Vermont Yankee Nuclear Power Corp. v. Entergy Nuclear Vermont Yankee, LLC , 683 F.3d 1330 ( 2012 )

United States Court of Appeals
for the Federal Circuit
__________________________
VERMONT YANKEE NUCLEAR POWER
CORPORATION,
Plaintiff-Cross Appellant,
v.
ENTERGY NUCLEAR VERMONT YANKEE, LLC,
AND ENTERGY NUCLEAR OPERATIONS, INC.,
Plaintiffs-Cross Appellants,
v.
UNITED STATES,
Defendant-Appellant.
__________________________
2011-5033, -5034, -5042
__________________________
Appeals from the United States Court of Federal
Claims in consolidated case nos. 02-CV-898 and 03-CV-
2663, Judge Thomas C. Wheeler.
__________________________
Decided: June 13, 2012
___________________________
RICHARD J. CONWAY, Dickstein Shapiro LLP, of Wash-
ington, DC, argued for plaintiff-cross appellant, Vermont
Yankee Nuclear Power Corporation, of Washington, DC.
VERMONT YANKEE NUCLEAR POWER v. US 2
BRAD FAGG, Morgan, Lewis & Bockius LLP, of Wash-
ington, DC, argued for plaintiffs cross appellants Entergy
Nuclear Operations, Inc., et al. Of counsel on the brief
was L. JAGER SMITH, Wise, Carter, Child & Caraway,
P.A., of Jackson, Mississippi.
ANDREW P. AVERBACH, Trial Attorney, United States
Department of Justice, of Washington, DC, argued for
defendant-appellant. With him on the brief were TONY
WEST, Assistant Attorney General, JEANNE E. DAVIDSON,
Director, and HAROLD D. LESTER, JR., Assistant Director
Of counsel on the brief were MARIAN E. SULLIVAN,
JEREMIAH M. LUONGO, MARIANA T. ACEVEDO, SETH W.
GREENE, JOSEPH D. KELLER, and DANIEL G. KIM, Trial
Attorneys; and JANE K. TAYLOR, Office of General Coun-
sel, United States Department of Energy, of Washington,
DC.
KYLE H. LANDIS-MARINELLO, Assistant Attorney Gen-
eral, Office of the Attorney General, State of Vermont,
Montpelier, Vermont, for amicus curiae. With him on the
brief was GAVIN J. BOYLES, Assistant Attorney General.
__________________________
Before BRYSON, MAYER, and DYK, Circuit Judges.
Opinion for the court filed by Circuit Judge DYK, in which
Circuit Judge MAYER joins except for Part I(C), and in
which Circuit Judge BRYSON joins except for Part III (B),
(D), and (F). Opinions dissenting in part filed by Circuit
Judges MAYER and BRYSON.
DYK, Circuit Judge.
This case involves the federal government’s breach of
a contract requiring it to accept for disposal spent nuclear
fuel generated at the Vermont Yankee Nuclear Power
3 VERMONT YANKEE NUCLEAR POWER v. US
Station (“VYNPS”). The government, the current owner
of VYNPS, Entergy Nuclear Vermont Yankee, LLC
(“ENVY”), 1 and the former owner of VYNPS, Vermont
Yankee Nuclear Power Corporation (“Vermont Yankee”),
each appeal from a judgment of the Court of Federal
Claims (“Claims Court”) awarding damages to ENVY for
breach of the contract. Because the government agrees
that it breached the contract, all issues on appeal concern
either the assignment of the contract (or contract claims)
from Vermont Yankee to ENVY or the measure of dam-
ages.
In Part I of this opinion, we hold that Vermont Yan-
kee validly assigned to ENVY pre-existing claims against
the government under the Standard Contract for Disposal
of Spend Nuclear Fuel and/or High-Level Radioactive
Waste, 10 C.F.R. § 961.11 (1984) (hereinafter “Standard
Contract”). We also hold that while the partial assign-
ment of rights and duties under the Standard Contract
from Vermont Yankee to ENVY was not valid, the gov-
ernment nonetheless waived its right to object to the
partial assignment.
In Part II, we hold that the scope of the assignment
from Vermont Yankee to ENVY encompassed the claims
Vermont Yankee asserted against the government, in-
cluding the claim for pre-sale mitigation costs and the
claim for the diminution in value of VYNPS.
In Part III, we hold that legal and lobbying fees in-
curred by ENVY to secure approval from the State of
Vermont for a dry storage facility were foreseeable. We
hold, however, that other state-imposed requirements
were not foreseeable, and hence not recoverable, including
1 ENVY’s sister company, Entergy Nuclear Opera-
tions, Inc., also joins ENVY as a Plaintiff-Cross Appellant.
For simplicity, we refer only to ENVY in this opinion.
VERMONT YANKEE NUCLEAR POWER v. US 4
payments into Vermont’s Clean Energy Development
Fund, performance of a flood analysis, and construction of
a visual barrier to the dry storage facility.
In Part IV, we hold that ENVY did not meet its bur-
den of proof with respect to its claimed damages for the
costs of disposing of contaminated material discovered
due to the breach and the characterization of spent fuel
moved to dry storage.
In Part V, we discuss the remaining issues, which are
for the most part controlled by our recent precedents. In
accordance with those precedents, we hold that ENVY is
not entitled to recover its cost of capital to fund its mitiga-
tion activities. And while we hold that ENVY is entitled
to recover its capital suspense loader overhead costs, we
hold that, due to insufficient argument on appeal, ENVY
is not entitled to recover its Resource Code 19 payroll
loader overhead costs.
BACKGROUND
This is another in a long series of cases in which the
government breached a commitment for the disposal of
spent nuclear fuel (“SNF”) and high-level radioactive
waste (“HLW”). Briefly, the background is as follows. In
1983, Congress enacted the Nuclear Waste Policy Act of
1982 (“NWPA”), Pub. L. No. 97-425, 96 Stat. 2201 (1983)
(codified as amended at 42 U.S.C. §§ 10101-10270 (2006)).
The NWPA authorized the Department of Energy (“DOE”)
to enter into contracts with nuclear facilities for the
disposal of SNF and HLW. 42 U.S.C. § 10222. Congress
expressly mandated that, under the terms of the con-
tracts, DOE accept SNF and HLW “beginning not later
than January 31, 1998.” Id. § 10222(a)(5)(B). Contem-
plating the potential sale of nuclear facilities, the NWPA
also provided that “[t]he rights and duties of a party to a
contract entered into under this [Act] may be assignable
5 VERMONT YANKEE NUCLEAR POWER v. US
with transfer of title to the spent nuclear fuel . . . in-
volved.” Id. § 10222(b)(3).
Pursuant to its authority under the NWPA, DOE
promulgated regulations defining the terms of the Stan-
dard Contract to be executed with nuclear facilities. See
42 U.S.C. § 10222(a)(1); 48 Fed. Reg. 5,458 (Feb. 4, 1983)
(proposed rule); 48 Fed. Reg. 16,590 (Apr. 18, 1983) (final
rule). Consistent with section 10222(b)(3), the Standard
Contract provided: “The rights and duties of the Pur-
chaser may be assignable with transfer of title to the
SNF . . . involved; provided, however, that notice of any
such transfer shall be made to DOE within ninety (90)
days of transfer.” 10 C.F.R. § 961.11, art. XIV; see also
J.A. 120.
In June 1983, DOE entered into a Standard Contract
with Vermont Yankee for the disposal of SNF stored at
the VYNPS facility. In consideration for DOE’s commit-
ment to dispose of SNF, the Standard Contract required
the utilities to pay fees to DOE. First is a one-time fee
that is based on any SNF generated prior to April 1983.
Payment of this one-time fee may be deferred with inter-
est until anytime prior to the beginning of DOE’s per-
formance. Vermont Yankee had been producing SNF
since 1972, and was thus obligated to pay the one-time fee
for disposal of its pre-1983 SNF. Vermont Yankee elected
to defer the payment of the one-time fee, which at the
time of this action, has not yet been paid. Second, con-
tract holders must pay a continuing quarterly fee based
on the amount of electricity generated and sold during
that quarter by the utility. This fee has been paid by
Vermont Yankee and ENVY during the period of their
ownership of VYNPS and accepted by the government.
DOE failed to begin accepting and disposing of SNF
from Vermont Yankee and other utilities in the nuclear
VERMONT YANKEE NUCLEAR POWER v. US 6
industry by January 31, 1998. On August 15, 2001,
Vermont Yankee entered into a Purchase and Sale
Agreement (“PSA”) with ENVY. On July 31, 2002, the
parties completed the sale of VYNPS, including title to all
of the SNF generated and stored at VYNPS. The PSA
expressly provided that “[Vermont Yankee] shall assign to
[ENVY] the DOE Standard Contract, except for the
obligation to pay the one time fee.” J.A. 241. The PSA
further provided that Vermont Yankee transferred to
ENVY “any claims of [Vermont Yankee] related to
[DOE]’s defaults under the DOE Standard Contract
accrued as of the Closing, whether relating to periods
prior to or following the Closing.” J.A. 197. The assign-
ment excluded “claims as may relate to the one-time fee
with respect to fuel used to generate electricity prior to
April 7, 1983.” J.A. 197.
In a letter dated July 31, 2002, ENVY notified DOE
“that Vermont Yankee ha[d] . . . assigned its right, title,
and interest” under the Standard Contract to ENVY, and
that ENVY would “assume and discharge the obligations
of Vermont Yankee under the [Standard] Contract in lieu
of Vermont Yankee.” J.A. 268. In a letter dated August
21, 2002, Vermont Yankee similarly notified DOE that it
had transferred to ENVY “its title to Spent Nuclear Fuel”
at VYNPS along with “its rights and duties under the
[Standard] Contract.” J.A. 269. The Vermont Yankee
letter also notified DOE that it had “retained the rights to
any and all damages and other remedies that might
accrue under from [DOE]’s breach of its obligations under
the [Standard] Contract to the extent of the one-time fee
for fuel used to generate electricity prior to April 7, 1983.”
J.A. 269. However, neither letter notified DOE that
Vermont Yankee had also retained the obligation to pay
the one-time fee prior to DOE’s performance. This reser-
vation was not discovered by the government until it
7 VERMONT YANKEE NUCLEAR POWER v. US
obtained a copy of the PSA during document production in
this case in 2006.
As a result of DOE’s breach, and as mitigation, ENVY
concluded that it should construct an on-site dry-storage
facility to provide for the interim storage of SNF at
VYNPS. Pursuant to federal regulations and ENVY’s pre-
existing license with the Nuclear Regulatory Commission
(“NRC”), ENVY was permitted to construct a dry-storage
facility implementing a system that had been previously
approved by the NRC. However, as discussed below,
ENVY claims that it incurred other expenses in order to
obtain approval from the State of Vermont to construct
the facility, including: (1) legal and lobbying fees;
(2) payments into Vermont’s Clean Energy Development
Fund; (3) the cost of performing a flood analysis; and
(4) the cost of constructing a visual barrier.
On November 12, 2003, ENVY filed an action in the
Claims Court for damages caused by DOE’s breach of
contract. The Claims Court consolidated ENVY’s action
with a separate action brought by Vermont Yankee as-
serting claims arising out of its pre-sale ownership and
operation of VYNPS. See Entergy Nuclear Vt. Yankee,
LLC v. United States, 95 Fed. Cl. 160, 167 (2010).
We have previously held that DOE’s failure to begin
collecting SNF constituted a partial breach of the Stan-
dard Contract. Me. Yankee Atomic Power Co. v. United
States, 225 F.3d 1336, 1342 (Fed. Cir. 2000) (“The breach
involved all the utilities that had signed the contract—the
entire nuclear electric industry.”); see also N. States Power
Co. v. United States, 224 F.3d 1361, 1367 (Fed. Cir. 2000).
The government admitted liability for its breach of
the Standard Contract, and the Claims Court awarded
ENVY $34,895,467 in undisputed damages, the largest
portion of which was for the construction of the dry stor-
VERMONT YANKEE NUCLEAR POWER v. US 8
age facility. However, the government, ENVY, and Ver-
mont Yankee disputed the government’s liability for
various categories of damages, and this dispute continues
on appeal. 2
Through determinations at summary judgment and
after trial, the Claims Court resolved the disputed claims
as follows. 3 The Claims Court held at summary judgment
that the assignment from Vermont Yankee to ENVY of
pre-existing claims against the government was valid,
and that, contrary to the government’s position, the
partial assignment from Vermont Yankee to ENVY of the
rights and duties under the Standard Contract was also
valid. Vt. Yankee Nuclear Power Corp. v. United States
(“Vermont Yankee I”), 73 Fed. Cl. 236, 240-42 (2006). The
Claims Court also held at summary judgment that Ver-
mont Yankee had unambiguously assigned to ENVY the
claims it asserted against the government for the cost of
its pre-sale mitigation activities and the diminution in
value of VYNPS. Vt. Yankee Nuclear Power Corp. v.
United States (“Vermont Yankee II”), 84 Fed. Cl. 339, 346-
47 (2008).
2 The government also disputed four categories of
damages before the Claims Court that are not involved in
this appeal.
3 Prior to the trial, Claims Court also entered a
Rule 54(b) final judgment dismissing Vermont Yankee’s
claims. In an initial appeal, we determined that because
“Vermont Yankee and ENVY have each claimed relief for
the same alleged wrong, and . . . that pursuant to the
[PSA] only one of them can recover,” “the claims [were]
too intertwined for entry of judgment pursuant to Rule
54(b) as to only one party.” Vt. Yankee Nuclear Power
Corp. v. United States, 346 F. App’x 589, 591 (Fed. Cir.
2009). Accordingly, we ordered the Claims Court to
vacate the Rule 54(b) judgment. Id.9 VERMONT YANKEE NUCLEAR POWER v. US
In addition to the undisputed portion of ENVY’s dam-
ages claim, the Claims Court awarded ENVY its claimed
costs of securing state approval for the dry storage facil-
ity, including: (1) legal and lobbying fees; (2) payments
into the Vermont Clean Energy Development fund;
(3) performance of a river flood analysis; and
(4) construction of a visual barrier to the dry-storage
facility. Entergy Nuclear, 95 Fed. Cl. at 184, 190. The
Claims Court also awarded ENVY damages for its
claimed costs of (1) disposing of contaminated material
discovered due to the breach; and (2) characterizing the
SNF moved into on-site dry storage. Id. at 190-92.
Finally, the Claims Court decided two issues that
have since been determined by our recent precedent. The
Claims Court denied damages for ENVY’s cost of capital
to fund its mitigation activities (consistent with our
precedent) and denied ENVY’s overhead costs calculated
via its capital suspense loader (contrary to our precedent).
Id. at 194-97. In addition, the Claims Court denied
damages for ENVY’s overhead costs calculated via its
Resource Code 19 payroll loader. Id. at 195-96.
The parties timely appealed. We have jurisdiction
under 28 U.S.C. § 1295(a)(3). We review legal conclusions
of the Claims Court de novo. Ind. Mich. Power Co. v.
United States, 422 F.3d 1369, 1373 (Fed. Cir. 2005).
Factual findings are reviewed for “clear error.” Id.DISCUSSION
I Assignment
The government argues that the NWPA’s assignment
provision does not allow for either the assignment of
claims under the Standard Contract or a partial assign-
ment of the contract itself from Vermont Yankee to
ENVY.
VERMONT YANKEE NUCLEAR POWER v. US 10
A
The government first argues that the NWPA’s as-
signment provision does not allow for the assignment to
ENVY of claims against the government previously ac-
crued by Vermont Yankee under the Standard Contract.
In general, the Assignment of Claims Act (“Claims Act”)
bars the assignment of claims against the United States
government unless the assignment is made “after [the]
claim is allowed, the amount of the claim is decided, and a
warrant for payment of the claim has been issued.” 31
U.S.C. § 3727(b). However, the restrictions of the Claims
Act may be waived by the government either by an ex-
press contractual provision or otherwise. See, e.g., Del-
marva Power & Light Co. v. United States, 542 F.3d 889,
891-93 (Fed. Cir. 2008). With respect to the assignment
provisions in the NWPA and the Standard Contract, we
recently held that “Congress’ intent is manifest in the
plain language of the NWPA: a party to the Standard
Contract may assign its rights,” including “the party’s
right to collect damages incurred due to an existing,
ongoing breach.” Dominion Res., Inc. v. United States,
641 F.3d 1359, 1363 (Fed. Cir. 2011). The government
now concedes that our decision in Dominion Resources
“disposes of the claim assignment issue.” Appellant’s
Reply Br. 16. Accordingly, we affirm the Claims Court’s
holding that the assignment of pre-existing claims from
Vermont Yankee to ENVY was valid. 4
B
The government also argues that the NWPA’s as-
signment provision does not allow for the partial assign-
4 The assignability of claims has no bearing on the
assignability of continuing rights and obligations of a
government contract, which, as discussed below, is gov-
erned by the Assignment of Contracts Act.
11 VERMONT YANKEE NUCLEAR POWER v. US
ment of the rights and obligations designated in the
Standard Contract, and in particular does not allow a
partial assignment where Vermont Yankee retained the
obligation to pay the one-time fee.
For contracts with the federal government, the As-
signment of Contracts Act (“Contracts Act”) provides:
No contract or order, or any interest therein, shall
be transferred by the party to whom such contract
or order is given to any other party, and any such
transfer shall cause the annulment of the contract
or order transferred, so far as the United States is
concerned. All rights of action, however, for any
breach of such contract by the contracting parties,
are reserved to the United States.
41 U.S.C. § 15(a) (2006). 5 Our precedents have estab-
lished that the government may consent to or waive any
objections it may have to assignments that would other-
wise be in violation of the Contracts Act. See Tuftco Corp.
v. United States, 614 F.2d 740, 745-46 (Ct. Cl. 1980).
Specifically, our predecessor court noted that the govern-
ment may recognize the validity of an assignment outside
the bounds of the Contracts Act by its “course of conduct,
its statements to the parties and its dealings with the
assignee.” Id. at 745.
Here, the Standard Contract allows for the assign-
ment of the rights and duties of the Standard Contract,
but says nothing about the validity of partial assign-
ments. Further, the Standard Contract expressly re-
5 41 U.S.C. § 15 was recodified on January 4, 2011,
in substantially similar form, at 41 U.S.C. § 6305. Be-
cause section 15 was still in effect at the time of the
disputed assignment, we will refer to that section for the
purposes of this appeal.
VERMONT YANKEE NUCLEAR POWER v. US 12
quires a “transfer of title to the [SNF] . . . involved” along
with an assignment of the “rights and duties” of the
contract holder. J.A. 120; see also 10 C.F.R. § 961.11, art.
XIV. Indeed, we have recognized that “[a] party to a
standard contract cannot transfer its rights and duties to
another party without also transferring title to the SNF.”
Dominion Res., 641 F.3d at 1363. This requirement that
the rights and duties of the Standard Contract must be
tied to the title of the involved SNF suggests that all of
the rights and duties under the Standard Contract must
be assigned together.
Moreover, under standard contract law, assignments
are generally not permitted in situations where they
would disadvantage the obligor. “A contractual right can
be assigned unless (a) the substitution of a right of the
assignee for the right of the assignor would . . . materially
increase the burden or risk imposed on him by his con-
tract, or materially impair his chance of obtaining return
performance . . . .” Restatement (Second) of Contracts
§ 317(2) (1981). “What is . . . an increase in burden or
risk . . . depends on the nature of the contract and on the
circumstances.” Id. cmt. d. But at the least, “if the obli-
gor is to perform in exchange for the promise of one
person to render a return performance at a future time,
substitution of the return promise of another impairs the
obligor’s expectation of counter-performance.” Id. Here,
the government has a strong interest in having all of the
rights and duties under the Standard Contract, including
the obligation to pay the one-time fee, reside in the same
party. Requiring any assignments of the Standard Con-
tract to be complete would ensure that the government
would only have to deal with a single party in order to
secure return performance or to resolve potential dis-
putes.
13 VERMONT YANKEE NUCLEAR POWER v. US
Vermont Yankee nonetheless argues that its retention
of the obligation to pay the one-time fee puts the govern-
ment at no greater risk than would exist without the
partial assignment. According to Vermont Yankee, this is
because DOE does not have to perform under the Stan-
dard Contract until after the one-time fee is paid, assum-
ing that, unlike the present situation, the government
were otherwise willing to perform. 6 But DOE has an
overarching interest in the goals of the NWPA, that is, to
establish a federal program “for the disposal of . . . spent
nuclear fuel.” 42 U.S.C. § 10131(b)(2). Thus, any addi-
tional risk that the SNF could not be properly disposed of
(because of a non-payment or a delayed payment of the
one-time fee) would disadvantage the government.
For these reasons, we disagree with the Claims
Court’s conclusion that “[t]he range of assignments per-
mitted under the NWPA . . . extends to the ‘partial’ as-
signment of rights and duties created by the Standard
Contract.” Vermont Yankee I, 73 Fed. Cl. at 240.
C
However, an improper assignment does not automati-
cally nullify the contract; rather it gives the government
the option to nullify the contract. See Tuftco Corp., 614
F.2d at 745. As described above, the government’s right
to void an assignment under the Contracts Act can be
waived. See id. at 745-46. Here, the government became
6 The government argued below that it had no duty
to perform, and thus could not be held liable for partially
breaching the Standard Contract until after the one-time
fee was paid. See Vermont Yankee I, 73 Fed. Cl. at 243.
However, the Claims Court held that payment of the one-
time fee was not yet due, and thus Vermont Yankee’s
deferral of the one-time fee did not excuse the govern-
ment’s failure to perform. Id. at 244. The government
does not raise that issue on appeal.
VERMONT YANKEE NUCLEAR POWER v. US 14
aware of the assignment and continued to accept post-
assignment payments of the quarterly fee from ENVY for
six years from 2006 (when it discovered the partial nature
of the assignment) up to the present. At the same time,
the government sought to invalidate the assignment at
summary judgment, arguing that “[b]ecause the contract
assignment to ENVY [was] defective, ENVY does not have
any privity of contract with DOE.” Defendant’s Motion
for Summary Judgment Regarding the Invalid Assign-
ment of Plaintiff’s Standard Contract at 2, Vermont
Yankee I, 73 Fed. Cl. 236 (No. 03-2663C). While, as the
dissent points out, this course of conduct would not neces-
sarily waive the government’s right to sue for damages for
breach of contract, it most assuredly prevents the gov-
ernment from seeking to undo (or to refuse to recognize)
the assignment of the Standard Contract from Vermont
Yankee to ENVY. The receipt of benefits is directly
inconsistent with the refusal to recognize the validity of
the assignment.
In comparable situations, it is well established that
the continued receipt of benefits under a contract bars the
non-breaching party from seeking to rescind the contract
and secure restitution. As the Supreme Court stated in
Mobil Oil Exploration & Producing Southeast, Inc. v.
United States, 530 U.S. 604, 622 (2000), “acceptance of
performance under a once-repudiated contract can consti-
tute a waiver of the right to restitution that repudiation
would otherwise create.” Following Mobil Oil, we have
held that it “is clear that the receipt of partial perform-
ance by the plaintiff will bar restitution.” Old Stone Corp.
v. United States, 450 F.3d 1360, 1371-74 (Fed. Cir. 2006)
(finding that plaintiff’s continued receipt of benefits
waived the right to restitution, but not the right to re-
15 VERMONT YANKEE NUCLEAR POWER v. US
cover damages). 7 The cases cited by the dissent are not to
the contrary. Each involved a situation in which the non-
breaching party was held entitled to sue for partial
breach, despite the continued receipt of benefits because
the non-breaching party supplied timely notice of the
breach. There is no inconsistency between the receipt of
benefits and a suit for partial breach. None of those cases
involved a situation in which the non-breaching party
sought to undo the contract in its entirety. 8
Accordingly, we hold that the partial assignment of
the Standard Contract from Vermont Yankee to ENVY is
effective.
7 See also Richard A. Lord, Williston on Contracts
§ 39:32 (4th ed. 2000) (“When one party commits a mate-
rial breach of contract, the other party has a choice be-
tween two inconsistent rights—he or she can either elect
to allege a total breach, terminate the contract and bring
an action, or, instead, elect to keep the contract in force,
declare the default only a partial breach, and recover
those damages caused by that partial breach—but the
nonbreaching party, by electing to continue receiving
benefits pursuant to the agreement, cannot then refuse to
perform his or her part of the bargain.”); id. § 40:1 (“[I]f a
party in default under a contract is allowed to continue to
perform, this precludes any right of the other party to
rescind the contract or declare a material breach and
refuse to further perform . . . .”).
8 See Westfed Holdings, Inc. v. United States, 407
F.3d 1352, 1356 (Fed. Cir. 2005) (plaintiff seeking reliance
damages); N. Helex Co. v. United States, 455 F.2d 546,
555 (Ct. Cl. 1972) (plaintiff seeking remainder of full
payment after the acceptance of partial payment); Inland
Trucking Corp. v. United States, 281 F.2d 457, 458 (Ct. Cl.
1960) (plaintiff seeking withheld portions of final pay-
ment).
VERMONT YANKEE NUCLEAR POWER v. US 16
II Scope of the Partial Assignment
Vermont Yankee challenges the Claims Court’s hold-
ing that it had transferred to ENVY each of the claims it
brought against DOE in this case. Vermont Yankee
argues that it retained its pre-closing mitigation costs
claims and its diminution-in-value claim.
Under the section entitled “Transfer of Assets,” the
PSA provided:
Upon the terms . . . contained in this Agreement,
at the Closing [Vermont Yankee] will sell, assign,
convey, transfer and deliver to [ENVY], and
[ENVY] will purchase, assume and acquire from
[Vermont Yankee], . . . all of [Vermont Yankee]’s
right, title and interest immediately prior to the
Closing in and to all of the properties and assets
constituting or used in the operation of the
[VYNPS] Facility . . . .
J.A. 195-96 (PSA § 2.1). Specifically listed amongst the
transfer of assets were the following:
(n) Subject to Section 6.11(b), any claims of [Ver-
mont Yankee] related to the Department of En-
ergy's defaults under the DOE Standard Contract
accrued as of the Closing, whether relating to pe-
riods prior to or following the Closing, excluding
such claims as may relate to the one-time fee with
respect to fuel used to generate electricity prior to
April 7, 1983[.]
J.A. 197 (emphasis added) (PSA § 2.1(n)). As noted in
section 2.1(n) of the PSA, the transfer of claims was
subject to section 6.11(b). That section, under the title of
“Spent Nuclear Fuel Fees,” provided:
17 VERMONT YANKEE NUCLEAR POWER v. US
(b) [Vermont Yankee] agrees, upon receipt of at
least 30 days advance written notice from [ENVY]
of the date on which the one-time fee for fuel
burned prior to April 7, 1983 under the DOE
Standard Contract will become due and payable in
accordance with the terms of the DOE Standard
Contract, to cause such fee to be duly paid when
due, subject to any rights of set-off to which [Ver-
mont Yankee] may be entitled by reason of the De-
partment of Energy’s defaults under said DOE
Standard Contract.
J.A. 241 (emphasis added) (PSA § 6.11(b)). Under “Ex-
cluded Assets,” the PSA similarly listed the following:
(i) The Vermont Yankee Spent Fuel Disposal
Trust and claims of [Vermont Yankee] related or
pertaining to [DOE]’s defaults under the DOE
Standard Contract to the extent applicable to the
one-time fee with respect to fuel used to generate
electricity prior to April 7, 1983[.]
J.A. 198 (PSA § 2.2(i)).
The Claims Court found that while Vermont Yankee’s
claims “may stem from the pre-1983 fuel, they are unre-
lated to the one-time fee,” and were thus not retained by
Vermont Yankee under the terms of the PSA. Vermont
Yankee II, 84 Fed. Cl. at 347. It is not perfectly clear
what exactly is included in the “set-off” referred to in the
“Spent Nuclear Fuel Fees” section. But Vermont Yankee
does not argue that the claims in question are related to
the one-time fee. Rather, Vermont Yankee argues that
the “set-off” encompassed in 6.11(b) is not limited to items
related to the one-time fee, but instead covers claims for
costs “related to DOE’s breach of and default on its duty
to pick up the pre-April 7, 1983 SNF for which Vermont
Yankee agreed to pay the one-time fee.” Vermont Yankee
VERMONT YANKEE NUCLEAR POWER v. US 18
Br. 21. Vermont Yankee’s interpretation of the PSA is not
plausible, and the PSA is clear that claims not related to
the one-time fee are not excluded from the transfer to
ENVY.
Thus, we affirm the Claims Court’s holding that Ver-
mont Yankee transferred to ENVY its claims for pre-
closing mitigation costs and diminution in value, and that
Vermont Yankee could not assert those claims in this
litigation.
III Vermont Legislation-Related Costs
The government challenges the Claims Court’s award
of $9,608,189 in damages for the costs incurred to obtain
approval from the State of Vermont to build an on-site dry
storage facility.
A
At the time Vermont Yankee signed the Standard
Contract in 1983, Vermont required that utilities obtain
legislative approval prior to constructing a “facility for
deposit, storage, reprocessing or disposal of spent nuclear
fuel.” Vt. Stat. Ann. tit. 10, § 6501 (1982). Vermont
Yankee enjoyed a company-specific statutory exemption
for the “temporary storage . . . of spent nuclear fuel.” Id.§ 6505. But after the 2002 sale of VYNPS to ENVY, the
Attorney General of Vermont rendered an opinion in 2004
stating that the statutory exemption did not extend to
ENVY as the successor of Vermont Yankee. After unsuc-
cessfully lobbying the Vermont general assembly to
extend the exemption, ENVY commenced negotiations
with the state to gain separate legislative approval.
On June 3, 2005, the Vermont state legislature en-
acted the Dry Cask Storage Authorization Act (“Dry
Storage Act”). The Dry Storage Act approved the con-
struction of a dry storage facility contingent on ENVY’s:
19 VERMONT YANKEE NUCLEAR POWER v. US
(1) obtaining a Certificate of Public Good (“Certificate”)
from the Vermont Public Service Board (“Board”) pursu-
ant to Vt. Stat. Ann. tit. 30, § 248; and (2) complying with
the terms of a spent fuel storage Memorandum of Under-
standing, which had been negotiated with the Vermont
Department of Public Service and was also signed on
June 21, 2005. See Vt. Stat. Ann. tit. 10, § 6522 (2012);
see also Entergy Nuclear, 95 Fed. Cl. at 176. ENVY
received the required Certificate from the Board and
entered into the Memorandum of Understanding (“Memo-
randum”). The Memorandum and the Certificate, how-
ever, imposed multiple requirements on ENVY. The
Memorandum required ENVY to pay, over the course of
several years, a total of $15,625,000 into the Clean En-
ergy Development Fund, which was also established by
the Dry Storage Act. See Vt. Stat. Ann. tit. 10, § 6523(2010) (recodified at Vt. Stat. Ann. tit. 30, § 8015 (2012)).
Due to the perceived inadequacy of an NRC-required flood
analysis relating to storage safety, the Certificate re-
quired ENVY to conduct an additional flood analysis to
demonstrate that the dry storage facility was not vulner-
able to potential flooding. The Memorandum also re-
quired ENVY to construct a visual barrier on two sides of
the dry storage facility.
ENVY seeks: (1) $3,385,783 for legal and lobbying
costs; (2) $5,625,000 for contributions made to the Ver-
mont Clean Energy Development Fund during the period
in question here; (3) $184,552 for the performance of a
river flood analysis; and (4) $412,854 for the construction
of a visual barrier to the dry-storage facility. Though we
affirm the award of damages for ENVY’s legal and lobby-
ing fees, we hold that the Claims Court clearly erred in
awarding damages to ENVY for payments made into the
Vermont Clean Energy Development fund, performance of
a flood analysis, and construction of a visual barrier.
VERMONT YANKEE NUCLEAR POWER v. US 20
B
The government challenges that these costs were not
foreseeable at the time of contracting in 1983. As we held
in Indiana Michigan, 422 F.3d at 1373, damages must be
“reasonably foreseeable by the breaching party at the
time of contracting.” See also Williston on Contracts
§ 64:29 (“[T]he defendant [must have] had reason to
foresee [the damages] as a probable result of the defen-
dant’s breach when the contract was made.”). ENVY
contends that the foreseeability requirement for each of
the above listed categories is satisfied because the need to
construct additional on-site facilities was foreseeable.
There is no need, ENVY argues, to establish foreseeability
of each particular type of cost incurred. This is incorrect.
The Restatement and relevant treatises have uni-
formly set forth the relevant standard and make clear
that a plaintiff must show that the type of damages are
foreseeable as well as the fact of damage. “[D]amages are
not recoverable for loss that the party in breach did not
have reason to foresee as a probable result of the breach
when the contract was made.” Restatement (Second) of
Contracts § 351. Although this does not require “actual
foresight” that the breach will cause a “specific injury or a
particular amount in money[,] . . . the injury actually
suffered [still] must be one of a kind that the defendant
had reason to foresee and of an amount that is not beyond
the bounds of reasonable prediction.” Joseph M. Perillo,
11 Corbin on Contracts § 56.7, at 108 (rev. ed. 2005)
(emphasis added). “[R]emoteness in space and time and
the number of intervening events have obvious bearing on
foreseeability.” Williston on Contracts § 64:13.
These principles have been adopted in our cases.
While a “specific loss” need not be foreseeable, Anchor
Sav. Bank, FSB v. United States, 597 F.3d 1356, 1364
21 VERMONT YANKEE NUCLEAR POWER v. US
(Fed. Cir. 2010), it is well-established that “a plaintiff
must prove that . . . [the] type of damages were foresee-
able,” Landmark Land Co. v. FDIC, 256 F.3d 1365, 1378
(Fed. Cir. 2001) (emphasis added). Similarly, our prede-
cessor court in Gardner Displays Co. v. United States, 346
F.2d 585, 589 (Ct. Cl. 1965), held that “consequential
damages involves consideration of the type of loss fore-
seeable by the contracting parties at the time of their
agreement.” Unquestionably, “the foreseeability prong
applies to the type of loss.” Sacramento Mun. Util. Dist.
v. United States, 293 F. App’x 766, 771 (Fed. Cir. 2008).
In keeping with this general rule, we have held that
plaintiffs cannot recover breach of contract damages
where the type of loss was not foreseeable. For example,
in Old Stone, 450 F.3d 1360, a Winstar case, the plaintiff
holding company was forced to sell valuable subsidiary
entities in order to mitigate the government’s breach and
did not have those assets available to help it solve other
problems not caused by the breach. This resulted in
seizure of the thrift. We held that damages resulting
from the seizure were not foreseeable because the plaintiff
did not establish that “this extended chain of causation
was foreseeable.” Id. at 1376. We explained:
[E]ven if the need for replacement capital was
foreseeable [as a result of the government’s
breach], that hardly establishes that the adverse
consequences alleged to flow from the need to
make [capital] infusions were foreseeable . . . .
“[T]he mere circumstance that some loss was fore-
seeable, or even that some loss of the same gen-
eral kind was foreseeable, will not suffice if the
loss that actually occurred was not foreseeable.”
Id. (quoting Restatement (Second) of Contracts § 351 cmt.
a). Similarly, in Landmark Land, the plaintiff land
VERMONT YANKEE NUCLEAR POWER v. US 22
holding company, which had acquired a struggling thrift
pursuant to a contract with the government, later trans-
ferred almost all of its land holdings to that struggling
thrift in order to receive favorable tax treatment. 256
F.3d at 1369-71. When the thrift was later seized as a
result of the government’s breach, we held that it was not
foreseeable at the time of contracting that the plaintiff
would have transferred essentially all of its assets to the
struggling thrift, and we therefore denied plaintiff’s
damage claim for the value of those assets. Id. at 1378-
79; see also Anchor Savings, 597 F.3d at 1364 (explaining
that “the mere circumstance that some loss was foresee-
able may not suffice to impose liability for a particular
type of loss that was so unusual as not to be foreseeable”
(quoting E. Allan Farnsworth, Farnsworth on Contracts
§ 12.14, at 262 (3d ed. 2004))); Prudential Ins. Co. of Am.
v. United States, 801 F.2d 1295, 1301 (Fed. Cir. 1986)
(finding government could not have foreseen that holding
over on its lease would cause the landlord to lose a tenant
for “other property in excess of that occupied by the
government”). This foreseeability standard has also been
applied in SNF cases. In Indiana Michigan, we held that
the utility’s “high cost” and “speculative” investment in an
alternative out-of-state private storage facility, was
unforeseeable even though we also determined that “DOE
should have foreseen that its breach would force Indiana
Michigan to find alternate storage for its SNF.” 422 F.3d
at 1376.
This is not a case like Citizens Federal Bank v. United
States, 474 F.3d 1314 (Fed. Cir. 2007), another Winstar
case where the adverse tax consequences of the plaintiffs’
mitigation activities were foreseeable because they ex-
isted in the code at the time of the transaction. Nor is
this case like Anchor Savings, where it was foreseeable
that acquiring thrifts would have to sell investments to
23 VERMONT YANKEE NUCLEAR POWER v. US
raise regulatory capital because the government previ-
ously “needed and expected” acquiring thrifts like Anchor
Savings “to leverage its [later disallowed] goodwill into
[those] profitable investments.” 597 F.3d at 1362.
C
The question is whether ENVY has established the
foreseeability of the costs incurred to secure approval for
the dry storage facility from the State of Vermont. With
respect to the legal and lobbying expenses incurred by
ENVY to secure state approval of the dry storage facility,
we agree that ENVY has established foreseeability.
At the time the Standard Contract was signed in
1983, it was foreseeable that at least some form of ap-
proval was required by the State of Vermont for the
construction of a dry storage facility at VYNPS. For
example, a Vermont statute, enacted in 1977, provided
that:
No facility for deposit, storage, reprocessing or
disposal of spent nuclear fuel elements or radioac-
tive waste material shall be constructed or estab-
lished in the state of Vermont unless the general
assembly first finds that it promotes the general
good of the state and approves, through either bill
or joint resolution, a petition for approval of the
facility.
Vt. Stat. Ann. tit. 10, § 6501(a). Although an exception to
the statute was adopted in 1979 specifically for Vermont
Yankee, see id. § 6505, and even though ENVY may have
itself believed that this exception was transferable, it was
still foreseeable that approval from the Vermont legisla-
ture might have been required for ENVY. The assign-
ment provision in the Standard Contract shows that the
sale of VYNPS and the assignment of the Standard Con-
VERMONT YANKEE NUCLEAR POWER v. US 24
tract was foreseeable. And the fact that the legislature
had gone so far as to create an exemption that applied
only to Vermont Yankee suggested that there may be
further legislative action in the future related to that
exemption or that the exemption would not extend to a
potential successor.
The statute required approval from the state legisla-
ture based on its finding that the dry storage facility
“promote[d] the general good of the state.” While the
specific amount of legal and lobbying fees may not have
been foreseeable, the payment of at least some legal and
lobbying fees was foreseeable. And because the govern-
ment only challenges the payment of legal and lobbying
fees in general, we have no occasion to determine whether
specific portions of those fees might have been unforesee-
able (and hence not recoverable). 9 Accordingly, we affirm
the Claims Court’s award of $3,385,783 for ENVY’s legal
and lobbying fees.
D
We hold, however, that ENVY has not established
that the government could have foreseen the unprece-
dented requirement that ENVY contribute money into
Vermont’s Clean Energy Development Fund. The Clean
Energy Development Fund was established in 2005 as
part of the Dry Storage Act. See Vt. Stat. Ann. tit. 30,
§ 8015. The imposed fees bear no relationship to any
costs incurred by the state or its citizens as a result of the
construction of the dry storage facility. It would not be
9 Thus we need not determine, for example,
whether it was foreseeable that Vt. Stat. Ann. tit. 30,
§ 248(a)(2) would apply to the construction of a dry stor-
age facility and would require ENVY to obtain a Certifi-
cate of Public Good from the Vermont Public Service
Board.
25 VERMONT YANKEE NUCLEAR POWER v. US
inaccurate to characterize the fee as a form of blackmail
for the state approval of the construction. ENVY con-
ceded at oral argument that, at the time the Standard
Contract was signed in 1983, neither Vermont nor any
other state had imposed payments similar those into the
Clean Energy Development Fund while licensing a nu-
clear utility. Moreover, ENVY conceded in another case
that the Clean Energy Development Fund had “nothing to
do with dry cask storage.” J.A. 749. 10
It was particularly unforeseeable that Vermont would
require payments into the Clean Energy Development
Fund because such a requirement raised a substantial
question of preemption and was likely unconstitutional. 11
10 The only testimony at trial regarding the foresee-
ability of potential state-imposed costs was the testimony
of an Entergy Services (a sister company of ENVY) em-
ployee who stated that there may be some “hidden costs
and surprises regulatory-wise” if ENVY needed to trans-
port SNF to other sites. J.A. 1059. Such testimony,
referring generally to “hidden costs and surprises,” and
only applying to situations where ENVY would need to
transport SNF generated at VYNPS off site, does not
speak to the foreseeability of the costs actually imposed
by the state.
11 The State of Vermont alleges that the government
waived its preemption argument by failing to timely
notify the state of the preemption challenge pursuant to
the notice requirements of 28 U.S.C. § 2403(b). Section
2403(b) applies to certain challenges to state statutes in a
“court of the United States,” which the Historical and
Statutory Notes explain “is defined in section 451 of this
title.” Id. The definition of “court of the United States” in
28 U.S.C. § 451 includes Article III courts, but as we
recognized in Essex Electro Engineers, Inc. v. United
States, 757 F.2d 247, 251 n.1 (Fed. Cir. 1985), the Claims
Court, as an Article I court, is not included within section
451’s definition of “court of the United States.” Accord-
ingly, the notice provisions of section 2403 did not apply
to this case in the Claims Court.
VERMONT YANKEE NUCLEAR POWER v. US 26
Through a trilogy of cases, the Supreme Court has estab-
lished a test evaluating when a state law involving nu-
clear power is preempted by the United States
government’s authority over nuclear safety. See English
v. Gen. Elec. Co., 496 U.S. 72 (1990); Silkwood v. Kerr-
McGee Corp., 464 U.S. 238 (1984); Pac. Gas & Elec. Co. v.
State Energy Res. Conservation & Dev. Comm’n, 461 U.S.
190 (1983). “[T]he Federal Government has occupied the
entire field of nuclear safety concerns, except the limited
powers expressly ceded to the States.” Pac. Gas, 461 U.S.
at 212. These limited powers include the states’ “tradi-
tional responsibility in the field of regulating electrical
utilities for determining questions of need, reliability, cost
and other related state concerns.” Id. at 205. In Pacific
Gas, the Court upheld California’s moratorium only
because the law was based on a non-safety (i.e., economic)
rationale. Id. at 215-16. Under the Supreme Court’s test,
a state law related to nuclear power is preempted if it: (1)
is motivated by safety concerns, id. at 213, or (2) “ha[s]
some direct and substantial effect on the decisions made
by those who build or operate nuclear facilities concerning
radiological safety levels,” English, 496 U.S. at 85.
Here, the required payments into the Clean Energy
Development Fund totaled $15,625,000. This extraction
of money is significant in amount, and, as a condition of
constructing a dry storage facility, could easily deter a
utility from constructing such a facility whose construc-
tion is encouraged if not mandated by federal law. See 42
U.S.C. § 10151(a). 12 In Skull Valley Band of Goshute
12 42 U.S.C. § 10151(a) states: “(1) the persons own-
ing and operating civilian nuclear power reactors have the
primary responsibility for providing interim storage of
spent nuclear fuel from such reactors, by maximizing, to
the extent practical, the effective use of existing storage
facilities at the site of each civilian nuclear power reactor,
27 VERMONT YANKEE NUCLEAR POWER v. US
Indians v. Nielson, 376 F.3d 1223, 1248-50 (10th Cir.
2004), the Tenth Circuit held that state provisions requir-
ing payments to cover the “unfunded potential liability” of
the site were preempted because “it is not the states but
rather the NRC that is vested with the authority to decide
under what conditions to license an SNF storage facility.”
Unlike the non-preempted state tort claims in English
that only had “some effect” on radiological safety deci-
sions, the requirement to pay money into the Clean
Energy Development Fund could have a “direct and
substantial effect” on decisions concerning radiological
safety. English, 496 U.S. at 85. Such a regulation of
“matters directly affecting the radiological safety of nu-
clear-plant construction and operation” is likely pre-
empted, “‘even if [it was] enacted out of nonsafety
concerns.’” Id. at 84 (quoting Pac. Gas, 461 U.S. at 212).
Notably, ENVY itself challenged the payments to the
Clean Energy Development Fund on preemption grounds
in a separate action before a federal district court (aban-
doning that challenge only after the Claims Court
awarded those fees as damages), see Entergy Nuclear Vt.
Yankee, LLC v. Shumlin, No 1:11-cv-99, 2012 WL 162400(D. Vt. Jan. 19, 2012), and even now does not argue that
the Vermont law can escape preemption under federal
law.
ENVY argues that “[d]isputing the state’s authority to
require the payments was not viewed as being in the best
interests of the company” because “the company needed to
continue to operate and do additional business in the
and by adding new onsite storage capacity in a timely
manner where practical; [and] (2) the Federal Government
has the responsibility to encourage and expedite the effec-
tive use of existing storage facilities and the addition of
needed new storage capacity at the site of each civilian
nuclear power reactor . . . .” (emphasis added).
VERMONT YANKEE NUCLEAR POWER v. US 28
state.” ENVY Br. 52. Thus, they argue, their choice to
acquiesce to the monetary demands of the state was
reasonable. But whether or not ENVY’s choice to acqui-
esce to the likely preempted state requirements was
reasonable as a business proposition does not reflect on
whether the costs incurred in complying with those re-
quirements were foreseeable at the time the Standard
Contract was signed. A leading treatise makes clear that
reasonableness and foreseeability are separate require-
ments in the context of mitigation damages:
If the attempt [to mitigate] is reasonable . . . the
injured party can recover . . . [but] [t]his is sub-
ject . . . to the qualification applicable to the right
to recover consequential damages of any kind,
namely, that the defendant had reason to foresee
them as a probable result of the defendant’s
breach when the contract was made.
Williston on Contracts § 64:29. Just because it may have
been in ENVY’s best interest to maintain good relations
with the state and to agree to pay a fee that was likely
preempted by federal law does not render the fee recover-
able. ENVY’s acquiescence to the state of Vermont went
so far as to agree not to challenge the requirements of the
Memorandum on preemption grounds. But ENVY cannot
agree to improper state requirements, agree not to chal-
lenge those improper requirements on preemption
grounds, and then pass the expense of complying with
those requirements to the federal government. As we
held in Hercules Inc. v. United States, a plaintiff cannot
voluntarily forego defending itself against third-party
claims that are barred as a matter of law, and then re-
cover those costs from the government. 24 F.3d 188, 200
(Fed. Cir. 1994), aff’d on other grounds, 516 U.S. 417(1996).
29 VERMONT YANKEE NUCLEAR POWER v. US
For these reasons, we reverse the Claims Court’s
award to ENVY of $5,625,000 in damages for payments
made into the Clean Energy Development Fund.
E
It was similarly unforeseeable that Vermont would
require the performance of a flood analysis, which also
raises a substantial question of preemption. Here, the
flood analysis was required due to the perceived inade-
quacies of a previously performed NRC-required flood
analysis that “took into account a ‘probable maximum
flood’ at the site to ensure that such flooding would not
create safety issues at the plant.” Entergy Nuclear, 95
Fed. Cl. at 179 (emphasis added). ENVY has failed to
point to any evidence that, as of 1983, Vermont or any
other state had required utilities to perform additional
flood control analyses beyond those already performed
under federal regulations. In any event, because the
requirement to perform an additional analysis was di-
rectly motivated by safety concerns, it is clear that the
flood analysis requirement was likely preempted under
Pacific Gas, 461 U.S. at 215; see also ANR Pipeline Co. v.
Iowa State Commerce Comm’n, 828 F.2d 465, 471-72 (8th
Cir. 1987) (finding state safety regulations to be pre-
empted by the federal regulation of gas pipelines). The
required flood analysis was thus not foreseeable. Accord-
ingly, we reverse the Claims Court’s award of $184,552 in
damages for the performance of the river flood analysis.
F
ENVY has also failed to meet its burden of establish-
ing that the requirement to build a visual barrier on two
sides of the dry storage facility was foreseeable. Notably,
the Public Service Board commented that “[VYNPS] is an
industrial site, and from an aesthetic perspective, the
addition of a limited number of concrete and metal con-
VERMONT YANKEE NUCLEAR POWER v. US 30
tainers results in little change to the overall aesthetics of
the site.” Entergy Nuclear, 95 Fed. Cl. at 178. The lack of
an impact that dry storage would have on the overall
aesthetics of a site suggests that the imposition of aes-
thetic requirements for a dry storage facility in particular
was not foreseeable. Moreover, ENVY has failed to point
to any evidence that, as of 1983, Vermont or any other
state had imposed such aesthetic requirements as a
prerequisite for licensing a utility. Accordingly, we re-
verse the Claims Court’s award of $412,854 for the con-
struction of the visual barrier.
IV Disposal of Contaminated Material and
Characterization of Spent Fuel
The government challenges the Claims Court’s award
of $276,980 to ENVY for the costs of disposing contami-
nated soil and asphalt, and $156,000 for the costs of
performing a characterization on SNF moved into on-site
dry storage. We hold that the Claims Court clearly erred
in awarding damages to ENVY for the costs of disposing
contaminated material and for the costs of characterizing
SNF moved into on-site dry storage.
In Yankee Atomic Electric Co. v. United States, we ex-
plained that “damages for breach of contract require a
showing of causation,” which in turn necessitates a “com-
parison between the breach and non-breach worlds.” 536
F.3d 1268, 1273 (Fed. Cir. 2008). As we further explained
in Energy Northwest v. United States, it is the plaintiff
who “must prove the extent to which his incurred costs
differ from the costs he would have incurred in the non-
breach world.” 641 F.3d 1300, 1306 (Fed. Cir. 2011).
Thus, a plaintiff is entitled to recover costs “only to the
extent it can prove, to a reasonable certainty, that but for
the government’s breach they would not have been in-
curred.” Id. at 1307.
31 VERMONT YANKEE NUCLEAR POWER v. US
A
During the construction of the dry-storage facility at
VYNPS, ENVY discovered contaminated soil and asphalt
and incurred $276,980 in costs having that contaminated
material disposed. The Claims Court did not find that
DOE’s breach caused the contamination, but rather found
that DOE’s breach caused ENVY to discover the contami-
nation. The government challenges these costs on the
grounds that they would have been incurred in a non-
breach world when the site was eventually decommis-
sioned. Without the benefit of our decision in Energy
Northwest, the Claims Court held that “it [was] the Gov-
ernment, not ENVY, that [bore] the burden of demon-
strating that these future costs at decommissioning would
be identical.” Entergy Nuclear, 95 Fed. Cl. at 191. How-
ever, Energy Northwest clearly dictates that it was
ENVY’s burden to “submit a hypothetical model establish-
ing what its costs would have been in the absence of
breach.” 641 F.3d at 1305. Because ENVY failed to prove
the amount by which its actual removal costs were differ-
ent from what its removal costs would have been at
decommissioning in a non-breach world, we reverse the
Claims Court’s award of $276,980 for the disposal of the
contaminated material.
B
In preparing SNF for on-site dry storage, ENVY in-
curred $156,000 in costs to characterize the SNF. Such a
characterization is required for storage in any NRC-
approved cask. ENVY’s theory is “that the fuel charac-
terization may well be required a second time” for DOE-
supplied casks, “when and if DOE performs.” ENVY Br.
57. Thus, ENVY argues that it may have to pay for two
characterizations, whereas in a non-breach world, it
would have had to pay for only a single characterization
VERMONT YANKEE NUCLEAR POWER v. US 32
for the DOE-supplied casks. However, ENVY has not
established the likelihood that DOE will require ENVY to
incur further characterization costs upon performance. In
fact, the Claims Court noted that “ENVY [itself] believes
that DOE will accept” the previously performed charac-
terization before finding that it is “possible that another
review of the spent fuel condition will be required.”
Entergy Nuclear, 95 Fed. Cl. at 182. Further, ENVY has
failed to “submit a hypothetical model” comparing what
its costs would be in breach versus non-breach worlds in
the event that DOE does eventually require further
characterization. Energy Nw., 641 F.3d at 1305. Accord-
ingly, we reverse the Claims Court’s award to ENVY of
$156,000 in costs incurred for the spent fuel characteriza-
tion.
V Issues Resolved By Our Recent Precedent
A Cost of Capital
ENVY challenges the Claims Court’s denial of
$7,472,866 in damages for the cost of capital to fund
ENVY’s mitigation activities. In Energy Northwest, we
held that the no-interest rule barred parties to the Stan-
dard Contract from recovering the costs of financing
mitigation projects. 641 F.3d at 1310-13 (citing 28 U.S.C.
§ 2516(a)); see also Sys. Fuels, Inc. v. United States, 666
F.3d 1306, 1310-11 (Fed. Cir. 2012). We further explained
in Boston Edison Co. v. United States that the “commer-
cial enterprise exception” to the no-interest rule did not
apply in the context of the NWPA. 658 F.3d 1361, 1371
(Fed. Cir. 2011).
Consistent with our decisions in Energy Northwest
and Boston Edison, we affirm the Claims Court’s denial of
ENVY’s cost of capital claims.
33 VERMONT YANKEE NUCLEAR POWER v. US
B Overhead Costs
ENVY also challenges the Claims Court’s denial of
$788,414 in damages for its capital suspense loader
overhead costs. Without the benefit of our recent SNF-
related decisions, the Claims Court denied ENVY’s capital
suspense loader overhead claims despite acknowledging
that “[ENVY]’s accounting practices follow Generally
Accepted Accounting Principles [GAAP] and FERC Guide-
lines.” Entergy Nuclear, 95 Fed. Cl. at 195. In System
Fuels, where the “Plaintiffs used accounting procedures as
mandated by FERC and consistent with [GAAP],” we held
that the plaintiff’s accounting records sufficiently “demon-
strate[d] the effect of the mitigation project on the capital
pools entitlement with reasonable particularity.” 666
F.3d at 1312 (internal quotation marks omitted); see also
Energy Nw., 641 F.3d at 1309 (allowing recovery for the
“portion of [the plaintiff’s] overhead costs fairly allocated
to support of the mitigation via generally accepted ac-
counting practices”); Bos. Edison, 658 F.3d at 1370 (allow-
ing recovery of “the portion of overhead costs (calculated
using GAAP) that was attributable to mitigation pro-
jects”).
Consistent with our recent decisions, we reverse the
Claims Court’s denial of $788,414 in damages for over-
head costs allocated to ENVY’s mitigation activities via
the capital suspense loader.
However, we decline to review the Claims Court’s
holding with respect to the Resource Code 19 payroll
loader based on ENVY’s limited arguments on appeal.
The Claims Court found that Resource Code 19 payroll
loader included, among other items, pension costs for
retired employees that could not be attributed to mitiga-
tion activity and were thus not recoverable. Entergy
Nuclear, 95 Fed. Cl. at 195-96. On appeal, ENVY has
VERMONT YANKEE NUCLEAR POWER v. US 34
failed to develop an argument as to why Resource Code 19
payroll loader overhead costs should be considered analo-
gous to other overhead costs that we have deemed to be
sufficiently attributed to mitigation activities and thus
recoverable. Because ENVY has not adequately briefed
its claim with respect to the Resource Code 19 payroll
loader, we affirm the Claim’s Court’s denial of $10,013 in
damages for that particular overhead cost.
AFFIRMED IN PART, REVERSED IN PART, and
REMANDED
COSTS
No costs.
United States Court of Appeals
for the Federal Circuit
__________________________
VERMONT YANKEE NUCLEAR POWER
CORPORATION
Plaintiff-Cross Appellant,
v.
ENTERGY NUCLEAR VERMONT YANKEE, LLC,
AND ENTERGY NUCLEAR OPERATIONS, INC.,
Plaintiffs-Cross Appellants,
v.
UNITED STATES,
Defendant-Appellant.
__________________________
2011-5033, -5034, -5042
__________________________
Appeals from the United States Court of Federal
Claims in consolidated case nos. 02-CV-898 and 03-CV-
2664, Judge Thomas C. Wheeler.
__________________________
MAYER, Circuit Judge, dissenting-in-part.
I join the court’s opinion, except for Part I-C, which
concludes that the government waived the right to chal-
lenge the partial assignment by Vermont Yankee Nuclear
Power Corporation (“Vermont Yankee”) of its rights and
obligations under the Department of Energy’s Standard
Contract. There was no waiver because the government
VERMONT YANKEE NUCLEAR POWER v. US 2
promptly and unequivocally objected to the partial as-
signment.
“‘Waiver’ is a vague term used for a great variety of
purposes, good and bad, in the law. In any normal sense,
however, it connotes some kind of voluntary knowing
relinquishment of a right.” Green v. United States, 355
U.S. 184, 191 (1957). The government never relinquished
its right to challenge Vermont Yankee’s partial assign-
ment of its rights and obligations under the Standard
Contract. It was not until 2006 that the government
learned, during discovery, that Vermont Yankee breached
the Standard Contract when it assigned its right to have
the government accept spent nuclear fuel (“SNF”), but
failed to assign the obligation to pay the substantial one-
time fee for SNF generated prior to April 1983. Upon
learning of the breach, the government promptly filed a
motion for summary judgment in the Court of Federal
Claims, arguing that the partial assignment violated the
Assignment of Contracts Act, 41 U.S.C. § 15(a), and was
therefore invalid. See Vt. Yankee Nuclear Power Corp. v.
United States, 73 Fed. Cl. 236, 240 (Fed. Cl. 2006).
The fact that the government continued to accept
payments under the Standard Contract after learning of
the breach is insufficient to establish waiver. When a
party timely and unambiguously objects to a breach, he
does not forfeit his claim by continuing to accept pay-
ments under a contract. See N. Helex Co. v. United
States, 455 F.2d 546, 555 (Ct. Cl. 1972) (explaining that a
contractor’s “acceptance of partial payment, even without
notation on the check, does not waive his claim”); Inland
Trucking Corp. v. United States, 150 Ct. Cl. 642, 654 (Ct.
Cl. 1960) (emphasizing that a contractor did not waive his
right to sue for breach by accepting “final payment” under
a contract). In Westfed Holdings, Inc. v. United States, for
example, we concluded that a bank had not waived its
3 VERMONT YANKEE NUCLEAR POWER v. US
right to seek damages notwithstanding the fact that it
had continued to accept “hundreds of millions of dollars
from the government” following the government’s breach.
407 F.3d 1352, 1360 (Fed. Cir. 2005). We explained that
because the government knew of the bank’s “timely
reservation of rights in protest to the breach,” the contin-
ued acceptance of payments under the contract did not act
as a waiver. Id.A similar analysis applies here. Although the gov-
ernment continued to accept payments as required by the
Standard Contract after learning of Vermont Yankee’s
breach, it preserved its right to challenge the partial
assignment by filing a timely motion to have that assign-
ment invalidated. See All-Ways Logistics, Inc. v. USA
Truck, Inc., 583 F.3d 511, 517 (8th Cir. 2009) (emphasiz-
ing that “there can be no waiver when the injured party
does not manifest an intent to waive the breach”). “A
party to a contract may waive the breach of an agreement
by the continued acceptance of performance by the
breaching party without reservation of rights.” Westfed,
407 F.3d at 1360; see also Ling-Temco-Vought, Inc. v.
United States, 475 F.2d 630, 637 (Ct. Cl. 1973) (applying
the waiver doctrine where a contractor continued to
perform under a contract and “no reservation of rights
was made known”). Conversely, however, the waiver
doctrine has no application where, as here, the non-
breaching party promptly and vociferously protests a
breach. See Cole Taylor Bank v. Truck Ins. Exch., 51 F.3d
736, 740 (7th Cir. 1995) (explaining that while a victim of
breach of contract must take some action to protect his
contractual rights, he “is not required upon learning of
the breach to wail and tear his hair”).
Tuftco Corp. v. United States, 614 F.2d 740 (Ct. Cl.
1980), upon which the court relies, is inapposite. There,
we concluded that the government waived its right to
VERMONT YANKEE NUCLEAR POWER v. US 4
object to contract assignments where the contracting
officer had assured the contractor “that despite the Anti-
Assignment Act, the assignments were proper and would
be recognized by [the government].” Id. at 745. Here, by
contrast, the government never approved of, or acquiesced
in, the partial assignment, but instead immediately
sought redress by seeking to have that assignment invali-
dated.
“Waiver is an affirmative defense, as to which the
breaching party bears the burden of proof.” Westfed, 407
F.3d at 1360. Mere assertions are not enough.
United States Court of Appeals
for the Federal Circuit
__________________________
VERMONT YANKEE NUCLEAR POWER
CORPORATION,
Plaintiff-Cross Appellant,
v.
ENTERGY NUCLEAR VERMONT YANKEE, LLC,
AND ENTERGY NUCLEAR OPERATIONS, INC.,
Plaintiffs-Cross Appellants,
v.
UNITED STATES,
Defendant-Appellant.
__________________________
2011-5033, -5034, -5042
__________________________
Appeals from the United States Court of Federal
Claims in consolidated Case Nos. 02-CV-898 and 03-CV-
2663, Judge Thomas C. Wheeler.
__________________________
BRYSON, Circuit Judge, concurring in part and dissenting
in part.
I join the court’s opinion on all issues but one: the ma-
jority’s conclusion that payments to the Vermont Clean
Energy Development Fund and the requirement to put up
a visual barrier at the power plant were unforeseeable
2
and therefore cannot be included in the calculation of
ENVY’s damages.
With respect to ENVY’s payments into the Clean En-
ergy Development Fund, I would uphold the trial court’s
finding that it was reasonably foreseeable at the time of
contract formation that a nuclear operator would be faced
with expenses of that type if the government’s breach
forced the operator to build a dry storage facility. The
costs of dealing with state regulatory efforts were clearly
foreseeable. While the precise identity of those expenses
may not have been predictable, all that is required is that
“the injury actually suffered must be one of a kind that
the defendant had reason to foresee.” 11 Joseph M.
Perillo, Corbin on Contracts § 56.7, at 108 (rev. ed. 2005);
see also Anchor Sav. Bank, FSB v. United States, 597 F.3d
1356, 1364 (Fed. Cir. 2010); Citizens Fed. Bank v. United
States, 474 F.3d 1314, 1321 (Fed. Cir. 2007). The trial
court reasonably found that the Clean Energy Develop-
ment Fund payments met that test.
“Foreseeability is a question of fact reviewed for clear
error.” Pac. Gas & Elec. Co. v. United States, 668 F.3d
1346, 1352 (Fed. Cir. 2012), quoting Bluebonnet Sav.
Bank, F.S.B. v. United States, 266 F.3d 1348, 1355 (Fed.
Cir. 2001). The government has failed to show that the
trial court’s findings on the issue of foreseeability were
clearly erroneous. The majority accepts the government’s
assertion that the payments in question were unforesee-
able because the State’s regulatory efforts would likely
have been preempted by federal law. But that is far from
clear. As the majority itself points out, states are permit-
ted certain regulatory powers over nuclear energy facili-
ties if those powers are directed at non-safety issues, such
as economic or other concerns. The majority relies on
English v. General Electric Co. for the proposition that
3
state law is preempted if it “ha[s] some direct and sub-
stantial effect on the decisions made by those who build or
operate nuclear facilities concerning radiological safety
levels.” 496 U.S. 72, 85 (1990). In fact, however, the
Court in English concluded that even though claims for
emotional distress stemming from whistleblowing activity
relating to safety at a nuclear facility “may have some
effect on these decisions,” the effect was “neither direct
nor substantial enough to place petitioner’s claim in the
pre-empted field.” Id. Similarly, state tort law is not
preempted for damages awards for radiation-based inju-
ries—including punitive damages—even though the
“prospect of compensatory and punitive damages for
[these] injuries will undoubtedly affect nuclear employers’
primary decisions about radiological safety in the con-
struction and operation of nuclear power facilities.” Id. at
86; see Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 256
(1984).
As the Supreme Court cases cited by the majority
demonstrate, in 1983 it was foreseeable to the govern-
ment that a state would try to regulate aspects of nuclear
power facilities. In fact, the government was intimately
involved in the litigation of nuclear power preemption
cases, with varying degrees of success. See English, 496
U.S. 72 (1990) (United States as amicus); Silkwood, 464
U.S. 238 (1984) (same); Pac. Gas & Elec. Co. v. State
Energy Res. Conservation & Dev. Comm’n, 461 U.S. 211(1983) (same). Attempted state regulation of nuclear
waste storage facilities was at that time—and continued
to be for years—a contested area of overlapping state and
federal regulation. 1 E.g., In re Indep. Spent Fuel Storage
1 The State of Vermont, as amicus curiae, asserts
that the government cannot raise its preemption argu-
ment because it failed to give notice of that argument to
4
Installation, 501 N.W.2d 638, 648 (Minn. App. 1993)
(concluding that “proposed facility must be classified as a
radioactive waste management facility [and] must obtain
legislative authorization” pursuant to state law); cf.
Citizens’ Util. Bd. v. Pub. Serv. Comm'n, 565 N.W.2d 554,
564 (Wis. App. 1997) (approving state commission’s
determination that environmental impact statement
prepared for dry fuel storage was adequate).
Given such attempts to regulate nuclear power facili-
ties by the states, it is reasonable to conclude that it was
foreseeable that an injured party attempting to procure
alternative storage for its SNF—and forced to do so
quickly due to the government’s breach—would acquiesce
in state demands, even demands that might be regarded
as excessive. “The reasonably foreseeable consequences of
a breach of contract are compensable, whether they were
actually foreseen or not, or even if the criminal act of a
third person intervened.” 24 Richard A. Lord, Williston
on Contracts § 64:13, at 138-39 (4th ed. 2002). Because
the issue of foreseeability in this case is at least debat-
able, we should defer to the trial court’s findings.
Given the pressure—due to the government’s
breach—on ENVY to build SNF storage facilities quickly,
it was also foreseeable that ENVY would elect not to
engage in prolonged, costly, and complex litigation with
the State pursuant to 28 U.S.C. § 2403(b). Setting aside
whether section 2403 applies to the Court of Federal
Claims, the statute is directed to the court, not the gov-
ernment. Moreover, the preemption issue is not directly
presented by this case; it is raised only indirectly, in
support of the government’s contention that in light of the
preemption doctrine among other reasons, it would not
have been foreseeable for a nuclear operator to have to
make mitigation payments in response to state regulatory
efforts.
5
the State of Vermont over the preemption issue. See
Restatement (Second) of Contracts § 351, cmt. c, illus. 9
(explaining that payment of settlement by injured party
to avoid litigation with a third party is foreseeable and
therefore recoverable); cf. N.Y. Marine & Gen. Ins. Co. v.
Lafarge N. Am., Inc., 599 F.3d 102, 122 (2d Cir. 2010)
(concluding that in light of exceptional circumstances, it
was reasonable for the insured to act quickly to minimize
damages, even if its actions were not in strict compliance
with those recommended by the insurer).
In an analogous case, the Court of Federal Claims re-
jected a similar argument by the government, stating that
it “simply cannot be the case that plaintiff should be
required to mitigate the damages caused by defendant’s
breach . . . , be compelled to pursue that mitigation
through the state legislature . . . , and then in the final
analysis be forced to absorb the economic cost of legisla-
tive mandates it had no power to avoid.” N. States Power
Co. v. United States, 78 Fed. Cl. 449, 463, 464 (2007); see
also Valladares v. DMJ, Inc., 885 P.2d 580, 582 (Nev.
1994) (“[I]t would be inequitable for [the injured party] to
be forced to pay for the results of [the breaching party’s]
extreme lack of diligence in completing the contract.”). In
this setting, as in other similar instances involving the
question of which party should bear the costs of mitiga-
tion, “the risks incident to [efforts to minimize losses from
a breach] should be carried by the party whose wrongful
conduct makes them necessary.” 11 Joseph M. Perillo,
Corbin on Contracts § 57.16, at 349.
The same arguments apply with perhaps even greater
force to the costs for constructing the visual barrier. The
government’s preemption rationale is attenuated in that
setting because it is beyond dispute that states are per-
mitted to regulate certain environmental aspects of
6
nuclear power plants as long as those aspects are unre-
lated to radiological safety. Silkwood, 464 U.S. at 249; N.
States Power Co. v. Minnesota, 447 F.2d 1143, 1151 (8th
Cir. 1971) (explaining that Atomic Energy Act “does not
impair State authority to regulate activities of [nuclear
plant operators] for the manifold health, safety, and
economic purposes other than radiation protection”);
Pennsylvania v. Lockheed Martin Corp., 684 F. Supp. 2d
564, 588 (M.D. Pa. 2010) (state statute permitting recov-
ery of cleanup costs for radioactive material does not
“cause a direct or substantial effect on the decisions made
by [operators of] nuclear facilities concerning radiological
safety levels”); Me. Yankee Atomic Power Co. v. Bonsey,
107 F. Supp. 2d 47, 54 (D. Me. 2000) (“Nonradiological
aspects of spent fuel storage, however, are still subject to
some regulation by the states . . . .”); Conn. Coal. Against
Millstone v. Conn. Siting Council, 942 A.2d 345, 359
(Conn. 2008) (state council’s findings with respect to
factors such as “distance of [nuclear] facility from residen-
tial areas, the flood zone, and tidal and inland wetlands;
the impact of the facility on groundwater; [and] the design
of the facility” are not preempted by federal law).
Because a visual barrier cannot be said to relate to
radiological safety concerns, it likely lies outside the zone
of federal preemption. It is therefore foreseeable that a
state would respond to a proposed dry storage facility by
requiring the construction of a visual barrier for aesthetic
reasons and that such a requirement would not be subject
to challenge on preemption grounds. See Me. Yankee, 107
F. Supp. 2d at 55 (state may insist that nuclear operator
“comply with state requirements that do not impermissi-
bly infringe on radiological, operational, construction, or
safety issues, such as, for example, aesthetic landscaping
requirements”).
7
I therefore respectfully dissent from the majority’s de-
cision to reverse the trial court on those two disputed
items of mitigation expenses.