Dairyland Power Cooperative v. United States
104 Fed. Cl. 400
| Fed. Cl. | 2012Background
- Dairyland previously received damages including PFS costs for the DOE breach of the Standard Contract, which the Federal Circuit vacated and remanded to determine any speculative offset.
- Dairyland operates the La Crosse BWR with 38 metric tons of spent nuclear fuel in a wet pool, delaying site decommissioning due to nonacceptance by DOE.
- Dairyland invested about $12 million in Private Fuel Storage (PFS) to mitigate off-site SNF storage costs, seeking to share construction costs with other utilities.
- The Federal Circuit held that Dairyland must prove how much of its PFS investment was speculative versus mitigation, vacating the prior PFS damages amount.
- On remand, the court held all PFS damages were mitigation costs caused by the breach and reinstated the $11,999,125 award.
- The government argued possible offsets based on overinvestment and residual value, but the court rejected these as improper or not properly before it.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Mitigation vs. speculation | Dairyland asserts PFS costs were mitigation to reduce breach harms. | US contends some PFS costs were speculative and should be offset. | PFS costs were mitigation; no offset required. |
| Offset for speculation based on storage needs | Dairyland contends equity share aligns with mitigation needs, not excess profit. | US argues excess equity beyond needs signals speculation. | No offset; costs attributable to mitigation were reasonable and proportionate. |
| Remand scope regarding residual value | Not applicable; focus is on mitigation vs. speculation. | Residual value should be accounted for offset. | Residual value not a remanded issue; even if considered, offset would not favor the government. |
Key Cases Cited
- Indiana Mich. Power Co. v. United States, 422 F.3d 1369 (Fed.Cir.2005) (affirmative duty to mitigate damages; damages must be foreseeable and not speculative)
- First Heights Bank v. United States, 422 F.3d 1311 (Fed.Cir.2005) (mitigation must be fair and reasonable; burden on breaching party to show alternatives)
- Franconia Assocs. v. United States, 61 F.4d 718 (Fed.Cl.2004) (mitigation damages principles in partial breach cases)
- Citizens Fed. Bank v. United States, 474 F.3d 1314 (Fed.Cir.2007) (mitigation damages recoverable to reimburse expenses incurred in correcting breach effects)
- Dairyland Power Coop. v. United States, 645 F.3d 1363 (Fed.Cir.2011) (remand to determine if PFS investment was speculative; vacatur of PFS costs awarded)
- Dairyland Power Coop. v. United States, 90 Fed.Cl. 615 (Fed.Cl.2009) (initial damages including PFS costs; baseline for remand)
- Dairyland Power Coop. v. United States, 77 Fed.Cl. 396 (Fed.Cl.2007) (contextual reference to mitigation and interim off-site storage considerations)