Hogan Lovells Secures $160 Million Victory for Client in High-Profile Nuclear Utility Appeal

WASHINGTON, D.C., 18 May 2012 – The U.S. Court of Appeals for the Federal Circuit on Friday handed a major victory to a trio of nuclear utilities, awarding them approximately $160 million in a long-running contract dispute with the federal government. Hogan Lovells represented the nuclear utilities in the case, Yankee Atomic v. United States, Nos. 2011-5020 et seq. (Fed. Cir. May 18, 2012).

The appeals stem from the federal government’s failure to live up to its promises to pick up and store “spent nuclear fuel”—a waste product produced by the nation’s dozens of nuclear plants. In the early 1980s, the U.S. Department of Energy contracted with the utilities to pick up their spent fuel beginning in 1998 and store it in a repository.  In exchange, the government required the utilities to pay millions of dollars per year in fees in advance of the pickup. The federal government has collected those fees for decades, but it never found a place to store the waste—plans to use Yucca Mountain in Nevada fell through—and never came to pick up the fuel. As a result, dozens of utilities have sued the government for breach of contract.

“We are very pleased that the court sided fully with our clients’ position and awarded them the full amount of damages they were owed,” said Cate Stetson, Co-Director of Hogan Lovells’ Appellate practice. “The decision is a significant milestone in this long-fought case, for the Yankee utilities and for other nuclear utilities across the country with similar damages issues."

In Yankee Atomic, the trial court awarded three New England nuclear utilities (Yankee Atomic Electric Company, Maine Yankee Atomic Power Company, and Connecticut Yankee Atomic Power Company) some $143 million in damages for the government’s breach. But it denied the utilities another $17 million they had sought, ruling that the damages had not been awarded in an earlier iteration of the case and that the “mandate rule” precluded the court from adding them now. The government appealed, arguing that most of the $143 million damage award should be thrown out because the utilities used a speculative damages model. The utilities, represented by Hogan Lovells, cross-appealed, arguing that the damages model was valid and that the “mandate rule” did not apply.

The Federal Circuit accepted Hogan Lovells’ arguments in full, affirming the trial court on the $143 million award and reversing it on the issue presented by the utilities’ cross-appeal. Writing for a unanimous panel, Chief Judge Randall Rader wrote that the government “did not identify any record evidence to support a finding that the trial court committed clear error in adopting [the damages] model.” He also wrote that the mandate rule did not foreclose Yankee Atomic from collecting the $17 million in damages it sought on cross-appeal. The court ordered those damages added to the utilities’ award without a remand.

Washington, D.C. partner Cate Stetson led the appellate representation and argued the case before the Federal Circuit. She was joined by Washington, D.C. associate Dom Perella on the briefs.

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