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On May 18, in Yankee Atomic Elec Co. v. United States, the Federal Circuit affirmed a damages judgment of $142.6 million, and added $17.0 million to the judgment by granting a cross-appeal, in a breach of contract action against the government arising from the Department of Energy's failure to remove spent nuclear fuel from three reactor sites in New England. The decision came in three consolidated cases from among the 55 that have been filed in the Court of Federal Claims as a result of DOE's breach of contracts it has with all nuclear utility companies under which the agency was required to begin removing spent fuel from reactor sites in 1998. Due to chronic delays with the DOE program, including controversy over the proposed Yucca Mountain, Nevada, repository DOE has never commenced any performance. The utilities have therefore been required to license and construct on-site storage facilities for the nuclear waste, the substantial cost of which constitutes the bulk of the damages claimed in the breach of contract actions.
Beginning in 2004 the government began settling some of these contract cases, and in recent years the pace of settlements has increased following utility victories on most contested issues. Settlements to date are estimated to exceed $2 billion, and only about 20 of the contract cases remain pending. However, separate litigation has arisen in the D.C. Circuit over DOE's proposal to formally cancel work on the Yucca Mountain repository, and also seeking to relieve the utilities of the obligation to pay ongoing fees to DOE under the spent fuel contracts, fees that collectively cost the industry about $750 million per year.
Yankee Atomic was the first of these spent fuel damages cases filed, in 1998, and GT lawyers have represented Yankee Atomic as well as the other two companies involved in the May 18 decision, Connecticut Yankee Atomic Power Company and Maine Yankee Atomic Power Company, throughout the litigation, which has involved two trials and three appeals.
For the Legal Times of Washington's take on this opinion, click here.
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