Duke Energy Progress, Inc. v. United States
14-1001
| Fed. Cl. | Nov 17, 2017Background
- Duke Energy (DEP and DEF) sued the United States for damages arising from DOE’s partial breach of the 1983 Standard Contract for disposal of spent nuclear fuel, seeking recovery for mitigation costs from Jan. 1, 2011 to Dec. 31, 2013; total claimed $71.59M, $68.15M conceded, $3.44M disputed.
- DOE failed to begin SNF acceptance by the 1998 contractual date, causing utilities to incur interim storage and related costs (dry storage systems, loading, equipment, transshipments, pool modifications, etc.).
- Disputed items focused on Crystal River (dry storage equipment, auxiliary building and crane/pedestal modifications), Robinson and Brunswick (inspection equipment, lights, dosimeters, radios, torque wrenches, lead blankets, lamps/cameras), and disposal of IF-300 transshipment equipment.
- The court applied the standard for breach damages: foreseeability, causation (but-for/hypothetical model), and reasonable certainty; mitigation expenses are recoverable if reasonable and caused by DOE’s breach.
- Court found many small items directly attributable to storage-cask loading (recoverable) but denied Crystal River claims tied to an unrelated containment delamination and other costs that would have been incurred regardless of DOE performance.
- Government’s request to offset damages by alleged ratemaking benefits (state regulatory inclusion of previously awarded assets in Duke’s rate base) was rejected as too remote and legally unsupported.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Recoverability of Crystal River dry-storage equipment and contract termination costs | Costs arose only because DOE breached; storage equipment and termination were mitigation | Costs resulted from Duke’s self-managed outage and containment delamination (not DOE); thus not caused by breach | Denied — costs not foreseeable/caused by DOE breach |
| Recoverability of Crystal River auxiliary building, crane, and transfer-pedestal modifications | Modifications necessary to support chosen NUHOMS 32PTH storage system caused by DOE’s delay | Many modifications and crane upgrade would be required for any future DOE-supplied cask; some changes were safety-driven or independent of breach | Denied — Duke failed to isolate breach-attributable costs or showed repetition likelihood |
| Recoverability of inspection, tooling, PPE, and loading-related consumables at Robinson and Brunswick (cameras, lights, dosimeters, radios, torque wrenches, lead blankets) | These items were purchased for storage-cask loading (direct consequence of DOE delay) and will likely need replacement when DOE performs | Some items are standard plant equipment and would have been purchased absent breach | Granted — items used exclusively for storage-cask loading are recoverable under System Fuels precedent |
| Recoverability of IF-300 transshipment equipment disposal costs | Casks were purchased for transshipment because of DOE’s delay; disposal costs flow from that mitigation | Contends witness deposition inconsistency and insufficient proof that equipment related to delay | Granted — corrected trial evidence supported causation and reasonableness |
| Government’s claimed offset for ratemaking benefits realized by Duke | N/A | Past damage awards were included in Duke’s state rate base and produced revenue; GOVT seeks a $1.53M credit | Denied — offset too remote; ratemaking consequences are downstream, not a proper reduction of breach damages |
Key Cases Cited
- Indiana Michigan Power Co. v. United States, 422 F.3d 1369 (Fed. Cir.) (utilities must bring successive SNF breach damage claims and DOE’s delay is partial breach)
- System Fuels, Inc. v. United States, 818 F.3d 1302 (Fed. Cir.) (storage-cask loading costs are recoverable because they are caused entirely by government’s nonperformance)
- Energy Northwest v. United States, 641 F.3d 1300 (Fed. Cir.) (costs likely to be repeated upon DOE performance may be recoverable; court must assess repetition likelihood)
- Vermont Yankee Nuclear Power Corp. v. United States, 683 F.3d 1330 (Fed. Cir.) (plaintiff must present a hypothetical model of costs absent breach to prove causation)
- San Carlos Irrigation & Drainage Dist. v. United States, 111 F.3d 1557 (Fed. Cir.) (reasonable approximation of damages sufficient; speculative damages not allowed)
- Citizens Federal Bank v. United States, 474 F.3d 1314 (Fed. Cir.) (but-for causation framework and principles on mitigation recovery)
- Yankee Atomic Electric Co. v. United States, 536 F.3d 1268 (Fed. Cir.) (breaching party liable only for damages it directly caused)
- Hughes Commc’ns Galaxy, Inc. v. United States, 271 F.3d 1060 (Fed. Cir.) (remoteness principle: do not offset breach damages by downstream transactions; limit inquiries to first-step consequences)
- LaSalle Talman Bank, F.S.B. v. United States, 317 F.3d 1363 (Fed. Cir.) (distinguishes direct substitute-transaction offsets from remote, collateral benefits)