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IN THE UNITED STATES COURT OF FEDERAL CLAIMS (Electronically Filed on April 27, 2007) ) ) ) ) ) ) ) ) ) ) )

NORTHERN STATES POWER COMPANY, Plaintiff, v. THE UNITED STATES, Defendant.

No. 98-484C (Senior Judge Wiese)

NORTHERN STATES POWER COMPANY'S POST-TRIAL REPLY BRIEF

Of Counsel: Jay E. Silberg Daniel S. Herzfeld Jack Y. Chu PILLSBURY WINTHROP SHAW PITTMAN LLP 2300 N Street, N.W. Washington, D.C. 20037 (202) 663-8000 (202) 663-8007 (fax) Kerry C. Koep XCEL ENERGY 414 Nicollet Mall, 5th Floor Minneapolis, MN 55401 (612) 215-4583 (612) 215-4544 (fax)

Alex D. Tomaszczuk PILLSBURY WINTHROP SHAW PITTMAN LLP 1650 Tysons Boulevard McLean, VA 22102-4859 (703) 770-7940 (703) 770-7901 (fax)

Counsel of Record for Plaintiff Northern States Power Company

April 27, 2007

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TABLE OF CONTENTS TABLE OF AUTHORITIES ......................................................................................................... iii I. II. CHRONOLOGY OF KEY EVENTS RELEVANT TO NSP'S CLAIM........................... 3 INDIANA MICHIGAN III ESTABLISHES THE PROPER FRAMEWORK FOR DETERMINING THIS CASE........................................................ 8 A. The Government Bears The Burden Of Showing NSP's Mitigation Costs Are Unreasonable Once NSP Has Discharged Its Showing Regarding Causation, Foreseeability, And Reasonable Certainty ...................................................................................... 9 Substantial Causation, Not Sole Causation, Is The Appropriate Standard................................................................................. 10 Foreseeability Only Required The Foresight That Prairie Island Would Shut Down Absent NSP's Efforts To Mitigate .................................................................................... 14

B. C.

III.

AS A RESULT OF THE GOVERNMENT'S IMPENDING BREACH, NSP REASONABLY INCURRED MITIGATION COSTS BY LICENSING AND CONSTRUCTING AN ON-SITE DRY STORAGE FACILITY AT PRAIRIE ISLAND .................................... 16 A. B. C. D. NSP's Decision Was Unaffected By The Specific Rate Of Acceptance .............................................................................................. 18 The Federal Circuit Did Not Create A Per Se 1994 Cut-Off To Recover Mitigation Costs In SNF Cases .................................. 20 NSP Could Have And Would Have Re-Racked Had It Expected DOE To Perform........................................................................ 24 The Risk Of A Prairie Island Shutdown With A Third Re-Rack Is No More Than The Risk With Dry Storage ............................. 28

IV.

NSP'S PRAIRIE ISLAND DRY STORAGE MITIGATION COSTS SHOULD NOT BE REDUCED FOR OTHER REASONS ............................... 31 A. B. C. NSP Is Entitled To Recover Its Internal Labor And Overhead............................................................................................. 31 NSP Should Not Have To Pay Now For Future Costs Of Loading DOE Casks................................................................... 33 The Government Should Not Receive An Offset For NSP's Decision To Upgrade Its Auxiliary Building Crane At Prairie Island........................................................................... 34 NSP's Pursuit Of A Transportation License For The TN-40 Casks Was Reasonable Mitigation............................................................ 36 NSP's Damages Should Not Be Reduced By Its Costs For the GE-Morris Facility Security Upgrade ...................................................... 37
i

D. E.

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V.

NSP MAY RECOVER ITS MITIGATION COSTS REGARDING PRIVATE FUEL STORAGE, LLC ......................................................... 38 A. The Federal Circuit's Indiana Michigan III Decision Does Not Preclude NSP, As A Matter Of Law, From Recovering Its PFS Costs............................................................................ 38 NSP Did Not Invest In PFS To Make A Profit And NSP Continues To Have An Incentive To Move Its Fuel From Minnesota To An Out-Of-State Facility Like PFS ............................ 39

B.

VI.

NSP MAY RECOVER ITS COSTS FROM THE MANDATES BECAUSE THEY MITIGATED THE POTENTIAL LOSS OF A PLANT SHUT DOWN........................................................................................... 42 A. NSP Would Not Have Incurred The Costs Of The Mandates Had NSP Believed DOE Would Timely Perform..................................................................................................... 43 DOE Foresaw Or Could Have Foreseen Legislative Intervention Over Concerns That An Interim Spent Fuel Storage Facility Would Become Permanent ......................................................... 45 The Size, Scope, And Amount Of The Mandates Are Well Below The Foreseeable Results Of The Government's Failure To Perform And The Payments NSP Has Had To Make To The Nuclear Waste Program ................................................................. 47 NSP Need Not Show That The Government's Actions Proximately Caused NSP's Damages ................................................................... 48

B.

C.

D. VII. VIII.

NSP SHOULD BE AWARDED ITS INCURRED COSTS OF CAPITAL..................... 49 DOE WOULD HAVE PERFORMED AT A RATE SUFFICIENT TO ASSURE THAT UTILITIES WOULD NOT NEED TO ADD AT-REACTOR STORAGE AFTER 1998 ....................................................................... 52 A. B. Determination Of The Acceptance Rate Is Irrelevant For Determining Causation................................................................................... 52 The NWPA And The Parties Expected DOE To Perform At A Rate Sufficient To Avoid The Need For Additional At-Reactor Storage After 1998 ............................................................................. 54 1.

IX.

The Standard Contracts Are Not Too Indefinite To Enforce ........................................................................ 58 2. The DCSs Did Not Create Binding Commitments .............................................................................. 61 3. The Parol Evidence Rule Has No Application Here, Because The Government Also Relies On Parol Evidence .................................................................................... 66 CONCLUSION................................................................................................................. 69

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TABLE OF AUTHORITIES Cases Abbott Labs. v. Brennan, 952 F.2d 1346 (Fed. Cir. 1991).................................................................................................. 13 Alabama Power Co. v. United States, 307 F.3d 1300 (11th Cir. 2002) .................................................................................................. 60 Atacs Corp. v. Trans World Communications, Inc., 155 F.3d 659 (3d Cir. 1998)....................................................................................................... 59 Aviation Contractor Employees, Inc. v. United States, 945 F.2d 1568 (Fed. Cir. 1991).................................................................................................. 59 Bell v. United States, 404 F.2d 975 (Ct. Cl. 1968) ................................................................................................. 49, 51 Bluebonnet Sav. Bank, FSB v. United States, 266 F.3d 1348 (Fed. Cir. 2001).................................................................................................. 38 Bullcreek v. NRC, 359 F.3d 536 (D.C. Cir. 2004) ............................................................................................. 39, 54 Cal. Fed. Bank v. United States, 395 F.3d 1263 (Fed. Cir. 2005), cert. denied, 126 S. Ct. 344 (2005) ........................................ 11 Centex Corp. v. United States, 55 Fed. Cl. 381 (2003), aff'd, 395 F.3d 1283 (Fed. Cir. 2005) ........................................................................................ 49 Chain Belt Co. v. United States, 115 F. Supp. 701 (Ct. Cl. 1953)................................................................................................. 32 Citizens Fed. Bank v. United States, 474 F.3d 1314 (Fed. Cir. 2007)...................................................................................... 11, 15, 47 Commonwealth Edison Co. v. United States, 46 Fed. Cl. 158 (2000), aff'd, 271 F.3d 1327 (Fed. Cir. 2001) (en banc) ................................................................................. 56 Consumers Energy Co. v. United States, 65 Fed. Cl. 364 (2005) ............................................................................................................... 63 Coyle's Pest Control, Inc. v. Cuomo, 154 F.3d 1302 (Fed. Cir. 1998).................................................................................................. 60 Energy Capital Corp. v. United States, 302 F.3d 1314 (Fed. Cir. 2002).................................................................................................... 8 Entergy Nuclear Generation Co. v. United States, 64 Fed. Cl. 336 (2005) ............................................................................................................... 64 First Heights Bank, FSB v. United States, 422 F.3d 1311 (Fed. Cir. 2005)............................................................................................ 10, 18 iii
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In re Application for Certificate of Need for Construction of an Indep. Spent Fuel Storage Installation, 501 N.W.2d 638 (Minn. Ct. App. 1993) ("In re ISFSI")..................................................... 44, 46 In re Kellett Aircraft Corp., 186 F.2d 197 (3d Cir. 1950)....................................................................................................... 15 Indiana Michigan Power Co. v. Dep't of Energy, 88 F.3d 1272 (D.C. Cir. 1996) ("Indiana Mich. I")............................................................. 58, 63 Indiana Mich. Power Co. v. United States, 57 Fed. Cl. at 88 (2003) ("Indiana Mich. II"), appeal dismissed, 112 Fed. Appx. 37 (Fed. Cir. 2004) ...................................................... passim Indiana Michigan Power Co. v. United States, 422 F.3d 1369 (Fed. Cir. 2005) ("Indiana Mich. III")........................................................ passim J.D. Hedin Constr. Co. v. United States, 456 F.2d 1315 (Ct. Cl. 1972) ..................................................................................................... 11 Koby v. United States, 53 Fed. Cl. 493 (2002) ............................................................................................................... 14 LaSalle Talman Bank v. United States, 317 F.3d 1363 (Fed. Cir. 2003).................................................................................................. 51 Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336 (Fed. Cir. 2000)...................................................................................... 19, 51, 54 Maine Yankee Atomic Power Co. v. United States, 44 Fed. Cl. 372 (1999), aff'd, 271 F.3d 1357 (Fed. Cir. 2001).................................................. 47 Massengill v. Guardian Mgmt. Co., 19 F.3d 196 (5th Cir 1994) ........................................................................................................ 60 McAbee Constr., Inc. v. United States, 97 F.3d 1431 (Fed. Cir. 1996).................................................................................................... 68 NRDC, Inc. v. United States NRC, 685 F.2d 459, 502, 510 (D.C. Cir. 1982), rev'd on other grounds sub nom. Baltimore Gas & Elect. Co. v. NRDC, Inc., 462 U.S. 87 (1983).............................................. 39 Old Stone Corp. v. United States, 450 F.3d 1360, 1370 (Fed. Cir. 2006), cert. denied, 75 U.S.L.W. 3333, 75 U.S.L.W. 3490, 75 U.S.L.W. 3497 (U.S. Mar. 19, 2007).....................................................................8, 10, 16, 48 Pac. Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm'n, 461 U.S. 190 (1983)................................................................................................................... 46 Pac. Gas & Elec. Co. v. United States, 73 Fed. Cl. 333 (2006), appeal pending, No. 2007-5046 (Fed. Cir.).............................................................................................. 32, 33, 37

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Roedler v. Dep't of Energy, 255 F.3d 1347 (Fed. Cir. 2001)............................................................................................ 20, 54 Sacramento Mun. Util. Dist. v. United States, 70 Fed. Cl. 332 (2006) ("SMUD"), appeal pending, No. 2007-5052 (Fed. Cir.)........................................................................................ 32, 33, 37, 53 Shyface v. Sec'y of Health & Human Servs., 165 F.3d 1344 (Fed. Cir. 1999).................................................................................................. 13 Sylvania Elec. Prods., Inc. v. United States, 458 F.2d 994 (Ct. Cl. 1972) ....................................................................................................... 66 Sys. Fuels, Inc. v. United States, 65 Fed. Cl. 163 (2005) ............................................................................................................... 64 Sys. Fuels, Inc. v. United States, 66 Fed. Cl. 722 (2005) ............................................................................................................... 63 Tenn. v. Herrington, 806 F.2d 642 (6th Cir. 1986) ...................................................................................................... 46 Tenn. Valley Auth. v. United States, 69 Fed. Cl. 515 (2006) ........................................................................................................ passim Westfed Holdings, Inc. v. United States, 407 F.3d 1352 (Fed. Cir. 2005).................................................................................................. 11 Wickham Contracting Co. v. United States, 12 F.3d 1574 (Fed. Cir. 1994).................................................................................................... 51 Yankee Atomic Elec. Co. v. United States, 54 Fed. Cl. 306, 316 (2002) ........................................................................................................65 Yankee Atomic Elec. Co. v. United States, 73 Fed. Cl. 249 (2006), appeal pending, Nos. 2007-5025, 2007-5026, 2007-5027, 2007-5031, 2007-5032, 2007-5033 (Fed. Cir.)................................................................... passim Statutes and Codes 42 U.S.C. § 10131................................................................................................................... 19, 54 42 U.S.C. § 10151......................................................................................................................... 14 42 U.S.C. § 10155......................................................................................................................... 14 42 U.S.C. § 10162......................................................................................................................... 58 42 U.S.C. § 10168......................................................................................................................... 56 42 U.S.C. § 10221......................................................................................................................... 55 42 U.S.C. § 10222....................................................................................................... 19, 54, 56, 59 1994 Minn. Sess. Laws Ch. 641 ........................................................................... 36, 41, 42, 44, 45 v
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2003 Minn. Sess. Laws, 1st Spec. Sess, Ch. 11............................................................................. 42 Minn. Stat. § 116C.77 ................................................................................................................... 41 Minn. Stat. § 116C.771 ........................................................................................................... 44, 45 Minn. Stat. § 116C.775 ........................................................................................................... 36, 42 Minn. Stat. §116C.777 ............................................................................................................ 36, 42 Minn. Stat. §116C.779 .............................................................................................................42, 45 Rules and Regulations 18 C.F.R. pt. 101........................................................................................................................... 50 48 C.F.R. § 52.233-1..................................................................................................................... 51 48 C.F.R. § 52.243-1..................................................................................................................... 51 48 C.F.R. § 52.243-2..................................................................................................................... 51 48 C.F.R. § 52.243-3..................................................................................................................... 51 48 C.F.R. § 52.243-4..................................................................................................................... 51 59 Fed. Reg. 27,007 (May 25, 1994) .............................................................................................. 6 60 Fed. Reg. 21,793 (May 3, 1995) ................................................................................................ 7 Other Authorities Statement of Ben C. Rusche, Director, DOE's Office of Civilian Radioactive Waste Acceptance, Statement before the Committee on Energy and Natural Resources, United States Senate, Senate Hearing Rep. 100-230, pt. 2 ........................................................ 56 11 JOSEPH M. PERILLO, CORBIN ON CONTRACTS (rev. ed. 2005) ............................................ 15, 47 3 DAN B. DOBBS, DOBBS LAW OF REMEDIES (2d ed. 1993).......................................................... 15 3 E. ALLAN FARNSWORTH, FARNSWORTH ON CONTRACTS (3d ed. 2004)............................... 13, 15 RESTATEMENT (SECOND) OF CONTRACTS § 350 ..................................................................... 10, 14 RESTATEMENT (THIRD) OF TORTS § 26 (Proposed Final Draft No. 1) .......................................... 12 Energy Proposal Leaves Some Grumbling, STAR NEWS, Apr. 17, 2007, available at http://www.erstarnews.com/2007/April/17xcel.html (visited Apr. 19, 2007) ........................... 42

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS (Electronically Filed on April 27, 2007) ) ) ) ) ) ) ) ) ) ) )

NORTHERN STATES POWER COMPANY, Plaintiff, v. THE UNITED STATES, Defendant.

No. 98-484C (Senior Judge Wiese)

NORTHERN STATES POWER COMPANY'S POST-TRIAL REPLY BRIEF Pursuant to this Court's December 4, 2006 Order, Plaintiff Northern States Power Company ("NSP"), respectfully files this post-trial reply brief. In Defendant United States' (the "Government's") March 27, 2007 post-trial brief, the Government refuses to accept the proper framework to determine damages in a mitigation case, continues to require a sole causation standard, and steadfastly refuses to acknowledge that it bears any burden to challenge the reasonableness of NSP's mitigation costs. Furthermore, the Government simply ignores the overwhelming evidence that the Government's impending breach was the primary, direct, substantial, and but-for cause of NSP seeking a spent nuclear fuel ("SNF") storage solution allowing operation of the plant until the end of the licensed-life of the Prairie Island nuclear plant. Indeed, the Government acts as if NSP were the breaching party. Throughout the 1980s and 1990s, NSP evaluated and accurately assessed that DOE would fail to perform its Standard Contract obligations. Ironically, the Government now seeks to penalize NSP for its foresight. The Government seeks to subtract much of NSP's actually incurred mitigation costs. The Government seeks to penalize NSP by arguing, but failing to establish, that (1) a third re-rack of

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the Prairie Island spent fuel pool was technically impossible; and (2) NSP would have built its dry storage facility even if it had expected the Department of Energy ("DOE") to perform. As NSP demonstrated during the trial and in its post-trial brief (and as further discussed below), the Government cannot further penalize NSP based on this theory, because NSP could have and would have re-racked its Prairie Island pools a third time. The Government continues to assert that NSP may not recover for the mandates. Indeed, the mandates were a direct result of DOE's impending failure to meet its 1998 obligation, leading the Minnesota agencies, courts, and legislature to fear that DOE would not remove NSP's spent fuel. NSP has shown that the mandates were foreseeable, as evidenced by similar provisions in the Nuclear Waste Policy Act ("NWPA") and by the concerns of DOE's first acting-director of the Office of Civilian Radioactive Waste Management ­ Mr. Robert Morgan ­ that states would put up roadblocks to establishing a SNF storage facility. This key evidence the Government essentially ignores. The Government asserts that NSP should be barred from recovering its costs for pursuing an out-of-state spent fuel storage facility through Private Fuel Storage, LLC ("PFS"), based on the false assertion that NSP entered that arrangement as a money making venture. It did not. As NSP proved at trial, the Government's impending breach caused NSP to pursue PFS. Furthermore, the Government is wrong in claiming that the U.S. Court of Appeals for the Federal Circuit's ("Federal Circuit's") factually-based decision in Indiana Michigan III, based on the evidence in that case, somehow precludes NSP from proving with substantial evidence in this case that the Government should have foreseen that NSP would seek an alternative off-site storage facility, and that the Government's impending breach caused NSP to pursue PFS.

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The Government has retreated from its pre-trial position that the acceptance rate is irrelevant to the question of causation and damages. The Government now claims causation cannot be determined without determining the acceptance rate and submits arguments similar to those in its 2001 summary judgment motion. For the reasons stated below, this Court need not determine the acceptance rate. To the extent that it does, NSP has proven that the NWPA required DOE to perform at a rate sufficient to avoid utilities from adding at-reactor storage after 1998. The Government's claim that the Annual Capacity Report ("ACR")/Delivery Commitment Schedule ("DCS") process leads to a 900 metric tons of uranium ("MTU") per year acceptance rate is unsupportable. The ACRs and DCSs were not contractually binding. And, the 900 MTU rate is based on an MRS facility that never existed and was then (and still is today) prohibited by the explicit provisions of the NWPA. 1 I. CHRONOLOGY OF KEY EVENTS RELEVANT TO NSP'S CLAIM Pursuant to the Court's request, and in response to the timeline set forth in the Government's Post-Trial Brief, we provide the following chronology of key events relevant to NSP's claim now before the Court. Date 1970 1973
1

Event 2 Monticello plant enters service with 40-year license. Prairie Island Unit 1 enters service with 40-year license.

The Government does not contest the award of damages based on NSP's efforts to mitigate the Government's breach by pursuing a dry storage facility at the Monticello plant and, therefore, NSP does not address that issue further in this brief. Defendant's Post-Trial Brief ("Govt. Post-Trial Br.") at 4. 2 In the interests of brevity, formal citations for cases, statutes, and regulations referenced herein have not been provided, but can be located in NSP's Post-Trial Brief dated February 9, 2007 or this brief. Certain transcript references have also been shortened but complete transcript references to all factual events discussed can also be located in NSP's briefs. 3
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1974 1977

Prairie Island Unit 2 enters service with 40-year license. President Carter announces suspension of reprocessing in the U.S. 13 Wkly. Comp. Pres. Doc. 502, 503. Prairie Island SNF pools are re-racked for the first time. Tr. 414-15 (McCarten); Tr. 775, 778 (Kapitz). Monticello SNF pool is re-racked, increasing total storage capacity to 2,237 assemblies. Tr.1805, 1818 (McKeown). Prairie Island pools are re-racked for the second time, increasing total storage capacity to 1,386 assemblies. Tr. 775, 778 (Kapitz). NWPA enacted. NSP executes three Standard Contracts at risk of having to shut down its reactors if it does not sign. Tr. 3863-64 (Morgan). Article II of each Contract requires DOE to commence performance by January 31, 1998. PX56, 57, 58. NSP makes one-time fee payment to DOE and begins payment of quarterly fees to DOE, which average approximately $12 million per year for each year going forward after 1983. At December 20, 1983 conference, OCRWM's then-acting Director tells assembled utilities, "The basic strategy which we have outlined in the mission plan is that, beginning in 1998, utilities will not have to provide any additional storage facilities on site." PX286; Tr. 3882 (Morgan). NSP ships 1,058 assemblies from Monticello to GE facility in Morris, Illinois, thus easing the SNF storage problem at Monticello. Tr. 134-35 (Bomberger). DOE issues Mission Plan for waste program. DX 45. The Mission Plan envisions repository acceptance at a 3,000 MTU rate after a 5-year ramp-up period. The Plan states at 381: "[I]f the DOE fails to meet the schedule shown in Table 9-2 or 9-3, then the additional storage capacity needed to accommodate the delay in schedule will be provided by the DOE, possibly at reactor sites." DOE issues draft Mission Plan Amendment, projecting at least a five-year delay in opening a repository and raising the possibility of performance at an MRS. PX303. Having solved the immediate SNF storage problem at Monticello, NSP and Ms. McCarten turn their attention to the SNF storage problem at Prairie Island. Ms. McCarten assesses that the Prairie Island pools will run out of space in approximately 1994. Tr. 420-21, 439 (McCarten). Ms. McCarten prepares a report for senior management apprising them that DOE will not perform at a repository until 2003 and that NSP cannot count on DOE having an MRS available by the Contract performance date of January 31, 1998. PX398B. The report advises that, "given the uncertainties and opportunities for further delay, NSP should anticipate having to provide storage for its fuel out to the end of life of the plants." Id. at NSP-0001638. Congress enacts amendments to the NWPA, establishing statutory linkages between the MRS and the repository which remain 4

1978

1981

1983

1984-87

1985

1987

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in effect today. NSP authorizes and conducts rod consolidation demonstration project. Tr. 768-72 (Kapitz). NUTECH issues draft report containing structural analysis of SNF pool at Prairie Island. PX595. 1988 Ms. McCarten issues revised report to NSP senior management concerning the DOE program and the Prairie Island spent fuel situation. PX398A. In this report, Ms. McCarten observes that linkages will limit MRS development and again advises that "NSP will have to provide storage for its spent fuel out to end-of-life of the plants." Id. DOE issues draft Mission Plan Amendment showing that MRS will not be available until 2003. PX279. Later in the year, Ms. McCarten and Mr. Kapitz issue a Prairie Island Spent Fuel Storage Technology Evaluation Report in which they recommend that NSP pursue dry storage and not rod consolidation. PX399. Rod consolidation is not pursued due to the slow speed of the process, the amount of radioactive debris produced, and damage to fuel rods. Tr. 769-72 (Kapitz). Although re-racking is a proven technology, a third re-rack is not pursued because it will not accomplish the goal of storing fuel at Prairie Island until the end of its license (2013). Tr. 870-74 (Kapitz). NSP management approves McCarten/Kapitz recommendation that NSP build dry storage at Prairie Island. Tr. 1943-44 (Howard). Ms. McCarten and Mr. Kapitz conduct evaluation of dry cask vendors and recommend that NSP acquire Transnuclear (TN)-40 casks. NSP management approves this recommendation. Tr. 795 (Kapitz). Minnesota Environmental Quality Board begins preparation of Environmental Impact Statement for dry cask facility ("ISFSI") at Prairie Island. Tr. 495 (McCarten). NUTECH issues final study advising that NSP can add 416 additional assemblies to the SNF pool at Prairie Island - this equates to a 29% re-rack. DX322; Tr. 795802, 5349-50 (Kapitz). NSP submits application to the NRC for license to build and operate an ISFSI at Prairie Island capable of handling 48 TN-40 casks. Tr. 819-22 (Kapitz). NSP begins preparation of Certificate of Need ("CON") application to the Minnesota PUC. Ms. McCarten prepares hand-written note estimating cost of third re-rack that would increase pool capacity by 20%. DX77. In April, NSP submits its initial CON application to the Minnesota PUC. NSP now projects shutdown of the Prairie Island plant in 1995 unless some action is taken. The CON application is amended in August and November. Shutdown is projected to cost a billion dollars in replacement power costs. PX60. DOE issues 1991 ACR with acceptance rates based on MRS that is prohibited by the NWPA's statutory linkages. DX108. In September 1991, U.S. General Accounting Office issues report concluding that an MRS by 1998 is highly unlikely. PX288 at 5. In April, ALJ Klein issues decision recommending that the PUC deny the CON application because of "permanence" concerns. PX749. In May, then-DOE Secretary Watkins sends a letter to NSP's James Howard advising NSP that DOE is "committed to fulfill the mandates imposed by the [NWPA]" and attaching 5
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1990

1991

1992

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milestones to measure DOE's MRS performance. DX314. DOE fails to meet any of the MRS milestones. Also in May (two days before the previous letter), DOE Secretary Watkins sends another letter advising, "If, contrary to our current expectations, we are not able to begin spent fuel receipt at an MRS facility by January 31, 1998, the Department has determined that it is not legally obligated to accept SNF." PX491. In August, the full PUC rejects the ALJ recommendation and authorizes a limited CON ­ up to 17 casks ­ for an ISFSI at Prairie Island. PX61. In accordance with the decision, NSP begins construction of the ISFSI pad and related activities. 1993 In June, the Minnesota Court of Appeals determines that the ISFSI is "permanent" and therefore requires approval by the Minnesota legislature. NSP's appeal to the Minnesota Supreme Court is unsuccessful. NSP suspends all construction work on the ISFSI. Tr. 862-63 (Kapitz). NSP engages the legislature. In May, the Minnesota legislature enacts legislation permitting NSP to build the ISFSI at Prairie Island. The law allows the placement of 17 casks, five of which can be loaded immediately. The legislation includes four key mandates: (1) alternate site in Goodhue County, (2) biomass (and wind) generation, (3) Renewable Development Fund, and (4) agreement with Minnesota Governor giving third-party beneficiary status to the Mdewakanton Dakota Tribe. NSP works feverishly to complete construction of the ISFSI site, procure casks, and comply with the new mandates. NSP begins to investigate alternative storage sites outside of Minnesota. DOE publishes "Notice of Inquiry" in the Federal Register announcing its proposed position that it has no statutory obligation to begin disposing of spent fuel by 1998 in the absence of a repository or MRS. 59 Fed. Reg. 27,007 (May 25, 1994). By the end of this calendar year, DOE's efforts to site an MRS (which remained subject to statutory linkages) collapse. Tr. 198485 (Howard). In May, the first casks are loaded at the Prairie Island ISFSI. Tr. 865 (Kapitz). Holtec issues report stating that pool capacity can be increased by 40%/50% via a third re-rack. PX435. NSP determines to participate actively in Private Fuel Storage ("PFS") as an out-of-state solution to the long-term SNF storage problem in Minnesota, which remains a concern even after enactment of the 1994 legislation. Tr. 2005-06 (Howard). NSP submits application to Minnesota Environmental Quality Board ("EQB") for siting of dry storage facility in Goodhue County; NSP also submits NRC license application for Goodhue County site. In March 1995, DOE issues the 1994 APR/ACR, PX314, utilizing acceptance rates carried-over from the 1991 ACR, even though the MRS is no longer a possibility and it would still be prohibited by the NWPA. DOE uses these rates in an effort to minimize its obligations to utilities. Tr. 4460-66 (Zabransky). The 1994 APR/ACR no longer uses actual performance dates but instead uses "Year 1" through "Year 10." DOE also publishes its "Final Interpretation" in the Federal Register announcing that DOE has no obligation to commence performance on January 31, 1998 due to the unavailability of a 6
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1995

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repository site, and that it will not commence performance until 2010 at the earliest. 60 Fed. Reg. 21,793 (May 3, 1995). 1996 Minnesota EQB denies NSP request to site an SNF storage facility in Goodhue County, but determines that NSP made a good faith effort in support of the Goodhue County site. PX142. Compliance with this and other mandates allows NSP to load casks six-nine. Tr. 1363-64 (Alders). DC Circuit issues Indiana Michigan I decision determining that DOE's failure to site a repository or MRS does not excuse its failure to comply with the NWPA. In March, the DOE Contracting Officer "voids" NSP's previously approved DCS. PX589A. By letter dated March 13, 1997, DOE advises all utilities with approved DCSs (including but not limited to NSP) that DOE will not be able to approve further DCSs and "waived" the "requirement" that utilities continue to submit DCSs. PX589A. DC Circuit issues Northern States decision declining to issue "move fuel" order but leaving NSP to pursue its contractual remedies. In June, NSP files suit in the Court of Federal Claims alleging, inter alia, partial breach of contract. In August, the Federal Circuit issues decisions in Maine Yankee and Northern States cases determining that DOE has breached its contracts with the entire nuclear industry. Minnesota legislature amends the 1994 law which allowed NSP to load 17 casks at the Prairie Island ISFSI. The amendment allows NSP to load up to 48 casks at the site, subject to various mandates. The biomass mandate is lowered from 125 to 110 megawatts. The required payments into the Renewable Development are increased from $500,000 per cask to $16 million per year starting in 2004. As a result of 1994 contract between NSP and Minnesota which conferred third-party beneficiary status on the Mdewakanton Dakota Tribe, NSP negotiates a settlement with the Tribe requiring annual payments of $2.25 million per year. PX187. This tribal settlement was essential to obtaining legislative approval lifting the 17-cask limitation in the 1994 legislation. Tr. 1682-83, 1690-93 (Wilensky). NSP prepares CON application to construct ISFSI at Monticello. PX389. In July, after a nine-year hiatus, DOE issues a new APR/ACR. PX163. This APR/ACR utilizes acceptance rates which ramp-up to 3,000 MTU in the aggregate in the fifth year of repository operations. DOE advises that DCSs submitted in response to this 2004 APR/ACR are to "replace, rather than supplement" previously approved DCSs. Tr. 4427, 4486-87 (Zabransky). In December 2004, DOE suspends the DCS process again. Tr. 4406-07 (Zabransky). It remains suspended. Tr. 240-41 (Bomberger), 4475 (Zabransky). On December 31, 2004, by agreement of the parties, the damages that NSP seeks in this case are cut-off.

1997

1998

2000

2003

2004

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II.

INDIANA MICHIGAN III ESTABLISHES THE PROPER FRAMEWORK FOR DETERMINING THIS CASE Indiana Michigan III created the framework for determining damages based on a utility's

actual mitigation costs. Indiana Michigan Power Co. v. United States, 422 F.3d 1369, 1375 (Fed. Cir. 2005) ("Indiana Mich. III"); Yankee Atomic Elec. Co. v. United States, 73 Fed. Cl. 249, 260 (2006) ("Indiana Michigan altered the landscape considerably by parsing utility claims into actual expenditures and framing the inquiry as one of mitigation."), appeal pending, Nos. 2007-5025, 2007-5026, 2007-5027, 2007-5031, 2007-5032, 2007-5033 (Fed. Cir.). As NSP has previously stated, NSP Post-Trial Br. at 2, 61-67, the Indiana Michigan III framework requires NSP to show "(1) the damages were reasonably foreseeable by the breaching party at the time of contracting; (2) the breach is a substantial causal factor in the damages; and (3) the damages are shown with reasonable certainty." Indiana Mich. III, 422 F.3d at 1373 (citing Energy Capital Corp. v. United States, 302 F.3d 1314, 1320 (Fed. Cir. 2002)). Once NSP has discharged this requirement, the Government bears the burden of showing that NSP's mitigation costs were unreasonable. See Tenn. Valley Auth. v. United States, 69 Fed. Cl. 515, 523 (2006); see also Old Stone Corp. v. United States, 450 F.3d 1360, 1370 (Fed. Cir. 2006) (noting that the Government failed to show that costs incurred were unreasonable), cert. denied, 75 U.S.L.W. 3333, 75 U.S.L.W. 3490, 75 U.S.L.W. 3497 (U.S. Mar. 19, 2007). The Government would have the Court believe that it agrees that the Federal Circuit's Indiana Michigan III decision governs this case. But then the Government does everything to undermine the framework set forth in that case for determining damages. Govt. Post-Trial Br. at 41-55. Notwithstanding the Indiana Michigan III framework the Government claims to adopt, the Government incorrectly asserts that it has no burden to show the unreasonableness of NSP's mitigation costs after NSP has shown substantial causation, foreseeability, and reasonable 8
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certainty. Furthermore, the Government continues to assert that the proper standard for causation is "sole causation," not "substantial causation" as clearly expressed in Indiana Michigan III. Finally, as to the proper framework, the Government appears to assert incorrectly that the Government needed to actually foresee each element of NSP's damages for NSP to recover. None of these contentions is valid. A. The Government Bears The Burden Of Showing NSP's Mitigation Costs Are Unreasonable Once NSP Has Discharged Its Showing Regarding Causation, Foreseeability, And Reasonable Certainty

The Government continues to shirk its burden to show that NSP's mitigation costs are unreasonable once NSP has shown that it incurred its damages. Govt. Post-Trial Br. at 41-43. In this regard, the Government erroneously asserts that the Tennessee Valley Authority trial decision incorrectly applies the Indiana Michigan III framework. However, unlike the Government's arguments, Tennessee Valley Authority and Yankee Atomic, among others, have faithfully followed the dictates of the Federal Circuit in Indiana Michigan III. In Tennessee Valley Authority, Judge Lettow properly applied the framework in Indiana Michigan III, by requiring the utility plaintiff ­ Tennessee Valley Authority ("TVA") ­ to show that the Government caused TVA to incur mitigation expenses, TVA's expenses were foreseeable, and the expenses were proven with reasonable certainty. Tenn. Valley Auth., 69 Fed. Cl. at 526-28. Once TVA discharged its burden, under the law of mitigation, the burden shifted to the Government to prove that TVA's mitigation expenses were unreasonable. Id. at 523; see also Yankee Atomic, 73 Fed. Cl. at 264 ("Defendant has the burden of showing that plaintiffs' mitigation efforts were unreasonable.").

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This burden-shifting, which the Government resists and treats as putting the "cart before the horse," Govt. Post-Trial Br. at 42, is consistent with the RESTATEMENT (SECOND) OF CONTRACTS and Federal Circuit precedent. See Tenn. Valley Auth., 69 Fed. Cl. at 523 ("`The amount of loss that [the non-breaching party] could reasonably have avoided by . . . making substitute arrangements or otherwise is simply subtracted from the amount that would otherwise have been recoverable as damages.'") (quoting RESTATEMENT (SECOND) OF CONTRACTS § 350 cmt. b); see also Old Stone, 450 F.3d at 1370 ("The government has not shown that it was unreasonable for OSC to replace the entire amount of regulatory capital that was eliminated by FIRREA."). Therefore, the Government bears the burden of showing that NSP's mitigation costs were unreasonable and cannot mask its claims by trying to transform them into questions of causation. See First Heights Bank, FSB v. United States, 422 F.3d 1311, 1317 (Fed. Cir. 2005) ("We thus conclude that the government's so-called causation argument is identical to the government's mitigation argument and reject it for the reasons described above."). B. Substantial Causation, Not Sole Causation, Is The Appropriate Standard

There is nothing in Indiana Michigan III, nor anywhere else, that requires NSP to prove the Government's self-serving "but for world" of sole causation. If a sole causation standard is not the proper test, then the Government's defense that there were other potential causes for NSP's actions falls like a house of cards, because NSP has clearly shown that the direct, principal, substantial, and but for (or necessary condition) cause of NSP's damages was the Government's impending breach. Even assuming arguendo that NSP must show sole causation, it has shown that DOE's impending breach was the sole reason NSP sought storage sufficient to allow Prairie Island to run until the end of its licensed life.

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The Government asserts that the traditional standard of causation requires a plaintiff to prove that a claimed damage "was attributable solely" to the Government's breach. Govt. PostTrial Br. at 47, 49 (citing and quoting J.D. Hedin Constr. Co. v. United States, 456 F.2d 1315, 1330 (Ct. Cl. 1972). Notwithstanding the language in J.D. Hedin, the Federal Circuit has stated just the opposite, noting that the breach need not be the "sole factor or sole cause" of a plaintiff's loss. Cal. Fed. Bank v. United States, 395 F.3d 1263, 1268 (Fed. Cir. 2005), cert. denied, 126 S. Ct. 344 (2005). Furthermore, when the Government has attempted to argue that the sole causation standard is a sine qua non for proving causation and relied on J.D. Hedin, the Federal Circuit has given it a cool reception. See Westfed Holdings, Inc. v. United States, 407 F.3d 1352, 1361-63 (Fed. Cir. 2005) (distinguishing J.D. Hedin by noting that the plaintiff in J.D. Hedin had taken on "numerous other obligations" that undercut its assertion that it borrowed money due to the Government's actions). Thus, the Government's sole causation standard enjoys no support. Furthermore, the Government attempts to write-out of Indiana Michigan III the language stating that the "breach is a substantial causal factor in the damages . . . ." 422 F.3d at 1374 (emphasis added); Govt. Post-Trial Br. at 46. The Government asserts that a later decision, Cal. Fed. Bank v. United States, somehow undermines any reliance on the Indiana Michigan III standard. Govt. Post-Trial Br. at 45-46. The Cal. Fed. decision, however, does nothing of the sort. Cal. Fed., 395 F.3d at 1268 (noting that the breach need not be the "sole cause or sole factor" of damages); see also Citizens Fed. Bank v. United States, 474 F.3d 1314, 1319-20 (Fed. Cir. 2007) (concluding that the "substantial causal factor" test as enunciated in Indiana Michigan III remains an appropriate standard to judge causation). In an attempt to muddy the clear language of Indiana Michigan III, the Government seeks to force-fit its "but for world" test into that decision by pointing to a particular factual 11
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finding ­ that the plaintiff there failed to show causation in that a "decision to perform a full, instead of a partial, rerack in 1995 was purely a business judgment which it would have had to pursue irrespective of DOE's partial breach." Indiana Mich. III, 422 F.3d at 1376; Govt. PostTrial Br. at 44-45. However, the Government ignores the immediately preceding sentence, which states that the "trial court found that Indiana Michigan's rerack schedule was not affected by 1987 and 1989 announcements projecting delays in the scheduled January 1998 acceptance start date." Id. In other words, the Federal Circuit (and trial court) said the plaintiff in that case had failed to prove that its decision to perform a full rerack was caused by the Government's breach at all. There was no "but for world" at issue. Indiana Michigan simply failed to discharge its burden of proof that its decision to rerack was caused by DOE's impending breach. The instant case, however, relies upon different facts, different parties, different witnesses, and nuclear plants (Prairie Island and Monticello) that were not at issue in Indiana Michigan. In this case, NSP presented 1987 and 1988 memoranda and reports, with supporting, credible testimony, that DOE's impending breach caused NSP to focus exclusively on storage technologies that would allow Prairie Island to have storage until the end of its Nuclear Regulatory Commission ("NRC")-licensed life. NSP Post-Trial Br. at 15-23. The Government also tries to rely on tort law to support its sole causation standard and the alleged need for NSP to prove a "but for world." Govt. Post-Trial Br. at 47-49. The Government's arguments are rebutted by the discussion of the "but for" standard in a recent draft of the RESTATEMENT (THIRD) OF TORTS § 26 cmt. b (Proposed Final Draft No. 1) (emphasis in original): An actor's tortious conduct need only be a factual cause of the other's harm. The existence of other causes of the harm does not affect whether specified tortious conduct was a necessary condition for the harm to occur. Those other causes may 12
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be innocent or tortious, known or unknown, influenced by tortious conduct or independent of it, but so long as the harm would not have occurred absent the tortious conduct, the tortious conduct is a factual cause. Recognition of multiple causes does not require modifying or abandoning the but-for standard in this Section. Tortious conduct by an actor need be only one of the causes of another's harm. Nor do the Federal Circuit tort decisions relied upon by the Government support the Government's causation standard. Shyface v. Sec'y of Health & Human Servs., 165 F.3d 1344, 1353 (Fed. Cir. 1999) ("Thus although the Shyfaces did not prove that the DPT vaccine was the only or predominant cause of his death, the requirements of the Vaccine Act are met prima facie upon proof of the substantial factor criterion."); see also Abbott Labs. v. Brennan, 952 F.2d 1346, 1353 (Fed. Cir. 1991) (noting in the tort context that "[c]ommentators have explained that the `but for' and `substantial factor' standards of causation generally yield identical results"). Here, the Government has offered no credible evidence to disprove that NSP's decision to mitigate using dry storage was caused by the Government's impending breach. Logic and common sense dictate that, absent the Government's breach, NSP would not have undertaken the time, effort, aggravation, and expense associated with building its dry storage facility at Prairie Island and later would not have been forced to pursue the construction of a dry storage facility at Monticello. Even if the Government can prove other causes (which it has failed to do), they are irrelevant, because the evidence in this case shows that NSP's decision to use a storage technology sufficient to store SNF through the end of the licensed-life of the Prairie Island plant was primarily, directly, and substantially caused by the Government's impending breach. Yankee Atomic, 73 Fed. Cl. at 298 ("That there was an independent or secondary reason for building the ISFSIs does not detract from the primary or substantial causal factor-the delay of over a decade in DOE's acceptance, transportation and disposal."); see also 3 E. ALLAN FARNSWORTH, FARNSWORTH ON CONTRACTS § 12.1, at 148-49 (3d ed. 2004) ("Breach may not 13
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be precluded, however, by the presence of other contributing causes . . . . Although the injured party's own failure to avoid loss may bar recovery for that loss, this is not thought of as a consequence of a requirement of causation but of a limitation under a `mitigation' rule.") (footnotes omitted). C. Foreseeability Only Required The Foresight That Prairie Island Would Shut Down Absent NSP's Efforts To Mitigate

NSP agrees that the proper framework for determining foreseeability is set forth in Indiana Michigan III, 422 F.3d at 1373. However, the Government's discussion of foreseeability throughout this case wholly ignores what loss was foreseeable and what loss must be mitigated. The foreseeable loss in this case is that NSP's plant would shut down with a resulting loss of over $1 billion. 3 See NSP's Post-Trial Br. at 30, 31, 76; PX60 at KRGNSP03832 (no action alternative discussed in Certificate of Need would mean $1 billion in replacement power costs); Tr. 546-51 (McCarten) (discussing alternatives); Tr. 158-59 (Bomberger). NSP's duty to mitigate and its response to this duty prevented this loss with far less costly measures. Indiana Mich. III, 422 F.3d at 1375 (stating that "`[o]nce a party has reason to know that performance by the other party will not be forthcoming, . . . he is expected to take such affirmative steps as are appropriate in the circumstances to avoid loss by making substitute arrangements or otherwise'") (quoting RESTATEMENT (SECOND) OF CONTRACTS § 350, cmt. b). Thus, the question becomes whether these mitigation measures were reasonable under the circumstances. Indiana Mich. III, 422 F.3d at 1375; Koby v. United States, 53 Fed. Cl. 493, 497 (2002) ("`The rule of mitigation of damages may not be invoked by a contract breaker as a basis for hypercritical examination of the conduct of the injured party, or merely for the purpose The NWPA recognized (in 1983) that adequate spent fuel storage capability was linked to "the continued, orderly operation of [civilian nuclear power] reactors." 42 U.S.C. § 10151(a)(3); see id. §§ 10155(b)(1)(A), (b)(2), & (g). 14
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of showing that the injured person might have taken steps which seemed wiser or would have been more advantageous to the defaulter.'") (quoting In re Kellett Aircraft Corp., 186 F.2d 197, 198-99 (3d Cir. 1950)). 4 Moreover, the doctrine of foreseeability does not require that a breaching party foresee the exact method of mitigating costs and the exact type of damages incurred. The Government's argument to the contrary is simply wrong. See Citizens Fed., 474 F.3d at 1321 ("If it was foreseeable that the breach would cause the other party to obtain additional capital, there is no requirement that the particular method used to raise that capital or its consequences also be foreseeable.") (emphasis added); 11 JOSEPH M. PERILLO, CORBIN ON CONTRACTS § 56.7, at 108 (rev. ed. 2005) ("Just as reason to foresee does not mean actual foresight, so also it is not required that the facts actually known to the defendant are enough to enable the defendant to foresee that a breach will cause a specific injury or a particular amount in money."). It only requires that the magnitude and type of losses that will result from a failure to perform be reasonably foreseeable. 3 E. ALLAN FARNSWORTH, FARNSWORTH ON CONTRACTS § 12.14, at 260-61 (3d ed. 2004) ("[W]hat must be foreseeable is only that the loss would result if the breach occurred. There is no requirement that the breach itself or the particular way that the loss came about be foreseeable."). It would be folly to assert that a utility would be charged with showing that the exact manner in which it mitigated damages must be exactly foreseeable over time, where it was generally known that the magnitude and type of loss avoided were the costs of

It is in this context that Professor Dobbs's comments regarding foreseeability and mitigation become meaningful; once it becomes clear that there is a foreseeable loss, how a nonbreaching party mitigates that loss becomes far less important, so long as it finds a way to mitigate the costs of the breach. See 3 DAN B. DOBBS, DOBBS LAW OF REMEDIES § 12.6(2), at 138 (2d ed. 1993). 15
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replacement power from a plant shutdown. Cf. Yankee Atomic, 73 Fed. Cl. at 286 ("[M]itigation in a contract that spans the ages is not limited to decades-old technology."). In its brief, the Government incorrectly asserts that NSP must show proximate causation in addition to showing substantial causation and foreseeability. Govt. Post-Trial Br. at 52-54. For this purpose, the Government invokes the Federal Circuit's decision in Old Stone, 450 F.3d at 1375, and asserts that the Federal Circuit considered proximate causation in the context of foreseeability. While Old Stone did involve the principle of mitigation, the plaintiff in that case also brought damages claims based, in part, on its reliance interest. Id. at 1370-71, 1374-75. In the portion of the decision relied upon by the Government, the Federal Circuit was clearly discussing reliance damages, which require proving both proximate causation and foreseeability. Id. at 1375 ("[R]eliance damages are subject to two pertinent limitations-the damages must have been both proximately caused by the breach, and foreseeable."). NSP has brought its claims based on an expectancy theory (not reliance) and therefore does not need to show proximate causation. See Indiana Mich. III, 422 F.3d at 1373 (discussing "substantial causal factor" but making no mention of proximate causation). III. AS A RESULT OF THE GOVERNMENT'S IMPENDING BREACH, NSP REASONABLY INCURRED MITIGATION COSTS BY LICENSING AND CONSTRUCTING AN ON-SITE DRY STORAGE FACILITY AT PRAIRIE ISLAND As proved at trial and in NSP's initial post-trial brief at 15-19, NSP determined in 1987 and 1988 to seek spent fuel storage at Prairie Island sufficient to meet its needs through the end of the NRC-licenses. See PX398A at NSP-0001624 through NSP-0001625; Trial Transcript ("Tr.") 444-45 (McCarten); see also PX389B at NSP-0001638; Tr. 427-28 (McCarten). NSP (and Ms. Laura McCarten, in particular) presciently concluded that NSP needed this amount of

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storage because NSP lacked confidence that DOE would perform before the end of the NRClicensed life of Prairie Island ­ 2013 for unit 1 and 2014 for unit 2 of the plant. PX398B at NSP0001623 through NSP-000162 5; Tr. 444-45, 448-49 (McCarten). Therefore, NSP's accurate prediction of DOE's breach was the basis of NSP's decision to seek such extended storage. See Yankee Atomic, 73 Fed. Cl. at 265 ("[T]he intent of the NWPA and the parties to the Standard Contract was to avoid the construction by utilities of additional at-reactor storage after January 31, 1998. DOE's failure to perform under the Standard Contract thus has led to the very thing the NWPA and the Standard Contract were designed to forestall., i.e., the construction of dry storage facilities for spent nuclear fuel at nuclear power electricity generating plants throughout the United States.") (internal quotations omitted); see also Tenn. Valley Auth., 69 Fed. Cl. at 519. The Government argues that NSP is not entitled to recover its costs of licensing and constructing the Prairie Island dry storage facility and may not recover any costs relating to the first seven casks. Govt. Post-Trial Br. at 4. The Government asserts four purported justifications why a significant portion of NSP's actual costs for its Prairie Island dry storage facility should be ignored: (1) because NSP in 1987 and 1988 could not know the specific rate DOE that would perform under the Standard Contracts in 1998, NSP could not have known the amount of storage to build when it made its decision; (2) NSP should be precluded from recovering any damages incurred prior to 1994; (3) NSP supposedly believed that a third re-rack was technically impossible or that a third re-rack would not have provided sufficient storage until DOE arrived; and (4) NSP would never have performed a third re-rack because of the uncertainty involved in avoiding a plant shutdown. Govt. Post-Trial Br. at 55-83. Because the Government is attempting to reduce NSP's mitigation costs, the Government bears the burden of showing that NSP's actions were unreasonable. Tenn. Valley Auth., 69 Fed. 17
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Cl. at 529-30 ("The government frames this argument as one of causation . . . but in the circumstances of this case, it realistically is a contention aimed at limiting the amount of damages [the plaintiff] may recover as a result of its mitigation efforts. The government contends that [the plaintiff's] damages should be constrained to the difference between the costs of building the dry storage facilities in the present (breach) world versus the costs of building the facilities later in the but-for, non-breach world . . . Because the government seeks to limit the non-breaching party's recovery for mitigation, the government bears the burden of proof."); cf. also First Heights Bank, 422 F.3d at 1317 ("We thus conclude that the government's so-called causation argument is identical to the government's mitigation argument and reject it for the reasons described above."). The Government has failed to meet its burden. But, regardless of which party bears the burden of proof, the Government's arguments do not bear scrutiny. A. NSP's Decision Was Unaffected By The Specific Rate Of Acceptance

In making its determination as to how to provide additional storage at Prairie Island, the Government asserts that NSP was left with complete uncertainty as to how DOE was expected to perform and, therefore, NSP could not have based any decision on DOE's performance. Govt. Post-Trial Br. at 55-60. The Government's arguments are meritless. First, the trial evidence shows that NSP reasonably (and correctly) believed DOE would not perform before the end of Prairie Island's licensed-life, making the annual acceptance rate at which DOE would perform a moot point. Second, the Government's effort to further reduce NSP's damages (to the costs of a third re-rack), ignores NSP's reasonable, "non-breach" expectation that DOE would fulfill its statutory obligation and would pick up fuel at a rate sufficient to avoid the need for additional atreactor storage after 1998.

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As noted above, in the actual world, the rate at which DOE might potentially have performed never played a major factor in NSP's determination. See PX398A; PX398B. Ms. McCarten extensively testified that "nothing before 2006 and 2007 was to our mind even possible and that it would be prudent to look at the life at the plant . . . . So we were looking at a certain timeframe, that we thought it only made sense to look at a certain increment of additional storage because of where we felt the DOE was in terms of realistically coming out to start accepting spent fuel from us at Prairie Island." Tr. 448-49 (McCarten); see also Tr. 762, 870-71 (Kapitz). Thus, in the real world, the question of rate was never a key factor in NSP's determination to provide storage until the end of the licensed-life of Prairie Island's spent fuel pools. However, in the but-for world, had NSP expected DOE to perform and believed that it needed only sufficient storage to meet its needs until DOE would begin to pick up NSP's fuel ­ 1999 ­ the reasonable expectation would have been that DOE would perform at a rate sufficient to assure NSP would not need to add storage capacity after 1998. See Tr. 774-75 (Kapitz); Tr. 454-55 (McCarten). While the NWPA lodged the responsibility with the utilities to pay for DOE's disposal program and to provide interim storage of SNF, the utilities only had the responsibility for the costs of interim storage "until such waste and spent fuel is accepted by the Secretary of Energy in accordance with the provisions of this Act . . . ." 42 U.S.C. §§ 10131 (a)(4) & (5). The NWPA specified the date ­ January 31, 1998 ­ when DOE was required to begin removing SNF from commercial nuclear reactors. 42 U.S.C. § 10222 (a)(5)(B); Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336, 1342 (Fed. Cir. 2000) ("Congress found this objective so important when it promulgated the Act that it took the unusual action of specifying that all the contracts must contain this explicit requirement."). Based on the intent of

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the NWPA, DOE was expected to perform its contractual obligations at a rate sufficient to avoid additional storage after 1998. See Roedler v. Dep't of Energy, 255 F.3d 1347, 1352 (Fed. Cir. 2001) (interpreting the NWPA and stating that "[f]or determination of contractual and beneficial intent when, as here, the contract implements a statutory enactment, it is appropriate to inquire into the governing statute and its purpose"). The Government asserts that NSP could not have known this, because the 1985 Mission Plan and other documents stated that a specific acceptance allocation would not be made available until 1991. Govt. Post-Trial Br. at 57 (citing 1985 Mission Plan, DX45). However, the same 1985 Mission Plan stated: "[I]f the DOE fails to meet the schedule shown in Table 9-2 or 9-3 [using a steady-state rate of 3,000 MTU after a five-year ramp-up], then the additional storage capacity needed to accommodate the delay in schedule will be provided by the DOE, possibly at reactor sites." DX45 at 381; see also Tr. 2133-34 (Supko). Thus, the same 1985 Mission Plan that allegedly created "uncertainty" about when DOE would perform also pronounced that, if DOE was unable to meet its required performance, DOE would provide storage for utilities after 1998 as expected under the NWPA. 5 B. The Federal Circuit Did Not Create A Per Se 1994 Cut-Off To Recover Mitigation Costs In SNF Cases

The Government asserts that the Indiana Michigan III Federal Circuit decision created a 1994 cut-off for the recovery of mitigation costs and, therefore, NSP may not recover costs prior to 1994. Govt. Post-Trial Br. at 79-83. The Government's assertion is wrong. See NSP PostTrial Br. at 87-89.

While the 1985 Mission Plan states that the "schedule is an approximation," DX45 at 29 (HQR-003-1133), so too did the 1991 ACR. DX108 at 4 (noting that the ACR provides "only an approximation of the system throughput rates"). 20
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First, the Government asserts that NSP may not recover costs prior to 1994 because the Federal Circuit allegedly "held" that Indiana Michigan could not recover damages prior to DOE's 1994 Notice of Inquiry. Govt. Post-Trial Br. at 79. Indiana Michigan III includes no such holding. As NSP explained in its initial brief at 87-89, Indiana Michigan III limited damages based on the facts in that case. Yankee Atomic, 73 Fed. Cl. at 261 ("Reasonableness, in light of particular facts and circumstances, is plaintiff-specific. The 1994 date is the latest date when mitigatory obligations arose ­ whe