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IN THE UNITED STATES COURT OF FEDERAL CLAIMS : : : Plaintiff, : : v. : : UNITED STATES OF AMERICA, : : Defendant. : __________________________________________: YANKEE ATOMIC ELECTRIC COMPANY, __________________________________________

No. 98-126 C (Senior Judge Merow) Filed electronically: January 13, 2005

YANKEE ATOMIC'S RESPONSE TO THE GOVERNMENT'S POST-TRIAL LEGAL BRIEF

JERRY STOUCK Spriggs & Hollingsworth 1350 I Street, N.W., Ninth Floor Washington, D.C. 20005 (202) 898-5800 (202) 682-1639 Counsel for Plaintiff, YANKEE ATOMIC ELECTRIC COMPANY Of Counsel: Robert L. Shapiro SPRIGGS & HOLLINGSWORTH January 13, 2005

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Table of Contents Page I. II. III. IV. V. VI. VII. VIII. IX. X. XI. XII. The Court Should Reject The Government's "Schedule Issue" Arguments ­ Again..........4 The Court Should Reject The Government's Criticisms Of Mr. Graves ­ Again...............8 The Government's Causation Arguments Are Factually And Legally Wrong..................16 The Yankees Have Met Their Burden Of Proof To Show Damages.................................23 The Court Should Reject The Government's Shutdown Priority Arguments ­ Again......24 The Court Should Reject The Government's Arguments On Pre-Breach And Future Damages ­ Again...............................................................................................................26 The Court Should Reject The Government's GTCC Waste Arguments ­ Again. ............29 The Government's Failed Fuel And Multi-Purpose Canister Arguments Are Contractually And Factually Wrong..................................................................................37 The Court Has No "Discretion" To Deny The Yankees The Damages They Have Incurred, And No Reason To Deny Those Damages.........................................................41 The Court Should Reject The Government's Objections To The Yankees' Takings Claims ­ Again. .................................................................................................................43 The Government's Good Faith And Fair Dealing Argument Is Legally And Factually Wrong. ...............................................................................................................................47 The Government Has No Right To Collect, Or Even Claim, Pre-1983 Fees. ...................49

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TABLE OF AUTHORITIES

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Cases Allegre Villa v. United States, 60 Fed. Cl. 11 (2004) ................................................................... 44 Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234 (Fed. Cir. 2002) ............... 47, 48 Armijo v. United States, 229 Ct. Cl. 34, 663 F.2d 90 (1981)........................................................ 46 Bass Enterprises Production Co. v. United States, 133 F.3d 893 (Fed. Cir. 1998)...................... 47 B-E-C-K Constructors v. United States, 215 Ct. Cl. 793, 571 F.2d 25 (1978)............................... 5 Bluebonnet Savings Bank, F.S.B. v. United States, 339 F.3d 1341 (Fed. Cir. 2003).................... 41 Branhill Realty Co. v. Montgomery Ward & Co., 60 F.2d 922 (2d Cir. 1932) .............................. 6 Brinson v. Linda Rose Joint Venture, 53 F.3d 1044 (9th Cir. 1995) .............................................. 9 Brooke Group, Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993)..................... 13 Chain Belt Co. v. United States, 127 Ct. Cl. 38, 115 F. Supp. 701 (1953)............................. 17, 36 Cienega Gardens v. United States, 194 F.3d 1231 (Fed. Cir. 1998) ............................................ 45 Cienega Gardens. v. United States, 331 F.3d 1319 (Fed. Cir. 2003) ........................................... 45 Commonwealth Edison Co. v. United States, 56 Fed. Cl. 652 (2003) ................................ 1, 2, 4, 6 Demutiis v. United States, 48 Fed. Cl. 81 (2000) ......................................................................... 31 Dolphin Tours, Inc. v. Pacifico Creative Service, Inc., 773 F.2d 1506 (9th Cir. 1985) ......... 13, 14 Energy Capital Corp. v. United States, 302 F.3d 1314 (Fed. Cir. 2002).......................... 11, 28, 35 Essex Electro Engineers, Inc. v. Danzig, 224 F.3d 1283 (Fed. Cir. 2000) ................................... 49 Fawick Corp. v. United States, 149 Ct. Cl. 623, 1960 WL 8478 (1960)...................................... 21 Florida Power & Light Co. v. Westinghouse Electric Corp., 826 F.2d 239 (4th Cir. 1987)........ 44 Franconia Associates v. United States, 536 U.S. 129 (2002)....................................................... 45 Gadsden v. United States, 111 Ct. Cl. 487, 78 F. Supp. 126 (1948) ............................................ 48 Hendler v. United States, 952 F.2d 1364 (Fed. Cir. 1991) ........................................................... 46 Hi-Shear Technology Corp. v. United States, 356 F.3d 1372 (Fed. Cir. 2004)............................ 24 ii

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Hughes Communications Galaxy, Inc. v. United States, 271 F.3d 1060 (Fed. Cir. 2001)............................................................................................................. 6, 22, 41 Indiana Michigan Power Co. v. United States, 57 Fed. Cl. 88 (2003) ........................................... 6 International Ore & Fertilizer Corp. v. SGS Control Services, Inc., 38 F.3d 1279 (2d Cir. 1994).......................................................................................................................... 42 Kalvar Corp., Inc. v. United States, 211 Ct. Cl. 192, 543 F.2d 1298 (1976) ............................... 48 Ketchikan Pulp Co. v. United States, 20 Cl. Ct. 164 (1990)......................................................... 27 Knotts v. United States, 128 Ct. Cl. 489, 121 F. Supp. 630 (1954) .............................................. 48 Librach v. United States, 147 Ct. Cl. 605, 1959 WL 7633 (1959) ............................................... 48 Locke v. United States, 283 F.2d 521 (Ct. Cl. 1960) .................................................................... 12 Long Island Savings Bank, FSB v. United States, 60 Fed. Cl. 80 (2004) ..................................... 17 Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982)................................ 45, 46 McKay v. United States, 199 F.3d 1376 (Fed. Cir. 1999)............................................................. 46 Minnesota v. NRC, 602 F.2d 412 (D.C. Cir. 1979)....................................................................... 44 Mobil Oil Exploration & Producing Southeast, Inc. v. United States, 530 U.S. 604 (2002) ....... 35 Myerle v. United States, 33 Ct. Cl. 1, 1800 WL 2024 (1897) ...................................................... 24 National By-Products, Inc. v. United States, 186 Ct. Cl. 546, 405 F.2d 1256 (1969).................... 6 Northern Helex Co. v. United States, 225 Ct. Cl. 194, F.2d 557 (1980) ...................................... 28 Orange Cove Irrigation District v. United States, 28 Fed. Cl. 790 (1993) .................................. 39 Pacific Far East Line, Inc. v. United States, 184 Ct. Cl. 169, 394 F.2d 990 (1968) .................... 39 Perini Corp. v. Greate Bay Hotel & Casino, Inc., 610 A.2d 364 (N.J. 1992).............................. 42 Porter v. Resor, 415 F.2d 764 (10th Cir. 1969)............................................................................ 46 Ramsey v. United States, 121 Ct. Cl. 426, 101 F. Supp. 353 (1951) ............................................ 24 Reliance Cooperage Corp. v. Treat, 195 F.2d 977 (8th Cir. 1952) ........................................ 17, 26 Roedler v. DOE, 255 F.3d 1347 (Fed. Cir. 2001)......................................................................... 47 Roseburg Lumber Co. v. Madigan, 978 F.2d 660 (Fed. Cir. 1992).............................................. 14

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San Carlos Irrigation & Drainage District v. United States, 111 F.3d 1557 (Fed. Cir. 1997)........................................................................................................... 21, 24, 41 Shockley v. Arcan, Inc., 248 F.3d 1349 (Fed. Cir. 2001).............................................................. 12 Skip Kirchdorfer, Inc. v. United States, 6 F.3d 1573 (Fed. Cir. 1993) ......................................... 46 Southern California Edison Co. v. United States, 226 F.3d 1349 (Fed. Cir. 2000) ..................... 30 Southern Nuclear Operating Co. v. United States, No. 98-614C (Fed. Cl. Apr. 7, 2004) ........... 44 Southern Nuclear Operating Co. v. United States, No. 98-614C (Fed. Cl. Dec. 20, 2004) ......... 29 Struck Construction Co. v. United States, 96 Ct. Cl. 186, 1942 WL 4411 (1942) ....................... 48 Tal'Wi-Wi Ranches v. United States, 156 Ct. Cl. 700 (1962)....................................................... 46 Tennessee Valley Authority v. United States, 60 Fed. Cl. 665 (2004) .................................... 17, 26 Tretina Printing, Inc. v. FitzPatrick & Associates, Inc., 640 A.2d 788 (1994)............................ 42 Trinidad Bean & Elevator Co. v. Frosh, 494 N.W.2d 347 (Neb. Ct. App. 1992)........................ 18 Turner Construction Co. v. United States, 367 F.3d 1319 (Fed. Cir. 2004)................................. 30 United States v. Ohio Edison Co., 276 F. Supp. 2d 829 (S.D. Ohio 2003) ............................ 15, 16 United States v. Winstar Corp., 518 U.S. 839 (1996)............................................................. 35, 47 Weisgram v. Marley Co., 528 U.S. 440 (2000)............................................................................. 13 Willems Industries, Inc. v. United States, 155 Ct. Cl. 360, 295 F.2d 822 (1961)......................... 23 Yankee Atomic Electric Co. v. United States, 42 Fed. Cl. 223 (1998).................................... 43, 44 Yankee Atomic Electric Co. v. United States, No. 98-126, 2004 WL 1535686 (Fed. Cl. June 28, 2004)................................................................................................... passim Yankee Atomic Electric Co. v. United States, No. 98-126, 2004 WL 1535687 (Fed. Cl. June 28, 2004)................................................................................................... passim Yankee Atomic Electric Co. v. United States, No. 98-126, 2004 WL 1535688 (Fed. Cl. June 28, 2004)................................................................................................... passim Statutes 42 U.S.C. § 10222(a)(4) (2000) ...................................................................................................... 7 42 U.S.C. § 2021c(b)(1) (2000) .................................................................................................... 32

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Regulations 48 Fed. Reg. 16590 (Apr. 18, 1983) ............................................................................................. 25 Other Authorities 3 Dan B. Dobbs, Law of Remedies, § 12.2 (2d ed. 1993) ............................................................. 36 24 Richard A. Lord, Williston on Contracts § 66:74 (4th ed. 2002) ............................................. 35 Restatement (Second) Contract § 204 (1981)................................................................................. 5 Restatement (Second) of Contract § 205 (1981)..................................................................... 39, 49 Restatement (Second) Contract § 350 (1981)................................................................... 16, 18, 27

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS : : : Plaintiff, : : v. : : UNITED STATES OF AMERICA, : : Defendant. : __________________________________________: YANKEE ATOMIC ELECTRIC COMPANY, __________________________________________

No. 98-126 C (Senior Judge Merow)

YANKEE ATOMIC'S RESPONSE TO THE GOVERNMENT'S POST-TRIAL LEGAL BRIEF1 Under the post-trial briefing schedule established by the Court, the government's initial post-trial brief represents the government's own best view of the case in light of all the trial evidence. In that context, it is notable that the government devotes most of its brief (about 60 pages, from pp. 7-73, except pp. 58-64) to arguments that the Court already rejected in its pretrial rulings: -- that the Yankees' contracts (each, a "Contract") with the Department of Energy ("DOE") "provide[ ] a specific mechanism for defining the schedule" for acceptance of spent nuclear fuel and high-level radioactive waste ("HLW") (collectively, "SNF"), Initial Gov't Br. at 22. See Commonwealth Edison Co. v. United States, 56 Fed. Cl. 652, 663 (2003), "adopted here" by Order of June 26, 2003 (rejecting government's theory that Contracts contain a "mechanism" for defining SNF pickup schedule); This brief responds to the government's initial post-trial brief on behalf of all three Yankee plaintiffs, and, accordingly, should also be deemed applicable to Connecticut Yankee Atomic Power Co. v. United States, No. 98-154C and Maine Yankee Atomic Power Co. v. United States, No. 98-474C.
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-- that the Contracts "provide DOE with the option of selecting any one of numerous potential acceptance scenarios," Initial Gov't Br. at 19. See Commonwealth Edison, 56 Fed. Cl. at 667 (rejecting theory that DOE may select schedule, and concluding instead that "[t]he court will, as it is required to do, determine the missing acceptance rate term in further proceedings" (citation omitted)); -- that DOE's Contract obligations are limited to acceptance of spent fuel described in an approved delivery commitment schedule ("DCS"), Initial Gov'Br. at 17 ("the maximum rate that t [the Court] can identify should be by reference to the DCSs that the Yankees submitted and DOE approved"). See Commonwealth Edison, 56 Fed. Cl. at 663 (rejecting government's theory); -- that the Court should disregard entirely the analysis and opinions of Frank Graves, because for various reasons his model is not "perfect," see Initial Gov't Br. at 30, and because the Yankees have provided no evidence of any actual exchange of DOE acceptance allocations, id. at 23-24. See Order of June 28, 2004, 2004 WL 1535686 at *5-*7 (denying motions in limine) (rejecting government arguments); -- that the Yankees' pre-breach and future damages are precluded as a matter of law, Initial Gov't Br. at 64-73. See Order of June 28, 2004, 2004 WL 1535688 (denying motion in limine) (rejecting government's arguments); Because the government's brief dwells on these rejected arguments, the government never comes to grips with the basic facts giving rise to the Yankees' damages claims. Those facts are straightforward and essentially undisputed: -- beginning in the early 1990s, it became well known in the nuclear industry that DOE would not begin Contract performance by the 1998 deadline imposed by the Contracts, or likely

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for many years thereafter, see, e.g., Yankee Atomic Post-Trial Proposed Findings of Fact ("YAPF") 91-96; -- DOE in fact did not meet the 1998 deadline; it currently projects 2010 as the earliest date it will perform, and most informed observers expect a much later start-date, see, e.g., id. 90, 164; -- each of the Yankees has had to store its SNF on site for an extended period of time ­ at least twelve-years longer than if DOE had timely performed, given DOE's conceded twelve-year "delay." see, e.g., id. 96-112; -- upon due deliberation, the Yankees determined to provide for extended on-site SNF storage by first (at Connecticut Yankee and Maine Yankee only) expanding their spent fuel pools through reracking and by constructing a dry storage facility, see, e.g., id. 96-105; Connecticut Yankee's Post-Trial Proposed Findings of Fact ("CYPF") 96-99 (re dry storage), 117 (re reracking); Maine Yankee's Post-Trial Proposed Findings of Fact ("MYPF") 118-123 (re reracking); and -- each of the Yankees has already spent many tens of millions of dollars on their on-site SNF storage arrangements, and will be required to spend enormous additional sums to operate the dry storage facilities until (if ever) their SNF is removed by DOE, see, e.g., YAPF 139-145, 156-159. The government's brief does not address these crucial damages facts. And, largely for that reason, the government's legal discussion is completely misguided. The government does not mention foreseeability or reasonable certainty, two of the three legal elements the Yankees must establish in order to recover their damages. See Yankee Atomic's Initial Post-Trial Legal Brief ("Initial YABr.") at 3-5, 12-15. As for causation ­ the third element the Yankees must

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establish ­ the government's brief addresses the issue without so much as acknowledging the most relevant damages facts, namely that Yankee Atomic has already spent more than $100 million to implement dry storage (and Connecticut Yankee and Maine Yankee have spent nearly as much), because each company determined that dry storage was the best way to store their SNF for an extended period, as is clearly required. Rather than address these crucial ­ and undisputed ­ facts, which go directly to the question of what caused the Yankees to incur these damages, the government's causation discussion focuses on the contours of the government's Contract obligations and the details of Mr. Graves' economic sequence model. See Initial Gov't Br. at 723, 23-53, 58-71. The Yankees address below the hodge-podge of largely-discredited arguments that the government has offered in attempting to avoid the compelling damages facts and the real legal issues. I. The Court Should Reject The Government's "Schedule Issue" Arguments ­ Again.

In the first major section of its brief the government reprises its pretrial motion on the rate of acceptance issue. It argues first, in various ways, that no contract provision requires DOE to accept SNF on any particular schedule. See id. at 7-23. The government is correct on that point, as the Court recognized in its June 26, 2003 Order "adopt[ing] here" most of Commonwealth Edison Co., 56 Fed. Cl. 652. See id. at 663 ("the Standard Contract, including specifically the ACR and DCS process, does not contain or create a SNF acceptance rate"). But the implication the government draws from this contractual silence ­ that the Contract therefore confers "discretion" on DOE to define or select among alternative acceptance schedules, see Initial Gov't Br. at 23, such as a schedule limited to accepting SNF on approved DCSs, id. at 16-19, or, presumably, no schedule at all ­ is simply wrong.

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Under the correct rule of law, "[a]s the court [also] found in its June 26, 2003 Order, DOE was to commence pickup at a reasonable rate no later than January 31, 1998." Order of June 28, 2004 at 9, No. 98-126, 2004 WL 1535686, at *6 (denying motions in limine) (emphasis added). The government's brief strikingly neglects to acknowledge this controlling ruling, or the governing legal principle it adopted. Instead, the government notes only that the Yankees "have argued" that "because the Standard Contract does not identify a minimum mandatory acceptance rate, the Court's role is to identify a `reasonable' rate . . ." Initial Gov't Br. at 19. True again as far as it goes, but of course the reason the Yankees have made that argument is that given the Contract's silence, governing precedent ­ and indeed black letter law ­ require the Court to enforce a reasonable rate. E.g., B-E-C-K Constructors v. United States, 215 Ct. Cl. 793, 571 F.2d 25, 31 (1978) ("It is well settled that where a time is not fixed in a contract for performance of an obligation, performance within a reasonable time, dependent upon the circumstances applicable, is required."); see Restatement (Second) of Contracts § 204 (1981) ("Rest. 2d Cont."). As noted above, the Court has already embraced this rule of law in these very cases. And as the Yankees explained in their opening brief, a "reasonable" SNF acceptance schedule in this case means a schedule consistent with the Contract terms (e.g., those providing for exchanges and shutdown priority), consistent with the parties' pre-litigation conduct, and consistent with the purpose of the Contract and the underlying statute (the Nuclear Waste Policy Act, "NWPA") as shown by the contemporaneous understandings of DOE and the contracting utilities. See Yankee Atomic's Initial Post-Trial Legal Brief ("Initial YABr.") at 10-12. The government's only response on this point is the same response it has previously given and the Court has previously rejected: "because of the manner in which the acceptance schedule mechanism in the Standard Contract is drafted, this Court may not simply identify a

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rate that it believes `reasonable' and incorporate it into the contract." Initial Gov't Br. at 19. The Yankees will not repeat here all the reasons why the Court was correct to reject that argument (as did Judge Hewitt in Commonwealth Edison, 56 Fed. Cl. 652, and Judge Hodges in Indiana Michigan Power Co. v. United States, 57 Fed. Cl. 88, 96 (2003) ("Here, the contract term is missing entirely.")), and instead refer the Court to Yankee Atomic's Opposition to Defendant's Motion for Summary Judgment on the Rate of SNF Acceptance, filed October 28, 2002 (Yankee Atomic's "Rate Motion Opp.").2 The government's new arguments, based on the concept of "alternative contracts," do not help the government because the DOE Contracts are not of that type. See Initial Gov't Brief at 19-22 ("The Standard Contract's schedule terms provide DOE with the option of selecting any one of numerous potential acceptance scenarios . . ."). As the government notes, an alternative contract "is one wherein A promises B some one of two or more alternative performances." Id. at 19 (quoting Rest. 2d Cont. § 344 cmt. a). Here the Contracts, being silent as to schedule, do not "promise" the Yankees even one particular alternative. Rather, silence prevails and the Court must enforce a reasonable acceptance schedule.3

Enforcement of a reasonable schedule in the circumstances of this case, where the Contract is silent, is different from the attempts to enforce specific terms not found in the contract documents or otherwise agreed between the parties, as was involved in new cases the government cites like National By-Products, Inc. v. United States, 186 Ct. Cl. 546, 405 F.2d 1256 (1969) and Branhill Realty Co. v. Montgomery Ward & Co., 60 F.2d 922 (2d Cir. 1932). Regardless of the rule applicable to alternative contracts, outside that context, as here, contract damages are frequently awarded based on government performance in the non-breach world that was not the "least costly to the promisor." See, e.g., Hughes Communications Galaxy, Inc. v. United States, 271 F.3d 1060 (Fed. Cir. 2001) (affirming damages of $102 million based on NASA's launch of five satellites in non-breach world, although government expert projected between one and six launches ­ and the contract did not expressly require any number of launches).
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Because the government continues to rely particularly on DCSs as imposing a limitation on DOE's Contract obligations, see Initial Gov't Br. at 17-18, 22-23, it bears repeating here that those forms, like the other tools provided in the Contract explicitly for "planning purposes," were designed to help plan for SNF acceptance scheduling in the context of an operating SNF removal program. However, in the "breach" world these planning tools cannot operate effectively. For example, a key function of DCSs ­ to provide a basis for exchanges that would make DOE's acceptance schedule more efficient ­ does not occur in the breach world because, as the Court recognized in a pretrial ruling and the trial testimony confirmed, given DOE's breach there is nothing to exchange. See Order of June 28, 2004, 2004 WL 1535686, at *4 ("Defendant's . . . breach prevented the very market the government assails as speculative . . ."); Tr. 864:9-865:11 (Graves); Tr. 2469:5-21 (Bennet) ("nothing to exchange"); see generally Yankee Atomic's Rate Motion Opp. at 28-30 (discussing the Contract's schedule planning tools).4 Outside the context of a functioning SNF program, the only possible use of the DCSs would be to limit DOE's contract obligations. That is not what DCSs were designed for. Indeed, the government cannot plausibly maintain that when the Yankees submitted DCS forms as DOE instructed, they thereby knowingly limited DOE's obligations to acceptance of only a fraction of their SNF, rather than all of it as the Contracts explicitly require. P1YA, Art. II ("The services to

Even if DOE's spent fuel program were operational, the Contracts' delivery and acceptance planning tools would not work mechanistically or flawlessly as drafted. The NWPA required the Contracts to be signed by June 30, 1983, less than six months after the NWPA became law. See 42 U.S.C. § 10222(a)(4) (2000). "DOE's promulgation of the Standard Contract in so short a time resulted in a number of significant problems remaining unresolved." D109 at YDK038346; see Tr. 375:20-378:15 (Mills) (schedule issues were "not fully fleshed out" in the Contracts and "needed to be fleshed out" later). DOE, having recognized a number of open issues in its first ACR, see P52 (1987 ACR) at 13-15, subsequently initiated (but later abandoned) a formal "Issue Resolution Process" with utilities in an effort to resolve these issues. See P60 (1991 ACR) at 1011.

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be provided by DOE under this contract shall . . . continue until such time as all SNF and/or HLW from the civilian nuclear power reactors specified in Appendix A . . . has been disposed of."). In the breach world, the DCSs submitted in the early 1990s are meaningless. DOE admitted as much when it issued a new ACR in July 2004 and solicited new DCS forms. See Yankee Atomic's Response to the Government's Proposed Findings of Fact ("Response to GPF") at pp. 5-6. Indeed, the instructions for completing the original DCS forms that DOE had distributed in 1992 made clear that the forms would need to be redone if the program did not start receiving SNF in 1998. See P1953 at 2, ¶ 7(a). And now, given the current status of DOE's program, the recent 2004 DCSs are meaningless also, a fact DOE conceded in a letter to utilities dated December 1, 2004 (see Exhibit A): [R]ecent developments relating to the FY 2005 budget along with other issues have led the Department to conclude that the resumption of the DCS process was premature. The Department thanks you for your response to its initial request for DCS planning information. Enclosed with this letter are any original DCS forms that you may have submitted with your response. After the Department has determined a revised date for the initial operation of the Yucca Mountain repository, it will resume the DCS process in accordance with the provisions of the Standard Contract. II. The Court Should Reject The Government's Criticisms Of Mr. Graves ­ Again.

The second major section of the government's brief contains a broadside attack on the analysis and opinions offered by Mr. Graves concerning what a reasonable schedule of spent fuel acceptance would have been in the non-breach world. For the most part the government, rather than offering legal objections to Mr. Graves' testimony, simply attempts to discredit the testimony by voicing substantive criticisms. Yankee Atomic answers the government's

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criticisms comprehensively in its response to the government's proposed findings. As shown there, Mr. Graves himself answered most of the government's criticisms, and on every point the government raises Mr. Graves provided the more reliable and convincing testimony. See e.g., Response to GPF 141-156, 168-178, 186 and at pp. 13-14. The government's brief also repeatedly mischaracterizes Mr. Graves' testimony. For example, the government asserts that Mr. Graves assumes perfect competition, Initial Gov't Br. at 28-29, that he assumes universal participation by contracting utilities in the market for SNF allocation exchanges, id. at 29, and that he also assumes that "DOE would have approved every single exchange request," id. at 32-33. Each of those assertions is wrong. As Mr. Graves explained at trial, markets are rarely if ever perfectly competitive, see Response to GPF 142 and at pp. 13-14, and his model would produce essentially the same results if only half the contracting utilities participated (or requested and obtained approval for exchanges), see Response to GPF 153. The government also offers no persuasive reason why market forces would not prevail, or why utilities would not eagerly participate in exchanges that reduced their costs.5 At bottom, the government seemingly misunderstands what Mr. Graves' economic sequence model purports to show. The model does not purport to be a "photograph" of the nonbreach world; Mr. Graves admitted that. Id. at p. 28; see Tr. 862:15-17 (Graves) ("I'm not offering my analysis as a structural photograph or description of exactly what would have

5

Contrary to the government's assertion, see Initial Gov't Br. at 32-33, Brinson v. Linda Rose Joint Venture, 53 F.3d 1044 (9th Cir. 1995), does not support the theory that the Contract's clause giving DOE "sole discretion" to approve exchanges precludes reliance on exchanges in determining a reasonable SNF acceptance schedule. In Brinson, the court applied a "sole discretion" clause to reject a challenge to the manner in which a seamen's bonus was calculated. Id. at 1049. The decision does not remotely suggest that the clause would allow the shipping company to refuse to calculate any bonus at all.

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transpired"). Rather, Mr. Graves' model portrays a reasonable SNF acceptance schedule in the non-breach world. What is important is not the photographic details but the big picture, and as Mr. Graves' explained in the same passage, the big picture is unmistakably clear: "[G]iven a program of a reasonable size, . . . there's an enormous opportunity to pursue that program efficiently by allowing swaps or by utilities arranging for deals amongst themselves, for intermediaries arising who will provide brokerage services. And the value of that is extremely high. And it's extremely simple to develop both the proof and the mechanisms for the ­ to show that that's worthwhile. Given that, I think an economic solution something like mine would occur. Whether or not it occurred through an auction mechanism that used the same pricing algorithm as I have shown is really not relevant. All I'm saying is there is so much compelling economic attraction to pursuing an efficient solution and so little barrier to doing so, that something like that would have been a reasonable thing. . . . And that not only is . . . good for the utilities, it's good for the program. Tr. 863:2-23 (Graves). This testimony succinctly answers all the government's attempts to nitpick the details of Mr. Graves' model. Although the government offers various case citations in its discussion of Mr. Graves' testimony, in essence the government makes only two legal points. First, the government argues that Mr. Graves' conclusions are "inherently speculative" because they "lack evidentiary foundation." Initial Gov't Br. at 25; see id. at 24-27, 43-54. Second, the government argues that the Court should reject Mr. Graves' model because it is analytically unsound or rests on dubious economic principles. See id. 29-42. These arguments do not raise any fundamental legal objection to Mr. Graves' testimony; rather, they take issue with the evidentiary support and economic principles on which his analysis and model are built.

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The government raised substantially the same "legal" arguments before trial, and the Court rejected them in its pretrial ruling denying the government's motion to preclude Mr. Graves' testimony. See Order of June 28, 2004, 2004 WL 1535686 (denying motions in limine). Finding the circumstances here comparable to those in Energy Capital Corp. v. United States, 302 F.3d 1314 (Fed. Cir. 2002), the Court noted that "Graves' opinion is not based on `unsupported speculation,'" but on "real world" facts. 2004 WL 1535686, at *5 (quoting Energy Capital, 302 F.3d at 1329). As the Court recognized even from the pretrial record: [H]ere, at least some of the costs have been incurred, SNF quantities are ascertainable, and both parties have projections of acceptance rate, delivery schedules, and quantities. . . . Pool capacities, inventories, and reactor discharge rates for all the spent fuel facilities in the United States were obtained from DOE publications and from Mr. Malone. Annual aggregate acceptance amounts used were found to be reasonable by Dr. Bartlett and supported by the opinion of Ivan Stuart, and also contained in a DOE planning document. . . . Id. As set forth fully in the Yankees' objections to the government's proposed findings, the trial evidence confirmed, and amplified, the substantial factual foundation underlying Mr. Graves' analysis and model. See, e.g., YAPF 61-87; Response to GPF 122-125. The Court has also previously (and forcefully) rejected the government's assertion, see Initial Gov't Br. at 37-39, that the absence of exchanges in the "breach" world has significance. As the Court put it, "[b]y partially breaching the contract, defendant cannot exclude Graves' opinion on the grounds that there is no market data. There is no market data because the government's breach thwarted this possibility." 2004 WL 153686, at *4; see id. at *3 ("Proof of damages need not always specify transactions that would have occurred but for the breach.") (citations omitted); id. at *4. The Court's analysis and conclusion on this point are likewise consistent with Energy Capital, as well as substantial other case law. See 302 F.3d at 1327 ("`where the defendant itself has wrongfully prevented the [market] from coming into existence 11

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and generating a track record,'" to the extent there exists uncertainty in the but-for model, "`the risk of uncertainty must fall on the defendant whose wrongful conduct caused the damages'") (quoting Mid-America Tablewares, Inc. v. Mogi Trading Co., 100 F.3d 1353, 1366 (7th Cir. 1996)); see also Locke v. United States, 283 F.2d 521, 524 (Ct. Cl. 1960) ("The defendant who has wrongfully broken a contract should not be permitted to reap advantage for his own wrong by insisting on proof which by reason of his breach is unobtainable"). The Court further recognized even before trial that Mr. Graves' model is based on "fundamental economic principles of market supply and demand and cost avoidance." Order of June 28, 2004, 2004 WL 1535686, at *7. Thus, "[d]efendant's objections are to the application of facts to Graves' economic principles and methodology," id. at *5, rather to the economic principles or methodology themselves. The largely factual criticisms that the government is advancing now, post-trial, are no different. But the trial evidence overwhelmingly establishes that when the foundational facts that the Yankees proved ­ concerning a reasonable acceptance rate, a reasonable "ramp-up" rate, the efficiencies both parties would gain by swaps, and the like ­ are applied to Mr. Graves' economic principles and methodology, his resulting conclusions are sound, credible and reliable. They also are essentially uncontroverted, because the government never presented any competing model of a "reasonable" non-breach world acceptance schedule. In short, there is no remaining legal dispute over the reliability of Mr. Graves' testimony, and to the extent factual disputes exist, the trial evidence requires the Court to resolve them decisively in the Yankees' favor. The new cases the government cites do not support its attacks on Mr. Graves; indeed, many of them actually support the Yankees. For example, in Shockley v. Arcan, Inc., 248 F.3d 1349, 1363 (Fed. Cir. 2001), see Initial Gov't Br. at 25-26, the expert admitted "that his

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determination that [plaintiff] would have sold 80,000 units per year . . . was an assumption without factual underpinnings. Rather, [the expert] testified that he based his opinion on the number of sales that [plaintiff] told him to assume it would have made." Dolphin Tours, Inc. v. Pacifico Creative Service, Inc., 773 F.2d 1506 (9th Cir. 1985); see Initial Gov't Br. at 24, which reversed a summary judgment that was based on purportedly inadequate expert testimony, supports Yankee Atomic. In that case the appellate court concluded, similar to the situation here, that "Dolphin has presented evidence from which a jury could reasonably estimate the amount of Dolphin's injury without speculation if Dolphin's damage evidence were filled in by testimony at trial and by [documentary evidence] which the record indicates [is] available to Dolphin." 773 F.2d at 1513. The government cites Weisgram v. Marley Co., 528 U.S. 440 (2000), for the proposition that "speculative" testimony "is not competent proof" and "contributes `nothing to a "legally sufficient evidentiary basis."'" See Initial Gov't Br. at 27 (quoting 528 U.S. at 454 (citation omitted)). What Weisgram actually says, however, is that "[i]nadmissible evidence contributes nothing to a `legally sufficient evidentiary basis.'" 528 U.S. at 454 (citation omitted) (emphasis added). The government does not even suggest that Mr. Graves' testimony is inadmissible. Nor could it; the Court rejected that argument prior to trial. The other Supreme Court decision the government cites, Brooke Group, Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993), simply explained, as the government notes, that "expert opinion cannot sustain a judgment when the opinion `is not supported by sufficient facts to validate it in the eyes of the law, or when indisputable record facts contradict or otherwise render the opinion unreasonable.'" See Initial Gov't Br. at 26-27 (quoting 509 U.S. at 242). Here, Mr. Graves' testimony is amply supported by validating facts that render his opinions reasonable, not unreasonable.

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Contrary to the government's absurd suggestion that courts typically reject economic theory, see Initial Gov't Br. at 29-30, the cases the government cites merely require reasonable application of economic principles. Indeed, cases cited elsewhere in the government's brief rely heavily on economic theory to support their holdings. See, e.g., Dolphin Tours, 773 F.2d at 1511 ("In using this [appropriate] approach [to establish lost profits], Dolphin must presume the existence of rational economic behavior in the hypothetical free market."); Roseburg Lumber Co. v. Madigan, 978 F.2d 660, 668 (Fed. Cir. 1992) (relying on "the record as well as normative economic behavior" to reject damages claim). The government's assertion that "the Yankees' exchanges theory is litigation-inspired," Initial Gov't Br. at 46-48, is true in a sense. Prior to this case, the Yankees never had occasion to analyze what acceptance schedule DOE would follow in the non-breach world. Going back to the early 1990s, what the Yankees used in their decommissioning cost estimates and spent fuel storage studies was their "analysis" of DOE's acceptance schedule given the increasing likelihood DOE would not begin SNF acceptance by January 1998. See, e.g., Response to GPF 283-291. The pejorative gloss the government puts on Mr. Graves' "litigation-inspired" analysis is unwarranted. It also bears repeating that the government has never articulated any position at all on what a reasonable schedule for SNF acceptance would be in the non-breach world. Instead, under various rubrics (i.e., contractual mechanism, alternative contract, DOE discretion), the government has advanced a variety of acceptance schedules that are patently unreasonable. In essence, the government's position is that even if the DOE SNF removal program were operating exactly as Congress designed it, and exactly as DOE and the contracting utilities understood and intended it would work, the program would be a colossal flop ­ and virtually all contracting

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utilities would have to construct costly dry storage facilities either now or in the future. There is no legal or factual support for that conclusion, and the Court should reject it. Finally, the government's ad hominem attack on Mr. Graves, based on his testimony in United States v. Ohio Edison Co., 276 F. Supp. 2d 829 (S.D. Ohio 2003), see Initial Gov't Br. at 45-46, is both unfounded and ironic. To the extent the court in that case found that Mr. Graves had made a "mistake," it was precisely the same mistake the government is making in this case. The situation in Ohio Edison was opposite to the situation presented here. As the court explained it, "Graves failed to offer any independent calculation of emissions; rather, his testimony consists of an attempt to discredit the calculations obtained by the Government's expert, Dr. Rosen." id. at 878. Because Dr. Rosen's opinions were based on substantial record evidence, id. at 879-80, and his "approach [was] a reasonable method," id. at 880, the court found that "Dr. Rosen made a reasonable calculation as to the effect of heat rate improvements on emissions." Id. In contrast, "Graves essentially testified that heat rate improvement was impossible to quantify and, therefore, Rosen's methodology was flawed." Id. ("Graves, at best, challenges the precision with which the predictions . . . were made"). Ultimately in Ohio Edison, the court concluded that Mr. Graves' testimony was contrary to the applicable legal standard: Fundamentally, the law does require such . . . estimates and predictions. An expert's opinion, which essentially contradicts the language or premise of the law, is entitled to little, if any, weight. . . . To the extent Graves contends that such estimates are impossible to construct, his opinion essentially conflicts with the law. Id. In the present case, Mr. Graves' testimony is consistent with the governing legal standard, which requires the Court to determine a "reasonable" SNF acceptance schedule. In

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contrast the government, which persuaded the court in Ohio Edison to disregard expert testimony that did not meet the applicable legal standard, does not even propose any alternative "reasonable" schedule here. Thus, to the extent it is relevant, Ohio Edison supports the Yankees. In Ohio Edison, "the Court f[ound] Dr. Rosen's conclusion to be persuasive; the criticisms offered by Graves [were] insufficient to cast doubt on the findings." Id. at 881. So here, the Court should find Mr. Graves' conclusion to be persuasive; the criticisms offered by the government are "insufficient to cast doubt on [his] findings." III. The Government's Causation Arguments Are Factually And Legally Wrong.

The government next asserts the Yankees have failed to establish the causation element of their damages claims. See Initial Gov't Br. 58-64. Again the government's arguments are predominantly factual. The government first claims that the "fuel-out" dates provided by Mr. Graves constitute the totality of the causation evidence presented by the Yankees. Id. at 59. The same argument was advanced in the government's Rule 52(c) motion, and is addressed in that context in Yankee Atomic's initial post-trial brief (at pp. 26-29). This government causation argument is simply wrong. As noted in their opening briefs, the Yankees did not consult with Mr. Graves ­ or contemplate his "fuel-out" dates ­ before developing and ultimately implementing dry storage. See Initial YABr. at 26. Rather, as shown at trial, the reason the Yankees implemented dry storage was that beginning in the early 1990s, it became increasingly clear that DOE would not accept SNF by January 1998 as the Contract required, and likely would not do so not for many years thereafter. See e.g., YAPF 97, 91-94. In a word, the Yankees "covered" by arranging a partial substitute for DOE's performance, or "mitigated" by seeking to avoid the even greater costs of long-term wet storage of its SNF. See Rest. 2d Cont. § 350 cmt. a.-h. (referring interchangeably to "mitigation" and 16

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"substitute performance"); Long Island Sav. Bank, FSB v. United States, 60 Fed. Cl. 80, 90 (2004) (in a Winstar case, capital injections prompted by breach were both "mitigation" and "substitute performance"). The government now expressly concedes that "economics tends to favor dry storage as the storage period gets longer," GPF 298. That concession explains why the government does not argue that the Yankees' implementation of dry storage was other than "reasonable," which is the governing legal standard in the mitigation context. See Initial YABr. at 7-8. Because the trial record also demonstrates affirmatively that the Yankees' implementation of dry storage was a reasonable response to DOE's impending (and ultimately actual) breach, causation is established ­ without regard to Mr. Graves' "fuel-out" dates, much less in sole reliance on them. Notably, the government's causation discussion does not address mitigation law and cites no mitigation cases. Those authorities, however, as explained in Yankee Atomic's initial brief at 6, actually required the Yankees to attempt to "take steps to minimize its losses in light of DOE's imminent non-performance." Order of June 28, 2004, 2004 WL 1535688, at *6 (quoting Tennessee Valley Authority v. United States, 60 Fed. Cl. 665, 674 (2004)). The government, having conceded that "economics tend to favor dry storage," cannot avoid the legal consequence of that concession ­ namely that the Yankees "w[ere] under an obligation to avoid by a reasonable effort any damages which it should have foreseen." Chain Belt Co. v. United States, 127 Ct. Cl. 38, 115 F. Supp. 701, 714 (1953).6 In its separate discussion of pre-breach damages, the government asserts there is no prebreach duty to mitigate, citing one old case applying Missouri law, Reliance Cooperage Corp. v. Treat, 195 F.2d 977 (8th Cir. 1952). Initial Gov't Br. at 68-70. But even under the government's view of Reliance (i.e., no duty to mitigate), where a non-breaching party does mitigate, the resulting costs are compensable. Nothing in Reliance suggests that if the buyer there had actually engaged in a cover transaction, it could not recover its resulting costs. In any event, the government's interpretation of Reliance is contrary to Chain Belt, to this Court's pretrial ruling on pre-breach damages, and to the Restatement. See Initial YABr. at 6-8; Rest. 2d
6

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The government's second factual argument on causation is that company "planning documents" purportedly show that "each of the Yankees assumed that, even absent any delay by DOE, they would need to store their SNF for many years." See Initial Gov't Br. at 59. The documents the government cites consist of decommissioning cost and spent fuel storage studies, and related documents, prepared from the early 1990's forward. See GPF 283-289. But the "planning" in those documents was for SNF storage in the breach world, and specifically, planning for how to pay for SNF storage for the extended period beyond 1998 that seemed increasingly likely as the 1990s progressed. See Response to GPF 283-86. As Mr. Bennet testified: "[f]or funding purposes, we had to look at a fairly significant worst case type of outcome so that we had to [have] funding to be able to store fuel during that delay period." Tr. 1705:17-20. DOE had announced in its 1989 "Reassessment" report to Congress, P101, that the Yucca Mountain repository could open in 2010 at the earliest, and subsequent planning by the Yankees took account of that fact. For example, Yankee Atomic's May 1992 decommissioning costs study ­ one of the "planning documents" cited by the government ­ assumes a "rate of spent fuel removal by DOE [that] is based on the lower rate of fuel acceptance published by DOE in the [1990 ACR] until the opening of a repository in 2010. Thereafter, accelerated shipment . . . is

Cont. § 350 cmt. b ("Once a party has reason to know that performance by the other party will not be forthcoming, . . . he is expected to take [] affirmative steps . . . to avoid loss by making substitute arrangements"). Moreover, the common law rule invoked in Reliance was limited to contracts for the sale of goods, was changed even in that context by § 2-610(a) of the U.C.C., and was flawed because it mis-incentivized non-breaching parties. See, e.g., Trinidad Bean & Elevator Co. v. Frosh, 494 N.W.2d 347, 353-54 (Neb. Ct. App. 1992). Finally, it would have been patently unreasonable for Yankee Atomic to not begin dry storage implementation until January 1998, as the government suggests, because its costs (and thus the government's damages liability) inevitably would have been higher. Cf. Order of June 28, 2004, 2004 WL 1535688 at *6 ("Should plaintiffs have waited until [January] 31, 1998 and then decided what to do with their nuclear waste? The court thinks not").

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assumed until 2018 until the last SNF is removed by DOE." D150 at 48. The 1990 ACR used a "lower bounding" acceptance rate that begins in 1998 and ramps up to only 900 MTU per year, based on the potential availability in 1998 of an interim storage facility. P59 at 7. That projection never came to fruition. See Response to GPF 84, 93. More generally, for lack of any better information the Yankees, in their decommissioning cost studies and other SNF planning documents, relied on spent fuel acceptance assumptions provided by DOE. See, e.g., YAPF 92; Response to GPF 283-298; Tr. 2296:8-11 (Bennet); Tr. 2295:19-24 (Bennet); D397 at DK 007545-46. The government's insistence that the cited Yankee documents all assume "timely performance by DOE," Initial Gov't Br. at 59, is simply wrong. The documents assume what DOE told the Yankees to assume, despite what they already knew, namely that DOE would not be removing their SNF anytime soon. See Response to GPF 284. The use of a 1998 start-date in these "planning documents" reflects only that that was what was required, not what the Yankees believed. See, e.g., D173 at 2 (October 1992 memo: "The current DOE schedule and federal law, which require DOE to begin taking SNF in 1998 must be viewed as optimistic. Any delay of this schedule favors the dry ISFSI options . . . . "); see also Response to GPF 283-286. The government states that "[i]n making decisions concerning its [sic] long-term storage needs, none of the Yankees assumed fuel-out dates predicated upon exchanges or priority" and "not a single Yankee document contains projected fuel-out dates consistent with either Mr. Graves' exchanges theory or with Mr. Graves' acceptance rate under an OFF schedule." Initial Gov't Br. at 60. That is true, and it is not surprising ­ the Yankees were not planning for SNF removal in the non-breach world, which is where exchanges would occur and the acceptance rate

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determined by Mr. Graves (and supported by DOE planning documents) would be followed. As Mr. Bennet's testified at trial: [T]he assumptions that were made here [in the decommissioning cost studies], and I think I framed them as unreasonable assumptions, we were being forced to make as a result of the circumstances, were assumptions that we specified to prepare our funding plan and to ensure that we had adequate funds available to move the fuel to dry storage and store it for quite some time. We did not at all believe that this was what DOE should do under the contract or that it was what was required under the contract. These were just assumptions that we were forced to make to ensure adequate funding under our FERC regulation. Tr. 1842:16-1843:2 (Bennet). The government's third fact-bound argument on causation is that "[o]nce the Yankees elected to permanently shutdown, their decisions to construct ISFSIs all were predicated upon the desire to decommission their nuclear reactors and wet storage pools promptly." Initial Gov't Br. at 60. The government notes that prompt decommissioning would address uncertainty over disposal options for the low-level radioactive waste ("LLW") generated during decommissioning, id. at 61, and that prompt decommissioning is "less costly," id. at 62. The government never explains what these matters have to do with damages causation. The answer is, "nothing." Because of DOE's breach, the Yankees have to store their SNF on-site for an extended period ­ at least twelve additional years (reflecting DOE's delayed start from 1998 to 2010), and likely much longer. Given the need for that extended on-site storage, the Yankees reasonably determined that dry storage was a better option than wet storage ­ and the

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government now agrees. See GPF 298 ("economics tend to favor dry storage"). Prompt decommissioning is a separate matter.7 The government's real argument has nothing to do with what motivated ­ that is, caused ­ the Yankees to implement dry storage (or what motivated two of them to rerack first, and then to implement dry storage). What the government is really arguing is that the Yankees have not suffered any damages at all resulting from DOE's breach, because even if DOE had performed as required, the Yankees' SNF would have remained on site for a very long time and their SNF storage costs thus would have been essentially the same in the non-breach world as in the breach world ­ hence, no damages. See Initial Gov't Br. at 58. This "zero damages" position, which the government attempts to dress up as a "causation" issue, is completely untenable for several different reasons. First, it necessarily relies upon the same niggardly view of DOE's Contract obligations ­ namely, that DOE has no real obligations ­ that the Court has already rejected in this case, in Commonwealth Edison and in Indiana Michigan. Second, the government's zero damages theory sidesteps and ultimately disregards the largely undisputed evidence showing what, in fact, motivated the Yankees' decisions to rerack and to implement dry storage. Those decisions were motivated by the companies' clear recognition of DOE's impending default, and the consequent need to take steps to assure the safe

The government is not helped by the cases it cites in discussing prompt decommissioning, Fawick Corp. v. United States, 149 Ct. Cl. 623, 1960 WL 8478 (1960) and San Carlos Irrig. & Drainage Dist. v. United States, 111 F.3d 1557 (Fed. Cir. 1997). See Initial Gov't Br. at 63. In Fawick, the plaintiff unreasonably failed to mitigate. See 1960 WL 8478, at *9 ("[i]t seems strange indeed that plaintiff should have imposed a $100,000 loss on itself rather than pay the $20,000"). In San Carlos, damages were rendered speculative by numerous contingencies, most importantly the government's discretion to divert water away from plaintiff's use, which discretion was conferred by express contract language providing for the supply of water "upon terms to be fixed by the Secretary [of Interior]." 111 F.3d at 1563. No similar circumstances exist in this case.

7

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and cost-effective long-term storage of their SNF. The cause-and-effect relationship to DOE's breach is confirmed by evidence showing that if DOE reversed course and took convincing steps to perform by 1998, Yankee Atomic, for example, under its "phased" contract with NAC International, could also "stop, rethink or change course." See YAPF 107; see also MYPF 97. Causation is also confirmed by direct testimony from the Yankees' witnesses that absent the DOE breach, the companies would not have converted to dry storage. See, e.g., YAPF 106; CYPF 103. Testimony of that type was held to establish causation in Hughes Communications Galaxy, 271 F.3d at 1067 (affirming this Court's ruling that "specifically credited testimony of Hughes' witnesses that Hughes would not have developed the HS-601 [a substitute satellite] if the Government had not breached the LSA [Launch Services Agreement]"). Nor can the government plausibly deny that the Yankees could have and would have avoided their reracking and dry storage costs if DOE had performed on any reasonable schedule. A reasonable schedule would have begun by January 1998. Overwhelming evidence shows that a reasonable schedule would have included an acceptance rate, after a brief ramp-up period, of approximately 3000 MTU per year. See, e.g., YAPF 68-78. In order to begin performing by January 1998 at a rate that promptly ramped-up to 3000 MTU per year, DOE would have had to engage in substantial planning throughout the 1990's. DOE would have been readying a repository or storage facility for operation in 1998, developing and procuring transportation casks, and building transportation infrastructure. If DOE had been actively working to develop such a program in the 1990s, the Yankees' contemporaneous behavior also would have been different. Rather than planning and incurring enormous costs for additional and extended on-site SNF storage, the Yankees would have strived to avoid those costs ­ and they would have been

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able to, provided that DOE actually did perform and remove the Yankees' SNF in a reasonable time frame beginning in 1998. There is absolutely no evidence to suggest that if DOE had begun picking up SNF in 1998 and had picked-up SNF thereafter on a reasonable schedule ­ a schedule consistent with the purpose of the NWPA, and the original intent and understandings of both DOE and the contracting utilities ­ the Yankees' SNF would have remained on their sites for long enough to require each of them to expend well over $100 million to implement and operate dry storage. In fact, the government does not even claim that such a schedule would be a "reasonable" one, and could not make that claim, particularly given that the only evidence presented at trial of what a reasonable schedule would have been was the evidence the Yankees presented. IV. The Yankees Have Met Their Burden Of Proof To Show Damages.

A theme in the government's initial brief, articulated in a short early section, see Initial Gov't Br. at 5-7, is that "[t]he Yankees bear the burden of establishing that their claimed damages are not speculative, remote, or unforeseeable." Id. at 6. As a matter of fact the Yankees have clearly met that burden here. The Yankees damages are concrete, and there is absolutely nothing speculative (or unforeseeable) about them. See Initial YABr. at 4-15. And the Yankees have provided compelling proof, and indeed the only evidence, of what a "reasonable" schedule for DOE performance would have been in the non-breach world, consistent with the original understanding and intent of DOE and the contracting utilities. See id. at 27-29. As a matter of law, the cases the government cites are unhelpful to it on the burden of proof. In some, unlike here, the plaintiff had not incurred any actual damages. For example, in Willems Industries, Inc. v. United States, 155 Ct. Cl. 360, 295 F.2d 822, 831-32 (1961), the government as purchaser failed to cover (or incur the expense of cover) after the breach, and the 23

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evidence also showed that market prices dropped below the contract price. Cf. Hi-Shear Tech. Corp. v. United States, 356 F.3d 1372, 1378-79 (Fed. Cir. 2004), cited in Initial Gov't Br. at 33 (denying claimed lost profits under a requirements contract, because there was no indication the government required the goods the foregone sale of which gave rise to the claimed lost profits). In other cases cited by the government, there was no evidence at all linking the claimed damages to the breach. See, e.g., San Carlos Irrig. & Drainage Dist. v. United States, 111 F.3d 1557, 1563 (Fed. Cir. 1997) ("SCIDD's allegations do not show that the malfunction of the spillage was the `but for' cause of its injury."). Here, the evidence is overwhelming that the reason the Yankees reracked and built dry storage ­ the "but for" cause of those expenditures ­ was DOE's impending and now actual breach. A third class of cases cited by the government involve "remote" or "indirect" damages. E.g., Ramsey v. United States, 121 Ct. Cl. 426, 434, 101 F. Supp. 353, 357 (1951) ("`For a damage to be direct there must appear no intervening incident'" (citation omitted)); Myerle v. United States, 33 Ct. Cl. 1, 1800 WL 2024 (1897) ("There must not be two steps between cause and damage."). Here, the government does not even allege, and could not plausibly allege, that there is an "intervening incident" or "two steps" between DOE's breach and the Yankees' reracking, dry storage or other damages. V. The Court Should Reject The Government's Shutdown Priority Arguments ­ Again.

The Contract provision on shutdown priority is one of the tools available to DOE to help it implement a reasonable schedule for SNF acceptance that would allow utilities to avoid on-site SNF storage costs of exactly the type giving rise to the Yankees' damages claims here. See, e.g., YAPF 89. The government's only response in its brief is to reiterate arguments regarding the shutdown priority provision that not only were largely rejected in the Court's pretrial ruling, see Order of June 28, 2004, 2004 WL 1535687 (denying summary judgment on shutdown priority

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issue), but that mischaracterize both Yankee's position and the pertinent evidence. In addition to wrongly asserting that the Yankees contend DOE was "obligated" to grant shutdown priority, Initial Gov't Br. at 54-56, the government argues the trial evidence showed that the Yankees "never believed" that DOE was obligated to or would grant priority, id. at 55, and that DOE acted properly in not granting shutdown priority to the Yankees (or any other shutdown utility), id. at 56. The short answer is that the evidence the government cites, as well as the arguments it makes, all concern the "breach" world. In contrast to the government's current litigation arguments, DOE itself has long recognized the value of the shutdown priority provision, not only in the statement it made in refusing to delete the provision from the Contracts (i.e., "[t]his type of priority is necessary to prevent reactors from waiting 20 or 30 years to be decommissioned after they finish generating electricity," 48 Fed. Reg. 16590, 16593 (Apr. 18, 1983), see YAPF 89, but also in studies DOE conducted addressing shutdown priority. For example, P152 is an October 1989 report (and a "contractor document") entitled "Spent Fuel Acceptance Scenarios Devoted to Shutdown Reactors: A Preliminary Analysis." It analyzed a "class of acceptance schemes in which the acceptance capacity of the [DOE program] is allocated principally to shutdown commercial power reactors" and reached a conclusion virtually identical to the Yankees' position here on the relationship between shutdown priority and exchanges: "[i]n the sense that the[se] alternative allocations are more economically efficient than OFF, however, they approximate the allocations that could result from free exchange of acceptance rights among utilities." Id. at iii, HQ0013953. Hence, under that DOE study, as under the Yankees' position on shutdown priority, such priority would only be invoked to the extent the "free exchange of acceptance rights among utilities" did not achieve an "economically efficient" acceptance schedule. See YAPF 89.

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VI.

The Court Should Reject The Government's Arguments On Pre-Breach And Future Damages ­ Again.

W