Kansas Gas and Electric Co. v. United States
685 F.3d 1361
| Fed. Cir. | 2012Background
- KG&E, KCPL, and KEPCO suffered damages from the Government's partial breach of the Standard Contract for SNF/HLW disposal.
- Trial court awarded $10,632,454.88 and rejected damages for capital costs and some mitigation-related studies, but allowed overhead costs via a total-cost allocation method with adjustments.
- Kansas Companies reracked Wolf Creek’s spent fuel pool, enabling higher enrichment fuel and reducing fuel assemblies purchased.
- Non-breach world would have required mitigation measures (e.g., boron credit, gate-drop analysis) and storage options the record shows Wolf Creek might have pursued anyway.
- Court retained focus on determining damages by balancing direct/remitted costs, mitigation benefits, and reasonable certainty under established precedents.
- Dissent argues overhead should not be fixed solely by regulatory accounting that inflates damages; majority reverses in part on overhead treatment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Overhead damages method validity | Kans. Companies: total-cost method reasonable for overhead; GAAP/FERC compliant. | Overhead inflated by material costs; adjust or deny. | Overhead calculated via total-cost method reversed-in-part; adjusted damages allowed. |
| Mitigation benefit reduction | Mitigation benefits (higher enrichment fuel) should be fully recoverable. | Benefits are remote/mitigated by market factors; reduce damages. | Damages reduced by the real-world savings from higher enrichment fuel mitigate the breach. |
| Costs of capital recovery | Should recover financing costs for mitigation. | No-interest rule bars financing costs under NWPA; commercial exceptions do not apply. | Denial of cost-of-capital damages upheld. |
| Costs of studying alternative storage options | Costs should be recoverable as reasonable mitigation research. | No apportionment evidence to tie costs to rerack; deny. | Damages for Morris/Morris study denied due to lack of apportionment between breach and non-breach worlds. |
| Overhead evidence sufficiency vs. accuracy | Regulatory-compliant accounting proves overhead; should recover. | Accounting method inflated overhead; adjust. | Court correctly weighed evidence; overhead damages adjusted but not wholly denied. |
Key Cases Cited
- Yankee Atomic Elec. Co. v. United States, 536 F.3d 1268 (Fed.Cir. 2008) (breach damages framework for nuclear disposal contracts; acceptance rate considerations)
- N. States Power Co. v. United States, 224 F.3d 1361 (Fed.Cir. 2000) (partial breach; damages focus on quantum)
- Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336 (Fed.Cir. 2000) (partial breach; mitigation/overhead issues framework)
- LaSalle Talman Bank, F.S.B. v. United States, 317 F.3d 1363 (Fed.Cir. 2003) (damages reduced by mitigation benefits)
- System Fuels, Inc. v. United States, 666 F.3d 1306 (Fed.Cir. 2012) (GAAP/FERC-compliant overhead evidence; damages sufficiency)
- Consolidated Edison Co. of New York, Inc. v. Entergy Nuclear Indian Point 2, LLC, 676 F.3d 1331 (Fed.Cir. 2012) (overhead damages and regulatory accounting precedents)
- Dominion Resources, Inc. v. United States, 641 F.3d 1359 (Fed.Cir. 2011) (contractual interpretation of fees and interest; use of one-time fees)
- Vermont Nuclear Power Corp. v. Entergy Nuclear Vermont Yankee, 683 F.3d 1330 (Fed.Cir. 2012) (GAP/FERC accounting reliance and overhead allocations)
- Indiana Michigan Power Co. v. United States, 422 F.3d 1369 (Fed.Cir. 2005) (damages recoverable with reasonable certainty; foreseeability standard)
- Energy Northwest v. United States, 641 F.3d 1300 (Fed.Cir. 2011) (no-interest rule for mitigation financing)