The standard for proving damages in spent nuclear fuel cases is becoming clearer.  As a result of delays in construction of the Yucca Mountain nuclear waste repository, nuclear utilities across the country have been forced to incur extensive costs storing spent nuclear fuel that would otherwise have been transferred to Yucca Mountain, leading to a series of decisions at the Court of Federal Claims and the Federal Circuit.  The Federal Circuit’s March 11, 2011 decision in Southern Nuclear Operating Co. v. United States, No. 2008-5020 (Fed. Cir. Mar. 11, 2011) [PDF] clarifies the parties’ roles in proving damages.

Southern Nuclear is one of many spent nuclear fuel (SNF) cases filed by nuclear utilities seeking to recover the costs they have incurred to store SNF.  The filing of these cases stems from the Department of Energy’s failure to comply with a requirement in the Nuclear Waste Policy Act that it begin, back in 1998, accepting high-level radioactive waste (primarily SNF) for disposal.  The statute contemplated that DOE would have the Yucca Mountain project constructed and ready to accept waste by 1998.  Because of various delays, Yucca Mountain is not available to accept waste, requiring utilities to store their SNF at other locations, typically at the plant site.  The Court of Federal Claims and the Federal Circuit have recognized that nuclear plant owners are entitled to be compensated by the government for the additional costs owners incur to store their SNF.

Southern Nuclear is significant primarily for its clarification of the burden of proof applicable to the owner plaintiffs in these SNF storage cases.  To establish damages, the owner plaintiff is required to establish the expenses it incurred “but for” the lack of DOE’s compliance with its obligation to accept SNF.  To do this, the plaintiff must establish the costs it incurred relating to storage, and then reduce that total by the costs (if any) avoided by storing the SNF itself.  In Southern Nuclear, the Federal Circuit held that the plaintiff has the “burden of persuasion” on the issue of damages, including the amount of “avoided costs.”  But because plaintiffs “cannot be expected to brainstorm every possible cost they would have saved in the non-breach world,” the court found that DOE had an obligation to “move forward by pointing out the costs it believes the plaintiff avoided because of its breach.” Absent such identification by the government, the Court of Federal Claims may “treat the issue as waived.”

The court in Southern Nuclear notes that the government’s burden to “point out” avoided costs applies only because SNF cases seek “expectancy damages.”  In cases seeking reliance or restitution damages, the burden on the government would be greater.  In those types of cases, “the defendant has the burden to establish offsets for saved costs.”  Slip Op. at n.4.

Last year DOE moved to dismiss Yucca Mountain licensing proceedings.  Various parties, including government entities wishing to ship the SNF in their jurisdictions to Yucca Mountain, have filed suit in the United States Court of Appeals for the District of Columbia Circuit, which has original jurisdiction over claims for failure to take action required under the Nuclear Waste Policy Act (see 42 U.S.C. § 10139(a)(1)(B)).  The pending suit (In Re Aiken County, No. 10-1050, et al. (D.C. Cir.)) is set for oral argument on March 22, 2011.  The efforts of the Executive branch to prevent Yucca Mountain from opening will certainly increase the number of claims, and the amount of damages being claimed, for SNF storage costs.