Entergy Nuclear Palisades, LLC v. United States

128 Fed. Cl. 120, 46 Envtl. L. Rep. (Envtl. Law Inst.) 20165, 83 ERC (BNA) 1372, 2016 U.S. Claims LEXIS 1487
CourtUnited States Court of Federal Claims
DecidedOctober 6, 2016
Docket12-641C
StatusPublished
Cited by1 cases

This text of 128 Fed. Cl. 120 (Entergy Nuclear Palisades, LLC v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Entergy Nuclear Palisades, LLC v. United States, 128 Fed. Cl. 120, 46 Envtl. L. Rep. (Envtl. Law Inst.) 20165, 83 ERC (BNA) 1372, 2016 U.S. Claims LEXIS 1487 (uscfc 2016).

Opinion

TRIAL OPINION

FIRESTONE, Senior Judge.

This lawsuit is one of a number of cases arising out of the failure of the defendant, the Department of Energy (“DOE” or “government”) to perform its contractual obligations to remove spent nuclear fuel (“SNF”) from nuclear power plants, including plaintiff Entergy Nuclear Palisades, LLC (“Enter-gy”), which operates the Palisades nuclear power plant located in Covert, Michigan. The Nuclear Waste' Policy Act (“NWPA”) of 1982, codified as amended at 42 U.S.C. §§ 10101-10270, called for DOE to enter into agreements under which nuclear power plants would pay the government to take SNF from the plants and put the SNF in a long-term storage facility in Yucca Mountain, Nevada. Though the NWPA and Entergy’s contract, DE-CR01-83NE44374 for Disposal of Spent Nuclear Fuel and/or High Level Radioactive Waste (the “Standard Contract”) required the government to begin accepting SNF on January 31, 1998, to date, the DOE has not accepted any SNF from Palisades or any other plant, and has no immediate plans to do so. Over the life of the contract, Entergy and its predecessor in ownership, Consumers Power Company (“Consumers”), have paid approximately $279 million in fees to the DOE.

This is the second case that has been filed concerning the government’s breach of the Standard Contract with respect to the Palisades plant. Consumers entered into the Standard Contract in 1983. When the government failed to abide by its obligations under the Standard Contract, Consumers sued the DOE to recover the costs of its efforts to mitigate the damages caused by the government’s failure to accept any SNF, including constructing and maintaining two long-term SNF storage facilities, known as independent spent fuel storage installations (“ISFSI”), at the Palisades plant. In 2005, this court held that the government had breached the Standard Contract when it failed to begin accepting SNF in 1998. Consumers Energy Co. v. United States, 65 Fed.Cl. 364, 375 (2005). *122 Consumers and the government settled the previous litigation in 2011. In 2007, Consumers sold Palisades to Entergy and, with the government’s consent, assigned the Standard Contract to Entergy.

'In this lawsuit, Entergy is seeking to recover costs it incurred to mitigate the government’s breach between the time it acquired Palisades on April 11, 2007 through June 30, 2013 (the “claims period”). The government agreed that it was liable to Entergy for approximately $20.6 million of the $36.1 million Entergy sought in this litigation. On May 18, 2015, the court entered partial judgment against the government in that amount. Order of Judgment, EOF No. 65.

Thereafter, the court held a seven-day trial in December 2015, at which thirteen witnesses testified, with regard to the amount of damages still in dispute. After the trial had concluded, the government conceded, that, following the Federal Circuit’s decision in System Fuels, Inc. v. United States, 818 F.3d 1302 (2016), Entergy was entitled to recover an additional $3,504,856. For the reasons set forth below, the court finds that Entergy has established damages in the amount of $13,828,676, including the $3,504,856 the government conceded it owed to Entergy post trial.

I. BACKGROUND

A. Stipulations

Prior to trial, the parties entered into stipulations of fact in which the government agreed that, while it did contest that Entergy was entitled to recover certain costs, it did not contest that Entergy actually incurred the amounts claimed, other than the amount claimed for security at the second ISFSI. The government also stipulated that, with respect to any payroll loaders associated with Entergy’s claims, the government would not challenge the calculation of the payroll loader rates and agreed that if a claimed damage category is recoverable, the associated payroll loaders are also recoverable.

B. Summary of Entergy’s Damages Claims

At trial, Entergy presented evidence with respect to three broad categories of damages, discussed below. The government, in turn, presented evidence in support of its argument that Entergy would have incurred many of these costs even if the government had not breached the Standard Contract.

1. Spent Fuel Pool Modifications

During the claims period, Entergy expended $10,359,1.20 to replace deteriorating racks, located in the spent fuel pool at Palisades, which hold SNF immediately after the fuel is removed from the reactor. 1 Of this amount, Entergy spent $677,399 to remove fuel rods that had become trapped in the old racks after parts of the racks had swollen and $9,681,721 for the new set of racks. At trial, Entergy’s witnesses testified that if the government had timely picked up spent fuel in accordance with the Standard Contract, En-tergy would have been able to manage the deteriorating racks problem and would not have needed to replace them because there would have been less fuel in the pool. The government presented evidence to show that the racks were defective and Entergy would have replaced them even if the government had performed. Further, the government argues that the decision to replace the racks was not a reasonable mitigation effort as compared to other solutions.

The court finds that Entergy would not have undertaken the re-rack project had the government not breached the contract. However, the court finds that the plaintiff did not meet its burden with respect to the cost of removing stuck fuel assemblies from the spent fuel pool during the rack replacement project because Entergy would have had to remove the stuck assemblies even if the government had performed under the contract.

2. Dry Fuel Storage Costs

Entergy initially claimed that it is entitled to recover $24,436,531 for costs related to loading the SNF into dry storage canisters and constructing the second ISFSI for long-term dry storage of SNF at Palisades. The government has already paid $19,957,483 in *123 this case for this category of damages. The bulk of the remaining $4,480,048 of damages related to the labor costs associated with loading the SNF into dry fuel storage casks for long-term storage, and the corresponding payroll loaders. At trial, the government claimed that Entergy had not met its burden of showing that the government’s breach caused these damages. However, following the Federal Circuit’s decision in System Fuels, Inc. v. United States, 818 F.3d 1302 (2016), which held that the government is liable for the cost of loading SNF into on-site dry fuel storage because that effort would not have been undertaken but for the government’s breach, the government conceded that Entergy was entitled to an additional $3,604,856 in dry fuel storage loading costs. 2

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128 Fed. Cl. 120, 46 Envtl. L. Rep. (Envtl. Law Inst.) 20165, 83 ERC (BNA) 1372, 2016 U.S. Claims LEXIS 1487, Counsel Stack Legal Research, https://law.counselstack.com/opinion/entergy-nuclear-palisades-llc-v-united-states-uscfc-2016.