 In the United States Court of Federal Claims
                                        No. 09-587C
                                   Filed: January 31, 2013

*************************************
                                    *          Collateral Estoppel;
                                    *          Law of the Case Doctrine;
                                    *          Mandate Doctrine;
SACRAMENTO MUNICIPAL UTILITY *                 Mitigation Costs;
DISTRICT,                           *          Nuclear Waste Policy Act, 42
                                    *             U.S.C. §§10101-10270 (2006);
      Plaintiff,                    *          10 C.F.R. Part 171 (NRC fees);
                                    *          10 C.F.R. § 961.11, Art. VI B; V D
v.                                  *             (exchange rights);
                                    *          Fed. R. Evid. 702 (expert opinions);
                                    *          RCFC 26(a)(1)(A)(iii) (disclosure of
THE UNITED STATES,                  *             damages);
                                    *          RESTATEMENT (SECOND) OF CONTRACTS
      Defendant.                    *             (1981);
                                    *          RESTATEMENT (SECOND) OF JUDGMENTS
                                    *             (1982).
                                    *
*************************************

Timothy R. Macdonald, Arnold & Porter, LLP, Denver, Colorado, and Howard N. Cayne,
Arnold & Porter, LLP, Washington, D.C., Counsel for Plaintiff.

Scott R. Damelin, United States Department of Justice, Civil Division, Commercial Litigation
Branch, Washington, D.C., Counsel for Defendant.

Jane K. Taylor, Office of General Counsel, United States Department of Energy, Washington,
D.C., Of Counsel for Defendant.

                    MEMORANDUM OPINION AND FINAL ORDER

BRADEN, Judge.

       This Memorandum Opinion and Final Order adjudicates claims alleged in a September 4,
2009 Complaint, filed by Sacramento Municipal Utility District (“SMUD”), for mitigation costs
incurred from January 1, 2004 to December 31, 2009, as a result of the Department of Energy’s
(“DOE”) breach of a June 14, 1983 contract between SMUD and DOE (the “Standard
Contract”), that was required by the Nuclear Waste Policy Act (“NWPA”), 42 U.S.C. §§ 10101-
10270 (2006). The Standard Contract obligated DOE to begin to dispose and store SMUD’s
spent nuclear fuel (“SNF”) and high-level waste (“HLW”), by January 31, 1998, and to continue
to do so until disposal was complete. See 42 U.S.C. § 10222(a)(5)(B). In exchange for DOE’s
disposal and storage services, SMUD was required to pay a fee that was deposited in the Nuclear
Waste Fund. See 42 U.S.C. § 10222(a)(5)(B).1

       Over a decade ago, the United States Court of Appeals for the Federal Circuit held that
DOE’s failure to dispose and store SNF and HLW generated by the nuclear-utility parties to the
Standard Contract by January 31, 1998, was a partial breach thereof. See Maine Yankee Atomic
Power Co. v. United States, 225 F.3d 1336, 1342-43 (Fed. Cir. 2000). To date, DOE has not
disposed of nor stored the SNF or HLW of SMUD or of any other nuclear-utility party to the
Standard Contract.

       To facilitate a review of this Memorandum Opinion and Final Order, the court has
provided the following outline:

I.     FACTUAL BACKGROUND AND RELEVANT PROCEDURAL HISTORY.

       A.     Sacramento Municipal Utility District v. United States, Civil Action Docket No.
              98-488C.

       B.     Sacramento Municipal Utility District v. United States, Civil Action Docket No.
              09-587C.

II.    DISCUSSION.

       A.     Whether Plaintiff’s Spent Nuclear Fuel And High Level Waste Would Have
              Been Removed Prior To January 1, 2004, Utilizing The Standard Contract’s
              Exchange Provision.

              1.     The Plaintiff’s Argument.

              2.     The Government’s Response.

              3.     The Plaintiff’s Reply.

              4.     The Court’s Resolution.

       B.     Whether Plaintiff Would Have Stored Class B And C Waste Onsite In The
              Non-Breach World.

              1.     The Plaintiff’s Argument.

              2.     The Government’s Response.

              3.     The Court’s Resolution.

       1
         If SMUD had declined to become a party to the Standard Contract, the Nuclear
Regulatory Commission (“NRC”) would not have renewed SMUD’s nuclear operating license.
See 42 U.S.C. § 10222(b)(1)(A).



                                               2
C.   Governing Precedent Regarding Damages In Spent Nuclear Fuel Cases.

D.   The Mitigation Costs That Plaintiff Claims Were Incurred From January 1,
     2004, To December 31, 2009, As A Result Of The Partial Breach Of The
     January 21, 1998 Standard Contract.

     1.    Whether Plaintiff Is Entitled To The Cost Of Independent Spent Fuel
           Storage Installation Operating And Related Maintenance Expenses.

           a.     The Plaintiff’s Argument.

           b.     The Government’s Response.

           c.     The Plaintiff’s Reply.

           d.     The Court’s Resolution.

     2.    Whether Plaintiff Is Entitled To The Cost Of Nuclear Energy Institute
           Fees.

           a.     The Plaintiff’s Argument.

           b.     The Government’s Response.

           c.     The Court’s Resolution.

     3.    Whether Plaintiff Is Entitled To The Cost Of Insurance Premiums.

           a.     The Plaintiff’s Argument.

           b.     The Government’s Response.

           c.     The Court’s Resolution.

     4.    Whether Plaintiff Is Entitled To The Cost Of The Cosumnes Power
           Plant Explosion Analysis.

           a.     The Plaintiff’s Argument.

           b.     The Government’s Response.

           c.     The Court’s Resolution.

     5.    Whether Plaintiff Is Entitled To The Cost Of Constructing A
           Wastewater Treatment Plant.

           a.     The Plaintiff’s Argument.

           b.     The Government’s Response.


                                   3
      c.    The Court’s Resolution.

6.    Whether Plaintiff Is Entitled To The Cost Of An Interim Onsite
      Storage Building.

      a.    The Plaintiff’s Argument.

      b.    The Government’s Response.

      c.    The Court’s Resolution.

7.    Whether Plaintiff Is Entitled To Recover The Cost Of Nuclear
      Regulatory Commission Fees.

      a.    The Plaintiff’s Argument.

      b.    The Government’s Response.

      c.    The Court’s Resolution.

8.    Whether Plaintiff Is Entitled To The Cost Of Greater-Than-Class-C
      Storage.

      a.    The Plaintiff’s Argument.

      b.    The Government’s Response.

      c.    The Court’s Resolution.

9.    Whether Plaintiff Is Entitled To Certain Overhead Costs.

      a.    The Plaintiff’s Argument.

      b.    The Government’s Response.

      c.    The Court’s Resolution.

10.   Whether Plaintiff Is Entitled To The Cost Of Capital.

      a.    The Plaintiff’s Argument.

      b.    The Government’s Response.

      c.    The Court’s Resolution.




                             4
       E.      Whether The Government Is Entitled To An Offset For The Costs That
               Plaintiff Would Have Incurred From January 1, 2004, Through 2008 To
               Operate The Wet Pool.

               1.      The Government’s Argument.

               2.      The Plaintiff’s Response.

               3.      The Court’s Resolution.

III.   CONCLUSION.

                                              * * *

I.     FACTUAL BACKGROUND AND RELEVANT PROCEDURAL HISTORY.

       A.      Sacramento Municipal Utility District v. United States, Civil Action Docket No.
               98-488C.2

       The Rancho Seco Nuclear Generating Station Unit 1 (“Rancho Seco”) was a nuclear-
powered power plant, located in Sacramento County, California, that was operated by SMUD.
See SMUD III, 70 Fed. Cl. at 339. As a result of a public referendum, on June 7, 1989, SMUD’s
Board of Directors decided to shut down Rancho Seco permanently. Id. at 340. Thereafter,
SMUD began to investigate options to decommission Rancho Seco and store its SNF in a dual-
purpose dry-storage facility, instead of the wet pool that SMUD was using at that time. Id. at
341.

        On June 9, 1998, SMUD filed a Complaint in the United States Court of Federal Claims
alleging, among other claims, that DOE breached the Standard Contract, for which SMUD was

       2
          The following Memorandum Opinions and Orders were issued in Docket No. 98-488C:
Sacramento Mun. Util. Dist. v. United States, 61 Fed. Cl. 438 (2004) (“SMUD I”) (denying the
Government’s motion to dismiss SMUD’s takings claim and dismissing SMUD’s illegal
exaction claim); Sacramento Mun. Util. Dist. v. United States, 63 Fed. Cl. 495 (2005) (“SMUD
II”) (determining that DOE was liable for a partial breach of the Standard Contract when it failed
to begin to dispose of SMUD’s SNF by January 31, 1998); Sacramento Mun. Util.
Dist. v. United States, 70 Fed. Cl. 332 (2006) (“SMUD III”) (determining that SMUD was
entitled to mitigation damages for certain costs incurred as a result of DOE’s partial breach of the
Standard Contract); Sacramento Mun. Util. Dist. v. United States, 74 Fed. Cl. 727 (2006)
(“SMUD IV”) (determining that SMUD was entitled to an award of $39,796,234 in mitigation
costs caused by DOE’s partial breach of the Standard Contract); Sacramento Mun. Util.
Dist. v. United States, 293 F. App’x 766 (Fed. Cir. 2008) (unpublished) (“SMUD V”) (affirming-
in-part SMUD II-IV and remanding for the trial court to determine causation, in light of the 1987
Annual Capacity Report, and to determine other mitigation costs); and Sacramento Mun. Util.
Dist. v. United States, 91 Fed. Cl. 9 (2009) (“SMUD VI”) (on remand determining that SMUD
was entitled to mitigation costs of $53,159,863, but staying entry of a final judgment, pending
resolution of this case, Docket No. 09-587C).


                                                 5
entitled to mitigation costs for a period that eventually would span from January 1, 1992 to
December 31, 2003. Id. at 356-57. On March 30, 1990, a proposal was adopted by SMUD to
move its SNF from wet pool storage to a dry storage system, primarily because of the projected
savings. Id. at 342. After several delays, the construction of an Independent Spent Fuel Storage
Installation (“ISFSI”), to implement dry storage, was completed in 2001. Id. at 355. From April
2001 to August 2002, SMUD moved twenty-one canisters of SNF into the ISFSI. Id. at 355-56.

        On January 19, 2005, the court determined that DOE was liable for the January 31, 1998
partial breach of the Standard Contract. See SMUD II, 63 Fed. Cl. at 506. On March 31, 2006,
the court determined that DOE’s January 31, 1998 partial breach of the Standard Contract
entitled SMUD to certain mitigation costs, incurred from May 15, 1997 to December 31, 2003.
See SMUD III, 70 Fed. Cl. at 367-73 (determining that SMUD was entitled to recover mitigation
costs for: dry storage; labor severance and recruiting; dry storage project delays; spent nuclear
fuel; ISFSI operation and maintenance; gantry crane refurbishment; and the preparation,
packaging, inspection, and loading of SNF). The court, however, denied SMUD’s recovery of
other claimed mitigation costs. Id. at 373-78 (determining that SMUD was not entitled to
mitigation costs for: dual purpose dry storage; related contract, lease, or other legal obligations;
certain aspects of the ISFSI construction; internal labor costs; overhead costs; and onsite drop-
testing). The court also determined that DOE was entitled to an offset of $4,196,360 for the
amount that “SMUD saved [in 2003] by placing SNF into dry storage and decommissioning the
wet pool[.]” Id. at 375. In reaching this conclusion, the court rejected SMUD’s contention that
it “would have been successful in trading SMUD’s acceptance priority with another utility or
convincing DOE to accept SMUD’s SNF early,” i.e., prior to 2003. Id. Thereafter, supplemental
expert testimony was proffered in this case to ascertain SMUD’s specific mitigation costs,
whereupon the court determined that SMUD was entitled to recover $39,796,234. See SMUD
IV, 74 Fed. Cl. at 730, 735. SMUD and the Government filed cross-appeals.

         On August 7, 2008, the United States Court of Appeals for the Federal Circuit issued an
opinion, affirming-in-part and reversing-in-part SMUD IV, and remanding Civil Action Docket
No. 98-488C, instructing the court to determine causation by applying the 1987 Annual Capacity
Report (“1987 ACR”) acceptance rate. See SMUD V, 293 F. App’x at 771. On remand,
applying the 1987 ACR acceptance rate, the United States Court of Federal Claims determined
that SMUD established entitlement to $39,796,234 in mitigation costs. See SMUD VI, 91 Fed.
Cl. at 18.3 In addition, the court “restor[ed] the $13,363,629 in offsets allowed by the appellate
court,” for a total award of $53,159,863. Id. The court also determined that the Government was
still entitled to an offset of $4,196.360 for wet pool savings realized by SMUD in 2003, since
       3
         The United States Court of Appeals for the Federal Circuit has held that, because there
has only been a partial breach of the Standard Contract, “[a] plaintiff can recover only such
damages as he or she has sustained, leaving prospective damages to a later suit in the event of
further breaches.” Ind. Mich. Power Co. v. United States, 422 F.3d 1369, 1377 (Fed. Cir. 2005);
see also id. at 1378 (“Accordingly, [plaintiff] must bring any future actions for damages related
to DOE’s breach of the Standard Contract within six years of incurring such damages.”).
Therefore, SMUD was entitled in Civil Action Docket No. 98-488C to mitigation costs incurred
during the relevant period, i.e., up to December 31, 2003. Any future costs would only be
recovered in a separate action.



                                                 6
“that ruling was not reversed on appeal.” Id. But, the court rejected the Government’s request
that the court offset this same amount of wet pool savings for January 1, 2004 to December 31,
2008, because “it is proper to account for any 2004-2008 SNF wet pool savings offset in [Docket
No. 09-587C].” Id. at 19. Instead, the court ordered that Civil Action Docket No. 98-488C be
stayed, pending the court’s resolution of Civil Action Docket No. 09-587C, to determine whether
SMUD would have achieved any savings during those years from the decommissioning of its
wet pool and, if so, the amount to be offset against SMUD’s recovery in Docket No. 98-488C,
because “the amount of costs SMUD may seek in [Docket No. 09-587C may] not be sufficient to
allow the Government to recoup the amount of SNF wet pool savings realized from 2004-2008.”
Id.

       On March 12, 2010, SMUD filed a Petition for a Writ of Mandamus requesting that the
United States Court of Appeals for the Federal Circuit order the court to lift the stay in Civil
Action Docket No. 98-488C that prevented entry of final judgment in SMUD VI. On September
16, 2010, SMUD’s Petition was denied. See In re Sacramento Mun. Util. Dist., 395 F. App’x
684, 688 (Fed. Cir. 2010) (unpublished).

       B.     Sacramento Municipal Utility District v. United States, Civil Action Docket No.
              09-587C.

        On September 4, 2009, SMUD filed a Complaint in this case, Civil Action Docket No.
09-587C, alleging that DOE was in partial breach of the Standard Contract and had violated the
implied covenants of good faith and fair dealing, for which SMUD was entitled to mitigation
costs incurred after January 1, 2004. 9/4/09 Complaint.4

        On November 3, 2009, the Government filed an Answer And First Affirmative Defense
alleging that, to the extent not barred by N. States Power Co. v. Dep’t of Energy, 128 F.3d 754
(D.C. Cir. 1997), “the ‘unavoidable delays’ clause of the [S]tandard [C]ontract would affect or
eliminate the Government’s liability for, and/or [SMUD’s] ability to recover, damages for
DOE’s delay.” Answer at 9.5



       4
        The underlying facts in Docket No. 09-587C were set forth in SMUD III and SMUD IV
and are also derived from: the Government’s November 3, 2009 Answer (“Answer”); Joint
Exhibits in Docket No. 98-488C (JX 1-6000); Plaintiff’s Exhibits (PX 6001-6358); the
Government’s Exhibits (DX 6001-6245); and the transcript of a trial of Docket no. 09-587C held
October 24-27, 2011 (“TR at 1-1163”).
       5
         Subsequently, the United States Court of Appeals for the Federal Circuit held en banc
that the decision in Northern States Power has res judicata effect on the partial breach of
Standard Contract cases filed in the United States Court of Federal Claims, because the United
States Court of Appeals for the District of Columbia’s ruling was not barred by sovereign
immunity and did not “impermissibly invade” the jurisdiction of the United States Court of
Federal Claims to adjudicate the partial breach and mitigation cost claims at issue. See Neb.
Pub. Power Dist. v. United States, 590 F.3d 1357, 1376 (Fed. Cir. 2010).



                                               7
       On February 19, 2010, SMUD served the Government with Initial Disclosures, including
“a computation of each category of damages claimed by the disclosing party.” RCFC
26(a)(1)(A)(iii). Therein, SMUD estimated “that its mitigation damages [were] in the range of
approximately $31 million to $37 million for 2004 through 2010.” Pl. Discl. at 4.

       On April 23, 2010, the parties filed a Joint Motion For Protective Order that the court
granted on April 26, 2010.

       On July 16, 2010, SMUD produced additional information, including a spreadsheet
itemizing mitigation costs claimed for the period of 2004 through 2010.

       On December 10, 2010, SMUD served the Government with a Damages Expert Report to
explain the basis of mitigation costs for 2004 through 2009, and advised the Government that
this Expert Report would be supplemented to include 2010 mitigation costs after SMUD’s expert
completed his review of all of the supporting documents. On March 8, 2011, the Government
deposed SMUD’s damages expert, during which he testified that he planned to supplement the
December 10, 2010 Expert Report, but was waiting for SMUD’s counsel to provide final
documentation.

        In late March 2011, SMUD’s counsel informed the Government that the Supplemental
Damages Expert Report was nearly completed. On April 8, 2011, however, the Government
objected to including any 2010 mitigation costs in this proceeding, but would agree to do so only
if SMUD agreed to afford the Government an extra two-and-a-half months to submit its Expert
Reports. On April 13, 2011, SMUD’s counsel replied that the Government had sufficient notice
of SMUD’s intent to seek 2010 mitigation costs in this proceeding. On April 18, 2011, the court
convened a status conference to discuss this issue. During that conference, the Government
represented that it conducted discovery of SMUD’s mitigation costs for 2004 through 2009, but
not through 2010. Following argument by the parties, the court made an oral ruling that SMUD
would only be able to seek mitigation costs up to December 31, 2009 in this case, Docket No.
09-587C, but could pursue any costs incurred after that date in a separate action.

        On April 20, 2011, SMUD filed a Motion For Leave To File Its Supplemental And
Amended Complaint to allege a claim for mitigation costs for 2004 through 2010. On that same
date, SMUD also served the Government with a Supplemental Expert Report and supporting
documentation with its final damages claim through 2010. On April 21, 2011, the court
convened a status conference to discuss SMUD’s April 20, 2011 Motion. On May 4, 2011, the
Government filed a Response, arguing that SMUD’s damages in this case must be limited to
those incurred prior to the date of its suit, i.e., September 3, 2009. The Government, however,
did not oppose SMUD’s April 20, 2011 Amended Complaint to the extent it alleged mitigation
costs from January 1, 2004, to December 31, 2009.

       On May 9, 2011, the court convened a second status conference to discuss SMUD’s April
20, 2011 Motion For Leave To File Its Supplemental And Amended Complaint.

    On May 17, 2011, the court issued a Memorandum Opinion and Order Regarding
SMUD’s Motion For Leave To File A Supplemental And Amended Complaint, determining that



                                               8
allowing SMUD “to include 2010 damages in its claim at this juncture would require the
Government to conduct significant extra discovery and potentially delay the evidentiary hearing
on damages set for October 24-28, 2011.” See Sacramento Mun. Util. Dist. v. United States, 98
Fed. Cl. 495, 499 (2011). In addition, SMUD did not establish how it would be prejudiced, since
SMUD could bring a future action to seek costs incurred in and after 2010. Id. For those
reasons, SMUD’s April 20, 2011 Motion For Leave was denied-in-part and granted-in-part to
allow SMUD to amend the September 4, 2009 Complaint to allege a claim for mitigation costs
incurred through December 31, 2009. Id.

        On June 10, 2011, SMUD filed a Motion To Strike The Government’s Unavoidable
Delay Defense Or For Judgment On The Pleadings or to rule, as a matter of law, that the
Government’s November 3, 2009 Answer And First Affirmative Defense was deficient. On July
8, 2011, the parties filed a Joint Motion And Stipulation, in which SMUD withdrew its June 10,
2011 Motion To Strike, based on the Government’s agreement that it would not pursue the
unavoidable delays defense in this case. On July 11, 2011, the court issued an Order granting the
parties’ July 8, 2011 Joint Motion And Stipulation.

        On August 4, 2011, the Government filed three other motions in limine. The first motion
sought to strike SMUD’s prior arguments in Civil Action Docket No. 98-488C regarding the
ability to obtain an early SNF removal date, based on the assumption that utility exchanges
would be available and on DOE’s policy favoring a priority for shutdown reactors. The second
motion argued that SMUD is not entitled to recover any type or amount of interest related to
claimed nominal damages. The third motion was to exclude the expert testimony of Michael W.
Snyder, because he attempted to introduce a new opinion not disclosed when his initial expert
report was filed.

        On August 12, 2011, SMUD filed a Memorandum Of Contentions Of Fact And Law and
an Exhibit List and Witness List. On August 25, 2011, SMUD also filed Responses to each of
the Government’s August 4, 2011 motions in limine. On August 26, 2011, SMUD filed a
Motion For Leave To File Designated Testimony, i.e., for the admission of certain portions of
the trial and deposition testimony, in other SNF cases, of Government witnesses: Mr. Robert
Campbell; Ms. Christine Gelles; Mr. David Huizenga; Mr. Ronald Milner; and Mr. David
Zabransky.

       On September 6 and 8, 2011, the Government replied to SMUD’s August 25, 2011
responses to the Government’s three August 4, 2011 motions in limine. On September 12, 2011,
the Government also filed a Response to SMUD’s August 26, 2011 Motion For Leave To File
Designated Testimony.

      On September 14, 2011, the Government filed a Memorandum Of Contentions Of Fact
And Law, an Exhibit List, and a Witness List.

       On September 20, 2011, SMUD filed a Reply in support of its August 26, 2011 Motion
For Leave To File Designated Testimony. On September 26, 2011, SMUD also filed a Motion
For Leave To File The Designated Deposition Testimony Of John Hoffman. That same day,
SMUD also filed a Motion For Leave To File A Response To The Government’s Untimely



                                               9
Request To Exclude Evidence Regarding A Possible Wet Pool Offset, which the court granted
on September 29, 2011.

      On September 30, 2011, the Government filed a Response to SMUD’s September 26,
2011 Motion For Leave To File Designated Deposition Testimony Of John Hoffman.

      On October 5, 2011, the court held a conference to discuss pretrial matters and pending
motions.

        On October 13, 2011, the Government filed a Response to SMUD’s September 26, 2011
Motion regarding Mr. Hoffman’s deposition. On that same date, the court issued an Order
denying the Government’s August 4, 2011 Motion In Limine to prohibit SMUD from introducing
relevant evidence on entitlement to interest, because an appeal had been filed in System Fuels,
Inc. v. United States, 92 Fed. Cl. 101, 109-114 (2010) (suggesting en banc reconsideration of the
“no interest” rule). The court also granted-in-part and denied-in-part the Government’s August
4, 2011 Motion In Limine to exclude the expert testimony of Michael Snyder, allowing him to
testify as a potential rebuttal witness. The court also denied the Government’s August 4, 2011
Motion In Limine to strike plaintiff’s previously litigated and rejected arguments asserting
exchanges and priority for a shutdown reactor, and allowed SMUD to introduce relevant
evidence on this issue at trial. In addition, the court granted SMUD’s August 26, 2011 Motion
For Leave To File Designated Deposition And Trial Testimony and advised the parties that the
record would remain open after trial to allow the Government to submit counter-designations and
SMUD to submit any counter-counter-designations. The court also granted SMUD’s September
26, 2011 Motion For Leave To File Designated Deposition Testimony Of John Hoffman and
advised the parties that it would leave the record open for a reasonable amount of time after the
trial to allow the Government to depose another witness on the subjects addressed by Mr.
Hoffman. The court, however, deferred ruling on the Government’s request to exclude evidence
regarding a possible wet pool offset as discussed in its September 14, 2011 Memorandum Of
Contentions Of Fact And Law.

       From October 24, 2011 to October 27, 2011, the trial was held in Washington, D.C. on
the mitigation costs to which SMUD was entitled for the period from January 1, 2004 to
December 31, 2009.6


       6
         At the October 24-27, 2011 trial, the following witnesses testified on behalf of SMUD:
Mr. Einar Ronningen, Superintendent of Rancho Seco Assets; Mr. Jason McAlister, in charge of
budget planning and budget reporting for SMUD’s Energy Supply Unit, which includes Rancho
Seco; Mr. James J. Field, Engineering Supervisor at Rancho Seco from 2004 to 2009; Mr. Steve
Redeker, Plant Manager at Rancho Seco from 1993 to 2008; and Mr. Robert Grubb, President
and Chief Operating Officer of Transnuclear, Inc.
        In addition, the court also admitted the written direct testimony of the following expert
witnesses who testified on behalf of SMUD: Mr. Frank C. Graves, an economic consultant with
the Brattle Group (PX 6350); Mr. Ivan F. Stuart, a nuclear industry consultant with I. Stuart &
Co. (PX 6351); Ms. Eileen M. Supko, a nuclear industry consultant with Energy Resources
International, Inc. (PX 6352); and Mr. Kenneth P. Metcalfe, C.PA., C.V.A., an economic
damages consultant with the Kenrich Group LLC (PX6353). The court also admitted the written


                                               10
       On December 16, 2011, the Government objected to SMUD’s Exhibit List. On
December 19, 2011, the Government filed a Notice Of Counter-Designations To SMUD’s
Designations Of Prior Deposition And Trial Testimony Of Department Of Energy Witnesses
(“Gov’t DOE Counter-Designations”), as well as Counter-Designations To SMUD’s
Designations Of Prior Deposition And Trial Testimony Previously Submitted In Plaintiff’s First
Spent Nuclear Fuel Case (“Gov’t First Case Counter-Designations”).

       On January 3, 2012, SMUD filed a Response to the Government’s December 16, 2011
Objections to SMUD’s Exhibit List.

      On January 9, 2012, the Government filed a Motion To Correct The Cumulative Index
For The Trial Transcript. On January 11, 2012, SMUD filed a Motion To Correct The
Cumulative Index and a Response to the Government’s Motion To Correct.

      On January 13, 2012, the Government filed a Reply to SMUD’s January 3, 2012
Response to the Government Objections To Plaintiff’s Trial Exhibits. That same day, the
Government filed a Response to the SMUD’s January 11, 2012 Motion To Correct.

       On January 18, 2012, SMUD filed a Motion For Leave To File Additional Designations.
And, on January 23, 2012, SMUD filed a Reply in support of its January 11, 2012 Motion To
Correct.

       On January 25, 2012, SMUD and the Government filed initial Post-Trial Briefs
(respectively, “Pl. Br.” and “Gov’t Br.”).

         On February 6, 2012, the Government filed a Reply to Plaintiff’s Objections To
Defendant’s Counter-Designations and a Response to SMUD’s January 18, 2012 Motion For
Leave To File Additional Designations. On February 16, 2012, SMUD filed a Reply in support
of its January 18, 2012 Motion For Leave To File Additional Designations.




rebuttal testimony of Mr. Michael W. Snyder of MHF Services, formerly the Superintendant of
Radioactive Waste Operations at Rancho Seco from 2001 to January 2009 (PX 6358). Each of
these individuals also testified at the October 24-27, 2011 trial on cross-examination and re-
direct.
        Testifying as a fact witness on behalf of the Government was Ms. Christine Gelles,
Director of the DOE’s Office of Disposal Operations. In addition, the court admitted the written
direct testimony of the following expert witnesses on behalf of the Government: Dr. Jonathan
Neuberger, Ph.D., an economic consultant with Economists Inc. (DX 6242); Mr. William Jones,
a nuclear industry consultant with ABZ, Inc., (DX 6243); Mr. Gregory Maret, a nuclear industry
consultant with Sequoia Consulting Group (DX 6244); and Mr. Robert Peterson, M.B.A., an
economic damages consultant with LitCon Group, LLC (DX 6245). Each of these individuals
also testified at the October 24-27, 2011 trial on cross-examination and re-direct.


                                              11
       On February 17, 2012, SMUD filed a list of the assumptions relied on by Mr. Kenneth
Metcalfe in his Written Direct Testimony. On February 24, 2012, the Government filed a list of
assumptions relied on by Mr. Robert Peterson in his Written Direct Testimony.

       On February 24, 2012, both SMUD and the Government filed Post-Trial Response Briefs
(respectively, “Pl. Resp.” and “Gov’t Resp.”).

       On April 2, 2012, the court issued an Order granting each party’s Motion To Correct The
Cumulative Index and allowing the Government to file counter-designations to the designated
deposition testimony filed by SMUD prior to the October 24-27, 2011 evidentiary hearing and
for SMUD to file counter-counter-designations. Neither the Government nor SMUD filed any
subsequent designations.

       On December 4, 2012, SMUD filed a Notice Of Supplemental Authority notifying the
court of the United States Court of Federal Claims’ opinion in Portland General Electric
Co. v. United States, No. 04-09C, 2012 WL 6013274 (Fed. Cl. Nov. 30, 2012).

II.    DISCUSSION.

       A.      Whether Plaintiff’s Spent Nuclear Fuel And High Level Waste Would Have
               Been Removed Prior To January 1, 2004, Utilizing The Standard Contract’s
               Exchange Provision.

               1.      The Plaintiff’s Argument.

        SMUD argues that, in light of economic incentives, the Standard Contract7 exchange
provision would have been utilized, so that all of SMUD’s SNF and HLW would have been
removed prior to January 1, 2004 in the non-breach world. Pl. Br. at 38-40. SMUD supports
this assertion with the testimony of DOE officials and Government experts that exchanges would
have occurred. PX 6355 at 173 (June 6, 2002 Mr. Zabransky (Contracting Officer for the
Standard Contract) Dep.), PX 6355 at 253 (July 14, 2004 Dr. Bartlett (former Director of DOE’s
Waste Program) Direct); PX 6351 ¶¶ 34-35 (Stuart Written Direct) (testifying that the “lengthy
schedule leading up to DOE performance . . . would have given utilities and DOE the time
necessary to coordinate and get approval for exchanges,” and therefore “there is no reason to
assume disapproval due to an ‘infeasible schedule’”); TR at 977 (Neuberger) (Government
expert economic witness).

       In addition, SMUD’s economic expert, Mr. Frank Graves, confirmed at the evidentiary
hearing that using the Oldest Fuel First (“OFF”) sequence would impose $1.6 billion of
       7
          The Standard Contract provided that utility-parties could exchange their place in line for
DOE disposal at a set time prior to performance. See 10 C.F.R. § 961.11, Art. V.B.1 (Standard
Contract) (setting process for approval of delivery commitment schedules 63 months prior to
delivery). The Standard Contract, however, also provided that DOE had the discretion to
prioritize the disposal of SNF and HLW from shut down nuclear reactors. See 10 C.F.R. §
961.11, Art. VI B., V D.



                                                12
additional spent nuclear fuel storage costs on the nuclear utility industry that could be avoided, if
the parties were able to utilize efficient exchanges. PX 6350 at 35. Since the utilities “are not
actual competitors . . . historically [they] engage in mutually beneficial exchanges . . . of
personnel, material, and even contract rights . . . not based on altruism, but collective self-
interest.” Pl. Br. at 42 (citing TR at 170 (Ronningen); TR at 609-10, 614-15, 628-29 (Field)).
Moreover, the nuclear industry had a history of cooperation, as evidenced by the uranium
exchange market and the nuclear plant spare parts market. TR at 619-20, 628 (Field); see also
PX 6352 ¶¶ 25-28 (Supko Written Direct); PX 6351 ¶¶ 25-26, 28 (Stuart Written Direct).

        Since DOE would have benefitted from these exchanges, it is reasonable to assume DOE
would be reasonable in approving them. See, e.g., PX 29 at ZAB-001-0899 (Apr. 8, 1983 DOE
Memorandum) (“[A]side from some complex record keeping, [an exchange provision] poses no
great problem to [DOE], and consequently, [DOE] ha[s] accepted this suggestion.”); PX 6356 at
106 (Robert L. Morgan, the first Director of the SNF Program) (observing that DOE would
approve exchanges, because it “intend[s] to be reasonable” and “if at all possible [DOE] would
approve it”); see also PX 6356 at 145 (Nancy Slater-Thompson, Team Leader of the Regulatory
Coordination Division of the DOE’s Office of Civilian Radioactive Waste Management) (“[I]t
was [DOE’s] intention to accommodate, to the extent practicable, all reasonable requests to
exchange”); PX 6355 at 254 (Dr. Bartlett) (testifying that he “anticipated that [DOE] would
readily approve any proposed swaps”).

        The record establishes that it was unlikely that the removal of SNF would have operated
under an OFF schedule. PX 6355 at 252-53 (Dr. Bartlett) (“The system would, in my opinion,
never have operated under an OFF concept. It would be extremely inefficient and inappropriate.
Because many of the discharges had been small quantities of fuel over large intervals of time.
And you could not operate your transport facilities and equipment efficiently if you followed the
OFF principle.”); PX 6356 at 69 (Mr. Keith Klein, Manager of DOE’s Richland Operations
Office) (stating that “a strict taking of the oldest fuel first from reactors would be very difficult to
implement” and therefore DOE “needed to have some flexibility in the system to allow common
sense to be used”); PX 6351 ¶¶ 8, 23, 32, 36-37 (Stuart Written Direct) (testifying that OFF
acceptance is “inconsistent with the view of DOE officials who were in charge of running and
developing the program in the real world and inconsistent with the historical practices of
shipping and managing spent fuel” and explaining how using OFF acceptance would be less
efficient and more burdensome both for the utilities and DOE); PX 6350 at 77 (Graves Written
Direct) (“The [G]overnment’s suggestion that Rancho Seco . . . would have had its SNF removed
according to its OFF allocation implies that the DOE would have developed a program that was
entirely capable of addressing all the industry’s SNF removal needs after 2004 and most of them
before, but that the program would have been implemented so poorly that it would not actually
solve those storage problems.”); TR at 977-78 (Neuberger) (“[T]here were clear incentives for
some utilities to accelerate their spent fuel acceptance relative to OFF.”); see also TR at 982-83
(Neuberger) (clarifying that he was not offering an opinion that it was more likely than not that
SMUD would have held fuel until 2008).

       In addition, as SMUD’s expert testified, “Rancho Seco’s fuel would have been removed
by 2003, and in fact likely well before then, even under unduly pessimistic assumptions about
the non-breach world.” PX 6350 at 5 (Graves Written Direct); see also id. (under Mr. Graves’s



                                                  13
“base case,” Rancho Seco’s SNF would have been removed in 1999). In addition, Mr. Graves
testified that there were dozens of utilities with OFF allocation rights in excess of their needs in
the early years of the SNF removal with the ability to exchange allocation rights without
disrupting their fuel storage needs. PX 6350 at 33-36, 38-39. To verify this assumption, Mr.
Graves conducted multiple sensitivity analyses to address: the updated discharge and capacity
data; extreme variations in spent fuel storage costs; the exercise of market power by utilities with
early acceptance allocations; transaction costs; barriers to trades; and the effect of greater-than-
Class-C (“GTCC”) waste. PX 6350 at 44-77. Even a simple comparison of acceptance under
the 1987 ACR would establish that within a few years after DOE’s removal of SNF commenced
in 1998, DOE’s total acceptance capacity would have exceeded the total amount of “must move”
fuel held by other utilities. PX 6350 at 18 (Graves Written Direct).8

        Even if the court rejected the assertion that DOE would have removed Rancho Seco’s
SNF prior to 2004, SMUD would have utilized the exchange provision to remove its SNF prior
to 2008. Pl. Br. at 63-66. To obtain a fuel-out date in 2004, SMUD had to initiate and schedule
two exchanges to remove 112.3 metric tons of uranium (“MTU”) of SNF when DOE would have
accepted 3,000 MTU of SNF total for the year. Pl. Br. at 63-64; PX 6350 at 18-19 (Graves
Written Direct); see also PX 119 (1987 ACR); PX 554 (1996 Annual Priority Ranking).9
Similarly in 2005, 2006, or 2007, SMUD only would need to arrange for one exchange to
remove 82.1 MTU of SNF. Pl. Br. at 64-65. Moreover, during this time Plaintiff contends that
there would have been more OFF allocation rights available than “must move” fuel needs. Pl.
Br. at 63-65.
       8
         SMUD emphasized that Mr. Graves’s exchanges model was accepted by the United
States Court of Federal Claims in every case involving a shutdown utility and that each of these
decisions subsequently was affirmed by the United States Court of Appeals for the Federal
Circuit. Pl. Br. at 36 (citing Yankee Atomic Power Co. v. United States, 94 Fed. Cl. 678, 701
(2010), aff’d, 679 F.3d 1354 (Fed. Cir. May 18, 2012); Pac. Gas & Elec. Co. v. United States, 92
Fed. Cl. 175, 184-85 (2010), aff’d, 668 F.3d 1346 (Fed. Cir. 2012); Dairyland Power
Coop. v. United States, 90 Fed. Cl. 615, 627-36 (2009), aff’d in part, vacated in part on other
grounds, 645 F.3d 1363 (Fed. Cir. 2011)).
        The only decision in which the United States Court of Federal Claims rejected Mr.
Graves’s exchange model did not involve a shutdown utility. See Kan. Gas & Elec.
Co. v. United States, 95 Fed. Cl. 257 (2010), aff’d in part, rev’d in part on other grounds, 658
F.3d 1361 (Fed. Cir. 2012). Nevertheless, the Kansas Gas & Electric Co. court effectively
reached the same result, determining that the utility would have managed its SNF in different
ways to avoid additional storage charges. Id. at 294-95.
       9
          Under a 2005, 2006, or 2007 “fuel out date,” SMUD would need to make only one
exchange, so it would want to facilitate an earlier acceptance. PX 6350 at 18-19 (Graves Written
Direct). Moreover, even if SMUD’s fuel out date were 2008, SMUD’s SNF would have been
removed at the beginning of the year, because “SMUD would have been at the front of the line
for acceptance in 2008 based on [OFF], and both DOE and SMUD would have had every
incentive to achieve final acceptance early in the year.” Pl. Br. at 65. In addition, if SMUD’s
fuel out date were 2008, “SMUD would have had an opportunity and incentive to sell their
allocations from 2000 to 2005 for significant value.” Pl. Resp. at 9 n.2 (citing TR 998-99
(Neuberger)).


                                                14
        Although the Government criticized Mr. Graves’s assumptions, it “offers not a shred of
evidence that SMUD would have been prevented from exchanging its single 2008 allocation for
an earlier one.” Pl. Resp. at 5. The Government also did not present an alternative scenario, take
a position on what the proper inputs should be, or develop its own model of the non-breach
world. Pl. Resp. at 29-31 (citing TR at 978-83, 992-93, 1008, 1017, 1029, 1040-44, 1048 (Dr.
Neuberger)). Therefore, SMUD concludes that the Government’s proposed OFF schedule and a
2008 fuel out date were not “a plausible view of the non-breach world for SMUD[.]” Pl. Br. at
49-50; see also Pl. Resp. at 4.

        SMUD contends that, even if the court accepts SMUD’s exchange model, it should not
offset any related costs, since those costs would be less than SMUD’s wet pool operating costs
from 1999-2004. Pl. Br. at 50; Pl. Resp. at 28-32. In other words, offsetting SMUD’s mitigation
costs by SMUD’s expedited exchange costs would place SMUD in a worse economic position
than if the Government had performed, contrary to the law of expectation damages. Pl. Resp. at
28 (citing RESTATEMENT (SECOND) OF CONTRACTS § 347 cmt. a (1979)). Applying standard
economic principles, Mr. Graves estimated that the exchange costs would be $8.4 million in his
base case. PX 6350 at 5-6 (Graves Written Direct). This is less than the approximately $20
million in wet pool operating costs incurred in the breach world that SMUD would not have
incurred in the non-breach world. Pl. Br. at 50. Even if the court adopts the Dairyland Power
approach and finds that SMUD’s exchange costs would be half of the avoided wet pool costs,
SMUD’s mitigation costs should not be reduced, “because SMUD has already ‘paid’ for half the
avoided costs.” Pl. Resp. at 34.

               2.     The Government’s Response.

         The Government responds that the law of the case doctrine precludes SMUD from
claiming that its SNF would have been removed earlier than under the OFF schedule. Gov’t Br.
at 13-16. In Civil Action Docket No. 98-488C, SMUD contended that it would have removed its
SNF earlier than the OFF schedule by utilizing the exchange or priority for shutdown reactors
provisions of the Standard Contract, but the court rejected this argument. See SMUD III, 70 Fed.
Cl. at 375 (reasoning that accepting this argument would require the court to “speculate about
whether SMUD would have been successful in trading SMUD’s acceptance priority with another
utility or convincing DOE to accept SMUD’s SNF early.”). SMUD did not appeal that ruling.
Nevertheless, in this case, Civil Action Docket No. 09-587C, SMUD reintroduced the evidence
rejected in Civil Action Docket No. 98-488C, and added Mr. Graves’s opinions. Gov’t Br. at 15-
16. The Government insists that SMUD made a litigation decision not to proffer Mr. Graves’s
opinion in the first case, and should not be allowed to do so here, as it “violates the law of the
case doctrine . . . and would prejudice the Government.” Gov’t Br. at 16.

        In addition, SMUD’s re-introduction of its exchange argument is barred by collateral
estoppel. Gov’t Br. at 16. Although the court has not entered final judgment in Docket No. 98-
488, “the mandate rule bars re-litigation of these accelerated acceptance theories on remand in
SMUD’s first case, [and therefore] the Court should find that issue sufficiently ‘final’ for the
collateral estoppel doctrine to apply.” Gov’t Br. at 16. Therefore, SMUD also is barred from
introducing a new theory to support SMUD’s assumption that DOE would accelerate removal of



                                               15
SMUD’s SNF, including: the priority for shutdown reactors; emergency deliveries; the “plus or
minus 20 percent” provisions in the Standard Contract; and the transportation campaigns opinion
proffered by SMUD’s nuclear industry consultant. Gov’t Br. at 15-17. Each of these arguments
previously was raised by SMUD and rejected by the court. Therefore, they are barred either by
the mandate rule; the law of the case; or collateral estoppel; or they are waived for failure to raise
them in the first case. Gov’t Br. at 17 (citing SMUD III, 70 Fed. Cl. at 336 n.1, 339). In fact,
“other than generalized references . . . , SMUD failed to present any evidence or analysis as to
how these provisions would effect, if at all, DOE’s acceptance of SNF and HLW from SMUD in
the [non-breach] world.” Gov’t Br. at 17.

        The Government then turns to its assertion that SMUD failed to establish that its SNF
would have been removed prior to 2008. Gov’t Resp. at 41-50. The Standard Contract granted
DOE “virtually unreviewable discretion” to approve any exchanges, and that discretion should
“weigh heavily against any damages award based upon this provision of the Standard Contract.”
Gov’t Resp. at 42 (citing Hi-Shear Tech. Corp. v. United States, 356 F.3d 1372, 1380 (Fed. Cir.
2004) (holding that a contractor cannot increase a damage award by claiming that the
Government would have exercised an option to extend the contract)). In response, SMUD cites
the potential efficiencies to be gained by utilizing exchanges, but these efficiencies have not been
ascertained nor quantified by DOE. Gov’t Resp. at 42-43; see also Gov’t DOE Counter-
Designations Att. A (Zabransky 10/19/09 TR at 711-12 (Pac. Gas & Elec., Co. v. United States,
Dkt. No. 04-0074C) (“What is efficient for one party maybe [sic] inefficient for another. So it
really determines – it depends upon the specifics of who is making the judgment as to whether
something is efficient or not.”)). Moreover, other nuclear utilities have testified that exchanges
were not a viable option and would not have participated in an exchange market. Gov’t DOE
Counter-Designations, Att. A (Zabransky 8/12/09 TR at 592-99, 301-02) (Yankee Atomic Elec.
Co. v. United States, Dkt. Nos. 98-126C, 98-154C, 98-474C) (asserting that Wisconsin Electric
Power Co., one of sixteen named plaintiffs in that case, would not have utilized exchanges, until
the DOE acceptance program established a five-to-ten-year track record).

        In addition, the United States Court of Federal Claims’ decision in Dairyland Power
highlighted the significant deficiencies in utilizing exchanges. Gov’t Resp. at 43-47. Dairyland
Power concerned a shutdown reactor with only 38 MTU of SNF, where there was a strong
incentive to engage in an exchange. See Dairyland Power Coop., 90 Fed. Cl. at 622, 634. In
contrast, Rancho Seco had 228.8 MTU of SNF. Gov’t Resp. at 44. Moreover, the Dairyland
Power court found that plaintiff’s expert’s model underestimated the costs of exchanges and
determined that plaintiff’s exchange costs in that case would consume half of its expected
exchange savings. Gov’t Resp. at 45-46 (citing Dairyland Power Coop., 90 Fed. Cl. at 635-36).
The trial court’s award of half of costs was affirmed on appeal. Dairyland Power Coop., 645
F.3d at 1371-73.

       In this case, SMUD’s hypothetical exchange scenario is also premised on unreliable
expert testimony. Gov’t Resp. at 47-50. First, Mr. Graves’s spent nuclear fuel storage cost
estimate was based on an insufficient and unreliable data sample. Gov’t Resp. at 47 (citing DX
6242 ¶¶ 124-70 (Neuberger Written Direct) (highlighting Mr. Graves’s use of generic costs, as
opposed to actual costs; a limited data sample; and miscalculation of three amounts used as a
proxy for wet pool cost estimates)). Second, the maximum pool capacity data relied on by Mr.



                                                 16
Graves were found to be unreliable in other SNF cases. See Kan. Gas, 95 Fed. Cl. at 290-91; see
also DX 6242 ¶¶ 108-118 (Neuberger Written Direct) (stating that Mr. Graves’s justifications of
his pool storage capacity data were incomplete and did not fully measure the impact of his
errors). Third, Mr. Graves’s model did not account for the fact that a potential seller of
acceptance allocations would attempt to extract a high premium from SMUD for an exchange, in
light of SMUD’s willingness to pay. Gov’t Resp. at 48-49. As such, Mr. Graves’s model
significantly underestimated exchange costs. DX 6242 ¶¶ 171-74 (Neuberger Written Direct).
Finally, Mr. Graves’s model relied on other speculative assumptions, e.g., there is no evidence
that: any nuclear utility contemplated moving back in the acceptance queue; there would have
been 100% participation in an exchange market; uncertainty and risk aversion was considered;
DOE would have approved all of the hypothetical exchanges; nor that perfect competition and
trading conditions would be present. Gov’t Resp. at 49-40 (citing DX 6242 ¶¶ 44, 57-79, 80-87);
see also Kan. Gas, 95 Fed. Cl. at 289-94 (determining that Mr. Graves’s exchange model was
unreliable for similar reasons). In addition, Mr. Graves’s sensitivity analyses examined only the
effect of individual changes, not cumulative effects. Gov’t Resp. at 50 n.17 (citing DX 6242 ¶¶
31, 195-96).

               3.     The Plaintiff’s Reply.

        SMUD replies that, as a matter of law, the court is not barred from determining what
would have happened in the non-breach world during 2004 to 2009, as to a “fuel out” date. Pl.
Br. at 30 (citing SMUD VI, 91 Fed. Cl. at 18-19 (holding that the court was not required to
address the savings that SMUD realized from 2004 to 2008, but would do so in this case)). For
this reason, the court preserved all issues regarding the period 2004 to 2009 for subsequent
adjudication. See SMUD VI, 91 Fed. Cl. at 19 (“SMUD has requested an unspecified amount of
damages ‘from January 1, 2004 forward’ in a separate proceeding. Accordingly the court has
decided it is proper to account for any 2004-2008 SNF wet pool savings offset in that
proceeding.” (citation omitted)). Although the court awarded the Government an offset for
avoided wet pool savings, that ruling applied only to the period through December 31, 2003. Pl.
Br. at 31. Since SMUD “chose to live with this 2003 wet pool deduction, [it] cannot be
collaterally estopped from challenging the [G]overnment’s claim to an offset for damage periods
that were not at issue.” Pl. Br. at 32; see also Pl. Resp. at 13 (citing Charter Fed. Sav.
Bank v. United States, 87 Fed. App’x 175, 178 (Fed. Cir. 2004) (reversing the trial court’s
determination that collateral estoppel applied, because any ambiguity should be resolved in favor
of the party against whom preclusion is asserted)).

        In SMUD III and SMUD VI, the court “did not determine SMUD’s fuel out date . . . , did
not determine whether SMUD could have exchanged or advanced its 2004, 2005, or 2008
allocations, and did not determine whether the [G]overnment was entitled to any offset for 2004
forward,” because SMUD filed this case for mitigation costs from 2004 forward. Pl. Br. at 33-
34. Therefore, no final judgment was entered in Civil Action Docket No. 98-488C, after the
court decided to ascertain the fuel out date and any wet pool savings offsets in this case. Pl. Br.
at 34. Moreover, applying collateral estoppel to this case would be improper, where there has
been a subsequent change in applicable law altering the framework for evaluating Mr. Graves’s
exchanges model. See Pac. Gas & Elec. Co. v. United States, 536 F.3d 1282, 1292 (Fed. Cir.
2008) (holding that the 1987 ACR established the proper acceptance rate); see also Dairyland



                                                17
Power Coop., 645 F.3d at 1369-71 (affirming the trial court’s award of damages based on Mr.
Graves’s exchanges model); Bingaman v. Dep’t of Treasury, 127 F.3d 1431, 1437 (Fed. Cir.
1997) (holding that “a significant change in the ‘legal atmosphere’ . . . can justify a later court’s
refusal to give collateral estoppel effect to an earlier decision”). Therefore, “[t]o the extent this
[c]ourt did not feel the law permitted such a finding in 2005, particularly because of the absence
of an acceptance rate, there have been multiple decisions since this [c]ourt’s 2006 decision
making clear that the law supports such a finding today.” Pl. Resp. at 11.

       Moreover, neither the law of the case nor the mandate rule is applicable in this case,
“because these doctrines serve to limit a party from relitigating issues within the same case.” Pl.
Resp. at 12 (citing Jamesbury Corp. v. Litton Indus. Prods., Inc., 839 F.2d 1544, 1550 (Fed. Cir.
1988) (stating that the law of the case doctrine “prevent[s] the relitigation of issues that have
been decided and . . . ensure[s] that trial courts follow the decisions of appellate courts . . . on a
question made previously during the case”), overruled on other grounds by A.C. Aukerman
Co. v. R.L. Chaides Const. Co., 960 F.2d 1020 (Fed. Cir. 1992). Likewise, the mandate rule
governs only the issues that a trial court considers on remand. Pl. Resp. at 12. Docket No. 09-
587C, however, is a new case, not a remand proceeding, and the appellate court has not directed
the court to establish a “fuel out” date. Pl. Resp. at 12.10

               4.      The Court’s Resolution.

        In adjudicating the claims alleged in Civil Action Docket No. 98-488C, the court
previously rejected SMUD’s argument that “it might have been able to convince another utility
in the queue to switch places to enable SMUD’s SNF to be removed in 2003.” SMUD III, 70
Fed. Cl. at 375. The court reasoned: “To accept SMUD’s position, the court would need to
speculate about whether SMUD would have been successful in trading SMUD’s acceptance
priority with another utility or convincing DOE to accept SMUD’s SNF early.” Id. SMUD did
not appeal this ruling. In addition, the court “determined that the $4,196,360.00 SMUD saved by
placing SNF into dry storage and decommissioning the wet pool should be offset.” Id. (citing
Bluebonnet Sav. Bank, F.S.B. v. United States, 339 F.3d 1341, 1345 (Fed. Cir. 2003) (“To derive
the proper amount for the damages award, the costs resulting from the breach must be reduced
by the costs, if any, that the plaintiffs would have experienced absent a breach.”)).

        On August 7, 2008, the United States Court of Appeals for the Federal Circuit affirmed
SMUD III in-part, reversed-in-part, and remanded the case with instructions to apply the 1987
ACR and reevaluate certain of the mitigation costs that SMUD claimed. See SMUD V, 293 F.
App’x at 771. On remand, the Government argued that the court should apply the $4,196,360
offset identified in SMUD III for the wet pool savings realized from 2004 to 2008. See SMUD
VI, 91 Fed. Cl. at 18. The court denied this request, in part because the scope of the mandate was

       10
          In a December 4, 2012 Notice of Supplemental Authority, SMUD argued that a recent
decision of the United States Court of Federal Claims, Portland General Electric Co v. United
States, 2002 WL 6013274, at *16-17, *23, supports SMUD’s position that an exchange-market
would have developed in the “but for” world, allowing for an early “fuel-out” date. That case,
however, is neither binding precedent nor relevant to the court’s evaluation of legal issues of
preclusion relevant to this case.


                                                 18
limited to SMUD’s mitigation costs through December 31, 2003 and no evidence was proffered
in the trial of Docket No. 98-488C as to any additional wet pool savings realized during 2004 to
2008. Id. at 18-19. Instead, the court decided that it would account for any wet pool savings
offset due the Government in this case, Docket No. 09-587C. Id. at 19.

        A threshold issue presented in this case is the effect of the law of the case and the
collateral estoppel doctrines on the issues adjudicated in Civil Action No. 98-488C. As to the
law of the case doctrine, the United States Court of Appeals for the Federal Circuit has held that
this doctrine “requires a court to follow the decision on a question made previously during the
case.” See Jamesbury Corp., 839 F.2d at 1550 (emphasis added); see also id. (“The law of the
case is a judicially created doctrine, the purposes of which are to prevent the relitigation of issues
that have been decided and to ensure that trial courts follow the decisions of appellate courts.”);
Suel v. Sec’y of Health and Human Servs., 192 F.3d 981, 985 (Fed. Cir. 1999) (“Under law of
the case . . . a court will generally refuse to reopen or reconsider what has already been decided
at an earlier stage of the litigation.”) (emphasis added). Because the law of the case doctrine
applies only to issues decided in a case, it does not necessarily apply in the trial court’s
consideration of the preclusive effect of the prior court’s findings in a separate, although related,
case.

       In contrast, issue preclusion applies if the following conditions are established:

       (1) the issue is identical to one decided in the first action; (2) the issue was
       actually litigated in the first action; (3) resolution of the issue was essential to a
       final judgment in the first action; and (4) the plaintiff had a full and fair
       opportunity to litigate the issue in the first action.

Laguna Hermosa Corp. v. United States, 671 F.3d 1284, 1288 (Fed. Cir. 2012) (quoting In re
Freeman, 30 F.3d 1459, 1465 (Fed. Cir. 1994)); see also Bingaman, 127 F.3d at 1436-37 (“The
principle of collateral estoppel dictates that an issue that is fully and fairly litigated, is
determined by a final judgment, and is essential to that judgment, is conclusive in a subsequent
action between the same parties.”).

       In this case, a final judgment did not issue in Docket No. 98-488C. For purposes of issue
preclusion, however, the United States Court of Appeals for the Federal Circuit has held that “it
is not necessary for [prior rulings] to be final orders for purposes of appeal.” Dana v. E.S.
Originals, Inc., 342 F.3d 1320, 1323 (Fed. Cir. 2003); see also Interconnect Planning
Corp. v. Feil, 774 F.2d 1132, 1135 (Fed. Cir. 1985) (same). Instead, a “‘final judgment includes
any prior adjudication of an issue in another action that is determined to be sufficiently firm to be
accorded preclusive effect.’” Dana, 342 F.3d at 1323 (quoting RESTATEMENT (SECOND) OF
JUDGMENTS § 13 (1982)). Therefore, finality is to be determined, based on “whether the prior
decision was ‘adequately deliberated and firm’ or ‘avowedly tentative,’ and whether the parties
were fully heard in the prior proceeding.” Dana, 342 F.3d at 1323 (quoting RESTATEMENT
(SECOND) OF JUDGMENTS § 13, cmt. g (1982)).

    Applying this precedent, the court has determined in this case that the issue of whether
SMUD would have been able to utilize the exchange provision has been adjudicated following a



                                                 19
trial on the merits. See SMUD III, 70 Fed. Cl. at 374-75. The court’s ruling therein, rejecting
SMUD’s exchanges argument on the grounds that it was speculative, was not appealed.
Although the case was remanded for the court to apply the 1987 ACR acceptance rate, the
exchange provision ruling was not subject to the remand. See SMUD V, 293 F. App’x at 771.
Moreover, on remand, the court held an evidentiary hearing, during which SMUD did not seek
reconsideration of the court’s prior ruling on exchanges. In SMUD’s words, it “chose to live
with this 2003 wet pool deduction.” Pl. Br. at 32. In SMUD VI, the court issued a final order on
remand, but “stay[ed] . . . execution of this judgment” for the purpose of allowing for a possible
additional offset against SMUD’s recovery, based on the damages determination in the present
case. See SMUD VI, 91 Fed. Cl. at 18-19. The fact that SMUD has not been afforded an
opportunity to appeal SMUD VI, however, does not bar issue preclusion. See RESTATEMENT
(SECOND) OF JUDGMENTS § 13, cmt. f (1982) (stating that “[t]he better view is that a judgment
otherwise final remains so despite the taking of an appeal[,] unless what is called an appeal
actually consists of a trial de novo,” i.e., that simply because there has not been a final
determination on appeal does not mean that a judgment should not be considered final for
preclusive purposes). Of course, SMUD could have appealed the court’s exchange ruling in
SMUD III. SMUD did not do so, nor did it challenge that ruling during the remand proceedings.
As such, the court’s determination as to finality in this case does not contradict the
“require[ment] that the party against whom the estoppel is asserted have had the right, even if not
exercised, to challenge on appeal the correctness of the earlier decision.” Interconnect Planning,
774 F.2d at 1135. In Interconnect Planning, an initial decision on a motion for partial summary
judgment was entered, although the non-prevailing party’s ability to appeal was uncertain. Id.
In such circumstances, the United States Court of Appeals for the Federal Circuit has stated that
it did not intend “to penalize a party for declining to try to take a piecemeal appeal,” particularly
where the appeal “would have been a meaningless exercise,” in light of a then pending
application for a patent reissuance. Id. at 1136; see also Vardon Golf Co., Inc. v. Karsten Mfg.
Corp., 294 F.3d 1330, 1333-35 (Fed. Cir. 2002) (same).

        Therefore, the fact that SMUD did not appeal the court’s remand decision in SMUD VI
does not bar application of the doctrine of issue preclusion to an issue not subject to nor
considered on remand, particularly if other elements of the issue preclusion test have been met.
SMUD’s resurrected exchange argument is identical to that decided in SMUD III, i.e., whether
SMUD could have used exchanges to have its SNF removed earlier than OFF allocation. See
SMUD III, 70 Fed. Cl. at 375. Although SMUD argues that the issues in the two cases are not
identical, because Civil Action Docket No. 98-488C dealt with the Government’s failure to
remove SNF prior to 2003, both Civil Action Docket No. 98-488C and this case, Civil Action
Docket No. 09-587C, concern SMUD’s assertion that it would have used exchanges to
accomplish an earlier fuel out date, albeit for different years in each of the two cases. In other
words, SMUD shifts its claimed fuel out date, but does not change its argument as to whether
SMUD could or would have used these exchanges. As such, there are no significant changed
circumstances that would affect SMUD’s use of exchanges from 1998 to 2003 during the period
from 2004 to 2009. See Arkla, Inc. v. United States, 37 F.3d 621, 625 (Fed. Cir. 1994) (“Absent
significant changes in controlling facts or legal principles since [the initial case], or other special
circumstances, the [prior court’s] resolution of the[] issue[] is conclusive here.”); see also
RESTATEMENT (SECOND) JUDGMENTS § 27 cmt. c (“[I]n the absence of a showing of changed




                                                  20
circumstances, a determination that, for example, a person was disabled . . . in one year will be
conclusive with respect to the next as well.”).

        In this case, SMUD’s argument emphasizes that there is “a substantial overlap between
the evidence or argument to be advanced.” See RESTATEMENT (SECOND) JUDGMENTS § 27 cmt.
c. Compare Pl. Br. at 38-49, Sacramento Mun. Util. Dist. v. United States, No. 09-587 (Fed. Cl.)
(discussing why the exchange provision was added to the Standard Contract, citing the testimony
of DOE officials that exchanges would have occurred because of efficiency gains, historical
evidence on nuclear utilities’ cooperative customs and practices, and that DOE would have been
reasonable in approving exchanges), with Pl. Resp. at 58-61, Sacramento Mun. Util.
Dist. v. United States, No. 98-488C (Fed. Cl.) (same). The additional proffer of Mr. Graves’s
exchanges model also highlighted the identity of these issues. Under Mr. Graves’s “base case”
model, SMUD’s SNF would be removed from Rancho Seco by 1999 and, under any of his
“sensitivity analyses,” SMUD’s SNF would be removed prior to 2003. PX 6350 at 5 (Graves
Written Direct). Therefore, the evidence proffered in this case was available to SMUD in its
round one case, as well.

        In addition, the “essential to final judgment” requirement is met where a finding is
“necessary to the judgment rendered in the previous action.” In re Freeman, 30 F.3d at 1466.
The court’s prior ruling that SMUD failed to establish that it would be able to utilize exchanges
to remove SNF prior to 2003 was a necessary predicate to the court’s determination in Docket
No. 98-488C that the Government was entitled to offset SMUD’s mitigation costs by $4.2
million for the wet pool savings costs that SMUD achieved. See SMUD III, 70 Fed. Cl. at 375.
The “actually litigated” requirement also is met, because “the parties to the original action [Civil
Case Docket No. 98-488C] disputed the issue [of exchanges] and the trier of fact decided it.” In
re Freeman, 30 F.3d at 1466. SMUD was afforded a full and fair opportunity to litigate the
exchange issue in Docket No. 98-488C. In this case, SMUD presented evidence at trial and
argued in post-trial briefing that it would have used the exchange provision prior to the court’s
decision in SMUD III. SMUD, however, failed to appeal the court’s ruling in SMUD III or seek
reconsideration on remand. See Pac. Gas & Elec. Co., 668 F.3d at 1354 (“Absent contrary
instructions, a remand for reconsideration leaves the precise manner of reconsideration—whether
on the existing record or with additional testimony or other evidence—to the sound discretion of
the trial court. Because this court instructed the trial court to undertake a recalculation of
damages consistent with the 1987 ACR, the trial court enjoyed broad discretion to allow the
testimony of [plaintiff’s] expert on the exchanges provision of the Standard Contract.” (internal
quotation marks and citations omitted)). Counsel for other utilities did not make this mistake.11



       11
            For example, in Pacific Gas & Electric, the United States Court of Federal Claims
initially found that the evidence did not support plaintiff’s exchange theory, and excluded Mr.
Graves’s testimony as “too speculative to be helpful to the court[.]” Pac. Gas & Elec.
Co. v. United States, 73 Fed. Cl. 333, 413, 436 (2006); see also Pac. Gas & Elec., 536 F.3d at
1292 (affirming the exclusion of Mr. Graves’s testimony). On remand, however, the court was
instructed to reconsider Mr. Graves’s testimony in light of the 1987 ACR acceptance rate and
determine whether it “provide[d] a reasonable description” of the non-breach world. See Pac.
Gas & Elec. Co., 92 Fed. Cl. at 184. Subsequently, that court found that the evidence adduced


                                                21
       In another case, the United States Court of Federal Claims discounted Mr. Graves’s
testimony regarding “the impact of the factors shown by [the Government] to retard market
development.” Yankee Atomic Elec. Co. v. United States, 73 Fed. Cl. 249, 306 (2006). But,
after Mr. Graves testified at the remand trial, the court determined that the use of the 1987 ACR
acceptance rate “minimize[d] the court’s previous concerns related to market uncertainty that
prevented the full acceptance of Mr. Graves’s initial opinion.” Yankee Atomic Power Co., 94
Fed. Cl. at 691. Again, in that case, the trial court determined that the plaintiff would have been
able to remove its SNF earlier than under the OFF allocations by utilizing the exchange
provision. Id. at 693.

        In this case, however, SMUD did not seek reconsideration nor move for leave to
introduce additional evidence of exchanges on remand, despite the fact that the court’s finding
that the exchange argument was speculative rested in part on the court’s observation that “the
evidence presented on the acceptance rate under the terms of the Standard Contract [was] highly
speculative,” SMUD III, 70 Fed. Cl. at 375 n.40, an observation that would have brought
SMUD’s exchanges argument squarely within the scope of matters open for reconsideration on
remand.12 As SMUD admitted, however, it made a decision to “live with” the court’s prior
ruling on exchanges. Pl. Br. at 32.

         Nevertheless, SMUD argues that the principles of issue preclusion should not apply,
because there has been a “change in the legal atmosphere,” as a result of the United States Court
of Appeals for the Federal Circuit’s decisions approving the use of an exchanges model in
Yankee Atomic, Dairyland Power, and Pacific Gas & Electric. The court is mindful that our
appellate court has indicated that “a significant change in the ‘legal atmosphere’ – whether in the
form of new legislation, a new court decision, or even a new administrative ruling – can justify a
later court’s refusal to give collateral estoppel effect to an earlier decision.” Bingaman, 127 F.3d
at 1438; see also Morgan v. Dep’t. of Energy, 424 F.3d 1271, 1276 (Fed. Cir. 2005) (“Bingaman
establishes that where a party seeks to establish the legal consequences of new facts that are
identical to facts previously adjudicated, collateral estoppel will not bar relitigation of the legal
consequences of those facts if an intervening change in law has altered the applicable legal
test.”).


on remand supported plaintiff’s position that it would have used the exchange provision in the
Standard Contract to advance one year in the acceptance queue. Id.
       12
          Moreover, at the remand evidentiary hearing, the court made it clear that the Federal
Circuit’s mandate reopened the issue of causation. 7/27/09 Post-Remand Hearing TR at 72,
Sacramento Mun. Util. Dist. v. United States, No. 98-488 (the court agreeing that the
Government’s argument that it was entitled to seek an offset for 2004-2008 wet pool cost savings
was not an argument that exceeded the appellate court’s mandate). In addition, SMUD has
acknowledged the court’s determination regarding exchanges was based in part on the absence of
an acceptance rate. Pl. Br. at 34 (“Since this [c]ourt imposed a wet pool offset for 2003, in large
part because of the absence of an acceptance rate, the Federal Circuit has established the
acceptance rate[.]”).



                                                 22
        The SNF cases cited, however, affirmed the trial court’s factual findings. See Dairyland
Power Coop., 645 F.3d at 1370 (“This court reviews the factual findings of the Court of Federal
Claims only for clear error. . . . We find no error in [the trial court’s conclusion regarding
exchanges], as it appears to have been grounded in proper weighing of the evidence.”); see also
Yankee Atomic Elec. Co., 679 F.3d at 1359 (“Just as this court found in Dairyland, the
Government did not identify any record evidence to support a finding that the trial court
committed clear error in adopting an exchanges model.”); Pac. Gas & Elec., 668 F.3d at 1355
(“The record supports the trial court’s award of damages [based on application of the exchanges
model] and this court discerns no error in the trial court’s determination concerning the
entitlement and offset applied.”). None of these cases concerned a change in the legal standard
applicable to the exchanges model, but they evaluated evidence of exchanges submitted on
remand according to existing evidentiary and legal standards. See Kan. Gas & Elec.
Co. v. United States, 685 F.3d 1361 (Fed. Cir. 2012) (the trial court’s rejection of Mr. Graves’s
exchange model was not challenged on appeal).

       To be sure, the appellate court’s directive to use the 1987 ACR acceptance rate to
determine causation represented a “change in the legal atmosphere,” but the court does not
consider that directive to afford a litigant the authority to relitigate settled issues. See SMUD V,
293 Fed. App’x at 771 (vacating and remanding with instructions that the court apply the 1987
ACR acceptance rate).

         SMUD is also correct that it is not estopped from challenging any wet pool offset sought
by DOE from 2004 through 2008, but that does not afford SMUD an opportunity to also
relitigate arguments previously raised and adjudicated in Docket No. 98-488C in SMUD II. Of
course, in that first case no fuel out date for SMUD was established. In the absence of SMUD’s
prevailing on its exchanges argument, however, the parties agree that SMUD’s final fuel out date
is 2008 under the 1987 ACR-based OFF allocations. Pl. Br. at 53 tbl. 4 (SMUD Allocations
Based On OFF Priority); Gov’t Br. at 12; see also PX 119 (1987 ACR); PX 554 (1996 Annual
Priority Ranking).

        Finally, the application of the collateral estoppel doctrine is particularly important given
the ongoing nature of the damage claims in the SNF cases. To date, the Government has been in
breach of the Standard Contract for fourteen years. Barring some other resolution, the United
States Court of Federal Claims faces decades of determining ongoing damages in six-year
intervals. See Ind. Mich. Power Co., 422 F.3d at 1377 (“A plaintiff can recover only such
damages as he or she has sustained, leaving prospective damages to a later suit in the event of
further breaches.”). Therefore, these cases must be managed and adjudicated with finality.
Otherwise, both trial and appellate courts will waste both time and resources – an outcome that is
not efficient for the courts nor the parties. As such, the interests of justice require that the parties
adhere to the time-tested rules of judicial repose.

       For these reasons, the court has determined that SMUD is precluded from relitigating
whether SNF would have been removed from Rancho Seco earlier than under the OFF schedule,
by exchanges or otherwise.




                                                  23
       B.      Whether Plaintiff Would Have Stored Class B And C Waste Onsite In The
               Non-Breach World.

               1.      The Plaintiff’s Argument.

        SMUD also argues that it would not have stored Class B and C waste onsite after
decommissioning was completed in 2008, because it decided to exit the nuclear industry. Pl. Br.
at 51 (citing TR at 249 (Ronningen); TR at 751 (Redeker)). “DOE’s failure to perform and the
fact that SMUD would be storing SNF onsite indefinitely was the dispositive factor in SMUD’s
decision to keep the B and C waste onsite.” Pl. Resp. at 50 (citing TR at 127, 193 (Ronningen);
TR at 657 (Redeker)). This is so because, “[a] key aspect of decommissioning the site in the
non-breach world would have been shipping all of SMUD’s radioactive low level waste to a
disposal facility for final disposal.” Pl. Br. at 17 (citing TR at 127-28, 182-83 (Ronningen); TR at
657 (Redeker)); see also DX 6034. Moreover, in the non-breach world, SMUD would have to
maintain a nuclear license if it decided to store Class B and C waste onsite. TR at 249
(Ronningen); TR at 751 (Redeker). Of course, if the DOE had performed under the Standard
Contract, SMUD could have disposed of this waste at the disposal facility in Barnwell, South
Carolina, or elsewhere. TR at 199-200, 249 (Ronningen). The fact that Mr. Redeker and Mr.
Ronningen recommended that the Class B and C waste be shipped to Barnwell in the actual
breach world underscores this point. Pl. Resp. at 51 (citing TR at 128, 193-94, 199-200, 205-06,
210 (Ronningen)). Moreover, the potential for environmental liability13 would not have deterred
SMUD from shipping waste offsite in the non-breach world, because that liability would exist
wherever the Class B and C waste was disposed, including at Rancho Seco. TR at 210, 249
(Ronningen); TR at 751 (Redeker).

               2.      The Government’s Response.

        The Government responds that SMUD’s decision to store Class B and C waste onsite was
not caused by DOE’s breach, but was a business decision. Gov’t Br. at 36, 41 (citing DX 6244
¶¶ 23-27 (Maret Written Direct)); Gov’t Resp. at 25. Therefore, even in the non-breach world,
SMUD would have kept Class B and C waste onsite. Gov’t Br. at 39. In the breach world,
SMUD could have shipped this waste to the Barnwell disposal facility as many other utilities did
during that time, but elected not to do so because of potential environmental liability. DX 6244 ¶
23 (Maret Written Direct); DX 6033 (Barnwell Disposal: Rancho Seco Recommendation to
Utilize Disposal Opportunity); TR at 201-10 (Ronningen) (discussing SMUD’s decision not to
ship B and C waste to Barnwell in the breach world); TR at 737-38 (Redeker) (same). These
same concerns would exist in the non-breach world and would have caused SMUD to reach the
same business decision to store Class B and C waste onsite. Gov’t Resp. at 25.



       13
          Environmental liability refers to that incurred under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, i.e., “[a]n Act to provide for liability,
compensation, cleanup, and emergency response for hazardous substances released into the
environment and the cleanup of inactive hazardous waste disposal sites.” Pub. L. No. 96-510, 94
Stat. 2767 (1980) (codified as amended at 42 U.S.C. §§ 9601-9675 (2006)).



                                                24
               3.     The Court’s Resolution.

        As Mr. Ronningen and Mr. Redeker testified, SMUD’s primary goal after the decision to
shut down Rancho Seco was to exit the nuclear industry entirely and as soon as possible. TR at
249 (Ronningen), 657 (Redeker). This could be accomplished only if SMUD shipped and stored
its Class B and C waste offsite. The most likely off-site recipient in the non-breach world was
the Barnwell facility in South Carolina. TR at 127 (Ronningen) (“We would have shipped [the
Class B and C waste] for disposal at the Barnwell facility.”); TR at 657 (Redeker) (“We would
have shipped [the Class B and C waste] and disposed of it at Barnwell.”). Although the
Barnwell facility declined to accept “out-of-compact” shippers, as of June 30, 2008, since
SMUD had Class B and C waste prior to that time, it would have been able to utilize Barnwell
and would not have had Class B and C waste onsite as of 2008. TR at 199-200, 206
(Ronningen).

         Moreover, the Government’s argument was contradicted by Mr. Ronningen, who testified
that the DOE’s breach was the “primary reason” that SMUD decided to store and maintain B and
C waste on-site. TR at 193 (Ronningen). In addition, both Mr. Ronningen and Mr. Redeker
emphasized that decision was made because SMUD’s SNF was already onsite and because
storing B and C waste there entailed a small incremental cost. TR at 127 (Ronningen) (testifying
that “the decision was made to utilize the staff that was necessary to be onsite for the fuel
oversight, and have them oversee some low-level waste, as well”), 248 (Ronningen) (“[W]e saw
the increment costs or management saw the incremental costs [of keeping low-level waste
onsite] as being very slight.”); TR at 657 (Redeker) (“[W]hen it was clear to us that the nuclear
fuel was going to stay there for a long time, we balanced the risk of shipping [the B and C waste]
to Barnwell as opposed to the incremental cost to store it on site given that the nuclear fuel
would be there, and the incremental cost to store it on site was very low.”). Moreover, in direct
response to the concern about environmental liability, Mr. Ronningen testified that “[t]he
liability is there for all the waste we’ve ever disposed of and the B and C waste when we finally
dispose of it.” TR at 249 (Ronningen); see also TR at 658 (Redeker) (stating that SMUD
previously accepted the risk of disposing other radioactive materials offsite, because “[a]nytime
you dispose of waste there is a risk, you eventually have to accept it”), 737-38 (Redeker) (“[W]e
could potentially avoid that degree of risk . . . given that the nuclear fuel is already [at Rancho
Seco].”).

       For these reasons, the court has determined that SMUD would have shipped its Class B
and C waste off-site in the non-breach world prior to or during 2008.

       C.      Governing Precedent Regarding Damages In Spent Nuclear Fuel Cases.

        “The remedy for breach of contract is damages sufficient to place the injured party in as
good a position as it would have been had the breaching party fully performed.” Ind. Mich., 422
F.3d at 1373. Such damages “are recoverable where: (1) the damages were reasonably
foreseeable by the breaching party at the time of contracting; (2) the breach is a substantial
causal factor in the damages; and (3) the damages are shown with reasonable certainty.” Id. In a
suit for a partial breach, however, “a claimant may not recover . . . prospective damages for
anticipated future non-performance resulting from the same partial breach.” Id. at 1376. In



                                                25
addition, a “non-breaching party should not be placed in a better position through the award of
damages than if there had been no breach.” Bluebonnet Sav. Bank, F.S.B. v. United States, 339
F.3d 1341, 1345 (Fed. Cir. 2003).

        To ascertain whether mitigation costs claimed by the nuclear utility-parties to the
Standard Contract were incurred because of DOE’s partial breach of the Standard Contract, the
court is required to make a “comparison between the breach and non-breach worlds[.]” Yankee
Atomic Elec. Co. v. United States, 536 F.3d 1268, 1273 (Fed. Cir. 2008); see also Energy
Nw. v. United States, 641 F.3d 1300, 1305 (Fed. Cir. 2011) (“It is only by comparing this
hypothetical ‘but-for’ scenario with the parties’ actual conduct that a court can determine what
costs were actually caused by the breach, as opposed to costs that would have been incurred
anyway.”). To conduct this comparison, “[the Government] must move forward by pointing out
the costs it believes the [nuclear-utility] plaintiff avoided[,] because of [DOE’s] breach[.]” S.
Nuclear Operating Co. v. United States, 637 F.3d 1297, 1304 (Fed. Cir. 2011). But, “with
respect to both claimed costs and avoided costs, [the nuclear utility-party to the Standard
Contract] bear[s] the burden of persuasion.” Id. Therefore, “a plaintiff seeking damages must
submit a hypothetical model establishing what its costs would have been in the absence of
breach.” Energy Nw., 641 F.3d at 1305; see also S. Nuclear, 637 F.3d at 1304 (“As we held in
Yankee Atomic, ‘[b]ecause plaintiffs . . . are seeking expectancy damages, it is incumbent upon
them to establish a plausible ‘but-for’ world.’”); Energy Nw., 641 F.3d at 1308 (“[T]he burden of
proving the non-breach world . . . lie[s] with [the plaintiff].”). But, a cost that would have been
incurred in the non-breach world is not recoverable. Energy Nw., 641 F.3d at 1307 (“If a cost
would have been incurred even in the non-breach world, it is not recoverable.”). Likewise, a cost
that would have been incurred in the non-breach world that has not been incurred in the breach
world, i.e., an avoided cost, is required to be offset against a plaintiff’s recovery. See Carolina
Power & Light Co. v. United States, 573 F.3d 1271, 1277 (Fed. Cir. 2009). An offset, however,
does not apply to costs that have merely been deferred. Id.

        In addition, “[w]hile the amount of damages need not be ascertainable with absolute
exactness or mathematical precision, recovery for speculative damages is precluded.” Ind.
Mich., 422 F.3d at 1373; see also Locke v. United States, 283 F.2d 521, 524 (Ct. Cl. 1960)
(“Certainty is sufficient if the evidence adduced enables the court to make a fair and reasonable
approximation of the damages.”). This is so, because “‘[t]he risk of uncertainty must fall on the
defendant whose wrongful conduct caused the damages.’” Energy Capital Corp. v. United
States, 302 F.3d 1314, 1327 (Fed. Cir. 2002) (quoting Mid-Am. Tablewares, Inc. v. Mogi
Trading Co., 100 F.3d 1353, 1366 (7th Cir. 1996)).




                                                26
       D.      The Mitigation Costs That Plaintiff Claims Were Incurred From January 1,
               2004, To December 31, 2009, As A Result Of The Partial Breach Of The
               January 21, 1998 Standard Contract.

       As a result of DOE’s partial breach of the January 21, 1998 Standard Contract, SMUD
seeks mitigation costs incurred from January 1, 2004 to December 31, 2009, as follows:

                       Type of Cost                                     Amount
       ISFSI Dry Storage Operations and Maintenance                         $19,852,000
       GTCC Waste Segmentation and Storage                                   $3,928,000
       NRC Fees                                                                $938,000
       Miscellaneous Additional Costs14                                      $1,616,000
       Total                                                                $26,334,000

Pl. Br. at 8 (citing PX 6353 ¶ 38, Table I (Metcalf Written Direct)).

               1.      Whether Plaintiff Is Entitled To The Cost Of Independent Spent Fuel
                       Storage Installation Operating And Related Maintenance Expenses.

                       a.     The Plaintiff’s Argument.

        SMUD argues that it is entitled to $13,366,60215 for mitigation costs associated with
operating and maintaining the Independent Spent Fuel Storage Installation from 2004 through
2009. Pl. Br. at 9. These costs include: “NRC-required security supporting the ISFSI, ISFSI
technicians that provided 24/7 onsite oversight and required maintenance work, purchased
materials and supplies supporting the ISFSI, SNF-related engineering support, and regulatory
compliance administration.” Pl. Br. at 9-10. SMUD emphasizes that this claim includes only
maintenance and operations costs that are “directly and solely related to the ISFSI” and excludes
costs that were “partially shared” or related to costs and activities that SMUD would have
undertaken in the non-breach world. Pl. Br. at 10-12 (citing PX 6353 ¶¶ 54-55 (Metcalfe Written
Direct); PX 6265 at A3 Rev. (Metcalfe’s Damages/Cost of Debt Binder A); TR at 106-23
(Ronningen)).



       14
          These “miscellaneous additional costs” include: building a new wastewater treatment
plant ($546,000); modifications to the Interim Onsite Storage Building (“IOSB”) ($539,000);
ongoing operation and maintenance costs at the IOSB ($59,000); modifications to address certain
drainage issues ($10,000); an explosion analysis regarding the Cosumnes Power Plant ($51,000);
and increased American Nuclear Insurance (“ANI”) insurance premiums from 2004 to 2008
($411,000). In addition, SMUD seeks to recover $3,619,000 for the cost of capital.
       15
         This amount represents SMUD’s total claimed ISFSI costs of $19,852,000, minus its
claimed costs for NEI dues ($535,527), 2009 ANI insurance premiums ($371,880), 2009 NEIL
insurance premiums ($92,342), and overhead costs ($5,485,649), which are included in SMUD’s
ISFSI cost figure, but are discussed separately herein.



                                                27
        SMUD asserts that it has established these costs with sufficient certainty to “enable[] the
court to make a fair and reasonable approximation of [SMUD’s] damages.” Pl. Br. at 27 (citing
Locke, 283 F.2d at 524). As in SMUD III, the costs in this case were tracked via January 1,
2004, to December 31, 2009 work orders captured by SMUD’s SAP accounting system.16 TR at
98, 102, 106-07 (Ronningen); TR at 260-63, 269-71 (McAlister). In addition, Mr. Ronningen
and Mr. Metcalfe testified that they reviewed the costs incurred from 2004 to 2009 to ensure
accuracy. TR at 97-98, 100-01 (Ronningen); PX 6353 ¶¶ 39-44 (Metcalfe Written Direct
Testimony). SMUD produced other evidence, including: electronic detail from the accounting
system; screen shots from the accounting system; routing sheets; accounting reports; outside
contracts; purchase orders; invoices; and labor hour reports. PX 6353 ¶ 43 (Metcalfe Written
Direct Testimony); see also PX 6275 at KRGSMUDII-007497-7500; PX 6276; PX 6277; PX
6278; PX 6281; PX 6282; PX 6283. In addition, all of SMUD’s supporting invoices for third-
party costs over $3000 were confirmed by the Government’s expert. DX 6245 Att. 2-a (Peterson
Written Direct).

                       b.     The Government’s Response.

        The Government responds that SMUD is not entitled to $4,054,676 of the claimed third-
party costs, because it did not provide the “necessary payment support documentation.” Gov’t
Br. at 61 (citing DX 6245 ¶ 45 (Peterson Written Direct)). The court previously reviewed the
same accounting system and determined that SMUD’s system was “designed to ensure
transactions were timely recorded and accurately reported.” SMUD III, 70 Fed. Cl. at 366. But,
this finding did not relieve SMUD of the obligation to establish claimed mitigation costs with
reasonable certainty. In Docket No. 98-488C, the Government identified $2.2 million in
accounting errors in SMUD’s claim and, in this case, the Government identified an error in
SMUD’s labor rate calculations resulting in an $8067 error that SMUD subsequently removed
from its claim. Gov’t Br. at 62. These errors demonstrate that simply relying on SMUD’s
accounting system to establish damages to a reasonable certainty “is not acceptable.” Gov’t Br.
at 62. For this reason, the Government requested payment support documentation, but was not
provided with access to “hard copy payment support documentation or the portion of the SAP
system containing the payment support documentation.” Gov’t Br. at 61 n.17. Despite the
court’s prior indication that the Government should bear the expense of obtaining this
documentation, SMUD had the burden of establishing, with reasonable certainty, the amount of
its damages claim, yet it has not done so for the $4,054,676 in third-party costs. Gov’t Br. at 61
(citing DX 6245 ¶ 45, Attach. 2a-1 (Peterson Written Direct)).

                       c.     The Plaintiff’s Reply.

       SMUD replies that the Government’s contention as to $4,054,676 in third-party costs is
unsupported, because the Government: does not “dispute that any specific costs were actually
incurred;” does not “point to any reason for needing every cancelled check in order to establish
that SMUD incurred such costs generally;” and does not “provide[] [any] case law in support of
the need for cancelled checks and wire transfers.” Pl. Resp. at 69. As for the two errors cited,


       16
          SMUD utilizes an SAP accounting system for “tracking [its] costs,” “inputting budget
plans,” and “run[ning] all of [its] reports to look at actual and plan data.” TR at 258 (McAlister).


                                                28
neither is relevant to the Government’s expert’s assertion that cancelled checks for every outside
invoice over a certain amount is required. In fact, SMUD’s inadvertent $2.2 million error in
Docket No. 98-488C was removed during the discovery phase of SMUD III. Pl. Resp. at 70.
Likewise, the $8067 labor rate error in this case was removed, because it was a fraction of a
percent of SMUD’s total claim and thus “too small of an issue over which to argue[.]” Pl. Resp.
at 71. “SMUD offered the [G]overnment the opportunity to review cancelled checks, but the
[G]overnment decided to do nothing.” Pl. Resp. at 71. Therefore, Mr. Metcalfe confirmed
payment by gathering a sample of cancelled checks and wire transfers. PX 6353 ¶ 43 (Metcalfe
Written Direct); PX 6276 at KRGSMUDII-007668 to 007672, KRGSMUDII-007675 to 007678,
KRGSMUDII-007680 to 007683.

       Last, in SMUD’s December 4, 2012 Notice Of Supplemental Authority, SMUD argues
that Portland General Electric supports its assertion that it need not provide copies of cancelled
checks or wire transfer receipts in order to prove its damages. See Portland Gen. Elec. Co., 2012
WL 6013274 at *23 (finding cost reports and expert testimony regarding the plaintiff-utility’s
accounting system sufficient).

                      d.      The Court’s Resolution.

       The court previously determined that “the Government, not SMUD, is responsible for
operation and maintenance costs associated with storage of SNF, until DOE accepts the last of
SMUD’s SNF.” SMUD III, 71 Fed. Cl. at 371. Therein, the court also determined that the costs
recorded in SMUD’s SAP accounting system were “established with reasonable certainty.” Id.
at 365-66. In this case, the Government challenges $4,054,676 of SMUD’s claimed ISFSI costs
on the grounds that these third-party costs were not adequately supported. The Government,
however, does not challenge any of these costs as unforeseeable nor contend that they were not
incurred because of the Government’s breach.

        The evidence proffered by SMUD establishes that it recorded costs using the same SAP
accounting system that the court credited as reliable in SMUD III. TR at 98, 102, 106-07
(Ronningen); TR at 260-63, 269-71 (McAlister). In addition, SMUD presented supporting
evidence from the SAP accounting system, including: screen shots from the accounting system;
routing sheets; accounting reports; outside contracts; purchase orders; invoices; and labor hour
reports. PX 6353 ¶¶ 43 (Metcalfe Written Direct Testimony); see also PX 6275 at
KRGSMUDII-007497 to 007500; PX 6276; PX 6277; PX 6278; PX 6281; PX 6282; PX 6283.
And, as the Government’s expert acknowledged, SMUD provided detailed invoice support for
third-party costs over $3000. DX 6245 Att. 2-a (Peterson Written Direct).

        The $8067 error in this case was removed from SMUD’s damages claim and does not
undermine the reliability of SMUD’s accounting system. Moreover, the Government has not
specifically challenged any specific cost, other than broadly arguing that additional
documentation is needed for all third-party costs. Nor has the Government advanced any new
basis for challenging the reliability of the SAP accounting system that the court previously found
reliable. Indeed, the Government had the opportunity to review SMUD’s cancelled checks and
did not do so. Nothing further is required to establish that SMUD incurred these costs with
reasonable certainty. See Locke, 283 F.2d at 524 (“Certainty is sufficient if the evidence adduced



                                               29
enables the court to make a fair and reasonable approximation of the damages.”); see also
Portland Gen. Elec. Co., 2012 WL 6013274 at *23; Dominion Res., Inc. v. United States, 84
Fed. Cl. 259, 284 (2008).

        For these reasons, the court has determined that SMUD is entitled to $13,366,602 in
mitigation costs incurred as a result of SMUD’s ISFSI operations and maintenance costs.

               2.     Whether Plaintiff Is Entitled To The Cost Of Nuclear Energy Institute
                      Fees.

       SMUD paid annual membership dues to the Nuclear Energy Institute, which “provides a
warehouse for sharing of knowledge, [and] provid[es] input for regulatory development.” TR at
114 (Ronningen).

                      a.      The Plaintiff’s Argument.

         SMUD argues that it is entitled to $535,527 for membership in the Nuclear Energy
Institute (“NEI”) from 2005 through 2008. Pl. Br. at 10. The goal of the NEI is to assist
facilities like SMUD “safely and cost-effectively” to manage SNF storage, including sharing
industry knowledge and best practices. Therefore, SMUD’s membership is required because of
the presence of SNF on-site at Rancho Seco. TR at 114-15, 121, 243 (Ronningen). Furthermore,
these mitigation costs are “reasonable under the circumstances.” Home Sav. of Am.,
FSB v. United States, 399 F.3d 1341, 1353 (Fed. Cir. 2005). SMUD adds that there is no
requirement that a mitigation cost must be a regulatory or licensing requirement in order to be
compensable. Pl. Resp. at 51 (citing Chain Belt Co. v. United States, 115 F. Supp. 701, 714 (Ct.
Cl. 1953) (holding that a plaintiff “is entitled to recover the amount proved to have been spent as
expenses incurred in a reasonable effort to avoid the harm which both parties had reason to
foresee would be the probable result of defendant’s breach of the contract”)). Notably, the
Government expert cited no evidence that SMUD would have maintained its membership in
NEI, even if SMUD’s SNF had been removed to an offsite location.

                      b.      The Government’s Response.

        The Government responds that SMUD is not entitled to recover any costs related to NEI
membership dues for the years 2004 through 2008, because that expense is related solely to SNF
storage and SNF would have remained onsite until 2008 under the OFF schedule in the non-
breach world. Gov’t Br. at 45 (citing TR at 238-40 (Ronningen)); DX 6244 ¶¶ 30-32 (Maret
Written Direct). In addition, NEI membership is not a regulatory or licensing requirement, and
therefore, “is not a cost or activity that DOE’s delay in SNF acceptance caused SMUD to incur
to ‘mitigate’ the breach.” Gov’t Br. at 45 (citing TR at 238-41 (Ronningen); DX 6244 ¶ 30
(Maret Written Direct)); see also Gov’t Resp. at 30 (“SMUD identified no requirement that it
belong to NEI, and we are aware of no case law that allows for recovery of unnecessary costs
that a plaintiff voluntarily decides it wants to incur.”). In fact, SMUD’s NEI dues are not solely
related to SNF storage, but are also related to nuclear decommissioning and the disposal of Class
B and C radioactive waste. TR at 240 (Ronningen); TR at 653-54 (Redeker); DX 6244 ¶ 32
(Maret Written Direct). Moreover, “[t]he record is silent as to any details of the services or any



                                                30
benefits provided to SMUD by NEI that ‘mitigated’ DOE’s delay in SNF acceptance.” Gov’t Br.
at 46.

                      c.      The Court’s Resolution.

       Because the court has herein determined that SMUD’s SNF would not have been
removed in the non-breach world prior to 2008, SMUD is not entitled to recover its NEI fees for
the years 2004 through 2008. See also SMUD VI, 91 Fed. Cl. at 12-14; TR at 114-15, 121, 241,
249 (Ronningen), 657, 751 (Redeker). In addition, in the non-breach world, SMUD’s
decommissioning would have been completed (as it was in the actual world), and SMUD’s class
B and C waste would have been removed offsite prior to or during 2008. Accordingly, the court
has determined that SMUD is not entitled to NEI fees claimed from 2005 through 2008.17

               3.     Whether Plaintiff Is Entitled To The Cost Of Insurance Premiums.

       SMUD maintained several insurance policies with ANI, including a facility form policy,
a master worker policy, and a suppliers and transporters policy. PX 6354 at 23-25 (Hoffman
Dep. Test.); TR at 132-43 (Ronningen). SMUD also maintained a nuclear property insurance
policy with Nuclear Electric Insurance Limited (“NEIL”) that covered damages to real and
personal property at Rancho Seco. TR at 132-33 (Ronningen).

                      a.      The Plaintiff’s Argument.

        SMUD argues that it is entitled to $410,714 for increased premiums paid for a liability
policy with ANI for the period from 2004 to 2008. Pl. Br. at 12-13, 67 (Table 5). In the non-
breach world, these premiums would have been reduced, because SMUD would not have stored
SNF onsite, although SMUD concedes that it would have maintained some ANI insurance
coverage for on-going decommissioning activities at Rancho Seco. Pl. Br. at 12-13 (citing PX
6265 at A5; PX 6248 (2010 ANI Rating Guide); PX 6354 at 190 (Hoffman Dep.)). Moreover,
the Government presented no evidence that industry-wide insurance premiums would be priced
differently if DOE performed under the Standard Contract. Pl. Resp. at 53-54.

        Mr. Hoffman, ANI’s Director of Underwriting, testified that SMUD correctly stated the
premiums and premium multiplier for each year. PX 6354 at 83-86, 92-111, 116-18 (Hoffman
Dep.); see also PX 6224; PX 6225; PX 6226; PX 6248 (2010 ANI Rating Guide). With the
exception of certain premium multipliers, the factors in the 2010 Rating Guide were not changed
during the years 2004 to 2009. PX 6354 at 21 (Hoffman Dep.). Mr. Hoffman’s analysis,
however, did not account for the presence of Class B and C waste onsite, because ANI’s rating
procedures do not list the presence of low-level waste as a ratings factor for shutdown facilities.
PX 6248 at 9 (2010 ANI Rating Guide, Section I.J.3) (“If a unit at a reactor facility is
permanently shut down, that unit is eligible for premium credit as follows: . . . Fuel Shipped
Offsite or in Dry Storage”); see also PX 6354 at 86-87 (Hoffman Dep.) (relying on Section I.J.3
of the 2010 Rating Guide). The presence of low-level waste, however, was to be expected

       17
         As SMUD did not claim NEI dues from 2009, the court makes no findings as to that
year’s NEI dues. See Pl. Br. 65, n.8.


                                                31
during that period, because SMUD was decommissioning Rancho Seco. PX 6354 at 132
(Hoffman Dep.) (stating that exposure under the Suppliers and Transporters Policy would be
lower if SNF was offsite, because “there likely would be fewer shipments . . . of low-level waste
involving the spent fuel facility”); PX 6354 at 173 (Hoffman Dep.) (confirming that SMUD
would be decommissioning the byproducts of the nuclear facility, including low-level waste).

        As to insurance costs in 2009, when the decommissioning was completed and SMUD’s
nuclear license terminated, SMUD had no further need to maintain a nuclear insurance policy
and would have terminated the ANI insurance. PX 6354 at 191-92 (Hoffman Dep.). In addition,
by 2009, SMUD also would have terminated its NEIL insurance policy for real and personal
property at Rancho Seco. Pl. Br. at 13 (citing TR at 132-33 (Ronningen)). Moreover, there is no
evidence to support the proposition that SMUD would have made a business decision to keep the
Class B and C waste onsite after decommissioning was completed in 2008. In fact, SMUD
would have had every incentive to remove all radioactive waste offsite so that it could terminate
the NRC licenses and exit the nuclear industry. TR at 249 (Ronningen); TR at 751 (Redeker).
Accordingly, it is speculative to assume that SMUD may have maintained its NEIL insurance for
unidentified “legacy exposure issues,” and SMUD’s ANI and NEIL costs of $464,222 are
therefore recoverable in full beginning in 2009. Pl. Resp. at 57.

                      b.      The Government’s Response.

        The Government responds that SMUD is not entitled to recover the cost of ANI
premiums paid during 2004 to 2008, because SMUD’s SNF would have remained onsite. Gov’t
Br. at 39. In addition, Mr. Hoffman failed to consider whether the ANI premiums would have
been required for the Class B and C waste that remained onsite and therefore SMUD’s
qualification of its insurance costs is flawed. PX 6354 at 149 (Hoffman Dep.); see also id. at 49-
52, 57-58 (stating that the facility form policy and master worker policy covered damages arising
from low-level waste, such as Class B and C waste). In fact, the decision to continue to store
Class B and C waste onsite was a business decision that was not caused by DOE’s breach. Gov’t
Br. at 41; Gov’t Resp. at 25. In addition, Mr. Hoffman’s analysis was also flawed, because he
utilized the current-day premium rating guide, not the rating guide from 2004 to 2008. PX 6354
at 92-93, 99-104.

        SMUD also has failed to meet its burden of proof to show that it would not have incurred
ANI and NEIL premiums in 2009. Gov’t Br. at 43. As for the NEIL insurance, SMUD relied
solely on the testimony of Mr. Ronningen that because decommissioning was completed in 2009
such costs are “directly associated with the oversight of fuel[.]” TR at 133 (Ronningen). But,
Mr. Ronningen also testified that the continued storage of Class B and C waste onsite would
require NEIL insurance. TR at 225 (Ronningen). In addition, the NEIL insurance agreement
does not state that the insurance is directly associated with or otherwise required by the presence
of SNF. DX 6230 (Apr. 10, 2009 NEIL Insurance Agreement). Further, SMUD did not
establish that NEIL insurance was not otherwise required in 2009 in light of Rancho Seco’s
potential legacy issues and other ongoing activities, such as the switchyard, backup control
center, and photovoltaic plant. Gov’t Br. at 44. As to the ANI insurance, SMUD specifically
failed to demonstrate that it would not have maintained the same level of ANI coverage, due to
the presence of Class B and C waste onsite in 2009. Gov’t Br. at 44-45; Gov’t Resp. at 25.



                                                32
                      c.      The Court’s Resolution.

       SMUD’s claim for increased ANI premiums for 2004 through 2008 is premised on
SMUD’s SNF being stored offsite during those years. The court has ruled in this case that
SMUD’s SNF would have remained onsite; therefore, SMUD is not entitled to its ANI insurance
or NEIL insurance costs for those years. See also SMUD VI, 91 Fed. Cl. at 13-14, 18. In
addition, the court has determined that SMUD would exit the nuclear industry beginning in 2009,
including no longer storing class B and C waste onsite. TR at 199, 200, 206 (Ronningen).
Therefore, SMUD would have had no reason to pay ANI premiums in that year in the non-
breach world.

        SMUD’s NEIL property insurance “provide[s] protection against the financial
consequences of accidents at nuclear power generating stations, which may not otherwise be
available, or available on the terms and conditions provided by NEIL.” DX 6230 at
SMUDII277324 (Apr. 10, 2009 NEIL Insurance Agreement). Mr. Ronningen testified that NEIL
insurance was required, because of the presence of the SNF, GTCC, and Class B and C waste
that remains onsite at SMUD. TR at 221-25 (Ronningen). As such, the NEIL premiums are a
mitigation cost that is “fair and reasonable under the circumstances.” Home Sav. of Am., FSB,
399 F.3d at 1353. Contrary to the Government’s argument, it is not necessary that SMUD
establish that it is required by law to carry NEIL insurance. The Government’s alternative
argument that NEIL insurance is required because of unidentified “legacy exposure issues” is not
supported in the record. The fact that other activities are ongoing at the Rancho Seco site—
including: a backup control center; photovoltaic plant; and a switchyard—does not establish that
SMUD otherwise would be required to maintain NEIL insurance. Although SMUD would need
to incur some form of property insurance in the non-breach world, the Government has not stated
what that cost would be. See S. Nuclear, 637 F.3d at 1304 (holding that it is DOE’s burden to
“move forward by pointing out the costs it believes the plaintiff avoided because of its breach”);
see also DX 6230 at SMUDII277323 (Apr. 10, 2009 NEIL Insurance Agreement).

       For these reasons, the court has determined that SMUD is entitled to $371,880 for ANI
insurance premiums for 2009 and $92,342 for NEIL insurance premiums for 2009.

               4.     Whether Plaintiff Is Entitled To The Cost Of The Cosumnes Power
                      Plant Explosion Analysis.

       The Cosumnes Power Plant is a natural gas-fired power plant about a half-mile south of
Rancho Seco that is owned by SMUD and was brought on-line in 2006. TR at 124 (Ronningen).
In 2004, SMUD undertook an analysis to determine the effects of an explosion at the Cosumnes
Power Plant on the ISFSI, where SMUD’s SNF was stored. TR at 124 (Ronningen).

                      a.      The Plaintiff’s Argument.

       This analysis was conducted in 2004 in anticipation of the Cosumnes Power Plant going
online in 2006. PX 6088 (Engineering Analysis of Consumes Explosion); TR at 123-24
(Ronningen). If the SNF had been removed prior to 2006, this testing would not have been



                                               33
necessary. TR at 123-24 (Ronningen); PX 6353 ¶ 60 (Metcalfe Written Direct); PX 6293; PX
6281 at KRGSMUDII-004317 to 004329. Therefore, SMUD argues that it is entitled to $51,473
for testing costs to determine the effects on the SNF stored at Rancho Seco in the event of an
explosion at the nearby Cosumnes Power Plant. Pl. Br. at 14.

                      b.      The Government’s Response.

        The Government responds that SMUD is not entitled to the costs incurred for the
explosion analysis because, in the non-breach world, SMUD would still have been required to
conduct this analysis as SNF would have remained onsite at Rancho Seco. Gov’t Br. at 46-47
(citing DX 6244 ¶¶ 33-34 (Maret Written Direct); TR at 177, 179-80 (Ronningen)); see also
Gov’t Resp. at 29-30 (“The analysis was performed during a period of time in which the SNF
would have been on-site . . . even with timely DOE performance.”).

                      c.      The Court’s Resolution.

        In SMUD VI, 91 Fed. Cl. at 12-13, and herein, the court found that SMUD would not
have removed its SNF offsite until 2008. As such, in the non-breach world, SMUD was required
to undertake the potential explosion analysis in anticipation of the Cosumnes Power Plant going
online in 2006.

        For these reasons, the court has determined that SMUD is not entitled to recover the costs
of the Cosumnes Power Plant explosion analysis.

               5.     Whether Plaintiff Is Entitled To The Cost Of Constructing A
                      Wastewater Treatment Plant.

        In 2008 and 2009, SMUD built a new wastewater treatment facility at Rancho Seco to
correct a decrease in water quality caused by the Freeport Water Project undertaken by another
municipal utility, East Bay Municipal Utility District (“East Bay MUD”). TR at 130-31
(Ronningen). SMUD also built a new wastewater treatment facility at the Cosumnes Power
Plant in response to the decreased water quality. TR at 129-32 (Ronningen). Subsequently,
SMUD entered into a $5 million settlement agreement with the East Bay MUD to mitigate the
costs of building these two facilities. TR at 131-32 (Ronningen), 742-43 (Redeker); see also DX
6222 (70/30/04 Freeport Regional Water Project Mitigation Settlement Agreement).

                      a.      The Plaintiff’s Argument.

       If SMUD’s SNF was removed prior to 2008, SMUD would not have been required to
retain on-site staff or the wastewater treatment facility. Pl. Br. at 14 (citing TR at 91
(Ronningen)). Therefore, but for DOE’s partial breach of the Standard Contract, SMUD would
not have been required to construct a wastewater treatment plant at Rancho Seco. Pl. Br. at 14.

       SMUD asserts that this mitigation activity was reasonable, because SMUD built an
inexpensive zero-discharge system. Pl. Br. at 15 (citing TR at 130-31, 230-31 (Ronningen)).
Therefore, SMUD argues that it is entitled to $546,000 that it spent to build a new wastewater



                                               34
treatment facility at Rancho Seco in 2008 to serve the continued full-time staff required “to
operate, maintain, and secure the SNF.” Pl. Br. at 14 (citing TR at 128-30 (Ronningen)).
Although SMUD received compensation in the settlement to offset the cost of building the
wastewater treatment facility, that amount did not fully compensate SMUD nor allow it enough
to implement the mitigation required at Consumnes. TR at 236-38 (Ronningen); TR at 743
(Redeker). SMUD adds that the savings recognized by SMUD from terminating its National
Pollutant Discharge Elimination System (“NPDES”) permit18 should not be offset against the
cost of this project because these are costs that SMUD “did not incur in the breach world, and
would not have incurred in the non-breach world” and they merely “reflect[] the difference in
costs saved between two choices of mitigation, of which SMUD implemented the less
expensive.” Pl. Resp. at 61. In addition, although SMUD concedes that others visit the site,
such visits are infrequent. TR at 118-19 (Ronningen) (noting that personnel visit “a few times a
year” to operate the backup control center).

                      b.     The Government’s Response.

         The Government responds that SMUD is not entitled to recover costs incurred to build
the wastewater treatment facility. Gov’t Br. at 48-51. This facility would have been required
regardless of the DOE’s partial breach, because SMUD personnel serving and using other
facilities at the Rancho Seco site, including the photovoltaic plant, backup control center, and
electric switch yard, also use the wastewater treatment facility. TR at 118-19, 228-29
(Ronningen); see also DX 6228 at SMUDII410973 (“These additional industrial facilities will
continue to be maintained and may expand to include additional commercial office use once the
decommissioning is complete.”). Furthermore, the change to the water supply was caused by the
Freeport Project, not by DOE, and bears no relationship to DOE performance. Gov’t Resp. at
27. This project was undertaken to mitigate the effects of the Freeport Regional Water Project
(“Water Project”) that resulted in the Rancho Seco and Cosumnes Power Plants receiving low
quality water and requiring SMUD to install expensive water treatment systems. Gov’t Br. at 50
(citing TR at 738-39 (Redecker)). To settle a dispute regarding this situation, SMUD agreed on
July 30, 2004 to a $5 million settlement. DX 6222 (July 30, 2004 Settlement Agreement). In
addition, SMUD should offset any allowed costs by the $5 million settlement that was intended
as mitigation for the Freeport Project, but which SMUD spent elsewhere. Gov’t Br. at 51; Gov’t
Resp. at 27-28; see also TR at 132 (Ronningen); TR at 742 (Redeker).

                      c.     The Court’s Resolution.

        The record indicates that the only employees who work regularly at the Rancho Seco site
today, in the breach world, do so to monitor the nuclear waste that remains onsite due to the
DOE’s partial breach. TR at 90-91 (Ronningen). In the non-breach world, SMUD employees
would only need to visit the site “a couple of times a year.” TR at 118-19 (Ronningen). But,
       18
          Prior to constructing the wastewater treatment facility, SMUD was required to
maintain an NPDES permit for discharging wastewater at a cost of approximately $40,000 per
year. TR 229-32 (Ronningen). Since the new facility was a zero-discharge system, SMUD only
needed to obtain a county permit at a cost of approximately $2000 per year. TR 229-32
(Ronningen).



                                              35
other activities at the site, such as the backup control center, a photovoltaic plant, and a
switchyard, would require water. TR at 118 (Ronningen).

        SMUD did not meet its burden of demonstrating that it would not need to construct a
waste water treatment facility at Rancho Seco in the non-breach world to support these other
non-SNF operations. Nor did SMUD proffer any evidence of other options that would have
addressed its water needs. A scenario in which SMUD’s other operations could function without
water at the site is unsubstantiated. Although SMUD employees only need to visit the backup
control facility “a couple of times a year” to make sure it works (TR at 118 (Ronningen)), it is
improbable to think that SMUD would not need fully-functioning water services at the site, in
the event that a backup was needed to serve as the primary control center.

         For these reasons, the court has determined that SMUD required a wastewater treatment
facility, irrespective of DOE’s partial breach, and received some compensation by way of the
Freeport Project settlement to offset this cost. Therefore, SMUD is not entitled to mitigation
costs to construct the wastewater treatment plant.

               6.      Whether Plaintiff Is Entitled To The Cost Of An Interim Onsite
                       Storage Building.

        In 2008, SMUD undertook the renovation of an existing building onsite at Rancho Seco
called the IOSB. These renovations included paving, painting, and roof repair work required to
make the building suitable for long term storage. TR at 125 (Ronningen). The IOSB was within
the Part 50 licensed area of Rancho Seco, signifying that it was licensed to store nuclear waste
materials. The IOSB subsequently housed various cask handling and loading equipment used to
remove the SNF from the wet pool, including: a transfer trailer; the transfer cask; a hydraulic
ram; a lifting yoke; a bailed fuel grapple; and other miscellaneous parts. TR at 125 (Ronningen).
This equipment, however, became radioactive during the SNF transfer process, and had to be
stored in a licensed facility. The IOSB was also used to store Class B and C waste. TR at 127
(Ronningen).

                       a.     The Plaintiff’s Argument.

        SMUD argues that it is entitled to $608,486 for mitigation costs related to the IOSB and
2009 operating expenses for the IOSB. Pl. Br. at 16. These costs were incurred because of
SMUD’s dry storage system and will be needed in the future, if SMUD is required to remove an
SNF canister from the ISFSI. TR at 217 (Ronningen). Since the equipment stored in the IOSB
has been contaminated, it needs to be held in a licensed facility, such as the IOSB, until it can be
disposed of in compliance with NRC regulations. TR at 126-27 (Ronningen).                      More
importantly, “DOE’s failure to perform and the fact that SMUD would be storing SNF onsite
indefinitely was the dispositive factor in SMUD’s decision to keep the B and C waste onsite.”
Pl. Resp. at 50 (citing TR at 127, 193 (Ronningen); TR at 657 (Redeker)). Therefore, a key
aspect of decommissioning Rancho Seco, in the non-breach world, would entail shipping all of
SMUD’s radioactive low level waste to a facility for final disposal, so that SMUD should be able
to recover the cost of the IOSB, even though it is also used to store B and C waste. Pl. Br. at 17




                                                36
(citing TR at 127-28, 182-83 (Ronningen); TR at 657 (Redeker)); see also DX 6034 (2002 Cost
Estimate Data).

         In sum, SMUD’s decision to refurbish the IOSB, instead of building a new licensed
facility, was the lowest cost and most reasonable mitigation. Pl. Br. at 16-17. Although SMUD
is not required to maintain this equipment, it was reasonable to do so, because selling it would
entail a cost, as would reacquiring and re-fabricating the equipment, if it is needed in the future.
TR at 217-18 (Ronningen); see also TR at 192, 215 (Ronningen) (testifying that there was no
other existing facility within SMUD’s Part 50 license other than the IOSB in which to store
equipment); TR at 216-17, 246 (Ronningen) (testifying that storage within the ISFSI likely
would violate security requirements and would require upgrades to the area and building a new
facility).

                       b.     The Government’s Response.

         The Government responds that SMUD is not entitled to the costs of refurbishing or
operating the IOSB, because SMUD made “an independent business decision completely
unrelated to DOE’s delay” to store Class B and C waste at the IOSB. Gov’t Br. at 36 (citing DX
6244 ¶¶ 23-27 (Maret Written Direct)). In other words, in the non-breach world, SMUD still
would have incurred these costs. Gov’t Br. at 39. In addition, SMUD was not required to keep
nor maintain the cask and handling equipment as part of its NRC license and, in fact, attempted
to sell both after Rancho Seco was decommissioned. TR at 217-21; PX 6134 at SMUDII000350
(Aug. 31, 2006 Rancho Seco Weekly Update) (discussing potential sale of cask and handling
equipment as they were “no longer necessary”). SMUD’s position that there would be additional
costs to dispose of the equipment and later reacquire it “lacks support and is irrelevant.” Gov’t
Resp. at 21. SMUD made no calculation of the cost to rent equipment versus maintaining the
equipment nor did any of SMUD’s experts attempt to quantify these costs. TR at 220
(Ronningen). As a result, SMUD “failed to provide evidence upon which to account for any
such costs in any damages analysis.” Gov’t Resp. at 22.

        Likewise, the 2009 operating costs for the IOSB are not recoverable, because they were
not required to mitigate the DOE’s partial breach of the Standard Contract, but were caused by
SMUD’s independent business decision to store Class B and C waste onsite. See Ind. Mich., 422
F.3d at 1376 (holding that there is no causation where a decision to re-rack SNF was “purely a
business judgment which it would have had to pursue irrespective of DOE’s partial breach”).
Moreover, even if the costs to maintain the IOSB were nominal, DOE is not required to pay
SMUD for these costs. Gov’t Resp. at 22. On November 23, 2009, the NRC issued an Order
that required licensees to implement enhanced security measures for any Class B and C waste
stored in an IOSB. DX 6190. This supports the Government’s position that the costs of these
security measures were caused by SMUD’s decision to store Class B and C waste onsite. Gov’t
Resp. at 22 (citing DX 6190 (Nov. 23, 2009 NRC Order)). Moreover, DOE’s partial breach may
have conferred a benefit on SMUD by allowing it to defer the need to incur disposal costs for the
Class B and C waste, as long as the rate of cost increases for disposal was less than SMUD’s
internal rate of return. DX 6242 ¶ 39 (Neuberger Written Direct); TR at 738 (Redeker).




                                                37
                       c.     The Court’s Resolution.

        In the non-breach world, SMUD would not have refurbished the IOSB nor incurred
operation and maintenance costs for the IOSB in 2009. But, in the breach world, the IOSB is
required to store Class B and C waste that, in the non-breach world, would have been stored
offsite. In the non-breach world, SMUD also would not be required to maintain transfer
equipment, since SMUD’s SNF and HLW would not be stored onsite.

        Nevertheless, the Government argues that SMUD’s decision to keep the transfer
equipment onsite was neither required, nor reasonable. Gov’t Br. at 37-38. But the Government
did not proffer any evidence of an alternative solution. Cf. SMUD V, 293 F. App’x at 772 (“It is
the Government’s burden to show that it was unreasonable for SMUD to pursue dual-purpose
storage canisters to mitigate the Government’s breach.”). In the court’s judgment, SMUD’s
decision to maintain transfer equipment onsite at a comparatively low yearly expense that also
was available in case of an emergency is “fair and reasonable under the circumstances.” Home
Sav. of Am., FSB, 399 F.3d at 1353. The Government’s counter-argument that SMUD’s actions
were unreasonable, because SMUD could have sold the equipment, is undermined by the
Government’s recognition that SMUD attempted to do so without success. Gov’t Br. at 38
(citing TR at 217-221(Ronningen)); see also Ind. Mich., 422 F.3d at 1375 (holding that the
plaintiff “is ‘not precluded from recovery . . . to the extent that [it] has made reasonable but
unsuccessful efforts to avoid loss.’” (quoting RESTATEMENT (SECOND) OF CONTRACTS § 350(2)
(1981)) (ellipsis and alteration in original)). In the same vein, the Government’s argument that
SMUD cannot recover these costs, unless it was required by law to keep the equipment onsite,
strains the standard for reasonableness. See Home Sav. of Am., FSB, 399 F.3d at 1353. SMUD
is not required to establish with mathematical precision that it elected the lowest cost option,
particularly where the equipment may be necessary in the event of an emergency.

        Likewise, the Government’s argument that SMUD’s Class B and C waste caused
increased security costs in 2009 is irrelevant, in light of the court’s determination that the B and
C waste would have been shipped offsite prior to 2009. Although SMUD “may have been
conferred a benefit” by the DOE’s partial breach, because low-level waste storage costs would
increase, the Government’s argument is speculative. In addition, the possibility that SMUD
would benefit by this action, if and when SMUD ships this waste offsite, is not relevant. See
Carolina Power & Light Co., 573 F.3d at 1277 (holding that an offset is not appropriate for costs
that are deferred, not avoided).

        For these reasons, the court has determined that SMUD is entitled to $608,486 in
mitigation costs for the refurbishment and modification of the IOSB, and related operating
expenses for 2009, because SMUD established that, in these “individual circumstances,” SMUD
“exercised reasonable judgment” in mitigating costs for the transfer equipment and storage
onsite. See N. Helex Co. v. United States, 524 F.2d 707, 718 (Ct. Cl. 1975) (stating that the test
is “whether, in the individual circumstances, the [plaintiff] exercised ‘reasonable commercial
judgment’ . . . in the effort to mitigate damages”).




                                                38
               7.     Whether Plaintiff Is Entitled To Recover The Cost Of Nuclear
                      Regulatory Commission Fees.

       SMUD paid fees to the NRC under 10 C.F.R. Part 171 (“Part 171 fees”) that annually are
charged to all nuclear utilities that have not permanently ceased operations or that still have
nuclear fuel onsite. PX 6353 ¶¶ 63-64 (Metcalfe Written Direct).

                      a.      The Plaintiff’s Argument.

       SMUD argues that it is entitled to recover $938,000 in Part 171 fees from 2004 to 2009.
Pl. Br. at 18. Under NRC regulations, SMUD would not have been assessed these fees if
SMUD’s SNF had been removed and stored by the DOE as required under the Standard
Contract. See Final Rule, 64 FED. REG. 31,448, 31,455 (June 10, 1999) (stating that the “new
annual fee will not be assessed to those reactors that have permanently ceased operations and
have no fuel onsite”); see also PX 6353 ¶ 64 (Metcalfe Written Direct).

       To the extent that SNF would have remained on site at Rancho Seco from 2004 to 2009,
SMUD is entitled to recover all of the Part 171 fees, except for the decommissioning-related
portion. Pl. Resp. at 66 (citing PX 6353 ¶ 64 (Metcalfe Written Direct); PX 6265; PX 6279; PX
6287; PX 6309; PX 6310; PX 6311). Prior to 1999, there were two Part 171 fees: one for
operating utilities and one for utilities with dry-storage facilities. See 10 C.F.R. §§ 171.15(b),
171.16. Because SMUD did not fit into either of these categories, it did not pay any Part 171
fees. Pl. Resp. at 62. In 1999, the NRC changed the fee structure, after DOE’s partial breach of
the Standard Contract. PX 6310 at KRGSMUDII-002780; PX 6311 at KRGSMUDII-002816
(1986 NRC Memorandum stating that the assessment of Part 171 fees “could create a
disincentive for licensees to pursue dry storage”); see also Boston Edison Co. v. United States,
658 F.3d 1361, 1368 (Fed. Cir. 2011) (affirming the trial court’s ruling that the change in Part
171 fee structure was caused by DOE’s partial breach); Consol. Edison Co. v. United States, 92
Fed. Cl. 466, 513-16 (2010) (finding that the change in the Part 171 fee structure was caused by
the DOE’s partial breach). Accordingly, SMUD argues that in the non-breach world in which
the pre-1999 Part 171 fee structure was unchanged and SMUD continued to store fuel in the
Rancho Seco wet pool, SMUD would not have paid a Part 171 fee, except for the
decommissioning-related portion. Pl. Resp. at 65-66.

        As to the Government’s arguments to exclude the testimony of Mr. Metcalfe, the work
papers supporting his analysis of the recoverable portion of the Part 171 fees were included in his
expert report and disclosed to the Government in December 2010. Pl. Resp. at 64 (citing PX
6279, PX 6287, PX 6309, PX 6310, PX 6311); see also TR at 859 (Metcalfe) (“[I]t says in my
report, my report includes the work papers which are an integral part thereof.”). SMUD asserts
that the Government had a full and fair opportunity to respond to Mr. Metcalfe’s opinions and
did so via Mr. Peterson’s testimony. Pl. Resp. at 64 (citing DX 6245 ¶ 63 (Peterson Written
Direct)). As such, the Government now cannot seek to exclude Mr. Metcalfe’s testimony on the
grounds that the Government was “prejudice[d],” because Mr. Metcalfe’s opinion was not
“buried” in his work papers. Pl. Resp. at 64.




                                                39
                       b.      The Government’s Response.

         The Government responds that SMUD is not entitled to Part 171 fees for the years 2004
to 2008, because SNF would have remained at the Rancho Seco site during this period. Gov’t
Br. at 51. Mr. Metcalfe’s testimony that, even if the SNF had remained onsite after 2004, SMUD
is entitled to recover some portion of the Part 171 fee, should be excluded, because SMUD failed
to disclose this opinion during discovery. Gov’t Br. at 53 (citing PX 6264 at 18 (Metcalfe Expert
Report); see also RCFC 26(a)(2)(B) (requiring that an expert’s written report contain a
“complete statement of all opinions the witness will express and the basis and reasons for
them”); O2 Micro Int’l Ltd. v. Monolithic Power Sys., 467 F.3d 1355, 1368-69 (Fed. Cir. 2006)
(holding that an expert’s report must “contain a complete statement of all opinions to be
expressed and the basis and reasons therefore”). The only opinion disclosed in Mr. Metcalfe’s
expert report related to NRC fees is based on SMUD’s SNF being removed prior to 2004. PX
6264 at 18. Therefore, it is irrelevant that such a calculation ultimately may be found in his work
papers, because an expert is required to disclose information in the expert report, i.e., trial is not
a “scavenger hunt” where the Government is required to search a “mass of binders” for relevant
information. Gov’t Br. at 57.

        Even if Mr. Metcalfe’s opinion properly were before the court, it should be rejected as
unreliable as it is an “unsupported legal conclusion with no reasoning or explanation.” Gov’t Br.
at 54 (citing Fed. R. Evid. 702 (requiring that an expert’s opinion “help the trier of fact to
understand the evidence or to determine a fact in issue;” be “based on sufficient facts or data;”
and be “the product of reliable principles and methods;” and that “the expert has reliably applied
the principles and methods to the facts of the case”)). In this case, however, Mr. Metcalfe did
not identify any factor or piece of evidence that led to his opinion, and there is no such evidence
in the record about the spent fuel storage portion of the Part 171 fee. In addition, Mr. Metcalfe
was an accountant without any expertise in the operation of nuclear plants or regulatory
oversight of nuclear power plants. Gov’t Br. at 56. Therefore, it is not surprising that Mr.
Metcalfe’s testimony failed to provide the court with a calculation of the amount of NRC fees to
which SMUD could be entitled. Gov’t Br. at 56 (citing TR at 856-57 (Statement of SMUD’s
counsel)). Only in Plaintiff’s Post-Trial Brief did SMUD attempt such a calculation, but that
calculation was not subject to discovery, and because Mr. Metcalfe stated during his deposition
that he was not offering that calculation as an opinion, Mr. Metcalfe’s testimony must be
discounted. Gov’t Resp. at 35-36 & n.14 (citing Pl. Br. at 67 n.11). As such, Mr. Metcalfe’s
testimony as to the NRC fees lacks foundation and is “unhelpful to the [c]ourt.” Gov’t Br. at 56.

        Finally, the Government asserts that SMUD mischaracterizes the holdings in relevant
decisions. Gov’t Resp. at 34-35. For example, the appellate court has not held that NRC’s fee
structure changed as a result of the partial breach, but observed that this was a trial court
determination that was not challenged on appeal in Boston Edison Co. 658 F.3d at 1368-70.
Similarly, the trial court’s determination that the change in NRC fees was caused by DOE’s
partial breach, in Consolidated Edison, 92 Fed. Cl. 466, was appealed to the United States Court
of Appeals for the Federal Circuit.19 Moreover, SMUD failed to disclose that the trial court in


       19
         After the completion of briefing in this case, the United States Court of Appeals for the
Federal Circuit issued Consolidated Edison Co. of New York v. Entergy Nuclear Indian Point 2,


                                                 40
Wisconsin Elec. Power Co. v. United States, 90 Fed. Cl. 714 (2009), also credited the testimony
of a DOE official, who had concluded that the Part 171 fee change “would have occurred in 1999
even if DOE had begun performance in 1998[.]” Id. at 785-86. In sum, in each of these cases
the plaintiffs produced evidence regarding NRC fees during discovery that was later considered
by the court. Gov’t Resp. at 35. The Plaintiff did not do so in this case.

                      c.      The Court’s Resolution.

        SMUD argues that it is entitled to a portion of fees incurred from 2004 through 2008
because of the NRC’s change to the Part 171 fee structure following the DOE’s partial breach of
the Standard Contract. The United States Court of Appeals for the Federal Circuit recently held
that a plaintiff-utility “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 the
generic fee structure in 1999,” and therefore was not entitled to Part 171 fees. See Consol.
Edison Co., 676 F.3d at 1340. The utility-plaintiff in that case presented no evidence “that its
generic fees increased as a result of DOE’s breach.” Id. Therefore, the appellate court rejected
subsequent public comments made by the NRC, as well as an internal memorandum by an NRC
Commissioner, as “insufficient as a matter of law to demonstrate that the new NRC rules were
the result of the government breach.” Id. at 1339. The public comments stated that the former
Part 171 fee structure raised concerns that it “could create a disincentive for licensees to pursue
dry storage.” Id. at 1338. In this case, SMUD relies on a November 5, 1998 internal NRC
memorandum stating that the former Part 171 fee “raised two concerns: (1) the fee structure
could create a disincentive for licensees to pursue dry storage, and (2) the fairness of assessing
multiple annual fees if a licensee holds multiple ISFSI licenses for different designs.” PX 6311
at KRGSMUDII-002816. But, this evidence does not materially differ from that presented in
Consolidated Edison.

        For these reasons, the court has determined that SMUD failed to demonstrate that the Part
171 fee change was a result of the Government’s breach, so that SMUD is not entitled to recover
any portion of its Part 171 fees from 2004 through 2008. The court, however, has determined
that SMUD would have exited the nuclear industry in 2009 in the non-breach world. Therefore,
in the non-breach world SMUD would not have been required to pay NRC fees for 2009 and,
therefore, SMUD is entitled to receive $118,750 in mitigation costs for the NRC fees that SMUD
paid in 2009.

               8.     Whether Plaintiff Is Entitled To The Cost Of Greater-Than-Class-C
                      Storage.

       In 2004, SMUD began the process of physically dismantling and decommissioning
Rancho Seco. Decommissioning was an extensive process involving the segmentation and
removal of reactor vessel internals that are an integral part of the power plant containing the
nuclear fuel. TR at 153-54 (Ronningen). The segmentation of the reactor vessel internals
created a significant amount of low-level waste, categorized by DOE as Class A, B, and C waste,


LLC, 676 F.3d 1331 (Fed. Cir. 2012), holding that the plaintiff was not entitled to recover for
Part 171 fees paid to the NRC. Id. at 1340.


                                                41
and high-level GTCC waste. The GTCC waste was loaded into a canister like the ones used to
store SNF and placed in the ISFSI for long-term storage. TR at 30, 91, 136 (Ronningen). A
twenty-four-hour security service also is onsite, as required by NRC regulations. TR at 90-91
(Ronningen).

                      a.     The Plaintiff’s Argument.

       SMUD argues that it is entitled to recover $3,927,926 in mitigation costs incurred to
prepare, segment, package, inspect, and load GTCC waste into the ISFSI. Pl. Br. at 19. The
evidence presented in this case establishes that DOE would have picked up and stored SMUD’s
GTCC waste and SNF in the non-breach world. PX 6351 ¶¶ 40-41 (Stuart Written Direct); PX
6352 ¶¶ 11-15, 59 (Supko Written Direct); PX 6355 at 146 (May 8, 2002 Mr. Milner Dep.
(Yankee Atomic Elec. Co. v. United States)), 254 (July 14, 2004 Dr. Bartlett (former Director of
DOE’s Waste Program) Direct); PX 6356 at 40, 49 (June 13-14, 2002 Campbell Dep. (Yankee
Atomic Elec. Co. v. United States)), 59-62 (Aug. 10, 2004 Mr. Huizenga (DOE Assistant Deputy,
Administration for the Office of International Material Protection and Cooperation) Direct).

        Under the Standard Contract, DOE is responsible for providing acceptance criteria and
the technical attributes of the transportation casks. PX 44 Art. IV.B (Standard Contract).
Because DOE did not pick up the GTCC waste, SMUD was required to store it in the ISFSI. Pl.
Br. at 21 (citing TR at 248 (Ronningen); TR at 764-65 (Grubb); PX 6358 ¶¶ 11, 22 (Snyder
Written Direct)). To accomplish this, SMUD segmented its reactor vessel internals so that the
GTCC waste would fit into a canister designed to be stored in the ISFSI. TR at 763-64 (Grubb);
TR at 768-70 (Grubb); PX 6358 ¶¶ 23-26 (Snyder Written Direct). In the non-breach world,
SMUD would have undertaken the GTCC waste segmentation and removal process in
accordance with DOE’s criteria, not the physical constraints of the ISFSI. Pl. Br. at 22 (citing
TR at 760-75, 782-87, 819-20 (Grubb); TR at 138-40, 161-64, 185-87, 248 (Ronningen); PX
6358 ¶¶ 11, 13, 22-26, 38, 45, 48, 55, 68-69, 71, 73 (Snyder Written Direct)); see also Pl. Resp.
at 43 (citing TR at 765, 787-88, 815-16 (Grubb); PX 6358 ¶¶ 13, 14, 69-70 (Snyder Written
Direct)).

        In the breach world, SMUD is required to incur the cost of preparing, packaging, and
loading GTCC waste for transport from the ISFSI to a DOE facility, when and if DOE performs.
Pl. Resp. at 44-45 (citing PX 6358 ¶¶ 13-14, 72-79 (Snyder Written Direct)). The segmentation
tasks that SMUD would be required to undertake in the non-breach world were dependent on the
type of transportation cask that DOE would select, but that design has not yet been elected by
DOE. TR at 769-70, 785-86, 813-16 (Grubb); TR at 974 (Gelles); TR at 1063 (Jones); TR at
1081 (Maret); PX 6358 ¶¶ 68, 78-79 (Snyder Written Direct). Because the cost of packaging of
GTCC waste for transport to a DOE facility has not occurred, allowing the Government an offset
for GTCC waste loading costs would be inappropriate. Pl. Resp. at 42 (citing Carolina Power &
Light Co., 573 F.3d at 1277 (“This court rejects the argument that [plaintiff] has avoided the
costs of loading casks such that the government should benefit from an offset in the damages
award. Plaintiffs have not avoided the costs of loading. Rather, they have merely deferred these
costs.”)).




                                               42
        SMUD contends that the mitigation costs to procure the GTCC basket and canister and to
load the basket and canister into the ISFSI are costs that SMUD is entitled to recover, because
they “serve no purpose other than for the temporary storage of GTCC at the ISFSI.” Pl. Resp. at
49 (citing PX 6358 ¶¶ 45-48 (Snyder Written Direct)). These costs total $977,583. Pl. Resp. at
49-50 (citing PX 6358 ¶¶ 45-52, 57, 59, 64-65 (Snyder Written Direct)).

        Although the overall segmentation project cost $15 million under a fixed-price contract
with Transnuclear, Inc. (“Transnuclear”), SMUD’s damages expert undertook an independent
detailed review of the project cost and determined that $3,927,926 was solely related to the
Government’s partial breach. Pl. Br. at 23 (citing PX 6358 ¶¶ 10-11 (Snyder Written Direct); see
also TR at 138-39, 158-66 (Ronningen)). Despite difficulties in segregating the costs of the
fixed-price contract, Mr. Snyder provided a thorough and reasoned basis for determining the
costs that were GTCC-related. Pl. Br. at 23 (citing PX 6358, Part IV (Snyder Written Direct)).
Moreover, the law does not require more where the Government has created the situation that
caused the imprecision. See LaSalle Talman Bank, F.S.B. v. United States, 317 F.3d 1363, 1374
(Fed. Cir. 2003) (“[W]hen damages are hard to estimate, the burden of imprecision does not fall
on the innocent party.”). The Government proffered no evidence disputing the accuracy of Mr.
Snyder’s calculations. Pl. Resp. at 48-49.

       In sum, “[j]ust as this [c]ourt awarded its damages related to the dry storage project in
[SMUD III] to prepare and store the fuel during the period of the government’s breach, . . . so too
should this [c]ourt award SMUD its comparable damages for its GTCC project.” Pl. Br. at 24;
see also Pl. Resp. at 40-41 (comparing the Government’s argument regarding GTCC waste
storage costs in this case to the Government’s rejected argument regarding SNF storage costs in
SMUD III, 70 Fed. Cl. at 372-73).

                      b.      The Government’s Response.

         The Government responds that the costs to perform GTCC waste segmentation and
removal are not recoverable, because these are activities that SMUD would have been required
to undertake in the non-breach world to decommission Rancho Seco. Gov’t Br. at 26; see also
Gov’t Resp. at 11 (“[N]othing in the RVI project was ‘caused’ by DOE’s delay.”). Specifically,
SMUD was required to dismantle the reactor vessel and segment all of the vessel’s internal
components, including all radioactive waste, whether it was Class A, B, and C waste, or GTCC
waste.20 Gov’t Br. at 27 (citing DX 6243 at ¶¶ 12-13, 18, 23, 40, 42 (Jones); DX 6244 at ¶¶ 20-
22 (Maret); TR at 182-87 (Ronningen); TR at 731-34 (Redecker)). Contrary to SMUD’s
argument that it is entitled to segmentation storage costs, the United States Court of Appeals for
the Federal Circuit in Yankee Atomic declined to hold that DOE is responsible for the costs of
segmenting HLW. Gov’t Br. at 29 (citing Yankee Atomic, 536 F.3d at 1279 (confining a utility’s
ability to recover GTCC-related storage costs)). In fact, the Standard Contract requires a utility
to “arrange for, and provide, all preparation, packaging, required inspections, and loading

       20
          Class A, B, and C, waste are low-level radioactive waste SMUD had to segment and
remove as part of decommissioning and for which responsibility is not assigned to DOE under
the Standard Contract.


                                                43
activities necessary for the transportation of SNF and/or HLW to the DOE facility.” PX 44, Art.
IV.A.2 (Standard Contract). Therefore, SMUD is attempting to transfer GTCC waste removal
and segmentation costs to DOE, contrary to the Standard Contract. Gov’t Br. at 31.

        In addition, the evidence adduced at trial failed to establish causation as to the claimed
GTCC-related portion of the Reactor Vessel Internals (“RVI”) project. The Government does
not dispute that the method used by SMUD to remove and segment GTCC waste was the least
costly and most efficient and, for that reason, SMUD would have undertaken the same project in
the same manner and at the same cost in the non-breach world as it did in the breach world.
Gov’t Br. at 31-32 (citing DX 6243 ¶¶ 28-30 (Jones Written Direct); TR at 770-71, 807, 809-10,
812-13, 818-19 (Grubb)). Moreover, SMUD could and did accomplish this task even without
knowing the characteristics of the DOE’s cask. Gov’t Br. at 33-34 (citing DX 6243 ¶¶ 29-30
(Jones Written Direct); DX 6244 ¶¶ 20-22 (Maret Written Direct)). Therefore, Mr. Snyder did
not establish that SMUD would not have performed the same segmentation and removal project
in the non-breach world or that SMUD needed to segment the GTCC waste from the reactor
vessel to provide it to DOE for shipment. Gov’t Br. at 30. In addition, Mr. Snyder improperly
and speculatively relied on the Draft Environmental Impact Statement for the Disposal of GTCC
Low-Level Radioactive Waste and GTCC-like Waste for the proposition that SMUD will need to
undertake a significant additional segmentation project when the DOE performs. Gov’t Resp. at
19 (citing PX 6358 ¶ 74 (Snyder Written Direct)). As DOE’s Director of the Office of Disposal
Operations testified, this document was not a final decision by the DOE, but a draft presenting a
“bounding” set of assumptions. Gov’t Resp. at 19-20 (citing TR at 955-56, 964-65 (Gelles)).
Therefore, these costs would have been incurred by SMUD absent the partial breach and are not
recoverable. See Energy Nw., 641 F.3d at 1307 (“If a cost would have been incurred even in the
non-breach world, it is not recoverable.”). This includes the costs of loading the GTCC waste,
the cask, and the canister. Gov’t Resp. at 14. Furthermore, SMUD’s argument that, absent DOE
acceptance criteria, there is no way to know how the segmentation and removal would have
occurred in the non-breach world ignores SMUD’s burden to establish the costs it would have
avoided in the non-breach world. Gov’t Resp. at 12-13 (citing Yankee Atomic, 536 F.3d at 1273
(requiring the trial court to perform a comparison between the breach and non-breach world)).

        SMUD also failed to establish with reasonable certainty the GTCC-related portion of its
claim. Gov’t Resp. at 14 (citing Wells Fargo Bank, N.A. v. United States, 88 F.3d 1012, 1023
(Fed. Cir. 1996) (holding that damages “such as would have been realized by the party from
other independent and collateral undertakings . . . are too uncertain and remote to be taken into
consideration as a part of the damages occasioned by the breach of the contract in suit.”)). First,
the Transnuclear executive in charge of SMUD’s RVI project admitted that he could not
segregate how much of the fixed price contract was related to GTCC waste nor could he
ascertain how precise an estimate would be. TR at 786-87 (Grubb). Second, SMUD’s expert,
Mr. Snyder, failed to account for certain costs included within the fixed-price contract to
determine if they were GTCC-related. TR at 797-800 (Grubb). Third, Mr. Snyder failed to
obtain information from Transnuclear’s sub-contractors to determine if and what portion of their
costs, such as tools, were GTCC-related. TR at 800-01 (Grubb). Fourth, Mr. Snyder included
the total cost of the water processing equipment used to address water clarity problems in his
estimate, but that issue arose prior to the removal of the GTCC waste and the same equipment
was used to address problems related to Class A, B, and C waste as well. TR at 1156-57, 1162



                                                44
(Snyder). Fifth, Mr. Snyder included SMUD internal labor costs in his estimate, but did not
review any time sheets to determine whether the work was GTCC-related. TR 1161-62
(Snyder). Instead, Mr. Snyder allocated a percentage of the time charged to the overall RVI
project to the GTCC-related portion of the project. Gov’t Resp. at 17. Finally, the fixed-price
contract did not identify the costs of the GTCC-related portion, but Mr. Snyder nevertheless
concluded that “$2.387 million” of the contract was GTCC-related. TR at 1147-49 (Snyder); PX
6358 ¶¶ 32-44 (Snyder Written Direct). In sum, Mr. Snyder either did not seek or ignored
available information that would have provided a more accurate assessment of SMUD’s GTCC-
related costs. Gov’t Resp. at 18. As a result, “the evidence [i]s insufficient to determine the
quantum of [damages] to a reasonable certainty.” Bluebonnet Sav. Bank, F.S.B. v. United States,
266 F.3d 1348, 1358 (Fed. Cir. 2001). Even if SMUD would have been required to undertake a
different project in the non-breach world, those costs would have been greater than in the breach
world. Gov’t Br. at 34. The bottom line is that SMUD cannot show that it suffered a net loss,
comparing the breach world to the non-breach world, and should not be permitted to recover for
an actual world cost that it claims would have been greater in the non-breach world. Gov’t Br. at
35 (citing Bluebonnet Sav. Bank, 339 F.3d. at 1346 (holding that it was necessary for the trial
court to “make further determination as to what costs, if any, the plaintiffs would have incurred
in the absence of breach and thus to ascertain the net financial effect of the breach on the
plaintiffs”)).

        The Government adds that a jury verdict method of determining damages is inappropriate
here, because SMUD has not shown a “justifiable inability to substantiate the amount of [its]
resultant injury by direct and specific proof[.]” Gov’t Resp. at 18-19 (quoting Joseph Pickard’s
Sons Co. v. United States, 532 F.2d 739, 742 (Ct. Cl. 1976)).

                      c.     The Court’s Resolution.

        To decommission Rancho Seco, SMUD undertook a large RVI segmentation project.
This entailed dismantling and removing the internals from the reactor vessel and then placing
them in the reactor cavity. TR at 771 (Grubb). To protect against radiation, the reactor cavity
was flooded with water, so that all of the segmentation work took place underwater in the reactor
vessel. TR at 761 (Grubb). Removal of the various parts of the internals involved separating
them from each other by milling and shearing off bolts and cutting apart various pieces. TR at
759-62, 770-71, 805 (Grubb). This project, however, created approximately 41,000 pounds of
GTCC waste and about 300,000 pounds of Class A, B, and C waste. TR at 795-96 (Grubb); DX
6129 at SMUDII3113412 (Sept. 19, 2006 Transnuclear RVI Segmentation Project Final Report).
SMUD was careful to minimize the amount of GTCC waste created and to separate it from A, B,
and C waste. TR at 793-94 (Grubb). The GTCC waste consisted primarily of reactor vessel
baffle plates and baffle formers that were removed essentially intact from the RVI. TR at 811-12
(Grubb). The GTCC waste was placed in the GTCC basket on the bottom of the reactor vessel
cavity. TR at 771 (Grubb). In addition, GTCC “chips” created by the shearing and milling
process were collected and placed into the GTCC basket. TR at 772-74 (Grubb). While in the
reactor cavity, the GTCC basket then was placed inside a previously constructed storage canister,
similar to those used by SMUD to store SNF. TR at 1152-53 (Snyder). This canister then was
removed from the reactor cavity, vacuum dried, backfilled with helium, welded shut, and in




                                               45
February 2006 was moved into the ISFSI. TR at 761-62 (Grubb); PX 6358 ¶¶ 26, 57 (Snyder
Written Direct).

        The United States Court of Appeals for the Federal Circuit has held that DOE is
responsible under the Standard Contract for the disposal of GTCC waste. See Yankee Atomic,
536 F.3d at 1278-79. SMUD argues that its GTCC waste and SNF would have been picked up at
the same time. The record shows that this could have been accomplished under the “plus/minus
twenty percent” provision of the Standard Contract and that the parties contemplated that DOE
would not leave GTCC waste at a utility after SNF was collected. PX 6351 ¶¶ 40-41 (Stuart
Written Direct); PX 6352 ¶¶ 11-15, 59 (Supko Written Direct); TR at 763-64 (Grubb); PX 6355
at 146 (May 8, 2002 Mr. Milner Dep. (Yankee Atomic Elec. Co. v. United States)), 254 (July 14,
2004 Dr. Bartlett Direct); PX 6356 at 40-41, 49 (June 13, 2002 Mr. Cambell (DOE Engineering
Program Manager) Dep.), 59-62 (Aug. 10. 2004 Mr. Huizenga (DOE Assistant Deputy,
Administration for the Office of International Material Protection and Cooperation) Direct). The
Government does not dispute this point. Therefore, the court has determined that SMUD’s
GTCC waste would have been removed by the end of 2008, along with SMUD’s SNF. Since
SMUD’s GTCC waste would be removed in the non-breach world, the Government’s partial
breach caused SMUD to incur GTCC storage costs. As such, SMUD is entitled to recover the
costs of storage for its GTCC waste. See Yankee Atomic, 536 F.3d at 1279 (affirming the trial
court’s holding that “the conclusions reached with respect to recoverability of SNF storage
expenses are equally applicable to GTCC waste, which is stored on-site in the same manner as
SNF”).

        The court has considered SMUD’s claim for GTCC mitigation costs in two categories:
costs that SMUD would have incurred in the non-breach world; and costs that SMUD would
have incurred in the non-breach world but, in the breach world, that SMUD will incur in the
future, i.e., deferred costs. The first category includes the costs to remove and segregate GTCC
in the reactor vessel. These are costs that SMUD would have incurred in the non-breach world,
but will not incur again in the breach world, and are not recoverable. See Energy Nw., 641 F.3d
at 1307 (“If a cost would have been incurred even in the non-breach world, it is not
recoverable.”). Nevertheless, SMUD insists that it is entitled to damages for these costs because
the entire Reactor Vessel Internals segmentation project was driven by the need to store the
GTCC waste in the ISFSI. But in the non-breach world, SMUD would have undertaken this
project with direction by DOE as to its choice of canister. Pl. Br. at 22-23. Therefore, SMUD
asserts that it is entitled to receive the entire amount as storage costs, until it is known what the
project would have entailed in the non-breach world. Pl. Resp. at 41-42.

        To the extent that SMUD would have incurred lower costs in the non-breach world,
SMUD has the burden to demonstrate a plausible non-breach world establishing these lower
costs. See S. Nuclear Operating Co., 637 F.3d at 1304 (“As we held in Yankee Atomic,
‘[b]ecause plaintiffs . . . are seeking expectancy damages, it is incumbent upon them to establish
a plausible ‘but-for’ world.’”). Conversely, to the extent that SMUD established that it would
have incurred higher costs in the non-breach world, i.e., avoided costs, the Government is
entitled to an offset for those costs. See Carolina Power & Light Co., 573 F.3d at 1277. Neither
SMUD nor the Government, however, established with any reasonable certainty that SMUD’s
segmentation costs would have been lower or higher in the non-breach world. Moreover, these



                                                 46
are not deferred costs that SMUD will be required to incur, if and when DOE performs. See id.
To the extent that SMUD may be required by DOE to cut the GTCC waste into smaller pieces to
fit into a DOE-selected canister in the future, that is not a cost that SMUD has yet to incur in the
breach world.

        The second category includes costs SMUD incurred to load the GTCC into the storage
cask and then remove it to the ISFSI. These are costs that SMUD will be required, in the breach
world, to incur again, if and when DOE performs. Therefore, they represent deferred costs for
which SMUD is entitled to recover. See Carolina Power & Light Co., 573 F.3d at 1277. Also
falling into this category are costs for the design and fabrication of both the GTCC canister and
GTCC basket.

        SMUD states that the following mitigation costs fall into the “loading” category and are
recoverable: (1) fabrication of the GTCC canister ($224,431); (2) design and fabrication of the
GTCC basket ($250,000); (3) SMUD operations and maintenance personnel ($84,965); (4)
Bigge Crane operators ($35,790); (4) contract surcharges to procure GTCC canister and GTCC
basket ($17,894.84);21 (5) SMUD’s engineering costs related to developing, loading, and
transporting the GTCC canister and GTCC basket ($174,202); (6) labor surcharges associated
with engineering costs ($58,530.35); (7) radiation protection crew costs during transportation
and loading of the GTCC canister into the ISFSI ($67,567); (8) design of the GTCC canister
($57,799); and (9) contamination protection clothing used to transport and load the GTCC
canister into the ISFSI ($6,404). Pl. Resp. at 49-50.

       The court finds that the cost to procure the GTCC basket and the GTCC canister, and
attendant design costs, are related directly to these loading costs. Likewise, SMUD’s associated
engineering costs and labor surcharges are loading costs. And, the radiation protection crew and
contamination protection clothing are loading costs, because they were incurred to conduct
GTCC loading operations. These are costs that SMUD is entitled to recover.

        The Government correctly asserts that SMUD also must establish these costs with
“reasonable certainty.” See Ind. Mich., 422 F.3d at 1373. To do so, SMUD must make a fair and
reasonable approximation of the damages incurred. See Locke, 283 F.2d at 524 (“Certainty is
sufficient if the evidence adduced enables the court to make a fair and reasonable approximation
of the damages.”). The costs for GTCC canister fabrication, canister design, and GTCC basket
and GTCC canister surcharges are specified in purchase orders and therefore were established
with reasonable certainty. Although payment for the GTCC basket design and fabrication was a
“milestone payment,”22 SMUD established this amount represents a fair and reasonable


       21
          The Government concedes that the first four categories are “loading” costs. Gov’t
Resp. at 20 n.8.
       22
          SMUD’s contract with Transnuclear to perform the RVI project was a fixed-price
contract, with payments due upon completion of different milestones. PX 6084 (Transnuclear
RVI Project Contract); see also PX 6358 ¶¶ 32 (Snyder Written Direct) (testifying that, based on
his experience, “the values assigned in the itemized price list accurately reflect SMUD’s and
Transnuclear’s understanding of the costs to perform those listed tasks”).


                                                47
approximation of the cost to design and fabricate the GTCC basket. PX 6358 ¶¶ 32, 47 (Snyder
Written Direct).

       For these reasons, the court has determined that SMUD established the costs for the
GTCC basket design and fabrication and GTCC canister design and fabrication of $550,124.84
with reasonable certainty.

        SMUD has also established Bigge Crane operation costs with reasonable certainty.
SMUD determined the percentage of total Bigge Crane contract costs attributable to the GTCC
project by “dividing the number of man-hours SMUD and Transnuclear anticipated would be
spent on GTCC-specific tasks (16 shifts) by the number of man-hours SMUD and Transnuclear
anticipated would be spent on segmenting the RVI in their entirety (103 shifts). . . . [T]his ratio
[was chosen] because [based on Mr. Snyder’s experience] the price of a complex contract is
often based on the anticipated amount of time required to complete that contract.” PX 6358 ¶ 44
(Snyder Written Direct); see also id. ¶ 51 (applying this methodology to Bigge Crane
operations).

       For these reasons, the court has determined that SMUD established Bigge Crane
operation costs of $35,790 that are attributed to GTCC loading and are a fair and reasonable
approximation of these costs.

       The costs of radiation protection crew and contamination protection clothing also have
been established by SMUD with reasonable certainty, as they were verified by purchase orders
placed in February 2006, the month during which SMUD loaded the GTCC basket into the
GTCC canister and removed the canister from the reactor cavity for drying. PX 6358 ¶ 57
(Snyder Written Direct). Mr. Snyder attributed 50% of these costs in February 2006 to these
“very high risk” activities. PX 6358 ¶ 57 (Snyder Written Direct). The court credits Mr.
Snyder’s allocation as a “fair and reasonable approximation” of the radiation protection crew and
contamination protection costs incurred for these loading costs. See Locke, 283 F.2d at 524. For
these reasons, the court has determined that SMUD established radiation protection crew and
clothing costs of $73,971.

        SMUD’s damages expert testified that SMUD employed four operation and maintenance
personnel to work on the segmentation project doing a variety of activities related to GTCC
loading, with one other operations and maintenance person performing work in a workshop
related to both GTCC and non-GTCC work. PX 6358 ¶ 50 (Snyder Written Direct). Therefore,
he allocated 80% of the operations and maintenance personnel costs to GTCC loading activities.
PX 6358 ¶ 50 (Snyder Written Direct). The problem with this approach is that SMUD presented
no evidence verifying with reasonable certainty what work the operations and maintenance
personnel actually performed. A similar problem arises regarding engineering costs. SMUD’s
damages expert estimated that at least 50% of SMUD’s engineering personnel’s time was
dedicated to GTCC activities. PX 6358 ¶ 53 (Snyder Written Direct). The engineering costs
claimed by SMUD, however, include both segmenting and loading activities without any
differentiation. PX 6358 ¶ 52 (Snyder Written Direct). Since the engineering labor surcharges
also are directly tied to the engineering costs, they must also be excluded. SMUD did not




                                                48
establish with reasonable certainty its operation and maintenance personnel costs, engineering
costs, and engineering labor surcharges.

       For these reasons, the court has determined that SMUD is entitled to $659,886 for the
portion of the claimed costs related to loading the GTCC waste into the ISFSI.

               9.     Whether Plaintiff Is Entitled To Certain Overhead Costs.

                      a.      The Plaintiff’s Argument.

        SMUD argues that it is entitled to $5,485,649 for mitigation costs incurred for internal
labor, contract costs, and purchased materials attributable to the Government’s partial breach for
the period 2004 to 2009. Pl. Br. at 24-26 (citing PX 6353 ¶ 42, 51 (Metcalfe Written Direct); TR
at 848-49 (Metcalfe)). SMUD asserts that it established that the SAP accounting system it uses
reliably tracks overhead costs, because it groups employees into cost centers and SMUD “loads”
each employee’s labor, allocating indirect costs necessary to support a direct labor cost center
group to that group in the form of an indirect surcharge rate. TR at 262-63, 265-72, 274-75
(McAlister). For example, the employees in the direct labor cost center group charge their
“loaded” time to a specific work order for activity on a specific project. TR at 262, 265-68
(McAlister). Indirect costs also are charged to a specific project, thereby reflecting the overhead
costs. TR at 262, 265-68 (McAlister). In this case, SMUD has claimed labor hours worked by
SMUD employees in mitigation of DOE’s partial breach and indirect costs for “mitigation labor
hours.” Pl. Br. at 25 (citing TR at 265-68 (McAlister)). In addition, SMUD’s damages expert,
Mr. Metcalfe, reviewed SMUD’s overhead claims and found them to be appropriate and properly
supported. PX 6353 ¶ 51 (Metcalfe Written Direct).

         The Government’s expert did not disagree with SMUD’s allocations, but commented
that, in other SNF cases, he found that the overhead costs were fixed rather than correlated with
the total dollars spent on allocation bases. DX 6245 ¶ 48 (Peterson Written Direct). SMUD
responds that it was not required to “recite what activities are performed by each of the cost
centers[.]” Pl. Resp. at 68. Nor was SMUD required to analyze the impact of the Government’s
partial breach on the costs charged, the correlation between costs charged and project activity, or
the correlation between costs charged and the general activity. Pl. Resp. at 68.

                      b.      The Government’s Response.

         The Government responds that SMUD’s overhead costs are barred by the law of the case
and/or mandate rule, because the court previously rejected similar claims. Gov’t Br. at 57 (citing
SMUD III, 70 Fed. Cl. at 377 (“Although SMUD properly may have incurred $2,497,724.00 for
other overhead costs, SMUD failed to meet the burden of demonstrating that such costs, in fact,
were incremental [to DOE’s delay].”)). This finding was not appealed and now is the law of the
case incorporated by the United States Court of Appeals for the Federal Circuit’s mandate.
Gov’t Br. at 58 (citing Tronzo v. Biomet, Inc., 236 F.3d 1342, 1349 (Fed. Cir. 2001) (holding that
a party’s challenge to a damages ruling was barred by the mandate rule where the party did not
raise issues on appeal that clearly were implicated in the trial court’s initial decision)).




                                                49
        In addition, SMUD failed to meet its burden of proof to establish entitlement to overhead
costs, because SMUD did not “tie DOE’s partial breach to particular overhead costs at issue to
establish that DOE’s delay actually caused SMUD to sustain harm.” Gov’t Br. at 58-59.
Moreover, SMUD was required to prove that it “incurred additional overhead costs.” Gov’t
Resp. at 31 (citing Sys. Fuels, Inc. v. United States, 666 F.3d 1306, 1311 (Fed. Cir. 2012)
(stating that a nuclear fuel supplier “incurred additional overhead costs when managing the [dry
fuel storage project]”)). In this case, SMUD did not “pinpoint[]” the activities performed at each
cost center and did not provide any method to determine why certain costs were allocated to
mitigation activities or if they relate to mitigation activities at all. Gov’t Br. at 59 (citing TR at
295-301 (McAlister)). Nor did SMUD analyze: 1) whether DOE’s delay impacted overhead
costs; 2) the correlation between overhead costs and project activity; or 3) the correlation
between overhead costs and general activity at Rancho Seco. Gov’t Br. at 59. Furthermore,
SMUD’s damage expert did not tie SMUD’s claimed overhead costs to DOE’s partial breach.
PX 6353 ¶ 51 (Metcalfe Written Direct). Therefore, the overhead costs claimed by SMUD are
general costs not attributable to breach-related project activities. Gov’t Resp. at 32.

                       c.      The Court’s Resolution.

        For the reasons previously discussed, the court has determined that the proper doctrine
for determining the preclusive effect of the court’s findings in Docket No. 98-488 is collateral
estoppel, not the law of the case doctrine nor the mandate rule. Collateral estoppel does not bar
the court from adjudicating SMUD’s claim for overhead costs incurred from 2004 through 2009,
because there has been “a significant change in the ‘legal atmosphere.’” Bingaman, 127 F.3d at
1438. In SMUD III, the court denied SMUD’s claim for overhead costs, because “SMUD failed
to meet the burden of demonstrating that such costs . . . were incremental.” SMUD III, 70 Fed.
Cl. at 377. Thereafter, the United States Court of Appeals for the Federal Circuit, in a different
SNF case, rejected the position that a plaintiff-utility “must prove that additional costs were
incurred as a result of DOE’s [partial] breach.” Boston Edison Co, 658 F.3d at 1370.

        In other words, “[o]nce a plaintiff has proved that certain work was undertaken because
of the breach (i.e., it would not have been undertaken in the non-breach world), he is entitled to
prove the amount of the associated cost (including both direct and indirect costs) by whatever
reasonable techniques are available.” Energy Nw., 641 F.3d at 1309 (also holding that a plaintiff
who furnishes such proof is not required to show that overhead costs increased as a result of the
breach); see also S. Cal. Edison Co. v. United States, 655 F.3d 1319, 1322 (Fed. Cir. 2011)
(“Because the ISFSI facilities had not existed prior to the Government’s breach, and indeed were
necessitated by the breach, this is not a case where the underlying costs were incurred by
operations independent of and unrelated to the breach.”). Therefore, SMUD must demonstrate
only that overhead costs were fairly allocated to an activity that was caused by DOE’s partial
breach, i.e., that the costs were properly “loaded” to mitigation activities. Moreover, as a matter
of law, overhead is considered fairly allocated where the allocation is made in compliance with
generally accepted accounting principles (“GAAP”) and Federal Energy Regulatory Commission
(“FERC”) regulations. See Sys. Fuels, Inc., 666 F.3d at 1312 (awarding overhead costs where
they were allocated in accordance with GAAP and FERC rules).




                                                 50
        The Government argues that SMUD is not entitled to these costs, because it has not
established: the exact activities occurring in each of the overhead cost centers; whether DOE’s
delay impacted SMUD’s overhead costs; the correlation between overhead costs and project
activity; or the correlation between overhead costs and general activity at Rancho Seco. Gov’t
Br. at 59. The Government, however, cites no precedent in support. To the extent that SMUD
must show that claimed overhead costs were caused by the Government’s partial breach, that
may be established by fairly allocating overhead costs to activities that were caused by the
breach. See Energy Nw., 641 F.3d at 1309 (“The plaintiff may prove the amount of costs by
whatever means available, so long as the cumulative result is a reasonable certainty that the
awarded costs were actually caused by the breach.”). Instead, the Government’s argument
attempts to resurrect the requirement that a plaintiff show that its overhead costs were
incremental, which is no longer required. The words “additional overhead costs” in System
Fuels does not change this analysis, as the United States Court of Appeals for the Federal Circuit
applied the same framework for analyzing overhead costs as in all prior SNF cases discussing
overhead costs. See Sys. Fuels, Inc., 666 F.3d at 1311-12.

        SMUD met its burden to show that it allocated its overhead costs by “loading” those
costs to each employee and then directly charging that “loaded” time to the project on which that
employee worked. TR at 262, 266, 269-73 (McAlister). This accounting system complies with
GAAP and FERC requirements. TR at 848-49 (Metcalfe); PX 6353 ¶ 42, 51 (Metcalfe Written
Direct). Moreover, SMUD only has claimed those overhead costs allocated to employee hours
for work performed on mitigation activities. TR at 265-68 (McAlister).23

        For these reasons, the court has determined that SMUD is entitled to $5,485,649 in
mitigation costs for overhead.

               10.     Whether Plaintiff Is Entitled To The Cost Of Capital.

                       a.      The Plaintiff’s Argument.

        Plaintiff argues that it is entitled to $3,619,000 for “the increased cost of capital expended
by SMUD related to each category of SMUD’s damages.” Pl. Br. at 8 n.1; PX 6353 ¶ 38, tbl. 1
(Metcalfe Written Direct); see also PX 6353 ¶¶ 46-50 (Metcalfe Written Direct); PX 6265
(Metcalfe’s Damages/Cost of Debt Binder A); PX 6266 (Metcalfe’s Damages/Cost of Debt
Binder A). SMUD acknowledges that the United States Court of Appeals for the Federal Circuit
has denied recovery for cost of capital in System Fuels, Inc., 666 F.3d 1306, and System Fuels,
Inc. v. United States, 457 F. App’x 930 (Fed. Cir. Jan. 19, 2012). SMUD, however, asserts that
Judge Newman’s dissent allowing recovery for the cost of capital in System Fuels, Inc., 666 F.3d
1306, sets forth the proper standard. See id. at 1314-15 (Newman, J., dissenting).




       23
          And, as SMUD points out, the Government’s economic damages expert, Mr. Peterson,
did not dispute these aspects of SMUD’s overhead costs, instead merely opining that these costs
were fixed and therefore could not be awarded as damages. DX 6245 ¶ 48 (Peterson Written
Direct).


                                                 51
                       b.     The Government’s Response.

        The Government argues that SMUD is not entitled to recover for cost of capital. Gov’t
Br. at 63. The cost of capital claimed by SMUD is in actuality nothing but an attempt to recover
interest in another name. TR at 896 (Metcalfe); DX 6242 ¶¶ 40-41 (Neuberger Written Direct).
Recovery of cost of capital is barred by the no-interest rule, set forth in 28 U.S.C. § 2516, absent
a clear waiver of sovereign immunity or unambiguous agreement by the Government to permit
such recovery. See Library of Congress v. Shaw, 478 U.S. 310, 314 (1986). No such waiver
exists here. Gov’t Br. at 63. Moreover, the United States Court of Appeals for the Federal
Circuit has rejected claims for cost of capital in other spent nuclear fuel cases, including claims
for interest paid on actual borrowings. See Energy Nw., 641 F.3d at 1310-12 (denying recovery
of interest paid on borrowed funds); see also Sys. Fuels, Inc., 666 F.3d at 1311 (denying
recovery for cost of capital); Sys. Fuels, Inc., 457 Fed. App’x at 935 (same); Boston Edison, 658
F.3d at 1371 (same).

                       c.     The Court’s Resolution.

        The United States Court of Appeals for the Federal Circuit consistently has held that
plaintiffs cannot recover the increased cost of capital to fund mitigation-related activities. See
Sys. Fuels, Inc., 666 F.3d at 1310-11 (holding that the no-interest rule “denies claims for interest
and ‘interest costs incurred on money borrowed as a result of the government’s breach or delay
in payment’” (quoting England v. Contel Advanced Sys., Inc., 384 F.3d 1372, 1379 (Fed. Cir.
2004)); see also Energy Nw., 641 F.3d at 1310-12 (denying recovery for interest paid on funds
actually borrowed to finance mitigation activities).

        Following binding precedent, the court must deny SMUD’s claim for the cost of capital,
despite the contrary and persuasive reasoning of Circuit Judge Newman in System Fuels, Inc. See
666 F.3d at 1314-15; see also England, 384 F.3d at 1381-83 (Newman, J., dissenting).

       E.      Whether The Government Is Entitled To An Offset For The Costs That
               Plaintiff Would Have Incurred From January 1, 2004, Through 2008 To
               Operate The Wet Pool.

               1.      The Government’s Argument.

        The Government argues that SMUD’s mitigation costs should be offset by approximately
$38 million to account for the wet pool “operating costs” that SMUD avoided for the period from
January 1, 2004, through 2008. Gov’t Br. at 18. This amount was derived by taking SMUD’s
wet pool storage savings of $4.2 million per year, as determined by SMUD’s Engineering
Supervisor (DX 6214, and adopted by the court in SMUD III, 70 Fed. Cl. at 375 (finding that
SMUD’s wet pool costs in 2003 were $4,196,360)), and adding that amount to the $14.2 million
cost of dry storage for 2004 through 2008. Gov’t Br. at 21 (citing TR 1112-23 (Peterson); DX
6245 ¶¶ 60, 65 & Att. 10 (Peterson Written Direct)). The Government contends that the total of
those two amounts is the estimated cost that SMUD would have incurred to operate the wet pool
in the non-breach world. Gov’t Br. at 20-21; see also Yankee Atomic, 536 F.3d at 1273




                                                52
(requiring that damages awarded be offset by any costs plaintiff would have incurred in the non-
breach world).

        SMUD’s $4,196,360 in annual savings from 2004 through 2008 reflects only the labor
savings achieved by transitioning from the wet pool to dry storage, not the total costs to operate
the wet pool during that period. Gov’t Br. at 20-21; Gov’t Resp. at 5 (citing TR at 638-44
(Field)). SMUD, however, argues that this amount represents the total cost of operating the wet
pool, but does not mention Mr. Field’s testimony and instead relies on Mr. Ronningen, who had
no part in calculating Mr. Field’s savings figure in DX 6214. Gov’t Resp. at 5 (citing Pl. Br. at
60). Therefore, the Government concludes that the logical way to calculate SMUD’s total cost to
operate the wet pool from 2004 through 2008 is to begin with Mr. Field’s cost savings estimate,
with certain adjustments.24 Gov’t Br. at 21-23 (citing DX 6245 ¶¶ 59-60 & Att. 9-a (Peterson
Written Direct); DX 6245 ¶ 65, Att. 10-a & nn. 2-4 (Peterson Written Direct); TR 976 (Field);
TR 1123-26 (Peterson)); see also Gov’t Resp. at 6 (citing DX 6245 ¶¶ 60, 65 (Peterson Written
Direct)). Under this approach SMUD’s total cost of operating the wet pool in the non-breach
world would have been the difference between the costs that SMUD would have incurred to
operate the wet pool in the non-breach world, totaling $24,286,336, added to the $14.2 million
cost of dry storage in the breach world. Gov’t Br. at 23 (citing DX 6245 ¶ 65 & Att. 10-a
(Peterson Written Direct).

        This amount also is consistent with SMUD’s real-world estimates for the low end of wet
pool operating costs. Gov’t Br. at 23 (citing DX 755 at 4 25 (indicating reductions in costs of
$10–12 million per year after switching from wet pool storage to dry storage)); DX 760 at
SMUD0028714; DX 871 at SMUD 062619. In addition, the Government’s claimed offset of
$38 million is consistent with representations that SMUD made to DOE in 1999 that the cost to
operate the wet pool was $9.6 million per year (or $48 million over five years) and that by
moving to dry storage SMUD would save over $8 million per year (or $40 million over five
years). Gov’t Br. at 23-24 (citing DX 729 at RS006101-102 (Mar. 14, 1997 letter from SMUD’s
General Manager Jan Schori to DOE responding to requests for comments on SMUD’s
mitigation options, estimating wet pool costs in 1998-1999 of $800,000 per month or $9.6
million per year (or $48 million over five years)); TR at 711-16 (Redeker) (same). And, it is
consistent with representations made by SMUD to the court in SMUD III. Gov’t Br. at 24 (citing
Pl.’s Post-Trial Br. at 53, Sac. Muni. Util. Dist. v. United States, No. 98-488, Aug. 22, 2005, Dkt.
No. 331) (estimating that the costs of continuing to operate the wet pool on a stand-alone basis
was $7.5 million per year or $37.5 million over 5 years , excluding the transition to and cost of
dry storage).



       24
          The Government’s economic damages expert adjusted this amount by applying
SMUD’s actual salary and labor rate information for the eliminated positions for the years 2004
through 2008 and adding $50,000 for spare parts and materials savings costs as estimated in
Docket No. 98-488C by Mr. Field, adjusted for inflation using the Consumer Price Index. DX
6245 ¶ 65 (Peterson Written Direct).
       25
          But DX 755 at 13 indicates a $19.44 million difference in annual “contribution”
between the two options.


                                                53
       In sum, as SMUD previously agreed:

       Had SMUD simply left its fuel in the pool, the 7½ years of additional wet storage
       costs (using an estimate of $7.5 million per year for operating and maintaining a
       stand-alone pool) would equate to at least $56 million in damages, 12 years of
       additional wet storage costs would equate to at least $90 million, and 14 years of
       additional wet storage costs would equate to at least $105 million, with the
       potential that all of these figures could have been higher because of the
       heightened and changing security requirements for pool storage of nuclear waste.

       There can be little doubt that, had SMUD simply left its spent fuel in the wet pool
       during the entirety of DOE’s delay and sought as damages all of the associated
       operating and maintenance costs resulting from the delay, the government would
       argue that SMUD failed to reasonably mitigate its damages.

Gov’t Br. at 24 (Pl.’s Post-Trial Brief at 53 (Dkt. No. 331, No. 98-488C, Aug. 22, 2005)).

       To the extent that SMUD now argues that its annual wet pool costs would not be much
higher than its annual dry storage costs, SMUD’s decision to implement dry storage could be
viewed ipso facto as unreasonable mitigation requiring the court to reverse its prior $53,159,863
award. Gov’t Br. at 24. In any event, at a minimum, the court is required to reduce SMUD’s
claimed mitigation costs by $20,981,800, or roughly $4.2 million for each year that SMUD
would have stored SNF onsite from 2004 through 2008, as SMUD admits. Gov’t Br. at 24-25;
Gov’t Resp. at 4 (citing Pl. Br. at 57-59 (conceding that the court’s prior offset of $4.2 million is
a reasonable estimate in the event that the court imposes a wet-pool offset)).26

       26
           The Government also adds that the court should reject SMUD’s argument that DOE
would have taken SMUD’s SNF in January of whichever year the court determines to be
SMUD’s final year of acceptance. Gov’t Resp. at 7-10. SMUD did not introduce any evidence
in support of this contention at trial, nor does it cite any such evidence in its briefing. Gov’t
Resp. at 7. Instead, SMUD makes several problematic claims. First, SMUD asserts that it would
have been able to select its delivery month under the Standard Contract, but it proffers no
evidence in support and ignores the fact that DOE had the right under the Standard Contract
unilaterally to reject any proposed delivery date. PX 44 at SMUD-0019687. In addition,
SMUD’s reliance on the trial court’s opinion in Dairyland is misplaced. SMUD argues that it
would have been easier to remove its SNF in the winter because Rancho Seco is located in a
milder climate. The Dairyland court found that a plant located in Wisconsin likely would have
had its SNF removed in the winter. See Dairyland, 90 Fed. Cl. at 627. In that case, however, the
trial court relied on evidence of the existence of convenient roadway and rail access to support
finding early removal, factors not present in this case. Id. In addition, the trial court’s decision
in Dairyland was based in part on the fact that that utility-plaintiff had only 7.9 MTU of SNF in
its final year of acceptance, whereas SMUD would have had 82.1 MTU of SNF in its final year
allocation. Compare id. with PX 3000 at 2. SMUD also asserts that utility-parties could
schedule outages at any time to accommodate DOE’s acceptance later in the year, but this
ignores the fact that such outages are scheduled in advance, usually during spring and fall when
demand for electricity is low. Gov’t Resp. at 9 & n.5 (citing The Fuel in the Reactor Core, Duke


                                                 54
               2.      The Plaintiff’s Response.

       If the court determines that SMUD’s SNF would not have been removed prior to 2004 in
the non-breach world, $4.2 million represents a reasonable estimate of SMUD’s annual avoided
wet pool costs to be offset against its recovery in this case, instead of the $8 million annual offset
claimed by the Government. Pl. Br. at 57.

        In 2000, an analysis of SMUD’s estimated wet pool costs was presented to SMUD’s
Board of Directors. DX 978A; TR at 668-71 (Redeker). This analysis estimated that in years
with decommissioning, wet pool operating costs would be $2.5 million, and in years without
decommissioning, wet pool operating costs would be $7.5 million. TR at 662-65 (Redeker).
Wet pool operating costs were estimated to be lower in the years without decommissioning,
because those costs do not include certain “baseload” costs shared with the decommissioning
project.27 PX 642; TR at 664-71 (Redeker). Because SMUD has not claimed these underlying
shared costs in this case, it would be improper for the court to deduct them as an offset. TR at
100, 116-17 (Ronningen) (noting that these shared decommissioning costs are not included in
SMUD’s damages claim). Therefore, SMUD’s analysis, accounting for price escalation and
some deviation in costs, supports an annual offset of no more than $4.2 million. Pl. Br. at 59.
This amount is also consistent with Mr. Field’s analysis of the cost savings achieved and
positions eliminated after the ISFSI dry storage system was completed. TR at 639-42 (Field).
And, it is also consistent with wet pool offsets in other SNF cases. See, e.g., S. Cal. Edison
Co. v. United States, 93 Fed. Cl. 337, 347, 371-72 (2010) ($3,757,908 for 10 months of wet pool
costs); Pac. Gas & Elec., 92 Fed. Cl. at 183 ($4,744,000 per year); Dairyland, 90 Fed. Cl. at 627
($4,035,040 per year).

        Although the Government now seeks an offset of approximately $8 million per year or
nearly $39 million total for the years 2004 through 2008, the Government did not offer a single
witness at trial with knowledge of wet pool operating costs and thus failed to establish its offset
with “reasonable certainty.” Pl. Br. at 56; Pl. Resp. at 35; see also Sys. Fuels, Inc. v. United
States, 79 Fed. Cl. 37, 71 (2007) (holding that “any ‘benefits’ that the government seeks to offset
must be shown to a reasonable certainty, or they must be denied as too speculative to meet the
standards set forth by the Federal Circuit[.]”). Under the Government’s new theory, the court is
required to deduct both SMUD’s annual wet pool costs of $4.2 million, as well as actual costs of
the transition to and cost of dry storage. In effect, the Government demands a double deduction
of SMUD’s wet pool storage and dry storage costs during this period, a position the court

Energy (Nov. 22, 2011), http://nuclear.duke-energy.com/?s=mcguire+undergoes+another
+outage). Finally, the evidence presented in Docket No. 98-488C established that closing the
wet pool was a complicated process, making it unlikely that, even if SMUD’s SNF were
accepted in January, it would have been able to close the wet pool immediately thereafter. Gov’t
Resp. at 9.
       27
         This is illustrated by the ISFSI costs claimed in this case. For the years 2004 through
2008, when SMUD was decommissioning Rancho Seco, ISFSI costs were approximately $2.8
million per year. In 2009, after decommissioning was completed, these costs increased by
approximately $2.5 million to $4.3 million per year. Pl. Br. at 59.


                                                 55
previously rejected. Pl. Br. at 57 (citing SMUD III, 70 Fed. Cl. at 371 (determining that “[u]nder
the circumstances, the [G]overnment, not SMUD, is responsible for operation and maintenance
costs associated with storage of SNF[.]”)). Moreover, the evidence does not support the
Government’s proposed avoided wet pool costs. As Mr. Redeker testified, $8 million per year
was not an accurate estimate of SMUD’s wet pool costs. Pl. Br. at 60 (citing TR at 660-71
(Redeker)). Mr. Ronningen also testified that the ISFSI costs claimed in this case “are unrelated
to wet-fuel operations.” TR at 113 (Ronningen). Instead, the Government cites Mr. Field’s use
of the term “savings,” although he did not agree with the Government’s theory that it was proper
to add “savings” to the ISFSI costs to ascertain the costs of a stand-alone wet pool. Pl. Resp. at
35 (citing TR at 638-42, 645-48 (Field)). Therefore, the Government rests its offset argument on
estimated wet pool costs for the early to mid 1990s that depict expenditures at a time when
SMUD was not engaged in decommissioning.                    See DX 755 (May 1997 Board
Options/Objectives for Decommissioning, estimating savings of $10-12 million); TR at 712-16,
752-57 (Redeker) (stating that decommissioning mainly started in the middle of 1997, with
minor decommissioning activities beginning before then).

        The Government’s supporting argument that the savings between wet and dry storage is
not great enough for SMUD’s mitigation to be reasonable is incorrect, because the degree of
mitigation is not the legal standard for whether mitigation costs are recoverable. See N. Helex
Co., 524 F.2d at 718 (holding that the “guiding principle” is whether “in the individual
circumstances” the mitigating party exercised reasonable judgment); see also RESTATEMENT
(SECOND) OF CONTRACTS § 350(2) (1981) (“The injured party is not precluded from
recovery . . . to the extent that he has made reasonable but unsuccessful efforts to avoid loss.”).
Moreover, the Government’s view of the success or failure of dry storage as mitigation is “short-
sighted,” because it does not fully account for the ultimate duration of DOE’s partial breach or
the safety benefits of utilizing dry storage in the interim. Pl. Resp. at 38.28

               3.     The Court’s Resolution.

        The United States Court of Appeals for the Federal Circuit has held that if a plaintiff is
entitled to mitigation costs for a breach of contract, the mitigation costs incurred must be offset
       28
           In addition, SMUD argues that “[t]he evidence establishes that SMUD likely would
have been out early in any year of its final acceptance such that the Court should only deduct
10% of the costs of a full year or $420,000.” Pl. Br. at 61. First, the Standard Contract allows
SMUD to designate the month of delivery. Second, nuclear transport during winter months
would be easier from a plant located in a milder climate, such as Rancho Seco. Third, operating
utility-parties under the Standard Contract were allowed to schedule outages at any time of the
year to accommodate acceptance later in the year. Since SMUD had small quantities of SNF, it
would be easier to remove its SNF earlier in the year. Pl. Br. at 61-62. Moreover, even if one
assumes a strict OFF acceptance, SMUD’s allocation in 2008 would fall within the first 10% of
the 3,000 MTU SNF allocations accepted by DOE that year. PX 554 (1996 Annual Priority
Ranking). For this reason, the Dairyland court reached a similar conclusion, determining that
because a plaintiff-utility’s SNF would have been picked up in January of the year in question,
the costs of storage should be awarded for the other eleven months of the year. See Dairyland,
90 Fed. Cl. at 627. This issue was not appealed.



                                                56
by any avoided costs, i.e., costs that the plaintiff would have incurred in the non-breach world.
See Bluebonnet Sav. Bank, 339 F.3d at 1345 (“To derive the proper amount for the damages
award, the costs resulting from the breach must be reduced by the costs, if any, that plaintiff
would have experienced absent a breach.”). The Government has the initial burden to establish
whether and what costs would have been avoided but for the breach. Then, the burden shifts to
the plaintiff to establish those costs with reasonable certainty. See S. Nuclear, 637 F.3d at 1304
(holding that “a defendant must move forward by pointing out the costs it believes the plaintiff
avoided because of its breach,” but “with respect to both claimed costs and avoided costs,
plaintiffs bear the burden of persuasion”).

        In this case, the parties agree that, in the non-breach world, SMUD would have continued
to operate a wet pool until DOE removed SMUD’s SNF. Pl. Br. at 57-59; Gov’t Br. at 2; Gov’t
Resp. at 4. The court herein ruled that SMUD’s SNF would have remained onsite until 2008.
See also SMUD VI, 91 Fed. Cl. at 12-14. Therefore, the Government is entitled to an offset for
the costs (not merely the savings SMUD achieved) that SMUD would have incurred to operate
the wet pool from 2004 through 2008. Although the court determined in Docket No. 98-488C
that $4.196 million was the proper offset amount for 2003, the court explicitly left the resolution
of the offset for the years 2004 through 2008 to be decided in this case. See SMUD VI, 91 Fed.
Cl. at 19. That determination required further fact-finding.

        The evidence presented established that SMUD did not operate the wet pool in the breach
world during 2004 through 2008. See SMUD III, 70 Fed. Cl. at 374-75; TR at 639-40 (Field).
But, during this time Rancho Seco also was undergoing decommissioning, so that SMUD
incurred some additional costs during this period for that purpose.29 SMUD’s reduction in costs
attributed to moving SNF from the wet pool to dry storage, however, were not separately
recorded from the costs attributed to decommissioning. TR at 667 (Redeker).

       Instead, the evidence in this case contains several estimates of SMUD’s wet pool costs.
Compare PX 642 (estimating costs of $7.5 million to operate the wet pool in 2008)30 with DX
6214 (Mr. Field estimating $4.2 million in annual savings for dry storage instead of operating the
wet pool); DX 729 at RS006101-102 (Mar. 14 1997 letter from SMUD’s General Manager
estimating annual savings of $8.1 million after SMUD’s SNF was removed from the wet pool to
dry storage); DX 755 (SMUD’s May 15, 1997 Board of Director’s presentation on options for
Rancho Seco dry storage, estimating savings for various alternatives to continuing wet pool
storage and, at 13, estimating an annual “contribution” of $18.35 million for “Transportable, dry
storage (current concept),” but $37.39 million to “keep fuel in spent fuel pool,” amounting to
savings of $19.04 million); DX 760 at SMUD0028714 (SMUD’s June 3, 1997 Board Finance
Committee Presentation, estimating $10-12 million in decrease in “expenses,” if “Dry Fuel
Storage was used” instead of “Wet Pool Storage”); DX 871 at SMUD062619 (SMUD’s Sept. 2,
1998 Board Integrated Resources and Customer Services Committee (same)).


       29
          This is illustrated by the fact that SMUD’s ISFSI costs in the breach world increased in
2009 after decommissioning was completed. TR at 117 (Ronningen).
       30
          Following a request by the court, the parties were unable to locate any additional PX
exhibits estimating SMUD’s wet pool costs.


                                                57
        SMUD, however, began with the proposition that in 2000 the estimated cost of operating
the wet pool was $2.5 million during decommissioning, but conceded an increase in this amount
to $4.2 million to reflect rising costs. Pl. Br. at 58-59. The Government insists that the court
must start with the $4.2 million in savings, as identified by Mr. Field (DX 6214), adding $50,000
to cover estimated spare parts and materials, and $2.84 million for the transition to and cost of
dry storage, resulting in SMUD achieving annual savings, or avoided costs, of approximately $8
million per year. Gov’t Br. at 20-21.

        Specifically, at trial evidence was proffered that SMUD avoided the following costs for
the period of 2004 through 2008: (1) ISFSI Operations and Maintenance costs; (2) $50,000 per
year in estimated spare parts and materials; and (3) labor costs, with adjustments, from the
transition from wet pool storage to dry storage.31

        The court has determined the ISFSI dry storage Operations and Maintenance costs for
2004 through 2008 amount to $13,680,473. See DX 6245 Att. 1-c-2. In addition, the total
avoided costs of spare parts and materials for 2004 through 2008 amount to $273,783, taking
into account inflation using the Consumer Price Index. DX 6245 Att. 10-a.

        To determine the additional labor costs that SMUD would have incurred, the court
examined Mr. Field’s labor savings analysis identifying the reductions in personnel that occurred
after SMUD’s transition to ISFSI storage. DX 6214. Mr. Field’s testimony identified three
categories of personnel that would be needed to operate the wet pool in the non-breach world,
but that were eliminated in the breach world: (1) security personnel who could be eliminated due
to reduced security requirements for the ISFSI; (2) shared personnel who worked on both dry
storage and wet pool operations; and (3) personnel who worked solely on developing the ISFSI,
but were not needed after the ISFSI was complete. TR at 641-42 (Field). The first category of
personnel represents additional costs that SMUD would have incurred to operate the wet pool.
TR at 642 (Field) (testifying that SMUD was “able to eliminate 10 positions because the
requirements of the dry storage physical security plan were less” than for wet pool storage). The
third category of personnel was dedicated to the ISFSI project, but would not be needed to
operate the wet pool in the non-breach world. TR at 641-42 (Field) (testifying that: the Senior
Quality Engineer oversaw the manufacturing of the dry storage cask and canister; the Senior
Nuclear Inspector primarily inspected the loading and closure of canisters; and the principal
Mechanical Engineer position was eliminated because, after the completion of the ISFSI, the
workload for mechanical engineers was reduced); see also TR at 1112 (Peterson) (“To my
       31
           These costs were expected to be the same for both wet pool and dry storage, i.e., labor
costs and security costs. The ISFSI labor costs include the security officer costs that SMUD
incurred from 2004 through 2008. PX 6265 at KRGSMUII007421A (work orders 1300452,
13004543, 13004544, 13006466, 13006580, and 13006581); TR at 111 (Ronningen). SMUD’s
ISFSI labor costs also include the “Old Fuel Storage – SMUD Staff” line item captured in Work
Order 4002862. PX 6265 at KRGSMUII007421A. These personnel represent the “staff onsite
directly responsible for the oversight of the fuel,” separate from the security function. TR at 112
(Ronningen). Although Mr. Ronningen testified that these costs were “unrelated to wet fuel
operations” (TR at 113), SMUD would have been required to incur these costs to operate the wet
pool in the non-breach world.



                                                58
understanding, [Mr. Field] was offering a modest deduction for the bottom three individuals
[listed in DX 6214].”). Therefore, these costs are not included in the wet pool offset amount.
The second category represents “shared” personnel, but is included because these employees
were primarily associated with wet storage. See TR at 642 (Field).

        It was SMUD’s burden to establish avoided costs with reasonable certainty, but SMUD
has failed to do so. Accordingly, the court adopts the Government’s proposed offset, with some
modifications. The court began with $13,680,473, i.e., the cost of dry storage operations and
maintenance for 2004 through 2008, including the overhead costs. DX 6245 Att. 1-c-2. To that
amount the court added the estimated labor savings from Mr. Field’s 2003-2004 estimates,
adjusting for yearly salary changes, totaling $24,286,336 DX 6245 Att. 10-a; DX 6214. The
court eliminated three positions from that estimate, however, as those costs solely were related to
ISFSI operations. The Government’s labor savings estimate for 2004 through 2008 therefore is
adjusted to $21,033,657. Adding the total labor savings to the total dry storage operations and
maintenance costs for 2004 through 2008, as well as $273,783 for estimated savings of spare
parts and materials (DX 6245 Att. 10-a), resulted in a total offset of $34,987,913 for the period
of January 1, 2004, to December 31, 2008.

III.   CONCLUSION.

         For the reasons set forth in Docket No. 98-488C, SMUD VI, 91 Fed. Cl. at 18-19, SMUD
is entitled to $53,139,863 for costs incurred to mitigate the Government’s partial breach of the
Standard Contract from January 1, 1992, to December 31, 2003. The Government is entitled to
an offset of $4,196,360 for costs SMUD avoided for 2003.

       In addition, for the foregoing reasons, the court has determined that, in Docket No. 09-
587C, SMUD is entitled to $20,703,595 for costs incurred to mitigate the Government’s partial
breach of the Standard Contract from January 1, 2004, to December 31, 2009. The Government,
however, is entitled to an offset of $34,987,913 for wet pool costs SMUD avoided from 2004
through 2008.

       Therefore, the court has determined that SMUD is entitled to mitigation costs of
$34,659,185 for the period from January 1, 1992 to December 31, 2009.

       The Clerk is directed to enter judgment in accordance with this Memorandum Opinion
and Final Order.

       IT IS SO ORDERED.

                                                     s/Susan G. Braden___
                                                     SUSAN G. BRADEN
                                                     Judge




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