Boston Edison Co. v. United States
658 F.3d 1361
| Fed. Cir. | 2011Background
- DOE breached its obligation to begin collecting spent nuclear fuel from the Pilgrim plant, triggering ongoing partial breach damages.
- Massachusetts restructured utilities; BE sold Pilgrim and related decommissioning/storage responsibilities to Entergy under a settlement and price structure that included a fully-funded decommissioning fund.
- Closing occurred July 1999; BE retained claims against the government related to the DOE breach, while Entergy acquired other related claims.
- Trial court awarded BE $40 million for post-decommissioning SNF-related damages and Entergy $4 million for mitigation costs, including NRC fees, with the government’s cross-claim for offset held moot.
- On appeal, the government challenged: diminution-in-value damages for partial breach, NRC-fee-related damages, overhead damages, and the right to recover financing costs; the court also considered the impact of the asset sale on rights to future damages.
- Court reversed BE’s diminution-in-value damages in a partial breach context, and remanded on NRC-fee adjustments; affirmed other mitigation and overhead damages but denied financing-cost recovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether diminution in value can be recovered for partial breach | Boston Edison argues diminution in value is recoverable under partial breach. | Government/Entergy contend no diminution recovery for partial breach; only incurred damages are recoverable. | Not recoverable; reversal of diminution-in-value award in partial breach. |
| Damages for NRC fees after DOE breach | Entergy seeks recovery of NRC generic and related fees paid due to the breach. | Government argues for limited or no recovery of such fees; seeks audit of adjustments post-rule change. | Remand to determine adjustments for NRC-fee changes; damages to be recalculated consistent with fee-structure effects. |
| Recoverability of overhead costs tied to mitigation | Entergy should recover overheads allocable to mitigation projects. | No bar to overhead recovery beyond direct costs; need proper causation. | Overhead costs properly attributable to mitigation are recoverable. |
| Recovery of financing costs for mitigation | Entergy seeks financing-cost recovery as costs of mitigation. | NWPA/standard contract prohibit interest/financing costs; no recovery. | Financing costs not recoverable; commercial-enterprise exception does not apply. |
| Effect of sale of Pilgrim on rights to future damages | Sale could affect the measurement or availability of future damages. | Sale does not alter the rule that future damages in partial breach are not recoverable until incurred. | Sale does not affect the settled rule; damages for future breach not recoverable until incurred. |
Key Cases Cited
- Indiana Mich. Power Co. v. United States, 422 F.3d 1369 (Fed. Cir. 2005) (limits prospective damages in partial breach; damages incurred as of suit, not future estimates)
- Yankee Atomic Elec. Co. v. United States, 536 F.3d 1268 (Fed. Cir. 2008) (no premature offset of non-breach obligations; subsequent actions allowed for future damages)
- Energy Northwest v. United States, 641 F.3d 1300 (Fed. Cir. 2011) (overhead costs attributable to breach may be recovered using reasonable techniques)
- Southern Nuclear Operating Co. v. United States, 637 F.3d 1297 (Fed. Cir. 2011) (plaintiff bears burden to prove costs incurred and avoided; adjust damages model accordingly)
- Neb. Pub. Power Dist. v. United States, 590 F.3d 1357 (Fed. Cir. 2010 (en banc)) (reaffirmed ongoing breach framework and damages concepts in nuclear-waste context)