The Federal Circuit Court of Appeals has upheld a lower court award of $142 million against the United States for costs, including indirect overhead costs, incurred by Southern California Edison due to a breach of nuclear waste removal contracts. S. Cal. Edison Co. v. United States, No. 2010-5147 (Fed. Cir. 8/23/11). The expenses were incurred at the San Onofre Nuclear Generating Station, near Pendleton, California, for the construction and operation of facilities to store high-level waste, overhead allocated to the project and off-site storage of spent nuclear fuel, while waiting for the government pick up and store the waste.
Under the Nuclear Waste Policy Act of 1992, (NWP A), the Department of Energy (DOE ) was required to take title to utility waste by January 31, 1998, and was responsible for its permanent storage. NWP A amendments in 1987 required that DOE consider only Yucca Mountain, Nevada, as a permanent underground storage repository. DOE and utilities entered into nuclear waste removal contracts that implemented NWP A’s provisions.
The U.S. government never constructed a nuclear waste repository, and, in 2009, the government abandoned the only planned facility, which would have been located at Yucca Mountain. The United States has been sued by dozens of utilities over alleged breaches of contracts it signed with energy providers in the 1980s. Numerous lawsuits are still pending, and, thus far, the claims exceed $6.4 billion. Finding that all of the plaintiff’s costs, including the overhead, were related to the breach, the appeals court found no error in the Court of Federal Claims’ decision.