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Southern California Edison Co. v. United States

ELR Citation: 41 ELR 20280
Nos. No. 2010-5147, (Fed. Cir., 08/23/2011)

The Federal Circuit, in a breach of contract case involving the U.S. government's failure to dispose of spent nuclear fuels (SNF) produced at San Onofre Nuclear Generating Station, held that certain indirect overhead costs incurred by an electric utility can be included in the utility's damages calculations. The trial court awarded $142,394,294 to the utility for expenses undertaken due to the breach. Of that amount, $23,657,791 was attributable to indirect overhead costs associated with the utility's construction of on-site SNF storage facilities. The government did not contest the existence of the claimed overhead expenses. Instead, it argued that the utility failed to meet its burden of separating out the overhead costs caused by the breach from those unrelated to the breach. But the government's breach caused the utility to build, staff, and maintain the on-site SNF storage facilities. Because the facilities did not exist prior to the government's breach, and indeed were necessitated by the breach, this is not a case where the underlying costs were incurred by operations independent of and unrelated to the breach. Accordingly, the lower court properly determined that the utility's overhead expenses were linked to the breach and were recoverable.