[00:00:00] Speaker 01:
to Fuels, Inc.

[00:00:01] Speaker 01:
versus United States.

[00:00:48] Speaker 01:
Okay, your name I can't even pretend to try to pronounce.

[00:00:51] Speaker 01:
Come on, we have it.

[00:00:52] Speaker 01:
What is it?

[00:00:53] Speaker 00:
Thomas Chuck, Your Honor.

[00:00:54] Speaker 01:
Thomas Chuck, okay.

[00:00:56] Speaker 01:
There's a lot of consonants in two Z's, not even next to each other like in pizza or anything.

[00:01:01] Speaker 01:
So that's hard.

[00:01:02] Speaker 00:
Don't remind me, Your Honor.

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My children have trouble with it even now.

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Very good.

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Please proceed.

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Thank you.

[00:01:10] Speaker 00:
Good morning.

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May it please the Court.

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These two cases.

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Which one is first, the Braden one or the Leto one?

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The Braden one is first, but Your Honor, on that score, my understanding is that the argument for both has been consolidated, so I plan to say something.

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Oh, I didn't.

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Did we consolidate?

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I don't have it on.

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You're mistaken.

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All right.

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There you go.

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Then I withdraw that comment.

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But you know what?

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Since you've offered, any objection, anybody to consolidating it?

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I couldn't see why it wasn't.

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OK, very good.

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Then it's consolidated.

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There are similar issues in both cases.

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Thank you.

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And the issue in the case, in both cases indeed, is whether the plaintiffs are entitled to recover their actual incurred costs for loading casts of spent nuclear fuel, which is periodically referred to as SNF.

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Is it true that we have these two opinions by these two judges, which seem to me to be somewhat at odds with each other despite being on virtually the same record, as well as two other opinions, one by Judge Koster Williams and a fourth, I don't remember who it's by.

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Judge Bruggen.

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Judge Bruggen.

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which are also on virtually the same record, and that none of these four opinions sort of go down the same path.

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I think that's a fair characterization.

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Each of them seem to resolve the same exact issues, the same parties, virtually the same record, different ways.

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I think that's a fair observation.

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For example, we filed the Notice of Supplemental Authority.

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Judge Koster-Williams denied the storage costs claimed in that case.

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and a decision that was rendered just a few months ago granted them.

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So there is I think inconsistency in the trial court which explains in part why we're before this honorable court.

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And it's all you and it's all these facilities.

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This isn't a different party's different record.

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It's your various facilities.

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And in fact if I understand this record right, because this is an ongoing partial breach by the government and there's a six-year statute of limitations, aren't you about ready to file another one of these to recoup your damages for the

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Most recent six-year period, this is the one that pertains to the past six-year period.

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That is also correct, Your Honor.

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We're required, because of the running of the statute of limitations, to bring a new action every six years, or we lose those costs.

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Those interim, yeah.

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And on that score, the current projection, just for the benefit of the court's question... What's the half-life of your case?

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Well, the current projection is that the Department of Energy is now going to commence performance in 2048.

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That's 32 years out from now, so I fear that these issues will come before this honorable court.

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I hope not frequently, but certainly from time to time.

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In the Grand Gulf case... Okay, so here, let me just summarize one of the problems I'm having with these two cases and definitely the different ways that the two judges and the opinions appealed to us dealt with them because they're at odds.

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as well as the other two judges, which also don't seem to take a systematic track to this.

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And my bigger question, it's a big picture question.

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If I'm not mistaken, you have argued that these are storage loading costs.

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These are not transportation loading costs, correct?

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Yes, Your Honor.

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And there is no question that if the government had performed, you would not need to load things for storage, correct?

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That is also correct.

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And Judge Leto found all of that as a matter of fact, did he not?

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Well, he made some findings along those.

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That's what I thought.

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Then, wait, time out.

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Let me just keep going down my little road here.

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So if these are all storage-related costs, then isn't it also true that under the current standard contract and current regulation, none of the casks that you have loaded this spent nuclear fuel into would be allowed to be used for transportation and accepted at facilities if there was a sudden facility created?

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He found that as a matter of fact.

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He did.

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He found as a matter of fact that the casks would not be accepted.

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Did he not?

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He found that there were uncertainties as to whether or not the storage casks, which are located at the Energy Arkansas facility, could be transported.

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And in point of fact, there's testimony in the record, Your Honor.

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From the Department of Energy official, right?

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Well, there was testimony in the record from Mr. David Zabransky, who was the then contracting officer, that the government, the Department of Energy, was not obligated under the contract as it exists today to pick up the canistered fuel.

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You've also testified that in the absence of an amendment to the standard contract, the spent nuclear fuel and dry storage casks would have to be unloaded from those casks and loaded into DOE-provided transportation casks.

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Is that correct?

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Answer.

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And this is the DOE official that you're talking about.

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Zembrowski?

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Yes?

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Zembrowski.

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Yes.

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The canister fuel would need to be, in essence, uncanistered and put in a transportation cask for acceptance.

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Yes.

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Is that the DOE position?

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Yes.

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So why is the government not on the hook?

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given that they have said, as of now, they would absolutely not accept these casks for transportation.

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They absolutely wouldn't.

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They would make you take all of the fuel out of the casks you put them in, move them into transportation-ready casks, and then they would accept those.

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So why aren't they on the hook for all the storage costs?

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I think they are, Your Honor, and that's precisely why I'm here.

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In both cases, I think the government should be on the hook for all of the storage costs because

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This is a cost based on the record, which the court just cited.

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But the record seems undisputed.

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Am I missing something?

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This is the government's witness.

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I don't see anything in this record that suggests the government would accept these casks that you've put this spent nuclear fuel into.

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There is nothing in the record that suggests the government will accept these costs, which is why we will incur these costs.

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But not accept these costs, except these casks.

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I'm sorry, not accept these casks.

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I misspoke.

[00:07:00] Speaker 01:
Thank you.

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OK.

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which is why we will incur these costs again in the future at such time as DOE comes to the site and brings a transportation cask and then takes that transportation cask to some storage facility.

[00:07:12] Speaker 03:
But why did you tell your expert, Ms.

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Sopko, not to quantify the cost of non-breach preparation and packaging?

[00:07:24] Speaker 00:
I think there's several reasons, Your Honor.

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First of all, there is a case which we submit is

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on point here, and that's the Carolina Power and Light case.

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And that case instructs us that loading costs are deferred costs that need not be modeled.

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So we have a binding Federal Circuit precedent which governs the instruction to our expert.

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Second, I would submit, Your Honor, we're disinclined to have our experts speculate about DOE's performance in the non-breach world.

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The information about DOE's non-breach world performance

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That's within the Department of Energy's province and control.

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And indeed, the rules of evidence limit speculation by experts.

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Rule 702B requires that experts' testimony be, quote, based on sufficient facts or data.

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Here, there are no facts or data on which a credible expert can opine.

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That's information that the Department of Energy controls, because they are the party under Article IV of the contract.

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And this is in the appendix.

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that the Department of Energy is required to bring a transportation cask to our sites.

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And this is where Judge Leto concluded they obstructed you in part by not ever telling you what kind of cask they would provide you, so it made it difficult for you to estimate the cost associated with that.

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Is that the idea?

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Yes, that is the idea, Your Honor.

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But apart from the difficulty associated with estimating it,

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I guess I don't even understand why that's relevant in light of his finding.

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I mean, and I went back to, because you almost looked perplexed at me when I said he made this finding on page A14 of his opinion.

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You can trust me, I'll read it accurately.

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As matters now stand, all of the SNF stored at ANO's IFCFI will have to be extracted and then reloaded for transportation by DOE.

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So that's a fact finding by Judge Latto, correct?

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And it's a correct fact, and it's watched

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So I guess the point I'm wondering is why, since you will absolutely in the future under this fact finding have to take all the junk out of the place the casks is stored in now and move it to something else for transportation, then why is this not properly categorized as he did in the first half of his opinion?

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as a storage cost and not a cost related to transportation.

[00:09:37] Speaker 00:
Respectfully, we submit the Judge Leto Erd in that regard, and he should have awarded all of the actual incurred storage costs that we incurred at ANO.

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And it seems to be there seems to be some confusion in the record.

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The most I can get out of the government's argument is a bit of smoke and mirrors in that, well, it's possible we will change either the standard contract in the future or the regulations.

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It's also possible that some of these things may change

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such that maybe under those circumstances, the casks will be allowed to be used for transportation.

[00:10:08] Speaker 01:
But that's not the current state of the law or the facts, right?

[00:10:11] Speaker 00:
Correct, Your Honor.

[00:10:12] Speaker 00:
It is not.

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And so if that does happen, and you have gotten, if for some reason the government starts complying in 2048, and if these casks are not so degraded at that point that the government will actually allow you to use them for storage, which is quite frankly an absurd proposition given what we're dealing with in terms of the contents.

[00:10:28] Speaker 01:
But if that is the case, then couldn't they come after you to recoup?

[00:10:32] Speaker 01:
Because if it turns out that they've changed the law, they've changed the regs, and if the facts change, and this do get used for transportation.

[00:10:39] Speaker 01:
At that point, couldn't they come back to you and offset some future damages provision by virtue of that?

[00:10:45] Speaker 00:
I'm sure the government could ensure that it's not harmed in the event it does perform as required under the contract and brings a transportation cast.

[00:10:55] Speaker 03:
But I want to emphasize again that what- Do the storage casts degrade because of their contents?

[00:11:02] Speaker 00:
The technical evidence about that in the record is that, yes, they do, Your Honor.

[00:11:08] Speaker 00:
I think that is a subject of study both by the Department of Energy itself as well as the Nuclear Regulatory Commission.

[00:11:16] Speaker 01:
Does it depend on the type of fuel that's being stored in them, the length of the storage period, that sort of thing?

[00:11:20] Speaker 00:
Yes, it does, Your Honor.

[00:11:24] Speaker 00:
The key point I want to make before this court is that these are actual incurred costs.

[00:11:29] Speaker 01:
There's a key point beyond what we just discussed?

[00:11:31] Speaker 01:
Okay, go ahead.

[00:11:34] Speaker 00:
The point I want to reiterate and reemphasize that these are actual incurred costs, which we would never have incurred had the Department of Energy performed.

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In both cases, the record is clear that we would never have built a dry fuel storage facility.

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Therefore, there would have never been any loading of storage casks

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and as a matter of step.

[00:11:55] Speaker 01:
Now, I feel like we have to address, because we've got these two different cases, Judge Leto's opinion went through a lot of what you and I just discussed in a lot of detail.

[00:12:06] Speaker 01:
And he seemed to make fact findings that I thought were completely consistent.

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And he awarded you most, but not all of the damages you saw.

[00:12:13] Speaker 01:
But in the Judge Braden opinion, even though you made all these arguments and I saw them, she didn't address any of them as far as I can tell.

[00:12:22] Speaker 01:
She didn't address, for example, she didn't even discuss in any detail the fact that you have to take this stuff out of these storage casts and put them in different casts to send them.

[00:12:34] Speaker 01:
I find her opinion and the brevity of it a little bit more difficult to track the resolution.

[00:12:42] Speaker 00:
As do we, and I would submit, Your Honor, that it was essentially the same record involving many of the same witnesses.

[00:12:49] Speaker 00:
On that score, though, Judge

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Braden has a finding that we submit is clearly erroneous, and this is in the appendix in the Grand Gulf case, the first case at page A28.

[00:13:02] Speaker 00:
She says, in pertinent part, A28 of Judge Braden's opinion.

[00:13:12] Speaker 00:
Just give me a second.

[00:13:13] Speaker 00:
Yes, sir.

[00:13:22] Speaker 01:
But she does acknowledge, by the way, at page 827, that DOE positions it will not accept the SNF in the SNF canisters that it's in currently under the standard contract.

[00:13:36] Speaker 00:
Yes.

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She acknowledges that same thing, that these storage containers are not going to be allowed to be used for storage under the current rules.

[00:13:42] Speaker 00:
Right.

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And that was the same testimony of the then Department of Energy contracting officer, Mr. David Zabranski.

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What I wanted to call the court's attention to,

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Judge Braden made at least one finding that is clearly erroneous, and the court is right.

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Her treatment of this issue, I think, is certainly shorter than Judge Leto's.

[00:14:00] Speaker 00:
But at page 828 in the right-hand column under the paragraph heading 18, she observes, quote, but plaintiffs failed to establish the projected cost of preparing and packaging SNF for dry storage in DOE casks.

[00:14:15] Speaker 00:
That statement doesn't make any sense, because there is no obligation under the contract

[00:14:21] Speaker 00:
for us to prepare and package spent nuclear fuel for dry storage.

[00:14:27] Speaker 00:
What DOE is required to bring under Article IV of the contract and what was envisioned by the contract is a transportation cask.

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So that finding, we submit, is clearly erroneous.

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And we also submit that in both cases, the court, I think, the courts failed to

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fully consider the effect of this court's decision in Carolina Power and Light, which holds that these are deferred costs, that these are costs that are going to have to be incurred again in the future, and we should be entitled to recover them now.

[00:15:01] Speaker 00:
And this is a little bit, and we discussed this in our brief.

[00:15:05] Speaker 01:
Stop talking, because I don't understand this argument and this deferred cost idea.

[00:15:11] Speaker 01:
I mean, I read her opinion and thought it looked like some offset

[00:15:16] Speaker 01:
that she was still trying to use the offset logic that was rejected by Carolina Power but without expressly discussing it.

[00:15:25] Speaker 01:
But this deferred cost thing, your storage costs are costs you incurred today.

[00:15:29] Speaker 01:
You're not talking about future costs, right?

[00:15:30] Speaker 01:
I just don't want you to confuse me on my understanding.

[00:15:32] Speaker 01:
It's a very complicated issue.

[00:15:34] Speaker 01:
So these are current storage costs.

[00:15:36] Speaker 02:
Yes.

[00:15:36] Speaker 01:
And if we're talking about what the costs might be in the future to move this stuff from these storage casks to storage casks that would be rendered acceptable for transportation,

[00:15:44] Speaker 01:
That is a future cost that may be incurred in the future when that actually comes to pass.

[00:15:49] Speaker 00:
Yes, Your Honor.

[00:15:49] Speaker 01:
OK.

[00:15:52] Speaker 00:
And what I started to say about deferred costs, this is akin to this court's decision in dominion resources, where the court may recall that it was considering the government's claim about the one-time fee and that the plaintiffs in the dominion case had been benefited by the deferral of the payment of the one-time fee.

[00:16:12] Speaker 00:
And this court held that the government was not entitled to, if you will, take that one-time fee value and offset it against the plaintiff's claim in that case.

[00:16:24] Speaker 00:
So to hear what the government's trying to do is essentially take these future costs

[00:16:29] Speaker 00:
which may be incurred at such time as DOE begins to perform and take them out of our pockets now.

[00:16:34] Speaker 00:
And we submit that's incorrect.

[00:16:35] Speaker 01:
And that might be OK if the evidence was the casks that you have loaded your storage into will double as transportation casks.

[00:16:44] Speaker 01:
That might be OK, because you're responsible for loading for transportation, right?

[00:16:48] Speaker 01:
But you're not responsible for loading for storage.

[00:16:50] Speaker 01:
And on the undisputed facts of this record, these casks can't be used for transportation.

[00:16:54] Speaker 01:
Correct, Your Honor.

[00:16:56] Speaker ?:
OK.

[00:16:57] Speaker 03:
pass my time yes we'll give you a few minutes of rebuttal time Mr. Breskin tell me about the government's cross appeal the government did not cross appeal oh that's right so how on earth can we consider your argument about the six million four hundred seventy five thousand

[00:17:25] Speaker 03:
since we would have to reverse the opinion below.

[00:17:33] Speaker 04:
I'm sorry, which argument about the $6 million?

[00:17:36] Speaker 03:
The government alleges that the claims court here is a matter of law when it inferred that due to the government's obstruction system could recover $6,475,497 for cost incurred to prepare and package.

[00:17:50] Speaker 04:
Right.

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But I think we also point out that although we disagree with his finding there, we did not cross appeal.

[00:17:55] Speaker 04:
And therefore, the court cannot remand reconsideration of that.

[00:17:59] Speaker 03:
So we're in agreement then?

[00:18:02] Speaker 03:
Correct.

[00:18:03] Speaker 04:
May it please the court.

[00:18:05] Speaker 04:
I'd like to go back to where Judge Moore started with his, how has the trial court considered this argument?

[00:18:12] Speaker 04:
And I think there have been, to my recollection, at least five trial courts that have addressed the government's causation argument here.

[00:18:19] Speaker 04:
Judge Williams in SFI Louisiana said the plaintiffs have not met their burden of showing their non-breach loading costs.

[00:18:26] Speaker 01:
But I don't even want to hear about all these other cases because I read every one of these opinions.

[00:18:31] Speaker 01:
Well, I read four.

[00:18:31] Speaker 01:
I don't know where the fifth magical one is, but I didn't read that one.

[00:18:34] Speaker 01:
I read four and none of them are consistent with each other at all.

[00:18:37] Speaker 01:
So clearly this is an issue in need of some clarification because you don't want, I mean,

[00:18:44] Speaker 01:
Even if there's a clear error standard of review, and even if we technically have to affirm every one of them under that standard, which I'm not saying is the case, but even if it were, it doesn't look good when the same party, this company, against the government gets four completely different resolutions.

[00:18:58] Speaker 01:
And that's what they have here.

[00:19:00] Speaker 01:
So let's try to just focus on these two for a second.

[00:19:03] Speaker 01:
And let's focus on the questions I was asking opposing counsel, because this record shows, undisputedly, as far as I can tell,

[00:19:11] Speaker 01:
even, which I love, I mean I love when government people are very honest in their depositions, as they always are, that these casks that this fuel has been stored in are not up to, would not meet regulatory or standard contract approval for being transportation casks.

[00:19:29] Speaker 01:
And that's correct, isn't it?

[00:19:30] Speaker 01:
I mean that's what the government witnesses all testified.

[00:19:32] Speaker 04:
Well, Mr. Zabransky testified that under the contract, as Dewey interprets it, they will not accept canistered fuel.

[00:19:38] Speaker 04:
He did not

[00:19:39] Speaker 04:
testify about the regulatory concerns that plaintiffs raise.

[00:19:42] Speaker 01:
I just want to be clear.

[00:19:43] Speaker 01:
No, I'm glad you're clear.

[00:19:44] Speaker 01:
And the regulatory concerns only go to whether it's burnt up.

[00:19:47] Speaker 01:
If it's burnt up fuel, I know I'm going to mutilate this, then it's of a kind that can't be transported because... High burn up fuel.

[00:19:57] Speaker 01:
Yeah, high, that's all right.

[00:19:59] Speaker 01:
All right, so let's put that aside then.

[00:20:00] Speaker 01:
So as of now, the regulatory issue aside

[00:20:04] Speaker 01:
because that is a dispute over what kind of fuel is in these things.

[00:20:08] Speaker 01:
And it's not clear to me that I could possibly figure that out from this record.

[00:20:11] Speaker 01:
But anyway, so putting that aside, the main issue though that I'm having trouble with is why aren't all these cost storage costs in light of the fact that it is undisputed on this record that these, the way they have loaded these things into these particular kinds of casks, those could not be used as transportation casks under the standard contract.

[00:20:33] Speaker 01:
So if they can't be used as transportation casts, I don't know why they fall within that portion of the standard contract where they would have the obligation of paying for the loading, because these aren't loading into transportation casts.

[00:20:45] Speaker 01:
And at least as of now, the law may change, but as of now, they can't be used as transportation casts.

[00:20:50] Speaker 01:
So these are only and can only be treated as storage casts.

[00:20:54] Speaker 04:
Your honor, the question really is, what is there a burden to show in order to demonstrate causation?

[00:21:00] Speaker 01:
Well, they showed all the stuff I just said, but that's what the record is.

[00:21:02] Speaker 04:
Right, they showed what they did, but Yankee Atomic says, interpreting Blue Bonnet into the spent fuel context, you need to demonstrate what you would have done with DOE performance.

[00:21:11] Speaker 01:
And it's not enough to just say... But no, but in timeout.

[00:21:14] Speaker 01:
Not what you would have done with DOE performance.

[00:21:16] Speaker 01:
The transportation, the cost of loading these things into a transportation casks under this record is still to come.

[00:21:23] Speaker 01:
It will have to be done if and when at any point in time the government complies since these casks have been deemed not appropriate by the government for transportation.

[00:21:33] Speaker 01:
This is a pure storage cost that is incurred.

[00:21:37] Speaker 01:
This has nothing to do with transportation.

[00:21:40] Speaker 01:
This is an ongoing cost of storage.

[00:21:43] Speaker 01:
So yes, in the future, they may bear the cost of putting these things into transportation casks.

[00:21:48] Speaker 01:
But I don't know why that would need to be deducted out of

[00:21:51] Speaker 01:
storage costs, which have nothing to do with transportation.

[00:21:55] Speaker 04:
The same argument was made by the utility and Energy Northwest.

[00:21:58] Speaker 04:
They said, we only undertook our plant modifications for dry storage.

[00:22:02] Speaker 04:
We used a dry storage cask.

[00:22:04] Speaker 04:
We put our fuel in dry storage.

[00:22:05] Speaker 04:
We weren't doing transportation under the contract.

[00:22:08] Speaker 04:
Therefore, we should recover all of our plant modification costs, and let's wait to see what happens in the future.

[00:22:14] Speaker 04:
And the court rejected that and said, it's not enough to simply label your activities for their end purpose.

[00:22:20] Speaker 04:
which is what the utilities here did and what the utility in Energy Northwest was doing.

[00:22:25] Speaker 04:
What they said was the activities we're doing are for storage and therefore we are not responsible for them.

[00:22:30] Speaker 04:
The court said you need to go a level below that and look at what are the actual activities you're engaging in.

[00:22:36] Speaker 04:
So here the loading activities are things of the nature of picking up spent fuel assemblies and moving them into a cask, doing things like cleaning the cask, closing the cask.

[00:22:46] Speaker 04:
These are the activities that they bear the burden of demonstrating

[00:22:49] Speaker 04:
they would not have performed with DOE performance.

[00:22:52] Speaker 04:
They did not meet their burden.

[00:22:55] Speaker 04:
They didn't even try to meet their burden.

[00:22:56] Speaker 04:
Instead, they simply instructed their expert not to quantify their average cost.

[00:23:00] Speaker 01:
I don't understand.

[00:23:01] Speaker 01:
I don't understand.

[00:23:02] Speaker 01:
They're still going to have to do all that stuff when they take this crap out of these casks and put them in transportation casks.

[00:23:09] Speaker 01:
And if they do that... So they have to do that.

[00:23:11] Speaker 01:
That has to happen because you all have said they can't use these casks for transportation.

[00:23:15] Speaker 03:
Are you presuming that

[00:23:16] Speaker 03:
transportation will actually never occur, and the DOE will simply never fulfill its obligation.

[00:23:23] Speaker 04:
No, the government actually put forth evidence that the industry expects, including the utilities here, for DOE to actually accept the loaded dual-purpose canisters that are sitting on their pads at those plants.

[00:23:37] Speaker 04:
Obviously, Judge Lotto didn't agree.

[00:23:38] Speaker 04:
I would point out, however, Judge Lotto did also find that $1.9 million of the cost that the utilities incurred

[00:23:46] Speaker 04:
are similar to costs they would have incurred in the non-breach world to load the DOE.

[00:23:50] Speaker 04:
So there is a fact finding here that there is a $1.9 million overlap for which they cannot recover those costs under Yankee Atomic and Energy Northwest.

[00:24:02] Speaker 04:
And I want to get back to this point.

[00:24:03] Speaker 04:
Energy Northwest rejected the idea that because of what you're doing is to storage, you are absolved of your requirement to demonstrate what your non-breach activities were.

[00:24:13] Speaker 04:
They said you need to look at the actual activities

[00:24:15] Speaker 04:
and the costs and demonstrate that you would not have incurred them but for DOE's breach.

[00:24:21] Speaker 04:
Here the utilities made a strategic decision not to do that.

[00:24:24] Speaker 04:
And it's perplexing because their expert, Eileen Supko, provided three pages in her written testimony in Mississippi and in her expert report describing what the utilities would have done with DOE performance to prepare, package, and load their fuel.

[00:24:42] Speaker 04:
She went right up to the point of actually quantifying those, which would have met their burden.

[00:24:46] Speaker 01:
But all of that testimony, it seems to me, was in the context.

[00:24:51] Speaker 01:
It was, quite frankly, before Mr. Zembrowski's testimony.

[00:24:54] Speaker 01:
I'm probably saying his name wrong.

[00:24:55] Speaker 01:
But it was in the context of we still don't have a clear understanding of whether these casks might actually be allowed to be used for transportation and therefore are a substitute.

[00:25:06] Speaker 01:
And so what you're looking for

[00:25:08] Speaker 01:
is for her to articulate with precision how much it would have cost for transportation casts versus how much these casts with the bolted or welded closure rather than bolted closure.

[00:25:16] Speaker 01:
And then the idea would be if these casts could actually later in time be used for transportation, then maybe now all they should get is the difference between the higher costs of loading these things with the welding and the lower cost of loading them into a bolted transportation cast, which is what the government said it would have provided for transportation purposes.

[00:25:36] Speaker 01:
So that's where that differential becomes relevant.

[00:25:40] Speaker 01:
It becomes relevant if these casts, which they paid more money to put these things into and weld shut, cost more to load than it would have to load the transportation casts the government would have provided if it had performed.

[00:25:53] Speaker 01:
But I don't see how that's relevant when the state of this record in both cases is that these casts cannot be used for transportation.

[00:26:01] Speaker 01:
So we're not talking about a differential.

[00:26:03] Speaker 01:
On this record, on equivocally, unless the law is changed or the contract is changed, these casts can't be used for that purpose.

[00:26:10] Speaker 04:
That's correct.

[00:26:11] Speaker 04:
And it's the government's position, as it advocated before both trial courts, that if and when the utilities are required to unpackage their canisters and repackage their fuel, that they can recover those speculative future costs, which we don't know what they're going to be.

[00:26:25] Speaker 04:
It might be as little as taking the canister out and putting it in.

[00:26:27] Speaker 01:
No, but they can't recover that.

[00:26:28] Speaker 01:
They can't recover later.

[00:26:30] Speaker 01:
Because what the standard contract says is they're on the hook.

[00:26:33] Speaker 01:
for loading fuel into a transportation cask.

[00:26:36] Speaker 01:
So when we get to the point of government performance and they have to open these casks up and take the fuel out of the existing location and put it into a transportation cask, they have to actually bear that cost.

[00:26:48] Speaker 01:
So they can't go after you later for that cost because that's exactly the cost that the standard contract anticipates they will pay.

[00:26:55] Speaker 04:
The standard contract at Article 4A, 2A says they are required to prepare and package their fuel sufficient for transportation to DOE.

[00:27:03] Speaker 04:
It doesn't say it has to go directly into a DOE provided transportation task.

[00:27:08] Speaker 04:
And the question is, what does that obligate the utilities to do?

[00:27:11] Speaker 04:
Here it obligates them to prepare and package each fuel assembly sufficiently for transportation.

[00:27:17] Speaker 04:
Whether these are sufficient for transportation, although we respectfully disagree with Judge Leto, is a question that will be determined at such time as DOE performs.

[00:27:26] Speaker 04:
What the utility's position here is that we should assume they will not be.

[00:27:29] Speaker 01:
What do you disagree with Judge Leto about, just so I understand clearly?

[00:27:31] Speaker 01:
You said we specifically disagree with Judge Leto.

[00:27:34] Speaker 04:
Well, the government put forth evidence that we believe proved that the utilities and DOE will work together to make these transportation dual-purpose cast transportable, and it makes perfect sense for them to do so.

[00:27:46] Speaker 04:
This is a little bit outside this record, but as a way of explanation, Mr. Brewer's testimony was there are a number of utilities that have completely decommissioned their plant.

[00:27:53] Speaker 04:
They don't have spent fuel pools anymore.

[00:27:55] Speaker 04:
So for them to take their fuel that they've already loaded into these dual-purpose canisters

[00:28:00] Speaker 04:
and repackage it into a DOE provided would cost hundreds of millions of dollars.

[00:28:05] Speaker 04:
DOE has no interest in, of course, requiring utilities to do that.

[00:28:09] Speaker 04:
There's evidence in the record that the utilities here specifically obtained the dual purpose Holtec canisters because they are transportable and they expected to be able to transport them in the future.

[00:28:20] Speaker 04:
So that is our disagreement with Judge Leto with respect to the future.

[00:28:24] Speaker 04:
But the more salient point is that on a causation

[00:28:27] Speaker 01:
But both Judge Leto and Judge Braden recognize that DOE itself has said under the standard contract, these things will not be accepted in these casts and would have to be moved from these things into transportation casts.

[00:28:39] Speaker 01:
What you're saying is, in the future, we might be willing to modify the current state of the law to work with them and accept these nonetheless.

[00:28:46] Speaker 04:
Well, that's true.

[00:28:47] Speaker 04:
I don't disagree.

[00:28:48] Speaker 04:
You're repeating Mr. Zabranski's testimony.

[00:28:50] Speaker 04:
The contract does contemplate amendments to the contract and that the parties will work together

[00:28:55] Speaker 04:
in good faith to come to those amendments.

[00:28:57] Speaker 04:
But as Judge Lado found right now, DOE's position is they are not acceptable.

[00:29:02] Speaker 03:
That pretty much does it, doesn't it?

[00:29:05] Speaker 04:
It doesn't, though, because what happens in the future is relevant under Carolina Power to the avoided cost question.

[00:29:11] Speaker 04:
But as this court in Energy Northwest said, you don't get to the avoided cost.

[00:29:14] Speaker 03:
Is this thing really going to go till, what was it, 2048?

[00:29:18] Speaker 04:
I believe there are current estimates that have performance sooner, but I won't stand up here and speculate exactly when DOE will perform.

[00:29:24] Speaker 03:
Well, there's a six-year statute of limitations, and these are in six-year increments.

[00:29:29] Speaker 03:
So it's realistic to say that six years from now, we're going to see another one where it's still sitting in those cats.

[00:29:37] Speaker 04:
Correct.

[00:29:38] Speaker 04:
I would assume that they will be.

[00:29:41] Speaker 04:
The problem is that the question of what happens in the future is really only relevant to an avoided cost analysis.

[00:29:47] Speaker 04:
And that is what utilities have been pushing this court to apply

[00:29:52] Speaker 04:
to the government's causation challenge.

[00:29:54] Speaker 04:
But in Energy Northwest, this court held very clearly that you don't get to the avoided cost question until you have demonstrated causation, that the breach was the factor that caused the utilities to undergo these activities and incur these costs.

[00:30:07] Speaker 04:
And you have to go, as I said, Energy Northwest instructs below, one level below.

[00:30:11] Speaker 04:
You can't just label them for storage.

[00:30:13] Speaker 04:
What are the actual activities, and what are the activities you would have done in the non-breach world?

[00:30:18] Speaker 04:
Eileen Supko, the plaintiff's non-breach expert, has a detailed loading

[00:30:22] Speaker 04:
scenario for a hypothetical DOE cask, which she could have quantified.

[00:30:27] Speaker 04:
She could have said, to load to a DOE cask, we would have incurred X amount.

[00:30:32] Speaker 04:
And then the court would have had the ability to compare that versus their incurred costs.

[00:30:36] Speaker 04:
The sole reason she didn't was instruction from counsel.

[00:30:39] Speaker 03:
Am I correct that these casks are sitting in pools of water?

[00:30:46] Speaker 04:
No.

[00:30:46] Speaker 04:
So the casks that they're sitting are concrete storage overpacks.

[00:30:51] Speaker 04:
And then inside them are the canisters themselves that are loaded with the fuel.

[00:30:55] Speaker 04:
They drain the water out after they load them with the fuel and they backfill with a gas that drives them.

[00:31:00] Speaker 04:
So they're not sitting in the water.

[00:31:03] Speaker 04:
I just want to point out one other thing that Council for the Utilities pointed out was that for Ms.

[00:31:10] Speaker 04:
SUPCO to quantify the non-breach loading costs would require speculation.

[00:31:15] Speaker 04:
But that's exactly what Energy Northwest says is

[00:31:19] Speaker 04:
the purpose of a non-breach world expert to fill in the gaps about what would have happened in the non-breach world.

[00:31:26] Speaker 04:
They have Ms.

[00:31:26] Speaker 04:
Succo testify in all of their cases.

[00:31:29] Speaker 04:
She speculates about a hypothetical DOE cask that could have been brought.

[00:31:32] Speaker 04:
She models an entire world around that cask in order to come up with what their non-breach costs would have been.

[00:31:38] Speaker 04:
She simply stopped short here, again, because they instructed her not to quantify those costs.

[00:31:44] Speaker 04:
If the court were to hold that because these

[00:31:48] Speaker 04:
these fuel assemblies under this record need to be repackaged later.

[00:31:54] Speaker 04:
What the court would really be doing is undoing Energy Northwest and Yankee Atomic, because what it would be doing is it would be relieving the utilities of their burden of demonstrating what they would have done in the non-breach world with DOE performance.

[00:32:06] Speaker 04:
It would be elevating Carolina Power well beyond the confines of its decision.

[00:32:11] Speaker 04:
What it said, Carolina Power quite clearly said, these are not costs that are avoided, they are deferred.

[00:32:16] Speaker 04:
With specificity, that only applies to costs that have been demonstrably proved to be caused by the breach.

[00:32:22] Speaker 04:
Here, we haven't reached the avoided cost question because we are still at the causation stage.

[00:32:27] Speaker 04:
Both Judge Braden in Mississippi found they did not meet their causation with any of their costs.

[00:32:33] Speaker 04:
Here, Judge Leto took it an extra step and found that at least $2 million of the costs they would have incurred with DOE performance.

[00:32:41] Speaker 04:
Thank you.

[00:32:44] Speaker 01:
I'll give you two minutes of rebuttal time.

[00:32:46] Speaker 00:
Thank you, Your Honor.

[00:32:52] Speaker 00:
To answer one of Judge Wallach's question, there is fuel in a wet pool at both of these facilities, Your Honor.

[00:32:59] Speaker 00:
It is then taken from the wet pool, put in a storage cask, and then moved out to the dry fuel storage facility, which both plants have, and it's those costs associated with

[00:33:11] Speaker 00:
moving the fuel from the wet pool, getting it out to the dry storage facility that we're seeking to recover in this case.

[00:33:20] Speaker 03:
So right now there are rods sitting in water?

[00:33:24] Speaker 00:
Yes, at both of these facilities.

[00:33:27] Speaker 00:
And as the months and years pass, we move that fuel because we have to or else the plants will have to shut down.

[00:33:34] Speaker 00:
I want to just say a quick word about the Envy decision on which Mr. Bruskin

[00:33:40] Speaker 00:
First of all, that court found as a matter of fact that the costs that were at issue there, fuel characterization costs, would not necessarily be incurred in the future based on that record.

[00:33:53] Speaker 00:
That's a very different record than what we have here.

[00:33:55] Speaker 00:
We are going to have to incur costs in the future associated with moving the fuel that has been placed in the storage casks and transfer that fuel to a DOE transportation cask at such time as DOE performs.

[00:34:09] Speaker 00:
I also briefly just want to say a few words about this court's decision, which I believe Judge Mayer authored roughly a decade ago in Indiana, Michigan.

[00:34:19] Speaker 00:
And Indiana, Michigan tells us a couple of things of critical importance.

[00:34:23] Speaker 00:
Number one, you can't speculate about future costs.

[00:34:26] Speaker 00:
In the Indiana, Michigan case, at that time, the issue before the court was a total breach and whether or not we could recover the entirety of the costs

[00:34:35] Speaker 00:
at issue in that case.

[00:34:36] Speaker 00:
And Indiana and Michigan said, no, you can't do that.

[00:34:38] Speaker 00:
You've got to come back every six years, and you've got to prove your actual incurred costs.

[00:34:42] Speaker 00:
Whatever label the government wants to put on it, what they're trying to do is take out of our hide today the costs associated with removing the fuel that's out of these dry storage facilities and putting them in their transportation casks.

[00:34:56] Speaker 00:
And as Judge Moore has

[00:34:58] Speaker 00:
has noted, that is a cost which is going to be incurred in the future.

[00:35:02] Speaker 00:
And Indiana Michigan says, I, a plaintiff, can't get that future cost, nor should the government be entitled to get, if you will, a benefit from a future cost yet to be incurred.

[00:35:11] Speaker 00:
These are deferred costs.

[00:35:12] Speaker 00:
They're going to be incurred again.

[00:35:14] Speaker 00:
We're entitled to recover for them now.

[00:35:16] Speaker 00:
Thank you.

[00:35:16] Speaker 01:
Thank both counsel for their arguments.

[00:35:18] Speaker 01:
The cases are taken under submission.