United States Court of Appeals
for the Federal Circuit
__________________________
CONSOLIDATED EDISON COMPANY OF NEW
YORK, INC.,
Plaintiff,
v.
ENTERGY NUCLEAR INDIAN POINT 2, LLC,
Plaintiff-Cross Appellant,
v.
UNITED STATES,
Defendant-Appellant.
__________________________
2010-5155, -5157
__________________________
Appeals from the United States Court of Federal
Claims in consolidated case nos. 03-CV-2622 and 04-CV-
033, Judge Thomas C. Wheeler.
__________________________
Decided: April 16, 2012
___________________________
ALEX D. TOMASZCZUK, Pillsbury Winthrop Shaw
Pittman LLP, of McLean, Virginia, argued for plaintiff-
cross appellant. With him on the brief were JAY E.
SILBERG and EVAN D. WESSER, of Washington, DC. Of
counsel on the brief was L. JAGER SMITH, JR., Wise Carter
Child Caraway, P.A., of Jackson, Mississippi.
CONSOLIDATED EDISON CO OF NY v. US 2
ANDREW P. AVERBACH, Senior Trial Counsel, Civil Di-
vision, United States Department of Justice, of Washing-
ton, DC, argued for defendant-appellant. With him on the
brief were TONY WEST, Assistant Attorney General,
JEANNE E. DAVIDSON, Director, ALAN J. LO RE, Assistant
Director. Of counsel on the brief were PATRICK B. BRYAN,
SCOTT SLATER and SHARI A. ROSE, Trial Attorneys; and
JANE K. TAYLOR, Office of General Counsel, United States
Department of Energy, of Washington, DC.
__________________________
Before LINN, DYK, and PROST, Circuit Judges.
DYK, Circuit Judge.
This case involves the federal government’s breach of
its commitment to dispose of spent nuclear fuel. On
appeal, there is no dispute as to the government’s liabil-
ity. However, the government and Entergy Nuclear
Indian Point 2, LLC (“ENIP”) separately appeal the
decision of the Court of Federal Claims (“Claims Court”)
with respect to damages. See Consol. Edison Co. of N.Y.,
Inc. v. United States, 92 Fed. Cl. 466 (2010). The govern-
ment appeals the Claims Court’s award of two categories
of damages: (1) ENIP’s Unit 1 wet storage costs for the
continued operation of its Unit 1 spent fuel pool; and (2)
regulatory fees paid to the United States Nuclear Regula-
tory Commission (“NRC”). For the reasons discussed
below, we reverse the Claims Court’s award of damages
for ENIP’s Unit 1 wet storage costs and ENIP’s NRC fees.
ENIP cross appeals the Claims Court’s denial of dam-
ages for: (1) ENIP’s indirect overhead costs associated
with its mitigation activities; and (2) ENIP’s cost of fi-
nancing its mitigation activities. The issues on cross
appeal are controlled by our recent precedents, which
3 CONSOLIDATED EDISON CO OF NY v. US
were not available to the Claims Court at the time of its
decision. These recent precedents require that we reverse
the denial of ENIP’s overhead costs, and that we affirm
the denial of ENIP’s cost of capital.
BACKGROUND
In 1983, Congress enacted the Nuclear Waste Policy
Act of 1982 (“NWPA”), Pub. L. No. 97-425, 96 Stat. 2201
(1983) (codified as amended at 42 U.S.C. §§ 10101-10270
(2006)). The NWPA authorized the Department of Energy
(“DOE”) to enter into contracts with nuclear facilities for
the disposal of spent nuclear fuel (“SNF”) and high-level
radioactive waste (“HLW”). 42 U.S.C. § 10222. Pursuant
to its authority under the NWPA, the Department of
Energy promulgated regulations defining the terms of a
Standard Contract to be executed with nuclear facilities.
See id. § 10222(a)(6); Standard Contract for Disposal of
Spent Nuclear Fuel and/or High-Level Radioactive Waste,
10 C.F.R. § 961.11 (1983) (hereinafter “Standard Con-
tract”); see also 48 Fed. Reg. 5,458 (Feb. 4, 1983) (pro-
posed rule); 48 Fed. Reg. 16,590 (Apr. 18, 1983) (final
rule). Congress expressly mandated that, under the
terms of the Standard Contract, DOE dispose of SNF and
HLW “beginning not later than January 31, 1998.” 42
U.S.C. § 10222(a)(5).
In June 1983, DOE entered into a Standard Contract
with Consolidated Edison Company of New York, LLC
(“Consolidated Edison”) under which DOE agreed to
accept SNF stored at Unit 1 and Unit 2 of Consolidated
Edison’s Indian Point facility. 1
1 Indian Point includes three units. Because Unit 3
is not at issue in this appeal, Unit 1 and Unit 2 are collec-
tively referred to as the “Indian Point” facility.
CONSOLIDATED EDISON CO OF NY v. US 4
Under the Standard Contract, each contracting nu-
clear utility would receive yearly allocations for the accep-
tance of SNF by DOE based on two factors: (1) DOE’s
projected total receiving capacity for the year; and (2) an
acceptance priority based on the respective ages of each
utility’s stored SNF, with the oldest fuel having the
highest priority. See 10 C.F.R. § 961.11; see also Pac. Gas
& Elec. Co. v. United States, 536 F.3d 1282, 1285-86 (Fed.
Cir. 2008). Though DOE published multiple capacity
reports prior to 1998, we have previously determined that
DOE’s obligations under the Standard Contract are based
on allocations calculated according to an Annual Capacity
Report (“ACR”) that DOE published in 1987. Pac. Gas,
536 F.3d at 1292. Based on the Standard Contract’s
priority scheme and DOE’s projected receiving capacity
under the 1987 ACR, DOE was obligated to accept the
following amounts of SNF from the Indian Point facility:
30.58 metric tons uranium (“MTU”) in 1998; 32.74 MTU
in 1999; 27.0 MTU in 2000; 0 MTU in 2001; 28.29 MTU in
2002; 24.42 MTU in 2003; 33.80 MTU in 2004; 63.51 MTU
in 2005; and 31.07 MTU in 2006.
DOE failed to begin accepting and disposing of SNF
from Consolidated Edison and other utilities in the nu-
clear industry by January 31, 1998. On November 9,
2000, Consolidated Edison entered into an Asset Purchase
and Sale Agreement with ENIP for the sale of Unit 1 and
Unit 2 of the Indian Point facility. The sale closed on
September 6, 2001. As Consolidated Edison’s successor,
ENIP assumed Consolidated Edison’s rights and obliga-
tions under the Standard Contract, with the exception of
claims related to the DOE’s breach under the Standard
Contract that accrued as of September 6, 2001.
As a result of DOE’s breach, ENIP constructed an on-
site dry-storage facility, otherwise known as an Inde-
pendent Spent Fuel Storage Installation (“ISFSI”) in the
5 CONSOLIDATED EDISON CO OF NY v. US
period leading up to 2008, to provide for the long-term
storage of SNF from Unit 1 and Unit 2. ENIP filed an
action in the Claims Court for damages caused by DOE’s
failure to collect and dispose of SNF generated at Indian
Point, including the costs incurred in connection with
ENIP’s mitigation activities. 2
We have previously held that DOE’s failure to begin
collecting SNF constituted a partial breach of the Stan-
dard Contract. Me. Yankee Atomic Power Co. v. United
States, 225 F.3d 1336, 1342 (Fed. Cir. 2000) (“The breach
involved all the utilities that had signed the contract—the
entire nuclear electric industry.”); see also N. States Power
Co. v. United States, 224 F.3d 1361, 1367 (Fed. Cir. 2000).
Consistent with Maine Yankee, the Claims Court granted
summary judgment to ENIP on the government’s liability
for a partial breach of contract. See Consol. Edison, 92
Fed. Cl. at 474.
In light of the liability determination, the government
conceded that ENIP’s construction of the dry-storage
facility was a proper mitigation activity, and did not
dispute $89,388,884 of ENIP’s claims related to the con-
struction of the dry-storage facility at Indian Point. See
Consol. Edison, 92 Fed. Cl. at 502. The government did
dispute what are now four categories of damages claimed
by ENIP. 3 As to these categories, the government argued
2 ENIP’s claims against the government were joined
with those of its predecessor, Consolidated Edison, for
trial and decision. See Consol. Edison, 92 Fed. Cl. at 473.
The issues involved in this appeal, however, are based
solely on ENIP’s claims against the government.
3 The government also disputed sixteen other cate-
gories and subcategories of damages before the Claims
Court that are not on appeal, some of which were
awarded and some of which were denied. See Consol.
Edison, 92 Fed. Cl. at 504-19.
CONSOLIDATED EDISON CO OF NY v. US 6
that they would have been incurred even if DOE had
begun collecting SNF in 1998, or they were otherwise not
related to DOE’s breach of the Standard Contract. Id. In
resolving the disputed claims, the Claims Court awarded
ENIP $7,660,038 in damages related to the costs of oper-
ating Unit 1’s spent fuel pools after ENIP purchased
Indian Point in 2001. Id. at 504-05. The Claims Court
also awarded ENIP $2,148,901 in damages related to its
claimed increase in regulatory fees paid to the NRC. Id.
at 513-16. The Claims Court denied, however, ENIP’s
claim of $6,894,662 in damages for certain overhead costs
related to its mitigation activities, id. at 517-18, and
ENIP’s claim of $20,838,626 in damages for the cost of
capital to fund its mitigation activities, id. at 518-19.
These four categories of damages are discussed in further
detail below. We have jurisdiction under 28 U.S.C.
§ 1295(a)(3).
DISCUSSION
We review legal conclusions of the Claims Court de
novo. Ind. Mich. Power Co. v. United States, 422 F.3d
1369, 1373 (Fed. Cir. 2005). Factual findings are re-
viewed for “clear error.” Id.
I Unit 1 Wet Storage Costs
The government appeals the Claims Court’s award of
$7,660,038 in damages related to the costs of operating
Unit 1’s spent fuel pool after ENIP purchased Indian
Point in 2001. See Consol. Edison, 92 Fed. Cl. at 504-05.
The Unit 1 costs included $6,745,093 for the operation
and maintenance of the Unit 1 spent fuel pool from 2004
to 2008, 4 when the spent fuel was moved into the dry-
4 ENIP also claimed damages for the operation and
maintenance of the Unit 1 spent fuel pool for 2002 and
2003, but those claims were denied by the Claims Court
7 CONSOLIDATED EDISON CO OF NY v. US
storage facility constructed by ENIP, and $914,945 in
costs attributed to the repair of Unit 1’s north curtain
drain, necessary to address a leak in Unit 1’s spent fuel
pool. Id.
In Yankee Atomic Electric Co. v. United States, we ex-
plained that “damages for breach of contract require a
showing of causation,” which in turn necessitates a “com-
parison between the breach and non-breach worlds.” 536
F.3d 1268, 1273 (Fed. Cir. 2008). Thus, “a plaintiff seek-
ing damages must submit a hypothetical model establish-
ing what its costs would have been in the absence of
breach.” Energy Nw. v. United States, 641 F.3d 1300,
1305 (Fed. Cir. 2011) (emphasis added).
Here, ENIP’s hypothetical model contemplated that if
DOE had not breached the Standard Contract, the SNF
stored in the Unit 1 spent fuel pool would have been
removed in 1998. 5 Thus, ENIP argues, in a non-breach
world, ENIP would not have incurred any costs related to
the continued operation of the Unit 1 spent fuel pool after
acquiring Indian Point in 2001. The Claims Court agreed.
Consol. Edison, 92 Fed. Cl. at 502-03.
The problem with ENIP’s theory is that it does not re-
flect the fact that in the non-breach world, Unit 2 SNF,
rather than Unit 1 SNF, would have been removed from
Indian Point in 1998, when Consolidated Edison still
owned the Indian Point facility. Some background is
helpful. After a nuclear fuel assembly is no longer useful
for generating electricity, the nuclear fuel is considered
due to a lack of records to sufficiently establish the al-
leged costs for those years. Consol. Edison, 92 Fed. Cl. at
504.
5 The Unit 1 spent fuel pool contained 30.58 MTU
of SNF, matching Indian Point’s 30.58 MTU allocation
rights for 1998 as calculated based on the 1987 ACR.
CONSOLIDATED EDISON CO OF NY v. US 8
spent, and the SNF is discharged from the reactor into a
spent fuel pool where it must be cooled for at least several
years. The Unit 1 reactor ceased operating in 1974, and
no additional SNF was added to the Unit 1 pool after that
time. Dr. Henri Gueron, the Director of Nuclear Fuel
Supply for Consolidated Edison and the designated point
of contact between Consolidated Edison and DOE, testi-
fied at trial that because the Unit 1 reactor had ceased
operating, and the Unit 1 spent fuel pool was “static,”
Consolidated Edison was “not concerned about . . . room
in that particular pool.” J.A. 133. In contrast to Unit 1,
the Unit 2 reactor began operating in 1974 and continues
to operate today. Because the Unit 2 reactor continued to
generate SNF that needed to be discharged into the Unit
2 spent fuel pool, Consolidated Edison preferred to use its
allocation rights under the Standard Contract to have
older Unit 2 SNF removed from the Unit 2 spent fuel pool
in order to ensure that there was sufficient space avail-
able in that pool for newly discharged SNF from the Unit
2 reactor. Dr. Gueron testified that Consolidated Edison
preferred to have DOE accept SNF “from the [Unit] 2
pool” because that was “critical to continue[d] operation”
of the Unit 2 reactor. Id. Under this approach, the Unit 1
SNF would not have been removed in 1998.
Consolidated Edison’s Unit 2 preference is also evi-
denced by its official communications with DOE. Under
the Standard Contract, DOE’s contracting officer re-
quested Consolidated Edison to submit Delivery Com-
mitment Schedules (“DCSs”) sixty-three months prior to a
requested acceptance date that corresponded to its SNF
acceptance allocation. Consolidated Edison requested
that DOE apply its allocation rights to Unit 2 SNF in each
of seven DCSs submitted to DOE between September 23,
1992, and September 14, 2000.
9 CONSOLIDATED EDISON CO OF NY v. US
The Claims Court found that Consolidated Edison’s
Unit 2 preference “[did] not accurately reflect [ENIP]’s
views on its fuel management practices if DOE had begun
performance as promised” in 1998. Consol. Edison, 92
Fed. Cl. at 503. Thus, the Claims Court held that ENIP
“was entitled to assume that DOE would collect Unit 1
spent fuel first” beginning in 1998. Id. However, when
constructing a hypothetical non-breach world, the facts of
the case may not be retroactively changed to fit a plain-
tiff’s damages theory. Consolidated Edison still owned
the Indian Point facility from 1998 to 2001, and thus
ENIP’s Unit 1 preference is irrelevant to establishing
what “would have been” in a non-breach world during this
earlier time frame. ENIP’s entire damages theory is
premised on the assumption that the Unit 1 SNF would
have been removed by 1998. The “hypothetical model
establishing what . . . would have been in the absence of
breach” must account for the fact that Consolidated
Edison’s Unit 2 preference governed which SNF would
have been taken from Indian Point. See Energy Nw., 641
F.3d at 1305. There is no basis for assuming that, absent
the breach, Consolidated Edison would have changed its
election of Unit 2 SNF for Unit 1 SNF even though each
request reserved Consolidated Edison’s right to change its
election and no delivery schedule was ever finalized due
to DOE’s breach.
ENIP argues in the alternative that, even if the
Claims Court erred by not applying Consolidated Edison’s
preference for 1998 to 2001, any such error was harmless
because ENIP could have used its 2002-2004 allocations
to remove all of the Unit 1 SNF prior to incurring the
Unit 1 wet storage costs awarded by the Claims Court.
This alternative theory, however, was not raised before
the Claims Court, and may not be raised for the first time
on appeal. Sage Prods., Inc. v. Devon Indus., Inc., 126
CONSOLIDATED EDISON CO OF NY v. US 10
F.3d 1420, 1426 (Fed. Cir. 1997) (“[T]his court does not
‘review’ that which was not presented to the [trial]
court.”).
We reverse the Claims Court’s award of $7,660,038 in
damages related to the costs of operating Unit 1’s spent
fuel pool.
II NRC Generic Fees
The government also appeals the Claims Court’s
award to ENIP of $2,148,901 in damages related to regu-
latory fees paid to the NRC. The NRC is required to
recover nearly all of its costs of regulating the nuclear
power industry from the licensees that it supervises. See
42 U.S.C. § 2214. 6 The NRC recovers the costs of its site-
specific activities by charging licensees site-specific fees
under 10 C.F.R. Part 170. These site-specific activities
include items such as reviewing license applications and
conducting inspections. See 10 C.F.R. § 170.12. Whether
or not the government’s breach resulted in site-specific fee
increases, ENIP’s claims before the Claims Court did not
include any alleged increase in Part 170 site-specific fees,
and any increase in such fees is not an issue in this ap-
peal.
The issue here concerns a second category of NRC
fees, which cover the costs of NRC’s general industry-wide
6 At the time of the 1999 change to the NRC fee
structure, NRC was required to recover 100% of its costs
through regulatory fees. See Omnibus Budget Reconcilia-
tion Act of 1990, Pub. L. No. 101-508, § 6101, 104 Stat.
1388, 1388-298, amended by Pub. L. No. 106-377, Title
VIII, 114 Stat. 1441, 1441A-86 (2000). Subsequently, the
percentage of the costs that that NRC was required to
recover was incrementally reduced from 98% in 2001
down to 90% in 2005 and thereafter. See 42 U.S.C.
§ 2214(c)(2) (2006).
11 CONSOLIDATED EDISON CO OF NY v. US
regulatory activities. These are the “generic fees” re-
quired by 10 C.F.R. Part 171. The generic fees cover the
costs of activities such as the development and provision
of regulatory guidance, “research,” and “[o]ther safety,
environmental, and safeguards activities.” 10 C.F.R.
§ 171.15.
ENIP claims that its generic fees paid from 2002 to
2008 increased as a result of DOE’s breach. 7 There are
two possible bases upon which ENIP could establish a
causal link between DOE’s breach and an increase in
generic fees paid by ENIP: (1) that NRC’s overall generic
costs increased as a result of DOE’s breach, causing the
NRC to assess increased generic fees on each of its licen-
sees; or (2) that a 1999 rule changed the fee allocation
method as a result of DOE’s breach and increased ENIP’s
share of generic fees.
With respect to the first possible basis, the Claims
Court found that it was “logical to assume that increased
regulatory oversight would occur if nuclear plant owners
were forced to store more spent fuel on their premises due
to DOE’s breach,” apparently concluding that generic fees
would increase as a result. Consol. Edison, 92 Fed. Cl. at
514. 8 However, ENIP does not point to any evidence in
7 We have previously considered the 1999 rule
change in Boston Edison Co. v. United States, 658 F.3d
1361, 1367-70 (Fed. Cir. 2011). However, in Boston
Edison, the government did not contest, and we did not
reach, the underlying issue of whether DOE’s partial
breach of the Standard Contract caused the generic fees
assessed on the plaintiff to increase. See id. at 1368.
8 The Claims Court statement that “[a]bsent DOE’s
breach, the NRC most likely would not have modified its
fee structure, because the number of dry storage facilities
would have been too few to warrant any change,” Consol.
Edison, 92 Fed. Cl. at 515, relates to the variable costs
attributable to increased dry storage; there is no reason to
CONSOLIDATED EDISON CO OF NY v. US 12
the record establishing that NRC’s generic activity costs
increased as a result of DOE’s breach. At oral argument,
ENIP conceded that it had no evidence that the NRC’s
generic-activity costs had increased after the breach. Oral
Argument at 31:44, Consolidated Edison Co. of N.Y. v.
United States, No. 2010-5155, -5157 (Fed. Cir. Jan. 9,
2012), available at http://www.cafc.uscourts.gov/oral-
argument-recordings/search/audio.html (search “Appeal
Number” for “2010-5155”). 9 ENIP has not established
that the NRC’s overall generic fees increased as a result of
DOE’s breach.
The second possible basis for establishing a causal
link between ENIP’s generic fees and DOE’s breach is
that the NRC changed its rules for allocating generic fees
as a result of DOE’s breach, and that this change in-
creased ENIP’s share of the overall generic fees.
Among the various types of generic fees charged to
NRC licensees under 10 C.F.R. Part 171 are those related
to nuclear plant decommissioning, wet storage, and dry
storage. Before 1999, the NRC charged an annual generic
fee to all licensees operating nuclear reactors to cover the
NRC’s general expenses related to wet storage and nu-
clear plant decommissioning. Before 1999, the NRC also
charged a separate annual generic fee to all licensees with
dry storage facilities to cover the NRC’s generic expenses
related to dry storage. The 1999 rule change eliminated
the separate generic fees for (1) dry storage, and (2) wet
storage and decommissioning, and created a new annual
assume that overall dry-storage generic (e.g., research)
costs increased.
9 Court: “The NRC total, did the Nuclear Regula-
tory Commission’s fees go up? Did their costs go up
during the period of the breach?” Counsel for ENIP: “I
don’t know whether their costs went up your Honor.”
Oral Argument at 31:44.
13 CONSOLIDATED EDISON CO OF NY v. US
Spent Fuel Storage/Reactor Decommissioning (“SFS/RD”)
fee, which covered the NRC’s generic costs related to both
dry storage and wet storage as well as decommissioning.
Specifically, the annual SFS/RD fee covered “the costs of
NRC’s generic and other research activities directly
related to reactor decommissioning and spent fuel storage
(both [wet and dry] storage options), and other safety,
environmental, and safeguards activities related to reac-
tor decommissioning and spent fuel storage.” Revision of
Fee Schedules; 100% Fee Recovery, FY 1999, 64 Fed. Reg.
31,448, 31,455 (June 10, 1999).
ENIP argues that as a result of the reallocation,
ENIP’s generic fees increased. The 1999 rule change
combined the previously separate categories for wet
storage and dry storage, and covered the NRC’s generic
wet-storage costs and generic dry-storage costs with a
single SFS/RD fee that applied to all licensees with either
wet storage or dry storage on site. ENIP’s argument is
apparently that, in a non-breach world, the NRC would
not have changed its fee structure, and ENIP would not
have had to pay the portion of the SFS/RD fee attribut-
able to dry storage from 2002 to 2008, when it did not
have a dry storage facility. 10
10 As the government points out, the $2,148,901 in
damages claimed by ENIP and awarded by the Claims
Court includes the portions of the annual SFS/RD fee
attributable to both the NRC’s wet-storage generic costs
and dry-storage generic costs. The government argues
that the award does not account for the fact that ENIP
would have required wet storage for Unit 2 regardless of
DOE’s breach, and thus would have paid generic fees
related to wet storage regardless of DOE’s breach. Be-
cause we find that ENIP failed to show that the 1999 rule
change was the result of DOE’s breach, we do not reach
the question of whether ENIP’s damages claim improp-
erly compared the breach versus non-breach worlds.
CONSOLIDATED EDISON CO OF NY v. US 14
However, ENIP has failed to show that the 1999 rule
change was the result of DOE’s breach. The NRC’s public
statements do not suggest that the 1999 changes were the
result of DOE’s breach. When proposing the 1999 rule
change, the NRC expressed multiple concerns behind the
rule change that were unrelated to DOE’s breach:
The current policy has raised three concerns: (a)
The fee structure could create a disincentive for
licensees to pursue dry storage; (b) The fairness of
assessing multiple annual fees if a licensee holds
multiple [dry storage] licenses for different de-
signs; and (c) Not all affected licensees are being
assessed the costs of NRC’s generic decommission-
ing activities.
Revision of Fee Schedules; 100% Fee Recovery, FY 1999,
64 Fed. Reg. 15,876, 15,881 (proposed April 1, 1999). The
NRC further explained that “[o]ne purpose of the review”
of the fee structure “was to assure consistent fee treat-
ment for both wet storage (i.e., spent fuel pool) and dry
storage (i.e., independent spent fuel storage installations
(ISFSIs)) of spent fuel.” Id. at 15,882. “The proposed
change would give equivalent fee treatment to both stor-
age options.” Id.
Though acknowledging DOE’s breach, the NRC again
expressed its concern over the fairness of its generic fee
assessment when issuing the final rule:
The NRC recognizes that sites will be required to
continue to store spent fuel onsite until another
solution becomes available. The fact that DOE
has not taken possession of the spent fuel does not
relieve NRC of the OBRA-90 requirement to re-
cover approximately 100 percent of its budget au-
thority through fees, including those costs
associated with generic spent fuel storage activi-
15 CONSOLIDATED EDISON CO OF NY v. US
ties. . . . The current policy has raised concerns
that the fee structure could create a disincentive
for licensees to pursue dry storage. The spent fuel
storage/reactor decommissioning annual fee will
give equivalent fee treatment to both storage op-
tions.
Revision of Fee Schedules; 100% Fee Recovery, FY 1999,
64 Fed. Reg. at 31,455. In sum, the only public state-
ments in the record that were made on behalf of the NRC
express a concern over the fairness of the generic fee
assessment, and do not establish any direct link between
DOE’s breach and the 1999 rule change.
In the absence of any public statement from the NRC
linking the 1999 rule change to DOE’s breach, ENIP
points to comments made by NRC Commissioner Merri-
field in an internal NRC memorandum accompanying his
vote on whether the NRC should, among other things,
adopt the 1999 rule change. Commissioner Merrifield
noted that the proposed SFS/RD fee “should result in a
more even and fair recovery policy for various decommis-
sioning and storage activities.” J.A. 2642. Commissioner
Merrifield stated further:
[I]t is unfortunate that the federal government
has not provided for permanent disposal of high-
level waste. Because of the delay in the DOE
high-level waste repository program, I believe the
Commission should seek legislation for FY2000 to
amend the Nuclear Waste Policy Act so that ge-
neric costs associated with the NRC’s spent fuel
storage activities can be derived from the Nuclear
Waste Fund.
Id. According to the Claims Court, “[t]hese comments
confirm the existence of a direct link between DOE’s
CONSOLIDATED EDISON CO OF NY v. US 16
breach and the NRC’s 1999 fee change.” Consol. Edison,
92 Fed. Cl. at 515. We disagree.
These comments are insufficient as a matter of law to
demonstrate that the new NRC rules were the result of
the government breach. We need not decide whether
unpublished views of agency members may be considered
in determining the reasons for agency action. In any
event, Merrifield’s comments merely parallel the NRC’s
stated objective to “give equivalent fee treatment to both
[wet and dry] storage options.” Revision of Fee Schedules;
100% Fee Recovery, FY 1999, 64 Fed. Reg. at 15882. And
while Merrifield’s comments explicitly suggest proposing
legislation to amend the NWPA because of the govern-
ment’s delay in accepting SNF, it does nothing to suggest
that the 1999 rule change was the result of that delay or
DOE’s breach. 11
In sum, ENIP has failed to prove either (1) that the
NRC’s overall generic-activity costs increased as a result
of DOE’s breach, or (2) that DOE’s breach caused the
NRC to change its generic fee structure in 1999. Accord-
ingly, ENIP has not established that its generic fees
increased as a result of DOE’s breach. We reverse the
Claims Court’s award of $2,148,901 in damages for ge-
neric fees paid to the NRC.
III Overhead Costs
ENIP cross appeals the Claims Court’s denial of
$6,894,662 in damages for certain overhead costs related
ENIP’s mitigation activities. ENIP’s parent company,
11 ENIP also points to the comments made by NRC
Commissioner McGaffigan in an internal NRC memoran-
dum accompanying his vote on the 1999 rule change.
However, McGaffigan’s comments made no mention of
DOE’s breach.
17 CONSOLIDATED EDISON CO OF NY v. US
Entergy Corporation, maintained a separate accounting,
referred to as the “capital suspense loader,” to capture
costs associated with engineering supervision and the
administration of capital projects, and to allocate equita-
ble portions of those costs to ENIP’s mitigation activity.
As ENIP points out, the utilized accounting practices are
compliant with the Federal Energy Regulatory Commis-
sion’s (“FERC”) regulations and are also in accordance
with Generally Accepted Accounting Principles (“GAAP”).
Without the benefit of our recent SNF-related deci-
sions, the Claims Court found that “the method employed
to charge time to [the overhead] pools and allocate them
to capital projects” was too “imprecise.” Consol. Edison,
92 Fed. Cl. at 517. However, in System Fuels, Inc. v.
United States, where the “Plaintiffs used accounting
procedures as mandated by FERC and consistent with
[GAAP],” we held that the plaintiff’s accounting records
sufficiently “demonstrate[d] the effect of the mitigation
project on the capital pools entitlement with reasonable
particularity.” 666 F.3d 1306, 1312 (Fed. Cir. 2011)
(citation omitted) (internal quotation marks omitted); see
also Boston Edison, 658 F.3d at 1370 (allowing recovery of
“the portion of overhead costs (calculated using GAAP)
that was attributable to mitigation projects”); Energy Nw.,
641 F.3d at 1309 (allowing recovery for the “portion of
[the plaintiff’s] overhead costs fairly allocated to support
of the mitigation via generally accepted accounting prac-
tices”).
Consistent with our recent decisions, we reverse the
Claims Court’s denial of damages for overhead costs
allocated to ENIP’s mitigation activities via the capital
suspense loader.
CONSOLIDATED EDISON CO OF NY v. US 18
IV Cost of Capital
ENIP also cross appeals the Claims Court’s denial of
damages for the cost of capital to fund ENIP’s mitigation
activities. ENIP seeks to recover $20,838,626 in cost-of-
capital damages for the financing of the breach-related
projects with its parent company Entergy’s own corporate
equity and general corporate debt.
In Energy Northwest, we held that the no-interest rule
barred parties to the Standard Contract from recovering
the costs of financing mitigation projects. 641 F.3d at
1310-13 (citing 28 U.S.C. § 2516(a)); see also Sys. Fuels,
666 F.3d at 1310-11. We further explained in Boston
Edison that the “commercial enterprise exception” to the
no-interest rule did not apply in the context of the NWPA.
658 F.3d at 1371.
Consistent with our decisions in Energy Northwest
and Boston Edison, we affirm the Claims Court’s denial of
ENIP’s cost of capital claims.
AFFIRMED IN PART AND REVERSED IN PART
COSTS
No costs.