your argument first and number two thousand and ten five one three six boston edison company against the united  states thank you your honor all around we have united states as the court is where there are several issues raised in this appeal that have been the subject of other appeals before this court related to this train nuclear fuel cases some of those cases have already been decided by this court in fact in march of this year my colleague mr lester provided chief judge rader with a list of common issues that cut across multiple appeals in those in this particular case used those issues include the government's challenge to overhead and plaintiff in gc's challenge to interest which was the subject interest generally was the subject of this court's ruling and yet i'll be of i would be happy to address those issues with the court i would like to focus with the court's permission three issues which we believe are of first impression before this court you think that energy northwest disposes of those two issues for purposes of this you know and are doing with west we believe the supposes of certainly the interest case your hon funds to n g c second issue is the court's refusal to offset spent nuclear fuel fuel storage damages against an g c to account for us enough storage compensation that it received as part of the sale and simply failed to require boston innocent to establish damages directly that there were directly caused by the breach and that they were foreseeable as a probable outcome of a result as a result of the breach and your not of a kind that would be foreseeable and to be specific about that at the time that the contract was let back in one thousand nine hundred three the government certainly understood that under the contract there could be a transfer of a sale of the plan the contract also included an assignment provision similarly we don't dispute that the government understood that there could be alternative storage needs if a plant if theory was unable to perform but what was not foreseeable and what is unusual as farnsworth says account of the damages that the plaintiff seats in this case is that what was foreseeable is that they the seller could transfer all of its rights under the contract for some to be a sign agreement and that the buyer would then step into the shoes it was not foreseeable is that the plaintiff or the seller would essentially fast forward its its damages to say i am transferring to you both  right to sue under the contract but also these speculative fully speculative damages that may or may not occur future and that we believe is not foreseen isn't it really that isn't that the argument that accelerated damages argument separately but i see this as really being purely an accelerated it damages question me it seems to me it's difficult to say that some kind of transfer with some kind of arrangement was not foreseeable but your argument really is that you just can't do this you can't hardly government now for what damages you will you or your successor will incur in the future well that's exactly michigan a plaintiff in a partial breach setting aside as and have planted no us may not essential fast forward its damages to say this is what i anticipate the damages will be in the future and therefore pay me now had there been no sale this would have been essentially a no brainer because we because we would have come in and said india mission control the fact that there was a sale which by the way i'm happy to address had nothing to do with the breach the fact that a sale occurred you are because honored because the the contract was assigned move yet because because of the assignment clause austin has and has a right to sue now the problem we have is that if a court says this sort of pivots to the to the the n g c portion of the error that we believe the ct community is if the court says well the damages associated with the transfer are recoverable by austin edison then we believe that that should be that amount that boston edison receives should be an offset to whatever claims that n g c would happen if you were little is it really an offset analysis or is it a basic principle of who suffered the damage well that's exactly right i mean there is one kind of compensation or in that case a benefit then it's a simply a question of ok the government has now they receive something in the case of an offset but more fundamentally the question is will there is one breach does the government pay twice we don't believe that that is correct we believe that once the government has paid for those damages then those damages should be centrally in g c starts with the position that it has received compensation and once it has used up that forty million dollars then it's a question it may have a right to a claim but not until until it's done so otherwise we are in a position where we are paying double and that violates the tenants we believe of both of us out and also the ninth circuit and the cat in the canopy case that we the argument is made that the increase of forty million dollar increase in the escrow fund is a is a measure of a diminishing of value caused by the breach that comes into play by virtue of this contract to and there was evidence at trial that other other offerers including even g c did not believe that the value of the plan was reduced in fact the court held that the price for the plant was not reduced well that's not exactly what the cour that that with respect to that the price reduction that had to do with the things and related to that that finds that there was no basis for awarding damages but the court specifically said that the risk of not performance what by the government was essentially taken into account by the that's true your honor but the court didn't expressly there's nothing in the record that says that the court made a finding that entergy said we are not going to buy this plant unless you transfer money related to the bridge in fact the way the record is established and this is a j twenty eight twenty nine sixty and thirty sixty two at the time of the offering memorandum this is before any bids were offered when the when the seller was looking for bidders the the offer or for the seller bos'n innocence set we are going to transfer a fully decommission you commission find in other words and in fact expressly says at thirty sixty we are going to include spent fuel storage costs so there was again it goes back to the causational says there was nothing that said to bo and you need to transfer this fund the government didn't say you need to transfer the money the seller of the buy around the didn't say that you need to transfer money associated with spent fuel there simply is no causal link between let me let me just read previously described and so the court specifically finding that that decommissioning fund was was determined based on that risk assessment we don't quibble with that final run of what we quibble with is that there was no causal link in other words under energy capital this court said that the damages must be directly flowing from the breach boston innocent that was a a deal between two private parties the government had nothing to do with it so now what they negotiated is between them the question for purposes of recovery of damages is did the breach cause those damages and the fact that awesomeness and may have paid is not for say it creating a right for them to recover this would be analogous to i believe the hercules case where the settled with a claimant on i believe was agent orange claims and then turned around and sued the government for breach of contract and not that those actions that the that you hercules took splitting hairs and i see my time is is low i would say that it is without the breach if we took out the breach the payment wouldn't be me we don't quibble with that but that is distinct i believe under energy capital from the be the breach what do the damages directly flow from the breach and i believe the best analogy would be the hercules case we are not going to hold you tight a two year time and we're going to provide a pursuing i understand your position with respect to the components of the came and that may have been attributable to anticipated for their expenses so for th e removal of the spent nuclear fuel but oh about though those portions of any payment that might be attributable to the consequences of the breach in th sense that even though the purchasing party might ultimately be able to recover for damages that it incurs that there is a litigation risk and litigation costs associated with that process of recovering those those breach related expenses that will drive down the price why shouldn't that diminish and value associated with the difference between what would have with litigation there would be no interest as a as our position all of those that perhaps they would have established an escrow fund to provide but you're on a course of funds for that contingency but had they done that your honor we believe that under indiana michigan those costs would not be recoverable in other words if a party set but the sell side the party says i am anticipating government is breach i'm anticipating a whole bunch of litigation so i'm going to put aside costs associated with dry storage and costs associated with recovering my damages we would come in and say in the first instance those are future costs they haven't been incurred yet so under any amount in the machine you and then secondly we would say those are costs that are simply not recoverable against the united states obviously there are certain circumstances where eja or interest occurs but in this case in these cases in the spent fuel cases there is no such recovery so all we're doing is treating the cell the the seller just the you're you're just because you're the government doesn't mean you're not contracting in a in a business world and you contemplated a transfer so all business is get sold and transferred all the time so at that point there has to be some value that's put on the fact that there's been this ongoing running breach you're out of the certainly we did contemplate the transfer and there's no dispute there but but again i take it back to the anchor savings analysis which is is this of the congress this recovery or there are these claim damages of the kind that could have been anticipated at the time of the sale and our answer is no because again substantively we would not take cost for instance of legal fees or of time value of money and we shouldn't pay them without the sale and therefore there is no reason that we should pay them with the sell out whether you look at it from a cause ation standpoint or foreseeability standpoint we do not believe that those costs will be recoverable because in a foreseeability setting it would be as f an usual type of damage to be looking fast forwarding thing ok this there may be a sale and there may be some contingency to cover for litigation so i just find the foreseeability to be such an odd way to look at this it seems to me that the answer you gave earlier is is the more direct answer which is you can do better by making a sale then you would do by not so i'm so i'll stick with that are in a three can get three clinton situation i think a court trying not to impose on too much on the court's generosity i have two issues that i have what be sure to address that are related damages and that's the n r c funs fees which we did recover a cost of capital of we didn't at the end i want to address the government's argument that we ought to give to them the post shut down storage fund that we prudently amassed against that day in exchange for the hope in the litigation risk is the court has recognized that we may be able to get the money back from the government when you need do you agree then with the government stipulation that energy northwest puts to bad your cost of capital it puts together part of the puts to bed part of the issue your honor we have argued as many litigants have that when congress said on a claim and twenty five sixteen didn't apply  this are with them argument has been rejected that's gone are blue bonnet argument has been rejected that's gone i think the standard oil argument is still alive and needs to be dealt with when congress adopted the statute it did not change but in incorporated prior jurisprudence and what standard oil says is when the government performs a service that other people perform in and does not carry out that service you're entitle to recover interest just like any other service provider we think standard oil survives twenty five sixteen we think it is a sound analogy for what has been done here and we believe that standard oil supports the recovery of cost of capital if we're not dead we're breathing art i understand we do think court will need home address standard oil i do want to turn on to  the n r c would not of them and it's rule i t ninety nine to impose on entergy the spent fuel storage and reactor decommissioning fee that was found as a fact i don't think that fact finding is being challenged here by the government the court said there were three parts of this fee generic costs related to web storage dry storage and the commission and what the court did and we think correctly is compare the real world feed that we had a breach and subtract from it that those coarsens which would have been paid in the un real world which the government kept its promises what the court first did was take out the decommission aspects of the city it then took out the separate surcharge and what was left was wet storage and dry stor i don't think the government has ever disputed that because we have no drive storage that's not see we would have been paying it but for the government's breach now we're paying it with storage we would have paid some fees before the breach but the court found as a fact which is not challenged as i understand it that the n r c generic costs for web storage increased as a result of the br was i understand the argument the government never got to make it's that in making these determinations that or put the burden with respect to the description of the plausible or whirl on the wrong party i don't think the government did that i think i'm sorry i don't think the court did that i think that would have been a valid thing to do under this court's precedents but what the court said is but for causation that this was but for that these were caused by the government we carry the burden of proof on that and what the court did was to compare the real world against the un real world by taking the real city and then cutting out the parts that the court found as a fact with point that what was allowed to go forward i don't think what we did is is to do two things but the government i think says we ought to do is this first we start from the ground up until but for world and we start from the ground up  we started with the real world and then from the real world we came from the top down and we took out the things that we would have paid even if the government hadn't breached contract and we carry the burden of causation on every aspect of that so i think the government i think the court did compare the real world with the real world that put the burden on us every point and again our evidence showed that almost all of the we storage costs were brand new before the break the n r c wasn't spending anything to speak of on generic which storage cost that was our experts testimony at page twenty two thirty three of the appendix the nine incremental costs of fuel in the pool would be two minutes so we think the court did exactly what the government says we should have done put the burden on us and we carried it let me go briefly to the to the question of the post shutdown fund what the government says is we believe in this characterization of the transaction it says we gained a windfall when we bought this plant  what happened is boston edison sold us plant the land and the decommissioning fund and we paid eighty million dollars in cash and we accepted all of their obligations under the standard contract the court found that was a fair market value trade indeed that was the basis of its damage award to boston that us that we paid fair market value and it was forty million dollars less than we would have paid absent the breach if we paid fair market value we couldn't have gotten the windfall and we didn't yet when the let me answer the question if if we and reno with the government that on a partial breach you can't recover diminished in in value damages once that fund is drawn down i'm assuming it's john down on to the extent of forty million or eighty million or whatever the extent that it struck down on do you agree that under your contract it would be boston edison that can recover those funds from the government or do you think you would have the right i don't think so and i noticed your honor's question on that and i want to get to it under the contract we acquired the right to recover for all future breaches now we prudently provided up t for the risk that the government would still be breaching the contract years from now when this plan shuts down but boston edison unequivocally and clearly clearly transferred  right to all future breaches that's how we recover the costs of reracking the pool that was a breach for which we were entitled to recover they didn't pick it up in one nine hundred ninety nine that haven't picked that up since we redirect the pool seller related or pertaining to the the only defaults accrued as the closing date whether relating to periods prior to or following the closing date are excluded from the transfer of death we don't believe  course this is this is our principle argument against the boston edison coverage is that we don't believe in fact that the post shut down commissioning fund had a crude at the time of the breach the wisdom of addresses as the government correctly says is breaches that may or may not happen so we don't believe that breaches that take place in the twenty third are claims that approved we do believe that we agree with the government that the diminution in value is wrong it's wrong because it's not the proper way to apply rule three forty eight of the restatement of a restatement rule is a brak as generally to construction contracts and what it does is put a brake on the continuation and the accumulation of repairs of the building just can't be fixed makes no sense to continue to try to repair  once you decide to ward of them and you shouldn't value at that point you stop paying for repairs they are alternative not supplemental means of recovery and to apply that fear is inconsistent with ship because indiana michigan says we want you to keep on making the repairs congress want you to mitigate the damages and congress is willing to have the government pay you to mitigate those damages we've been awarded medication and that's inconsistent up front with the idea of liquidating and resolving all the damages in a single loss of value case that's what ray forty three forty eight uses a loss of value for it doesn't apply in a case where you're going to keep on they repair so we believe that the forty million shouldn't admit awarded the boss and assuming we believe that even if it is the court was right in saying there's no reason to have to deal with it until the end of the day when we find out whether or not the government may have a double liability argument they don't have it yet and they may someday perform the contract and that issue will rise and i will reserve of federal claims post trial findings are clearly erroneous secondly indiana michigan's prohibition on recovering damages of speculative future losses is not like the first point particularly important because as you can see from the arguments made by the government  that it was suffered by box of medicine that the amount which is not an issue in this appeal was certain that it was foreseeable and it was directly caused by the breach where middle elaborate findings on that there's been no indication by the offered fifty million dollars now p v to forty million dollars decommissioning fund but for the breach even if we accept all those five propositions how do you were covered the money in a partial preach are we supposed to assume performance in a partial  done we had a right under the agreement to sell the plant and transfer the title to the spent nuclear fuel that was in the standard agreement from one thousand eighty three the government understood when they signed that that was foreseeable that in a breach that would cause the plant to be a plant and the assets to be less viable the court made a specific finding about that so we sold the plant as we had every right to do under the agreement the  breach was essentially totaled to us because we were done we did transfer to what entergy the right to sue for future bridges and future damages but as far as the damages to that point they were they were liquidated in the amount had they have allowed funds for building is to seize more studies to destroy spent nuclear fuel the may not be needed as well no one knows if and when the government's ever going to take this material they could take it tomorrow they could find some other approach but this right to sell the plant goes away all right to sell the asset to transfer the plant goes away because because then we're looking a situation where we have to transfer the plant retain title to the spent nuclear fuel and super cost twenty thirty forty million dollars down the down the road or more wish we have a right under the agreement to sell the plant to set the sell title to spend if you will and in order for that right to be effective we have every right to sell it and to mitigate or damages that point and mitigation is a point to the court below found and under oath under restatement three forty four three forty seven three forty eight we can recover diminished value or other incidental or other types of  damages to make us all and there's no doubt that we paid that money in order to provide for the future spend we feel in fact government counsel says that there's no requirement in the home in the record to show that entergy in fact asked for the spent nuclear well i don't think you unilaterally make a total breach when you're transferring the ongoing contract with the government's obligations still intact well it is it is for is to an entirely different form abridgement suppose that you are the owner of a building that's undergoing renovation and the contractors delayed in the renovation can't sell the building and then say ok well now i'm going to treat contractor committed then i did just take this on those facts if you sell your building to me while the contractor is delayed in performance in breach in partial bridge by virtue of the done on the day i sold it therefore to me it's a toll bridge right well in fact in fact if i don't know when the contractor is going to do that work with it's five ten twenty years down the road it is a total bitch because the because time is of the essence of the work wasn't done properly  thing at the same thing now you're quibbling i think with my hypothetical my hypothetical is you have to treat it as if you held the building it would be a partial bricks and you know you can say well it's a total breach because because times of the essence and and you didn't complete time but if you assume with me that it's a partial breach if you hold the building you can't then convert it to a total breach simply by selling the building you would agree with me on that right well not necessarily if  contractor was supposed to supposed to do the work by a certain date and didn't do it by that date that's a bridge by the car since and it's called the partial bridge of the contractor let's assume a way time is of the essence that's just take an old style corben hypothetical this is a failure to perform on time and therefore partial bridge right right and you sell the building during the pendency of that period of partial breach ok you don't get to say ok now legally it has become a total breach by virtue of my having unilaterally decide to sell the building i but i can sue that contractor for else you wanted to touch on before award of the government argues there is an argument here that in fact it was it was too dramatic a breach to remark and therefore not cause this court found that in fact it was cos we are well within the clear distinction between the standard oil case and the situation standard while this goes to the interest the last complete breasts of the interest claim are the in standard oil that government was engaged in the business of insurance i believe they were insuring ships that is a clearly commercial enterprise in this case what the government is get engaged in is the the removal and permanent disposal of spent nuclear fuel and to go no further than the nuclear waste policy act section want to eleven four which says that the actions of the government are taking your for the public good and health and safety of the public in other words this is not c to the burden as a stand which under yankee tom yankee atomic in other words it did not require that the plane of a stamp was its condition in a boat for world specifically what the court said was entergy need not quantify the court was within its appropriate bounds to then consider what factors might apply in that world you are i understand that the court made the finding with respect to a possible for a while but our position is that under yankee atomic it requires two for to create a possible but for world the party must show its condition with performance and by letting them letting the plaintiff off the hook with respect to these wet and dry storage fees it didn't do that and i would take the court to saying that energy need not quantify the fees that it would have incurred in the pot for work it lets them off the hook that is inconsistent with this whole time this court told me to come up with respect to i did want to clarify one thing general i said i did i want to be clear what the government's position our position on this is on the future of damages after forty minutes now our position on perhaps i misunderstood you much book earlier is that in g studies go to and he says well if you pay for cost of study so you should pay for future damages in this case that's not true at all cost of studies are studies that a utility is taking in anticipation of running out of fuel and as we've said before certainly a direct consequence of the breach would be a need for alternative studies to analogize what boston as is asking for which is the cost of hard costs of building buildings in a decommission world is not the cost of studies leading up to an immediate need for spent fuel so we would make that distinction then also the process raises this issue of well we somehow would be not permitting the plaintiff or the the owners of these plans to sell their plans again that's simply not what we're what we're arguing what we're arguing is that if the if the if seller wants to sell that's perfectly within their purview but to it to do that they can do that under the contract the assignment clause permits as there have been other cell since the seller was to sell the con edison plant for instance and other sells they get the contract certainly permits the seller to sell passing on those rights to recovery if there was a contract and i have a contract for the trash collection in my house and i had a big yard and i could keep that trash would without the need for actually you know building a storage shed a very big and somebody preach i contra when i went to sell the house if i sold the house and said here you go buyer you have the right to sue the contractor who hasn't shown up but in addition to that i'm going to give you the cost that i think it's going to cost to build a shed that someday may or may not that is what i'm guessing it's going to cost that would be a violation of the michigan and going to the point that the court made with mr conway the fact that we still that the that the trash you have a little bit of little time left true very quick points made with court everything congress does is for the public good or at least congress thinks so when congress went into the insurance business in world war one it so for the public good what the supreme court said is when you go into the insurance business you ought to be treated like you're in the insurance business and you  but the court has long drawn a distinction between more commercial type activities that the government engages in and more executive public type activities  and when the government raises an army they're not engaged in the commercial activities when they sell the goods on the market i think the court may choose to draw that commercial enterprises do and because the government has breached its obligation under this contract it is something commercial enterprises are doing every waste disposal in the nuclear feeling right now is being done by a nuclear by our commercial enterprise we think standard oil indicates that congress would have one of those to be paper that but we that that's an issue that we think courts still have to address but one thing about mitigation it is certainly true as mr conway says the court did talk about boston edison steps to mitigate but the steps it took didn't actually mythic what the court says on page nineteen this case involves mitigation but it only level one step removed from the actual measure of damages the actual measure of damages is a couple of decades down the road when we actually do the mitigation and what the court said is that as part of the sale negotiation the two parties estimate the cost of the mitigation to come and the court recognized that as reduced value but that's not mitigation itself what this court said congress wanted us to do when the government did not keep promises this indiana michigan says congress wanted the operator to do the government and congress wanted the operator to be paid for doing the government's job boston edison didn't do the government's job instead it chewed off its leg to get out of the trap and it sold us the leg and the trap at what the court