Monday, April 23, 2012

Consolidated Edison Co. v. Entergy Nuclear Indian Point 2

Apr 16: In the U.S. Court of Appeals, Federal Circuit, Case No. 2010-5155, -5157. Appealed from the United States Court of Federal Claims. The Appeals Court explains that the case involves the Federal government's breach of its commitment to dispose of spent nuclear fuel.
    On appeal, there is no dispute as to the government's liability. However, the government and Entergy Nuclear Indian Point 2, LLC (ENIP) separately appealed the decision of the Court of Federal Claims (Claims Court) with respect to damages. See Consol. Edison Co. of N.Y., Inc. v. United States, 92 Fed. Cl. 466 (2010). The government appeals the Claims Court's award of two categories of damages: (1) ENIP's Unit 1 wet storage costs for the continued operation of its Unit 1 spent fuel pool; and (2) regulatory fees paid to the United States Nuclear Regulatory Commission (NRC). The Appeals Court rules, ". . .we reverse the Claims Court's award of damages for ENIP's Unit 1 wet storage costs and ENIP's NRC fees."

    ENIP cross appeals the Claims Court's denial of damages for: (1) ENIP's indirect overhead costs associated with its mitigation activities; and (2) ENIP's cost of financing its mitigation activities. The Appeals Court rules further that, "The issues on cross appeal are controlled by our recent precedents, which were not available to the Claims Court at the time of its decision. These recent precedents require that we reverse the denial of ENIP's overhead costs, and that we affirm the denial of ENIP's cost of capital."

    In further explanation, the Appeals Court notes, "In Yankee Atomic Electric Co. v. United States, we explained that 'damages for breach of contract require a showing of causation,' which in turn necessitates a 'comparison between the breach and non-breach worlds.' 536 F.3d 1268, 1273 (Fed. Cir. 2008). Thus, 'a plaintiff seeking damages must submit a hypothetical model establishing what its costs would have been in the absence of breach.' Energy Nw. v. United States, 641 F.3d 1300, 1305 (Fed. Cir. 2011) (emphasis added).

    "Here, ENIP's hypothetical model contemplated that if DOE had not breached the Standard Contract, the SNF stored in the Unit 1 spent fuel pool would have been removed in 1998.5 Thus, ENIP argues, in a non-breach world, ENIP would not have incurred any costs related to the continued operation of the Unit 1 spent fuel pool after acquiring Indian Point in 2001. The Claims Court agreed. Consol. Edison, 92 Fed. Cl. at 502-03. The problem with ENIP's theory is that it does not reflect the fact that in the non-breach world, Unit 2 SNF, rather than Unit 1 SNF, would have been removed from Indian Point in 1998, when Consolidated Edison still owned the Indian Point facility. . ."

    Access the complete opinion (click here). [#Energy/Nuclear, #Haz/Nuclear, #CAFed]

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