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Nature of Suit Code: 536
Nature of Suit: 
Cause of Action: 

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United States Court of Appeals 

for the Federal Circuit ______________________

SYSTEM FUELS, INC., SYSTEM ENERGY 

RESOURCES, INC., SOUTH MISSISSIPPI 

ELECTRIC POWER ASSOCIATION,

Plaintiffs-Appellants

v.

UNITED STATES,

Defendant-Appellee

______________________

2015-5094

______________________

Appeal from the United States Court of Federal 

Claims in No. 1:11-cv-00511-SGB, Judge Susan G. 

Braden.

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SYSTEM FUELS, INC., ENTERGY ARKANSAS, INC.,

Plaintiffs-Appellants

v.

UNITED STATES,

Defendant-Appellee

______________________

2015-5095

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2 SYSTEM FUELS, INC. v. US

______________________

Appeal from the United States Court of Federal 

Claims in No. 1:12-cv-00389-CFL, Judge Charles F. 

Lettow.

______________________

Decided: April 4, 2016

______________________

ALEXANDER D. TOMASZCZUK, Pillsbury Winthrop Shaw 

Pittman LLP, McLean, VA, argued for plaintiffsappellants. Also represented by CLARE M. CAVALIERO, JAY 

E. SILBERG, Washington, DC; LAYTON JAGER SMITH, JR., 

Jager Smith LLC, Jackson, MS.

ERIC PETER BRUSKIN, Commercial Litigation Branch, 

Civil Division, United States Department of Justice, 

Washington, DC, argued for defendant-appellee. Also 

represented by CHRISTOPHER JAMES CARNEY, JAMES 

PATRICK CONNOR, BRYANT G. SNEE, ROBERT E.

KIRSCHMAN, JR., BENJAMIN C. MIZER.

______________________

Before MOORE, MAYER, and WALLACH, Circuit Judges.

MOORE, Circuit Judge.

In these related appeals, System Fuels, Inc., System 

Energy Resources, Inc., South Mississippi Electric Power 

Association, and Entergy Arkansas, Inc. (collectively,

“System Fuels”) appeal two judgments of the Court of 

Federal Claims denying one category of damages arising 

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SYSTEM FUELS, INC. v. US 3

from the government’s partial breach of contract. We 

reverse and remand both cases.1

BACKGROUND

These cases are another round of litigation following 

the government’s failure to accept and dispose of spent 

nuclear fuel (or “SNF”). The general facts and circumstances regarding spent nuclear fuel cases have been 

explained in both Court of Federal Claims opinions below 

and in opinions from this and other courts. See, e.g., 

Energy Nw. v. United States, 641 F.3d 1300, 1302–03 

(Fed. Cir. 2011); Ind. Mich. Power Co. v. United States, 

422 F.3d 1369, 1371–72 (Fed. Cir. 2005); Me. Yankee 

Atomic Power Co. v. United States, 225 F.3d 1336, 1337–

40 (Fed. Cir. 2000); Ind. Mich. Power Co. v. Dep’t of Energy, 88 F.3d 1272, 1273–74 (D.C. Cir. 1996). Thus, we 

limit our discussion to only those facts necessary to understand the issues giving rise to these appeals.

In the Nuclear Waste Policy Act of 1982, Congress authorized the Department of Energy (“DOE”) to contract 

with nuclear power utilities as part of its plan for a national nuclear waste disposal system. See 42 U.S.C. 

§§ 10131, 10222; see generally Energy Nw., 641 F.3d at

 

1 We note that the two cases on appeal decide the 

damages issue regarding entitlement to loading storage 

casks differently. And the parties have brought to the 

court’s attention at least two other recent decisions also 

from the Court of Federal Claims on the same issue. 

Entergy Nuclear Fitzpatrick, LLC v. United States, 

No. 03-2627C, 2015 WL 9025699 (Fed. Cl. Dec. 15, 2015) 

(unpublished); System Fuels, Inc. v. United States, No. 03-

2621C, 2016 WL 537617 (Fed. Cl. Feb. 10, 2016). It can 

be fairly stated that the four decisions each reach different results on the same issue, entitlement to damages for 

storage cask loading fees. 

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1302–03; Ind. Mich. Power, 422 F.3d at 1371–72. Congress set forth the contracts’ basic terms, requiring the 

utilities to pay fees into a Nuclear Waste Fund in return 

for the government taking title to and disposing of the 

utilities’ spent nuclear fuel beginning no later than January 31, 1998. 42 U.S.C. § 10222; Energy Nw., 641 F.3d at 

1302. Pursuant to Congress’ instruction, the DOE promulgated regulations defining the text of the standard 

contract for use with the utilities. Energy Nw., 641 F.3d 

at 1302; Contract for Disposal of Spent Nuclear Fuel 

and/or High-Level Radioactive Waste, 10 C.F.R. § 961.11 

(“Standard Contract”). 

Under the Standard Contract the utilities are responsible for providing “all preparation, packaging, required 

inspections, and loading activities necessary for the 

transportation of [spent nuclear fuel] and/or [high-level 

radioactive waste] to the DOE facility.” 10 C.F.R. 

§ 961.11. The government is responsible for “arrang[ing] 

for, and provid[ing], a cask(s) and all necessary transportation of the [spent nuclear fuel] and/or [high-level radioactive waste] from the [utility’s] site to the DOE facility.” 

Id. The Standard Contract also requires that the casks 

supplied by the DOE “shall be suitable for use at the 

[utility’s] site, meet applicable regulatory requirements, 

and be accompanied by pertinent information.” Id.

In 1983, System Fuels and the government executed 

the Standard Contracts at issue in these appeals, which 

relate to spent nuclear fuel generated at the Grand Gulf 

(appeal No. 2015-5094) and the Arkansas Nuclear One 

(appeal No. 2015-5095) power stations. In 1994, the 

government announced that it would not be able to accept 

spent nuclear fuel from any utility by the statutory and 

contractual deadline of January 31, 1998. Waste Acceptance Issues, 59 Fed. Reg. 27,007 (Dep’t of Energy May 

25, 1994). The government explained that the thencurrent projection for the earliest possible date it could

begin accepting spent nuclear fuel was 2010. Id. at 

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SYSTEM FUELS, INC. v. US 5

27,008. The government did not meet its 2010 projection 

and, in fact, has yet to begin accepting any spent nuclear 

fuel.2 It is undisputed that the government’s failure to 

accept spent nuclear fuel at this point in time is a partial 

breach of the Standard Contract.

System Fuels filed their first complaints seeking 

damages for the government’s partial breach in 2003 

(Arkansas Nuclear One) and 2005 (Grand Gulf). The 

Court of Federal Claims ultimately awarded System 

Fuels damages for costs incurred through August 31, 2005 

(Grand Gulf) and June 30, 2006 (Arkansas Nuclear One). 

These awards included, inter alia, the costs System Fuels 

incurred to construct Independent Spent Fuel Storage 

Installations (“ISFSIs”) at Grand Gulf and Arkansas 

Nuclear One to store spent nuclear fuel in dry storage 

casks that it would not have had to store had the government begun performing on time. 

The decisions currently appealed arise from new complaints System Fuels filed seeking damages for costs 

incurred due to the government’s continued partial breach 

covering the periods of September 1, 2005 to July 31, 2011 

(Grand Gulf) and July 1, 2006 to June 30, 2012 (Arkansas 

Nuclear One) (collectively, “new damages periods”). 

Before the Court of Federal Claims, the government did 

not dispute that System Fuels was entitled to most of the 

damages it claimed for the new damages periods.3 And 

 

2 At oral argument, System Fuels’ counsel stated 

that the current, speculative projection is that the government will begin performance in 2048, although the 

government believes that other projections may have 

performance beginning sooner. Oral Argument at 3:30–

40, 29:15–24, available at http://oralarguments.cafc.

uscourts.gov/default.aspx?fl=2015-5094.mp3. 3 These undisputed amounts are $44,414,139 

(Grand Gulf) and $29,370,717 (Arkansas Nuclear One). 

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6 SYSTEM FUELS, INC. v. US

the government does not appeal any of the Court of Federal Claims’ damages awards that are adverse to it.

Rather, System Fuels appeals the Court of Federal 

Claims’ denial of damages for one category of costs: the 

costs incurred to load spent nuclear fuel into storage 

casks stored at the Grand Gulf and Arkansas Nuclear 

One ISFSIs. At both sites, System Fuels incurred costs 

when it loaded spent nuclear fuel into Holtec (Grand Gulf) 

or Holtec and VSC–24 (Arkansas Nuclear One) storage 

systems. This process involved first loading the spent 

nuclear fuel into canisters, then loading those canisters 

into the dry fuel storage casks and welding the casks 

closed. System Fuels argues that these costs, the costs of 

loading storage casks, are storage costs that it would not 

have incurred if the government had performed. We have 

jurisdiction over these appeals under 28 U.S.C. 

§ 1295(a)(3).

DISCUSSION

We review the Court of Federal Claims decisions de 

novo for errors of law and for clear error on findings of 

fact. Ind. Mich. Power, 422 F.3d at 1373. “A finding may 

be held clearly erroneous when the appellate court is left 

with a definite and firm conviction that a mistake has 

been made.” Id. (alterations and citation omitted). 

Whether a breach of contract caused certain damages is a 

fact question reviewed for clear error. See Bluebonnet 

Sav. Bank, F.S.B. v. United States, 266 F.3d 1348, 1356 

(Fed. Cir. 2001).

 

For reference, the Court of Federal Claims found in the 

Arkansas Nuclear One case that System Fuels “has fully 

performed its obligations under the Standard Contract” 

and, as of the end of the new damages period, has paid 

$344 million into the Nuclear Waste Fund. System Fuels, 

Inc. v. United States, 120 Fed. Cl. 737, 741 (2015) (“Arkansas Nuclear One”). 

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SYSTEM FUELS, INC. v. US 7

In the cases currently appealed, the Court of Federal 

Claims took two different approaches in denying damages 

for the costs incurred by System Fuels in loading spent 

nuclear fuel into storage casks. In the Grand Gulf case, 

the Court of Federal Claims denied System Fuels the 

entire claimed amount of $4,706,387 because it determined that System Fuels “failed to establish the projected 

costs of preparing and packaging [spent nuclear fuel] for 

dry storage in DOE casks.” System Fuels, Inc. v. United 

States, 120 Fed. Cl. 635, 661 (2015) (“Grand Gulf”). The 

court noted that System Fuels acknowledged that it 

would have incurred costs, although at a lesser expense,

to load the DOE casks had the DOE performed. It also 

stated that it “may not consider the possible future costs 

[System Fuels] may incur to repackage the [spent nuclear 

fuel] in DOE casks, if and when DOE performs.” Id. The 

court made these findings despite noting System Fuels’ 

argument that, under the current regulations regarding 

transport of radioactive material and the terms of the 

Standard Contract, the DOE will not accept canistered 

fuel as stored by System Fuels at Grand Gulf. Id. at 660–

61. Thus, under the current regulations and contract, 

System Fuels will have to unload the spent nuclear fuel 

from the storage casks and canisters and reload it into the 

DOE-supplied transportation casks if and when the DOE 

performs.

In the Arkansas Nuclear One case, the Court of Federal Claims found that the government will not accept 

canistered spent nuclear fuel as stored by System Fuels at 

Arkansas Nuclear One under the current terms of the 

Standard Contract. Arkansas Nuclear One, 120 Fed. Cl. 

at 749. Quoting the testimony from Mr. Zabransky, the 

Director of the Office of Standard Contract Management 

at the DOE, the court found that “[a]bsent an amendment 

to the Standard Contract, ‘canistered fuel would need to 

be unloaded from the canister and repackaged in a transportation cask for acceptance.’” Id. (alterations omitted). 

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8 SYSTEM FUELS, INC. v. US

Finding that the Standard Contract had not been amended and it was unknown what amendments would be 

necessary in order for the DOE to accept canistered fuel, 

the court concluded that “[a]s matters now stand, all of 

the [spent nuclear fuel] at [Arkansas Nuclear One’s 

ISFSI] will have to be extracted and then reloaded for 

transport by DOE.” Id. The court also found that about 

one third of the storage casks contained a particular type 

of fuel (i.e., “high burn-up fuel”), which cannot be transported in the Holtec casks under the current regulations 

regarding transport of radioactive material. Id. (citing 10 

C.F.R. pt. 71). Nevertheless, the court did not award 

System Fuels all of its claimed $6,475,497 in damages. 

Rather, in order to determine the amount of disallowed 

costs, the court subtracted from the claimed total the 

costs to which System Fuels was allowed: 1) all the costs 

to load the high burn-up fuel; 2) the costs to load the 

canisters containing non-high burn-up fuel into the storage casks (but not the costs to load this fuel into the 

canisters); and 3) an amount accounting for the higher 

cost to close welded, as opposed to bolted, casks. It thus 

granted System Fuels $4,532,848 in damages and denied 

the remainder ($1,942,649).

Before the Court of Federal Claims and on appeal, 

System Fuels argues that the government’s breach caused 

it to incur costs to load spent nuclear fuel into dry storage 

casks that it then stored at its ISFSIs. It argues that, but 

for the government’s partial breach, it would not have had 

to load storage casks at all, such that its costs to load 

storage casks in the non-breach world would have been 

zero. Rather, it states that under the Standard Contracts

it is responsible for costs incurred for loading the DOEsupplied transportation casks and argues that it will incur

costs to load transportation casks when the government 

ultimately performs. As explained above, loading the 

storage casks used by System Fuels involves first loading 

the spent nuclear fuel into canisters and then loading 

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SYSTEM FUELS, INC. v. US 9

those canisters into the storage casks. System Fuels 

argues that, given the DOE’s unequivocal statement that 

it will not accept the currently loaded canisters (that are 

within the storage casks) or the storage casks themselves 

under the existing Standard Contracts, it will undisputedly incur costs to unload the spent nuclear fuel from the 

storage casks and canisters and to reload that fuel into 

the DOE-supplied transportation casks in the future 

when the DOE performs. Thus, System Fuels argues that 

it is entitled to all of the costs of loading these storage

casks. 

We agree with System Fuels that the Court of Federal 

Claims clearly erred in both decisions when it denied 

damages for costs incurred to load the storage casks

and/or canisters, regardless of the type of fuel loaded. The 

record in both cases indicates that under the existing 

Standard Contracts, the DOE cannot accept for transport 

any of the canistered fuel as is, such that System Fuels 

will incur costs to unload this fuel from the storage casks 

and canisters and to reload it into transportation casks if 

and when the DOE performs. Indeed, the Court of Federal Claims in the Arkansas Nuclear One case found this 

very fact. Arkansas Nuclear One, 120 Fed. Cl. at 749. 

And in Grand Gulf as well the court quoted the government’s position: “DOE’s position is that it will not accept 

canistered SNF, such as the SNF that is in dry storage at 

Grand Gulf, under the Standard Contract unless there is 

an amendment to the Standard Contract, the terms of 

which DOE has not defined.” Grand Gulf, 120 Fed. Cl. at 

660. In Grand Gulf, the Court of Federal Claims also 

acknowledged that under the current regulations, the 

storage casks in which the high burn-up fuel is stored 

cannot be used for transportation of that fuel. Id. The 

court went on to find: “That will require Plaintiffs to 

prepare and package SNF, if and when DOE performs, 

unless [the relevant] . . . regulations are changed.” Id. In 

light of these fact findings made in both Court of Federal 

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10 SYSTEM FUELS, INC. v. US

Claims decisions, namely that the storage casks used by 

System Fuels may not be used for transportation, System 

Fuels was entitled under the law to all of the costs of 

loading these storage casks. The Court of Federal Claims

thus erred in both cases by denying System Fuels damages based on alleged failures to prove how the costs to load 

the storage casks and canisters differ from the costs it 

would have incurred in loading the DOE-supplied transportation casks. Such an analysis assumes that the 

government will accept the canistered fuel as is when the 

government performs in the future—an assumption that 

is wholly unsupported by the present record. System 

Fuels is obligated under the Standard Contracts to load 

the government-provided transportation casks. It is 

undisputed that under the Standard Contracts, the government will not allow the storage casks used by System 

Fuels to be used as transportation casks. Thus, the costs 

of loading future transportation casks, or the difference 

between the costs of loading these storage casks and 

loading transportation casks, are irrelevant to System 

Fuels’ entitlement to the expenses it incurred for loading 

these storage casks. These are expenses incurred entirely 

for storage due to the government’s breach. And because, 

as admitted by the government, these storage casks 

cannot be used for transportation under the Standard 

Contracts, System Fuels will be required, if and when the 

government begins to comply, as both Court of Federal 

Claims decisions acknowledge, to unload the spent nuclear fuel from these storage casks and reload it into suitable 

transportation casks provided by the government. As we 

have explained, “the government cannot prematurely 

claim a payment that has not become due.” Carolina 

Power & Light Co. v. United States, 573 F.3d 1271, 1277 

(Fed. Cir. 2009) (quoting Yankee Atomic Elec. Co. v. 

United States, 536 F.3d 1268, 1281 (Fed. Cir. 2008)). 

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SYSTEM FUELS, INC. v. US 11

Loading into transportation casks, the parties agree, is an 

expense that must be incurred by System Fuels. That is 

not the expense for which they seek damages today.4 The 

government argues that, while it is true that the storage 

casks loaded by System Fuels may not under the current 

Standard Contracts be used for transportation, it is 

possible that the Standard Contracts could be modified in 

the future such that these storage casks may be deemed 

suitable for transportation. Such speculation about what 

might happen is not sufficient to preclude the damages for 

which System Fuels has proven entitlement. Cases are 

decided on the facts of record, not a set of facts that may 

come into being in the future. 

CONCLUSION

For the foregoing reasons, we reverse the Court of 

Federal Claims’ denial of damages for the costs incurred 

by System Fuels in loading spent nuclear fuel into storage 

casks in both the Grand Gulf and Arkansas Nuclear One 

cases. We remand for further proceedings consistent with 

this opinion.

REVERSED AND REMANDED

COSTS

Costs to System Fuels.

 

4 System Fuels also argues that regulations prevented transportation of certain types of fuel which it is 

storing (high burn-up fuel). Because it prevails in light of 

the state of the record which precludes transportation in 

the storage casks under the Standard Contracts, we need 

not address its additional argument related to regulatory 

prohibitions on transporting some of the fuel at issue in 

the casks at issue. 

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