Entergy Nuclear Palisades, LLC v. United States, 2016 U.S. Claims LEXIS 1487

Background

Entergy Nuclear Palisades (Entergy) operates Palisades plant; DOE agreed under the Standard Contract to begin accepting spent nuclear fuel (SNF) by Jan. 31, 1998 but never did; Entergy (and predecessor) paid fees into the program.
Entergy acquired Palisades in 2007; this suit seeks mitigation costs incurred April 11, 2007–June 30, 2013 after government breach; partial judgment already awarded $20.6M and government conceded an additional $3,504,856 post-trial.
Major contested damage categories: (1) replacement of deteriorated Carborundum racks in the spent fuel pool (re-rack) and removal of stuck assemblies, (2) costs to load SNF into dry storage canisters and construct a second ISFSI (including delay-related standby costs), and (3) full-time security staffing for the second ISFSI.
Entergy’s position: re-rack and related dry-storage work were undertaken but-for DOE’s failure to remove SNF; re-rack was a reasonable permanent mitigation compared to repeated temporary measures or more frequent dry-storage campaigns.
Government’s position: many costs either would have been incurred regardless (racks were defective), were not sufficiently caused by the breach (liberation of stuck fuel), or were the result of Entergy’s own errors/unexplained delays (standby costs); it conceded certain dry-cask loading costs after System Fuels.
Court outcome (damages): awarded Entergy $13,828,676 (including the post-trial concession). Court found re-rack recoverable (but not costs to liberate stuck assemblies), awarded certain dry-storage loading and track-alley structural review costs, denied delay/standby costs caused by Entergy’s errors, and awarded full security staffing for both posts.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether re-racking Region I was caused by DOE breach / but-for requirement	Re-rack was undertaken because DOE’s nonperformance left too much fuel in pool; in but-for world fewer assemblies would remain and re-rack would not be needed	Racks were defective and would have been replaced anyway; re-rack was unreasonable compared to adding dry storage	Re-rack was caused by breach and was a reasonable mitigation; recoverable (except costs to free stuck assemblies)
Recovery for liberating stuck fuel assemblies	Costs incurred to free assemblies were part of the re-rack project and claimed as mitigation	DOE: assemblies would have to be prepared/removed by Entergy even if DOE performed; costs not caused by breach	Not recoverable — DOE not but-for cause of liberation costs; Entergy would have had to remove them when DOE performed
Dry-cask loading and standby/delay costs	Loading costs were necessary mitigation; delay standby costs were part of campaign expenses	DOE conceded post-System Fuels liability for loading costs but disputes $945,331 in standby/wait costs as Entergy-caused or unexplained	Court awarded loading costs including conceded $3,504,856; denied delay/standby costs caused by Entergy’s errors or unexplained delays
Security staffing for second ISFSI	Two 24/7 posts were required by NRC and staffed; costs are incremental mitigation damages caused by DOE breach	DOE disputed proof that both posts were consistently staffed and that claimed labor was incremental	Court credited security manager testimony and found both posts staffed; awarded full security staffing costs (additional $629,603)

Key Cases Cited

System Fuels, Inc. v. United States, 818 F.3d 1302 (Fed. Cir. 2016) (government liable for on-site dry fuel loading costs under Standard Contract breach)
Yankee Atomic Elec. Co. v. United States, 536 F.3d 1268 (Fed. Cir. 2008) (but-for causation and plaintiff burden to show non-breach financial condition for mitigation damages)
Robinson v. United States, 305 F.3d 1330 (Fed. Cir. 2002) (no recovery for damages avoidable by reasonable efforts)
Energy Nw. v. United States, 641 F.3d 1300 (Fed. Cir. 2011) (standard for proving internal mitigation costs and reasonable certainty)
Sacramento Mun. Util. Dist. v. United States, 70 Fed. Cl. 332 (2006) (government bears burden to show mitigation efforts were unreasonable)