Monday, June 27, 2011

Dairyland Power Cooperative v. United States

Jun 24: In the U.S. Court of Appeals, Federal Circuit, Case No. 2010-5110. The case concerns the Department of Energy's ("DOE's" or "the government's") breach of its obligation to accept spent nuclear fuel from the nation's nuclear power utilities. Liability is not at issue. The parties dispute various aspects of the U.S. Court of Federal Claims' damages award.
    As described by the Appeals Court, first, the government contends that the trial court erred in awarding damages based on testimony that absent breach, the plaintiff would have successfully bargained its way to the front of DOE's fuel acceptance queue and would have transferred away all spent nuclear fuel in the first year of performance. Relatedly, Dairyland cross-appeals the amount of damages award, contending that the trial court erred in reducing the damages awarded by the cost of purchasing the exchange. Second, the government argues that the trial court erred in awarding the plaintiff damages to compensate for various indirect overhead costs it claims were caused by the breach. Third, the government contests the trial court's award of plaintiff's investment in an industry consortium to build a private spent fuel storage facility, particularly because, the government points out, plaintiff received significant equity in the venture for its investment. See generally Dairyland Power Coop. v. United States, 90 Fed. Cl. 615 (2009) (Trial Op.).
    The Appeals Court explains that the appeal, like a number of others recently before or pending with this court, concerns the government's liability for damages in connection with its failure to develop a permanent solution for the storage of spent nuclear fuel (SNF). From 1967 to 1987, Plaintiff Dairyland Power Cooperative (Dairyland) operated a nuclear power plant in Genoa, Wisconsin called the La Crosse Boiling Water Reactor. The reactor is no longer active, but Dairyland maintains 38 metric tons of spent uranium there in a wet storage pool. The fact that there is SNF stored on-site prevents Dairyland from permanently decommissioning the La Crosse plant.
    The Appeals Court ruled, "We hold that the Court of Federal Claims did not commit reversible error in three of these four issues. We therefore affirm the award of damages based on plaintiff's 'exchange' model and the award of indirect costs, as well as the cross-appealed discounting of plaintiff's damages. Regarding the plaintiff's investment in a private venture to build a spent fuel storage facility, we hold that the court was required to only award the cost of that investment to the extent it was made for mitigation, and not as a speculative venture for profit. We vacate the award of damages for the investment in the private fuel storage venture, and we remand for determination of the extent to which the investment was mitigation and the extent (if any) to which it was speculation."
    The Appeals Court concludes, ". . .we affirm the Court of Federal Claims' award of damages based on Dairyland's 'exchange' model and its reasoning in awarding overhead and G & A costs. We also affirm its discounting of damages for the cost of the year-one delivery commitment schedules, which Dairyland raised on cross-appeal. We vacate those portions of the award concerning Dairyland's investment in PFS and remand for further proceedings."
    Access the complete opinion (click here). [*Haz/Nuclear, CAFed]

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