LOS ANGELES -- Participants in the Washington Public Power Supply System cost-sharing lawsuit are at a temporary standstill over efforts to craft an out-of-court settlement, a lawyer in the case said Friday.
Settlement negotiations are "on the back burner," according to Albert Malanca, who represents several public utilities from the Pacific Northwest in the proceeding. "At the moment, they've gone nowhere."
As a result, Mr. Malanca said lawyers are primarily focusing on reports they must file with a U.S. District Court judge by Aug. 14. Among other things, those filings will suggest ways for streamlining the complicated case, Mr. Malanca said.
The judge, William D. Browning recently extended a stay in the case through this past Saturday to allow additional settlement talks.
The nine-year-old lawsuit represents one of the last avenues of recovery for current holders of WPPSS nuclear power units 4 and 5 bonds. The supply system defaulted on $2.25 billion of those bonds in 1983 after the Washington State Supreme Court ruled that local utilities lacked authority to enter participants' agreements that secured the debt.
Chemical Bank, the units 4 and 5 bond trustee, alleges in the cost-sharing action that WPPSS improperly charged about $400 million in costs to units 4 and 5 rather than to their respective "twinned" plants, units 1 and 3.
Judge Browning in 1990 ruled that cost-sharing principles akin to those espoused by Chemical Bank should have governed expense allocation under the bond resolution. In February, however, the U.S. Ninth Circuit Court of Appeals disappointed units 4 and 5 bondholders - and pleased WPPSS and other defendants -- by reversing Judge Browning's decision and favoring instead a cost-allocation formula used by the supply system.
The appellate court remanded the case to Judge Browning, but discovery proceedings are on hold because of the judicial stay in the case. Judge Browning on June 25 agreed to extend the stay, rather than let it expire on that day, after parties in the case requested the extension to accommodate further settlement negotiations.
In his order extending the stay, Judge Browning cited "a good faith effort" to explore avenues of settlement and to update him on settlement progress by Aug. 14.
Participants in the lawsuit generally decline to comment on the specifics of settlement negotiations, but Mr. Malanca's remarks suggest a breakthrough is not imminent.
Certain investor-owned utility defendants, citing a lack of progress in settlement talks, suggested in June that Judge Browning consider appointing a settlement master in the case. But some lawyers said that step would be premature, and they asked instead for the extended stay.
A Chemical Bank official said Friday that the bank cannot comment on the status of any settlement talks.
