbitration panel’s function was not

to determine the ultimate result from the assignment

of Defendants’ claims, but whether Defendants’ tak-

ings claimis were in fact transferred to Plaintiffs as

part of the Purchased Assets under the Agreements.

Nor did the arbitration panel decide what would be-

come of Defendants’ assigned takings claims; rather

it simply found that the Agreements’ assignment

language included Defendants’ takings claims and

that the Assignment of Claims Act did not act as

an absolute prohibition of Defendants’ assignment

of their takings claims to Plaintiffs. Therefore, the

Court finds that the arbitrators have not exceeded

their powers here.

2. Did-the Arbitrators Fail to Consider Evidence?

Defendants next argue, pursuant to N.J.S.A.

2A:23B-23(aX3), that the arbitrators failed to con-

sider evidence related to the potential value of their

takings claims against the United States. The arbi-

49a

tration panel aézlressed the viability of Defendants’

claims by stating:

It is also uncertain whether the takings theory

under which the claims are being brought will

prove to be viable and to what extent ACE/

Delmarva would be able to show any significant

loss as a minority owner. Further assuming the

sellers were able to proceed with the takings

claims, it is unclear whether and to what extent

any takings damages would remain for the

sellers in these cases after the buyer’s contract

claims were resolved. See Boston Edison, 64 Fed.

Cl. at 187. Thus, the idea that recognition of

ACE/Delmarva’s assignment to PSEG of the

takings claims is against the public interest is

speculative and may also be exaggerated.

Arb. Opinion, pp. 23-24.

Defendants contend that this assertion is entirely

inappropriate and should not be a basis to justify the

extinguishment of Defendants’ takings claims. De-

fendants claim that these statements demonstrate

that the arbitrators failed to consider the “undisputed

evidence” indicating that Defendants’ claims are

viable and valuable, and thereby prejudiced Defen-

dants and the New Jersey customers on whose behalf

Defendants’ takings claims are being pursued. De-

fendants point to the evidence that there is a long-

standing basis for takings claims of this nature, that

Defendants’ claims have already withstood a sum-

mary judgment motion by the United States,’ and

2 This point, however, is now mooted after the Court of

Federal Claims granted the United States’ most recent motion

for summary judgment on November 13, 2007, as mentioned

supra.

50a

that substantially identical claims in a recent case

withstood all motions to invalidate them. In Boston

Edison Co., v. United States, 64Fed. Cl. 167 (2005),

the Court of Federal Claims denied the government’s

motion for summary judgment against the plaintiff,

and according to Defendants, the trial has recently

concluded with asserted damages of over $100

million. See Cert. of Nicholas Mattia, 410. Defen-

dants have retained the same expert used in the

Boston Edison Co. case, and this expert has proffered

that Defendants’ claims may be worth $70-80 million.

See ibid. Therefore, by ignoring the evidence demon-

strating that Defendants’ takings Claims have merit

to them, Defendants’ argue that they have been sub-

stantially prejudiced by the arbitrators.

Defendants also argue that the arbitration panel

failed to consider the aforementioned litany of cases

that Defendants cited to in support of their position

that the only party able to bring a takings claim

against the Government is the owner of the property

at the time of the taking, and any attempt to assign

such a claim to a third party is invalid. Defendants

state that the arbitrators made absolutely no refer-

ence to Dow, supra, or Argent, supra, and only

referred to Rochester Gas, supra, as support for an

unrelated proposition despite the fact that these were

the cases that Defendants primarily relied on. There-

fore, Defendants contend that the arbitration panel

giled to consider the propositions that these cases

stand for and were thereby prejudiced. Defendants

argue that the arbitration panel should have distin-

guished these opinions in order to demonstrate that

the panel considered this evidence.

Plaintiffs respond that just because a judge has

allowed a takings claim in another case to make it to

5la

trial does not establish the validity of Defendants’

takings claims in their case against the United States

in the Court of Federal Claims. Plaintiffs contend

that arbitration awards have only been vacated on

this basis when the arbitrators haven’t allowed

evidence to be entered or presented, not when the

arbitrators tiave found evidence to simply be not

compelling. Moreover, Plaintiffs state that this

evidence is not material to the underlying issue of

whether Defendants assigned their takings Claims to

Plaintiffs when the parties executed the Agreements.

Finally, Plaintiffs argue that the arbitration panel

did not have to address this litany of cases because,

contrary to Defendants’ assertions, no case exists

which states that a takings claim cannot be assigned

between private parties. Therefore, Plaintiffs argue

that the arbitration panel did not fail to consider

material evidence in making its decision.

The Court finds that this evidence that the

arbitration panel allegedly failed to consider was not

material to the controversy at issue, i.e., whether

Defendants assigned their takings claims to Plaintiffs

pursuant to the Agreements. The arbitration panel

addressed the viability of Defendants’ taking claims

in support of its finding that Defendants felt the,

were getting a fair value for their minority interests

in the Stations regardless of any takings claims. This

finding contradicts Defendants’ belief that Plaintiffs

would be receiving a windfall if the arbitration panel

found that the takings claims had been assigned,

because (1) the viability of the takings claims is

uncertain, and (2) the amount of liabilities assumed

by Plaintiffs from Defendants remains uncertain. But

the arbitration panel stated that “[wlJhatever

rhetorical force this argument may have, it does not

give the Panel license to rewrite the [Agreements],

52a

which plainly state (multiple times) that all claims

relating to SNF are assigned to PSEG.” Arb. Opinion

at 23. Therefore, the Court finds that the arbitration

panel based its decision on the language of the

Agreements, and not the issue of viability of the

takings claims. Thus, the evidence that the

arbitration panel purportedly failed to consider was

immaterial to its finding that pursuant to the

Agreements, the takings claims were assigned.

Moreover, the Court finds that the arbitration

panel need not have cited to the litany of cases pre-

sented to it by Defendants because the arbitration

panel recognized that only the United States could

invoke the Assignment of Claims Act as a defense,

and that the United States had the authority to con-

sent to an assignment of takings claims. Defendants

allege that Dow, supra, Argent, supra, and Rochester

Gas, supra, all affirm that under the Assignment of

Claims Act, the assignment of takings claims against

the Government to a third party is “absolutely null

and void” unless certain specific requirements are

met. However, the arbitration panel rejected this al-

leged proposition by stating that the Government

could consent to an assignment of a claim that would

otherwise violate the Assignment of Claims Act, see

Vt. Yankee Nuclear Power Corp. v. United States, 73

Fed. Cl. 236, 240 (2006), and that only the United

States could invoke the Assignment of Claims Act to

void the assignment. See United States v. Certain

Space in Property Known as Chimes Bldg., 320 F

Supp. 491, 496 (N.D.N.Y. 1969), affd, 435 F.2d 872

(2d Cir. 1970). Furthermore, the arbitration panel

stated that Defendants’ contention that they could

not have assigned the takings claims at issue rang

hollow, and that Defendants failed to cite to any

cases in which the Assignment of Claims Act has

53a

been used to invalidate an assignment as between pri-

vate parties. The Court thereby finds that the arbi-

tration panel did consider the cases cited by Defen-

dants, but simply found that none of them prohibited

the assignment of Defendants’ takings claims at issue

here. Therefore, the Court finds that Defendants’ sec-

ond argument that the arbitration panel failed to

consider evidence must fail.

3. Is the Arbitration Clause Applicable to Defen-

dants’ Takings Claims?

Third, Defendants argue, pursuant to N.-J.S.A.

2A:23B-23(aX5), that the arbitration clause in the

Agreements does not apply to Defendants’ takings

claims. Defendants state that Section 8.3 of the

Agreements provides that any dispute relating to or

arising out of any provision of this Agreement

is subject to arbitration. However, Defendants argue

that their takings claims do not arise out of the

Agreements, but rather under the Fifth Amendment

of the United States Constitution. Therefore, Defen-

dants conclude that there was no agreement to arbi-

trate the assignment of their takings claims and thus

the arbitration panel was without jurisdiction in

making the arbitration award. Defendants addition-

ally argue that because under the Assignment of

Claims Act, the assignment of claims against the

United States is rarely permitted in circumstances

not relevant here, there could be no agreement to ar-

bitrate the assignment of Defendants’ takings claims

here.

Plaintiffs respond that this argument invokes the

same issues that Defendants raised in their argu-

ment that the arbitrators exceeded their powers

because the Court, in resolving the issue, must deter-

mine the scope of the arbitration clause. Plaintiffs

54a

again state that the language of the arbitration

clause is clear in granting the arbitration panel

jurisdiction over whether Defendants assigned their

takings claims to Plaintiffs.

The Court finds that Defendants’ arguments here

are unpersuasive. The Court agrees that Defendants’

takings claims against the United States do arise un-

der the Fifth Amendment of the United States Con-

stitution. However, the dispute between Defendants

and Plaintiffs does not regard the merits of Defen-

dants’ takings claims against the United States.

Rather, the dispute arises from whether, by execut-

ing the Agreements, Defendants assigned their tak-

ings claims to Plaintiffs as part of the Purchased

Assets. This dispute thereby clearly arises from

Section 2.1 of the Agreements which discusses which

assets Plaintiffs are receiving. Therefore, the Court

finds that there is an agreement to arbitrate whether

Defendants’ takings claims have been assigned to

Plaintiffs. |

Moreover, Defendants’ argument under the As-

signment of Claims Act does not change the fact that

the arbitration clause in Section 8.3 applies to the

dispute in this matter. The parties are both sophisti-

cated, and were free to contract to any terms in the

Agreements to their satisfaction. As the Court has

already stated, the Assignment of Claims Act does

not place an absolute prohibition on an assignment of

takings claims against the United States from one

party to another; the United States may choose to

consent to such an assignment. Therefore, the Court

finds that the arbitration clause in Section 8.3 is ap-

plicable to the assignment of Defendants’ takings

claims.

55a

4. Did the Arbitrators Act in Manifest Disregard of

the Law?

Finally, Defendants argue that the arbitrators

acted in manifest disregard of the law. The Court

first finds that it need not address this argument in

light of its decision to apply the NJAA to this matter.

It is clear to the Court that New Jersey law does not

recognize “manifest disregard of the law” as a basis

for vacation of an arbitration award. The Court first

notes that the NJAA does not list “manifest disregard

of the law” or other similar language as a reason un-

der which an arbitration award can be vacated. See

N.J.S.A. 2A:23B-23. Moreover, case law interpreting

the former statute governing the vacation of an arbi-

tration award, N.J.S.A. 2A:24-8 (nearly identical to

the first four subsections of N.J.S.A. 2A:23B-23(a)),

has held that a mistake of law is not a ground for the

vacation of an arbitration award. In Tretina ov.

Fitzpatrick & Assocs., 135 N.J. 349 (1994), the

New Jersey Supreme Court discussed the previously

existing standard under which a court could vacate

an arbitration award whenever an arbitrator's award

“embraced egregious mistakes of law.” See Perini

Corp. v. Greate Bay Hotel & Casino, Inc., 129 N.J.

479, 496 (1992). However, the Tretina court rejected

this standard and adopted the standard articulated

by Chief Justice Wilentz in his concurring opinion

in Perini Corp., supra, which held that arbitration

awards may be vacated only for fraud, corruption, or

similar wrongdoing on the part of the arbitrators,

and can be corrected or modified only for very

specifically defined mistakes.*® Tretina, supra, at 358.

*° These mistakes are defined at N.J.S._A. 2A:24-9 as cited in

Tretina, supra, and now pursuant to the NJAA at N.J.S_A 2A:23-

20 and are not applicable to the present matter.

56a

Thus, a mistake of law provides no basis for the vaca-

tion of an arbitration award. See Cap City Products,

Co. v. Louriero, 332 N.J. Super. 499, 504 (App. Div.

2000). Therefore, the Court finds that Defendants are

not entitled to seek vacation of the June

20, 2007 arbitration award on the alleged basis that

the arbitrators acted in manifest disregard of the law.

Even were the Court to address Defendants’ con-

tention that the arbitrators acted in manifest disre-

gard of the law, the Court would find that no support

exists here for that position. Defendants argue that

Rochester Gas, supra, is “on all fours” with the situa-

tion at issue here. However, in Rochester Gas, supra,

the United States was the party who challenged this

assignment under the Assignment of Claims Act.

Here the Defendants are attempting to invoke the

Assignment of Claims Act in barring the assignment

of their takings claims to Plaintiffs. As discussed,

supra, only the United States may invoke the Act as

a defense to an assignment of claims against it. See,

e.g., United States v. Aetna Gas. & Sur. Co., 338 U.S.

366, 371 (1949); Martin v. National Sur. Co., 300 U.S.

588, 594 (1937). Moreover, the United States has ex-

pressly accepted the assignment of Defendants’ tak-

ings vlaims to Plaintiffs, something it has the right to

recognize. See Tuftco Corp. v. United States, 614 F.2d

740, 745 (Fed. Cl. 1980). Therefore, although the

facts underlying the takings claims here may be

similar to those facts in Rochester Gas, the fact that

the United States has consented to the assignment

here rather than attacked its validity distinguishes

the situation here from that in Rochester Gas.

Moreover, the Court finds that the other cases cited

by Defendants which are allegedly manifestly ignored

by the arbitration panel do not support Defendants’

57a

position. Defendants contend that Dow, supra, stands

for the proposition that any attempt to assign a

takings Claim against the United States to a third

party is invalid. Although this may be generally true,

Defendants’ reliance on Dow ignores the above

mentioned precedent stating that the United States

may consent to an assignment even if it doesn’t

comply with the requirements of the Assignment of

Claims Act. Defendants’ reliance on Argent, supra,

and United States v. Shannon, 342 U.S. 288 (1952) is

also misguided. These cases have held that absent a

valid voluntary assignment of a compensation claim

against the Government for the taking of property,

the general rule is that the owner at the time of

the taking is the party who has the claim and is to

receive payment. These cases do not preclude the

Government from recognizing assignment of takings

claims and thereby removing the absence of a valid

voluntary assignment. Therefore, it certainly cannot

be said that this is one of those exceedingly rare

instances where some egregious impropriety on the

part of the arbitrators is apparent.

The Court thereby finds that all of Defendants’ ar-

guments in support of their position that the June 20,

2007 arbitration award should be vacated must be

rejected. Therefore, the Court will confirm the June

20, 2007 arbitration award in this matter.

For the above stated reasons, Plaintiffs’ request to

confirm the June 20, 2007 arbitration award is

GRANTED.

| 58a

APPENDIX C

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

[Filed October 6, 2008]

Docket No. A-002559-07T3

PSEG POWER

vs.

ATLANTIC CITY ELECTRIC

ORDER DISMISSING APPEAL

This matter being opened to the Court on its own

motion and it appearing from the attached that the

appellant has requested that the appeal be with-

drawn;

It is HEREBY ORDERED that the above appeal is

dismissed.

WITNESS, the Honorable Edwin H. Stern,

Presiding Judge for Administration, at Trenton, this

06 day of October, 2008.

/s/ John M. Chacko

John M. Chacko

Clerk of the Appellate Division

59a

APPENDIX D

PSE&G CONTRACT NO. 83-6-ND-684

U.S. DEPARTMENT OF ENERGY

CONTRACT NO. DE-CRO01-83NE44480

SALEM GENERATING STATION

NOS. 1 AND 2 UNITS

CONTRACT FOR DISPOSAL OF SPENT NUCLEAR

FUEL AND/OR HIGH-LEVEL

RADIOACTIVE WASTE

THIS CONTRACT, entered into this 13th day of

June 1983, by and between the UNITED STATES OF

AMERICA (hereinafter referred to as the “Govern-

ment”), represented by the UNITED STATES DE-

PARTMENT OF ENERGY (hereafter referred to as

“DOE”) and PUBLIC SERVICE ELECTRIC AND

GAS COMPANY, (hereinafter referred to as the

“Purchaser”), a corporation organized and existing

under the laws of the State of New Jersey, acting on

its own behalf as managing utility for Salem Gene-

rating Station, Nos. 1 and 2 Units and on behalf of

the joint owners, Philadelphia Electric Company,

Atlantic City Electric Company, and Delmarva Power

and Light Company.

60a

PSE&G CONTRACT NO. 83-6-ND-684

U.S. DEPARTMENT OF ENERGY

CONTRACT NO. DE-CRO1-83NE44480

SALEM GENERATING STATION

NOS. 1 AND 2 UNITS

CONTRACT FOR DISPOSAL OF SPENT NUCLEAR

FUEL AND/OR HIGH-LEVEL

RADIOACTIVE WASTE

THIS CONTRACT, entered into this 13” day of

June 1983, by and between the UNITED STATES OF

AMERICA (hereinafter referred to as the “Govern-

ment”), represented by the UNITED STATES DE-

PARTMENT OF ENERGY (hereafter referred to as

“DOE”) and PUBLIC SERVICE ELECTRIC AND

GAS COMPANY, (hereinafter referred to as the

“Purchaser”), a corporation organized and existing

under the laws of the State of New Jersey, acting on

its own behalf as managing utility for Hope Creek

Generating Station, No. 1 Unit and on behalf of the

joint owner Atlantic City Electric Company.

* ae 3 me

6la

APPENDIX E >

(DP&L-SALEM)

PURCHASE AGREEMENT

BY AND BETWEEN

DELMARVA POWER & LIGHT COMPANY

and

PSEG POWER LLC

Dated as of September 27, 1999

& * * *

ARTICLE I

PURCHASE AND SALE

2.1 Transfer of Purchased Assets. Upon the terms

and subject to the conditions set forth in this Agree-

ment, at the Closing. Seller shall sell, assign, convey,

transfer and deliver to Buyer, and Buyer shall pur-

chase, assume and acquire from Seller, free and clear

of all Encumbrances, except for the Permitted En-

cumbrances, all of Seller’s rights, title and interests,

of whatever kind and nature, whether tangible or in-

tangible, in and to all assets (except for the Excluded

Assets) constituting or used and necessary for the op-

eration of the Salem Station or any portion thereof,

together with all goodwill relating thereto, including,

without limitation, those assets listed below, each as

in existence on the Closing Date (collectively, the

“Purchased Assets”):

(a) The Real Property;

(b) The Inventories;

NRC Licenses;

62a

(d) The Fuel Supplies;

(e) All machinery (mobile or otherwise), equip-

ment (including computer hardware and software

and communications equipment), vehicles, tools,

spare parts, fixtures, furniture, furnishings and other

personal property located at or in transit to the Sa-

lem Station or used and necessary for the operation

of the Salem Station, in each case, on the Closing

Date (collectively, the “Tangible Personal Property”),

including the electrical transmission assets (as op-

posed to generation assets) set forth in Schedule

2.1(e);

(f) Subject to the receipt of necessary consents

and approvals, the Seller’s Agreements;

(g) Subject to the receipt of necessary consents

and approvals, the Transferable Permits and all of

Seller’s rights, title and interests in and to any other

permits, registrations, franchises, certificates, li-

censes and other authorizations, consents and ap-

provals of Governmental Authorities relating to the

ownership, lease, maintenance or operation of the

Salem Station or any portion thereof;

(h) Seller’s Nonqualified Decommissioning Funds

as of the Closing Date, including all income, interest

and other earnings accrued thereon, together with all

required accounting and other records;

(i) Seller’s Qualified Decommissioning Funds as

of the Closing Date, including all income, interest

and other earnings accrued thereon, together with all

required accounting and other records;

(j) All books, operating records, operating, safety

and maintenance manuals, engineering design plans,

blueprints and as-built plans, specifications, proce-

63a

dures and similar items of Seller relating specifically

to the Salem Station (subject to the right of Seller to

retain copies of same for its use) other than such

items which are proprietary to third parties and ac-

counting records;

(k) All unexpired, transferable warranties and

guarantees from third parties arising out of, in re-

spect of, or in connection with, (i) any item of Real

Property or personal property, or interest therein, in-

cluded in the Purchased Assets or

(ii) the Assumed Liabilities;

(1) All claims of Seller relating to or pertaining to

the Department of Energy’s defaults under the De-

partment of Energy Standard Contract (including all

claims for failure by the Department of Energy to

take Spent Nuclear Fuel) accrued prior to, on or after.

the Closing Date, whether relating to periods prior to,

on or after the Closing Date, and all other claims of

Seller against the Department of Energy with respect

to, arising out of or in connection with the Purchased

Assets, other than the claims described in Section

2.2(1); and

(m) The rights of Seller in, to and under all

causes of action against third parties with respect to,

arising out of or in connection with Seller’s rights,

title and interests in and to the Purchased Assets or

the Assumed Liabilities, or any portion thereof,

whether accruing prior to, on or after the Closing

Date, other than any such causes of action as consti-

tute Excluded Assets or Excluded Liabilities whether

received as payment or credit against future liabili-

ties, in each case, relating to any period prior to, on

or after the Closing Date, other than the claims de-

scribed in Section 2.2(m).

64a

2.2 Excluded Assets. Notwithstanding anything to

the contrary in this Agreement, nothing in this

Agreement shall constitute or be construed as re-

quiring Seller to sell, assign, convey, transfer or de-

liver, and Buyer shall not be entitled to purchase or

acquire, any right, title or interest in, to or under the

following assets and properties which are associated

with the Purchased Assets, but which are hereby

specifically excluded from the definition of Purchased

Assets (collectively, the “Excluded Assets”):

(a) The right, title and interest of Seller in, to

and under all electrical transmission or distribution

assets (as opposed to generation assets) located at or

forming part of the Salem Station (whether or not re-

garded as a “transmission” or “generation” asset for

regulatory or accounting purposes), including all

switchyard facilities, substation facilities and support

equipment, as well as all permits, contracts (includ-

ing the LDV Agreement) and warranties, to the ex-

tent they relate to such transmission and distribution

assets (other than the electrical transmission assets

identified in Schedule 2.1(e) included as Purchased

Assets) (collectively, the “[ransmission Assets”);

(b) The right, title and interest of Seller in, to

and under certain switches and meters, gas facilities,

revenue meters and remote testing units, drainage

pipes and systems, pumping equipment and asso-

ciated piping, in each case, located at or forming part

of the Salem Station as identified in Schedule 2.2(b)

attached hereto;

curities, bonds, debentures, evidences of indebted-

ness, and interests in joint ventures, partnerships,

limited liability companies and other entities, in-

cluding account balances under Seller’s Insurance

65a

Policies and the right, title and interest of Seller in,

to and under account balances held by NEIL under

Buyer’s insurance Policies, but excluding such assets

comprising the Decommissioning Funds;

(d) All Seller’s Insurance Policies and the right,

title and interest of Seller in, to and under account

balances held by NEIL under Buyer’s Insurance Poli-

cies;

(e) All cash, cash equivalents, bank deposits, ac-

counts and notes receivable (trade or otherwise), and

‘prepaid expenses, including premiums and account

balances under Seller’s Insurance Policies and the

right, title and interest of Seller in, to and under ac-

count balances held by NEIL under Buyer’s Insur-

ance Policies, and any income, sales, payroll or other

Tax receivables (in each case, whether held by Seller

or any third party, including Buyer under the Own-

ers Agreement), but excluding such assets comprising

the Decommissioning Funds;

(f) The right, title and interest of Seller in, to and

under all intellectual property, including the names

“Delmarva Power & Light Company”, “DP&L” or any

derivation thereof, as well as any related or similar

name, or any other trade names, trademarks, service

marks, corporate names and logos, or any part, deri-

vation, colorable imitation or combination thereof;

(g) All tariffs, agreements and arrangements

with Persons other than Buyer to which Seller is a

party for the purchase or sale of electric capacity or

energy, or for the purchase of transmission, distribu-

tion or ancillary services;

(h) Other than with respect to the Decommis-

sioning Funds, all Tax refunds or credits (including

refunds or credits of real property Taxes paid or due

66a

with respect to the Salem Station or any related Real

Property), which refunds or credits are owed to Seller

with respect to periods prior to the Closing Date,

whether directly or indirectly, under the Owners

Agreement or otherwise regardless of when actually

paid (which refunds or credits shall be net to Seller of

all reasonable out-of-pocket costs and expenses (in-

cluding legal fees) incurred by Buyer in connection

with obtaining the portion of such Tax refund or cre-

dit owed to Seller);

(i) The minute books, stock transfer books, corpo-

rate seal and other corporate records of Seller;

_ Gj) The right, title and interest of Seller in, to and

under all contracts, agreements, arrangements, li-

censes and leases of any nature, other than the Sel-

ler’s Agreements;

(k) All other assets and prceperties owned or

leased by Seller which are not used and necessary for

the operation of the Salem Station or any portion

thereof;

(1) Ail claims of Seller relating tc or pertaining to

any refund or credit received on or after the Closing

Date by Buyer or its successors or permitted assigns

of all or any part of Department of Energy Decom-

missioning and Decontamination Fees for which Sel-

ler is or was liable; provided that Seller shall not

have any right to pursue such claims separately, but

shall be entitled to pursue such claims solely by joint

action with Buyer and any other interested parties

approved by Buyer, such action to be controlled by

Buyer in its sole discretion; provided, also, that if

Buyer shall receive any such refund or credit on or

after the Closing Date of all or any part of such De-

partment of Energy Decommissioning and Deconta-

67a

mination Fees, Seller’s claim to a portion of such re-

fund shall be limited to the amount of such refund or

credit multiplied by a fraction, (i) the numerator of

which is the amount of Decommissioning and Decon-

tamination Fees with respect to the Salem Station

paid by Seller or on Seller’s behalf, and (ii) the deno-

minator of which is the amount of Decommissioning

and Decontamination Fees with respect to the Salem

Station paid by all of the parties to the Owners

Agreement or on their behalf; and provided, further,

that the aforesaid claims shall constitute Excluded

Assets (rather than Purchased Assets) after the

Closing only if Seller shall continue to pay after the

Closing its proportionate share of the costs and ex-

penses (including reasonable legal fees) of pursuing

any such claims (but not Department of Energy De-

commissioning and Decontamination Fees), such

proportionate share to be determined as if Seller had

not transferred its rights, title and interests in and to

the Purchased Assets to Buyer;

(m) All rights of Seller in, to and under the action

against Westinghouse Electric Corporation or its Af-

filiates, or their respective successors or assigns, cap-

tioned Public Service Electric & Gas Company, et al.

v. Westinghouse Electric Corporation, C.A. No. 96-925

(MTB) in the United States District Court for the

District of New Jersey. and all related actions cur-

rently pending in state courts; provided that the afo-

resaid claims shall constitute Excluded Assets (ra-

ther than Purchased Assets) after the Closing only if

Seller shall continue to pay after the Closing its pro-

portionate share of the costs and expenses (including

reasonable legal fees) of pursuing any such claims,

such proportionate share to be determined as if Seller

had not transferred its rights, title and interests in

and to the Purchased Assets to Buyer; and

68a

(n) The right, title and interest of Seller in. to

and under this Agreement, the Collateral Agreement

and the Additional Agreements.

2.3 Assumed Liabilities. At the Closing, Buyer

shall assume and agree to pay, perform and other-

wise discharge, without recourse to Seller (other than

as set forth herein or in the Owners Agreement, as

amended by the Amendment to Owners Agreement),

in accordance with the terms and subject to the con-

ditions set forth herein, all of the liabilities and obli-

gations of Seller, direct or indirect, known or un-

known, asserted or unasserted, absolute or

contingent, accrued or unaccrued, which relate to the

Purchased Assets (other than Excluded Liabilities)

(the “Assumed Liabilities”), including those set forth

below; provided that nothing set forth in this Section

2.3 shall require Buyer to assume any liabilities or

obligations that are expressly excluded pursuant to

Section 2.4:

* * ae ak

(f) All liabilities and obligations of Seller in re-

spect of Spent Nuclear Fuel, including Spent Nuclear

Fuel Fees, whether such liability or obligation is

known or unknown, contingent or accrued, and

whether arising or occurring prior to, on or after the

Closing Date, except as specified in Section 2.6 (col-

lectively, “Assumed Spent Fuel Liabilities”) ....

* * * of

2.5 Control of Litigation.

(a) The Parties acknowledge and agree that, from

and after the Closing Date, Seller shall be entitled

exclusively to control, defend and settle any suit, ac-

tion or proceeding, and any investigation arising out

of or related to any Excluded Assets or Excluded Lia-

69a

bilities, so long as such control, defense or settlement

does not unreasonably interfere with Buyer’s opera-

tion of the Salem Station;.and Buyer agrees to coope-

rate fully in connection therewith, provided, however,

that Seller shall reimburse Buyer for all reasonable

costs and expenses incurred in providing such

cooperation.

(b) The Parties acknowledge and agree that, from

and after the Closing Date, Buyer shall be entitled

exclusively to control, defend and settle any suit, ac-

tion or proceeding, and any investigation arising out

of or related to any Purchased Assets or Assumed

Liabilities, so long as such control, defense or settle-

ment does not unreasonably interfere with Seller’s

ownership of the Excluded Assets or with the Ex-

cluded Liabilities; and Seller agrees to cooperate fully

in connection herewith provided, however, that Buyer

shall reimburse Seller for all reasonable costs and

expenses incurred in providing such cooperation.

2.6 Spent Nuclear Fuel Fees. Seller, to the extent

of the Salem Interest, shall be liable for and pay,

pursuant to the Owners Agreement, all Spent

Nuclear Fuel Fees in effect prior to the Closing Date

with respect to its share of electricity generated at

and sold from the Salem Station prior to the Closing

Date, and Buyer shall have no liability or obligation

in respect thereof. Buyer shall be liable for and pay

all Spent Nuclear Fuel Fees with respect to its share

of electricity generated at and sold from the Salem

Station, including that relating to the Salem Interest,

from and after the closing date, together with all

additional Spent Nuclear Fees that are assessed or

become effective on or after the Closing Date,

whether assessed with respect to. electricity

generated at or sold from the Salem Station prior to,

70a

on or after the Closing Date, and Seller shall have no

further liability or obligation in respect thereof.

Without limiting the liability of Buyer under Sections

2.3(e) and (f), from and after the Closing Date, Buyer

shall assume title to, and such liabilities and

obligations as Seller may have for the storage and

disposal of, Spent Nuclear Fuel presently stored at

the Salem Station (including any such fuel which

may have been used in connection with generating

Seller'

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