Clean coal power plant faces new legal hurdle

May 1, 2012

An environmental group has filed an appeal to once again stop construction of a $2.88 billion integrated gasification combined-cycle power plant in Kemper County, Miss.

The Mississippi Public Service Commission voted 2-1 on April 24 to reissue a certificate for Mississippi Power, a unit of Southern Co. (NYSE: SO), to build the 582 MW Kemper County plant. The Sierra Club appealed the PSC’s ruling to the state Supreme Court on April 27, according to Reuters.

The environmental group’s filing reportedly described the commission’s latest order as “abandoning many of its previous finding from the 2010 Kemper orders, and substituting new and contradictory ones geared at supporting approval of the Kemper project,” the article said.

Sierra Club successfully appealed the earlier Kemper certificate at the Mississippi Supreme Court. The court then ruled in March that regulators did not fully explain why they had to raise a cost cap on the plant from $2.4 billion to $2.88 billion.

 

HERE

Trial Over Removal of Spent Nuclear Fuel SYSTEM FUELS, INC., SYSTEM ENERGY RESOURCES, AND SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION, V. UNITED STATES

SYSTEM FUELS INC. v. U.S.

SYSTEM FUELS, INC., SYSTEM ENERGY RESOURCES, AND SOUTH MISSISSIPPI ELECTRIC POWER ASSOCIATION, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Cross Appellant.

Nos. 2010-5116, 2010-5117

United States Court of Appeals, Federal Circuit.

Decided: January 19, 2012.

ALEX D. TOMASZCZUK, Pillsbury Winthrop Shaw Pittman, LLP, of McLean, Virginia, argued for plaintiffs-appellants. With him on the brief were JAY E. SILBERG, of Washington, DC; and EVAN D. WESSER, of McLean, Virginia. Of counsel on the brief was L. JAGER SMITH, JR., Wise Carter Child & Caraway, P.A., of Jackson, Mississippi.
ALAN J. LO RE, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-cross appellant. With him on the brief were TONY WEST, Assistant Attorney General, JEANNE E. DAVIDSON, Director, HAROLD D. LESTER, JR., Assistant Director, SHARON A. SNYDER, Trial Attorney, MARIAN E. SULLIVAN and ANDREW P. AVERBACH, Senior Trial Counsel; and SCOTT R. DAMELIN, Trial Attorney. Of counsel on the brief was JANE K. TAYLOR, Attorney, Office of General Counsel, United States Department of Energy, of Washington, DC.
Before RADER, NEWMAN and DYK, Circuit Judges.
Opinion for the court filed by Chief Judge RADER. Opinion concurring-in-part, dissenting-in-part filed by Circuit Judge NEWMAN.

 

 RADER, Chief Judge.

On summary judgment, the United States Court of Federal Claims determined that the United States breached its contract with Plaintiffs-Appellants System Fuels, Inc., System Energy Resources, and South Mississippi Electric Power Association (collectively “Plaintiffs”) for the removal of spent nuclear fuel. Sys. Fuels, Inc. v. United States, 66 Fed. Cl. 722, 732-33 (2005) (“SFI I“). The trial court also granted summary judgment in favor of the Government regarding the implied covenant of good faith and fair dealing. Id. at 735. The trial court set damages for the breach at $10,014,114 as well as the cost of borrowed funds for financing the construction of the dry fuel storage project. Sys. Fuels, Inc. v. United States, 78 Fed. Cl. 769, 809 (2007) (“SFI II“). On reconsideration, the trial court reduced damages to $9,735,634 and denied the cost of borrowed funds. Sys. Fuels, Inc. v. United States, 92 Fed. Cl. 101, 114 (2010) (“SFI III“). This court affirms the trial court’s denial of borrowing costs and reverses the denial of overhead costs. On damages, this court affirms the trial court’s award.

I.

In 1983, Congress enacted the Nuclear Waste Policy Act of 1982 (“NWPA”), Pub. L. No. 97-425, 96 Stat. 2201 (codified at 42 U.S.C. §§ 10101-10270 (2006)), to provide for the Government’s collection and disposal of spent nuclear fuel (“SNF“) and high-level radioactive waste (“HLW“). The NWPA authorized the Department of Energy (“DOE”) to contract with the owners of SNF and HLW for disposal. 42 U.S.C. § 10222(a)(1). In return for the payment of fees into the Nuclear Waste Fund, the Standard Contract provided that the DOE would begin to dispose of the SNF and HLW “not later than January 31, 1998.” 42 U.S.C. § 10222(a)(5)(B); 10 C.F.R. § 961.11 (2011). The Standard Contract provides that “[t]he Purchaser shall arrange for, and provide, all preparation, packaging, required inspections, and loading activities necessary for the transportation of SNF and/or HLW to the DOE facility.” 10 C.F.R. § 961.11 (Article IV.A.2). Because collection and disposal of SNF and HLW did not begin on January 31, 1998, this court held in Northern States Power Co. v. United States, 224 F.3d 1361, 1367 (Fed. Cir. 2000), and Maine Yankee Atomic Power Co. v. United States, 225 F.3d 1336, 1343 (Fed. Cir. 2000), that the DOE had breached the Standard Contract with the nuclear energy industry. This case examines another chapter in the lengthy search for remedies for breach of the Standard Contract.

On June 30, 1983, System Fuels, Inc. entered into the DOE’s Standard Contract on behalf of itself, System Energy Resources, and South Mississippi Power Association. SFI I, 66 Fed. Cl. at 725. System Energy Resources and South Mississippi Power Association own Grand Gulf Nuclear Station (“Grand Gulf”). System Fuels, Inc. served as the purchaser under the Standard Contract. Id. The Nuclear Regulatory Commission issued a license to System Fuels, Inc. and South Mississippi Power Association to operate Unit 1 of Grand Gulf, whose SNF is stored in a “wet pool.” Id. In 2002, Plaintiffs began preparations to construct an Independent Spent Fuel Storage Installation (“ISFSI”) capable of holding additional dry storage containers of SNF until DOE complied with its removal obligations. Plaintiffs anticipated that the “wet pool” would reach capacity in 2007. Id.; SFI II, 78 Fed. Cl. at 783. The record shows that System Energy Resources and South Mississippi Power Association have paid almost $148 million into the Nuclear Waste Fund in accordance with the terms of the applicable fee schedule of the Standard Contract. The Government has not begun performing its duties and responsibilities under the Standard Contract. SFI I, 66 Fed. Cl. at 725, 730. As of March 4, 2005, Plaintiffs alleged that they had spent approximately $4.75 million to construct the ISFSI. Id. at 732-33. After this court rendered its decision in Indiana Michigan Power Co. v. United States, 422 F.3d 1369 (Fed. Cir. 2005), Plaintiffs amended the complaint to allege that they had incurred $12,178,000 in costs to plan and construct the ISFSI at Grand Gulf to mitigate breach damages. SFI II, 78 Fed. Cl. at 771.

Every 18 months, the reactor at Grand Gulf shuts down to facilitate removal of fuel assemblies, which are then placed in two onsite storage facilities for 20 to 25 days during routine maintenance. Id. at 779. In an effort to explore their options for dry fuel storage, Plaintiffs sought guidance from an engineering services firm in the commercial nuclear industry. This firm recommended the “best short-term option for increasing spent fuel storage capacity at Grand Gulf was to recover cells currently inaccessible in the existing [onsite storage facilities].” Id. at 780. Plaintiffs also contracted with a dry cask storage system company and explored long-term options. Plaintiffs undertook construction of dry fuel storage because the core of the Grand Gulf reactor would reach capacity in 2007, and, by their estimates, the Government would not remove waste until 2022. Id. at 781. As a business practice, Plaintiffs maintain a full core reserve—a practice beyond current federal requirements. Id. at 782. Plaintiffs determined that they could maintain this business practice through 2005 and, with cell recovery efforts, accommodate the SNF and HLW discharges through 2007. Id. at 782-83.

In constructing the ISFSI, Plaintiffs created six categories of capital work operations: spent fuel studies, ISFSI design and construction, cask fabrication facility, dry fuel equipment storage building, ISFSI electrical and security systems, and auxiliary building door modification. Plaintiffs recorded and tracked costs associated with the dry fuel storage facility. Id. at 783. Plaintiffs sought damages for the capital work operations, totaling $10,591,000, and cost of capital to finance these operations, totaling $1,587,000. Id. at 783, 785.

The trial court held an eight-day trial on damages. Id. at 773 n.2. The trial court did not specify an acceptance rate of spent fuel but determined that Plaintiffs should be awarded over $10,014,114 in mitigation damages for their capital work operations. Id. at 794, 809. The award did not include the cost of borrowed funds because, even though the trial court determined that Plaintiffs were entitled to recover this amount, it needed clarification and sought additional expert testimony before making a final decision concerning mitigation damages. Id. at 809-10.

The trial court revisited its causation analysis after this court rendered the following decisions: Yankee Atomic Electric Co. v. United States, 536 F.3d 1268 (Fed. Cir. 2008); Pacific Gas & Electric Co. v. United States, 536 F.3d 1282 (Fed. Cir. 2008); Sacramento Municipal Utility District v. United States, 293 Fed. Appx. 766 (Fed. Cir. 2008). SFI III, 92 Fed. Cl. at 102. The trial court held evidentiary hearings concerning causation and addressed the claim for the costs of borrowed funds. Id. at 103-05. The trial court reduced the amount of damages previously awarded to Plaintiffs for their “cell recovery efforts” and determined that England v. Contel Advanced Systems, Inc., 384 F.3d 1372, 1379 (Fed. Cir. 2004), barred the grant of an award for the cost of borrowed funds. 92 Fed. Cl. at 108, 111-12.

Plaintiffs appeal the trial court’s refusal to award the cost of borrowed funds and overhead costs as mitigation damages. The Government appeals on the ground that the trial court’s causation analysis did not include a comparison of breach and non-breach worlds under the Standard Contract. This court has jurisdiction under 28 U.S.C. § 1295(a)(3).

II.

This court reviews the factual findings of the United States Court of Federal Claims for clear error, Ind. Mich., 422 F.3d at 1373, including “the general types of damages awarded . . ., their appropriateness . . ., and rates used to calculate them . . .,” Home Sav. of Am. v. United States, 399 F.3d 1341, 1347 (Fed. Cir. 2005). “A finding may be held clearly erroneous when . . . the appellate court is left with a definite and firm conviction that a mistake has been committed.” 422 F.3d at 1373 (quoting In re Mark Indus., 751 F.2d 1219, 1222-23 (Fed. Cir. 1984)). This court reviews the trial court’s legal conclusions without deference. Yankee Atomic, 536 F.3d at 1272. This court provides the trial court with wide discretion in determining an appropriate quantum of damages. Hi-Shear Tech. Corp. v. United States, 356 F.3d 1372, 1382 (Fed. Cir. 2004).

III.

Plaintiffs sought $1,587,000 as damages for the cost of borrowed funds to construct their dry fuel storage facility. SFI II, 78 Fed. Cl. at 785. The trial court stated that its authority to award interest on a claim of damages is governed by the Judiciary and Judicial Procedure Rules of Decision Act, which states that “interest on a claim against the United States shall be allowed in a judgment of the United States Court of Federal Claims only under a contract or Act of Congress expressly providing for payment thereof.” SFI III, 92 Fed. Cl. at 110 (quoting 28 U.S.C. § 2516(a)) (internal citations omitted).

As this court stated in England, “[t]he no-interest rule is an aspect of the basic rule of sovereign immunity.” 384 F.3d at 1379 (citing Library of Cong. v. Shaw, 478 U.S. 310, 315 (1986); Smith v. Principi, 281 F.3d 1384 (Fed. Cir. 2002)). This no-interest rule denies claims for interest and “interest costs incurred on money borrowed as a result of the government’s breach or delay in payment.” 384 F.3d at 1379 (citing J.D. Hedin Constr. Co. v. United States, 456 F.2d 1315, 1330 (Ct. Cl. 1972); Komatsu Mfg. Co. v. United States, 131 F.Supp. 949, 950 (Ct. Cl. 1955); Ramsey v. United States, 101 F.Supp. 353, 356-57 (Ct. Cl. 1951); Myerle v. United States, 33 Ct. Cl. 1, 25 (1897)).

Although expressing concerns about the policy and uniform application of England, the trial court ultimately applied the rule of that case and denied interest. In Energy Northwest v. United States, issued after the trial court’s judgment in the present case, this court addressed those concerns and reaffirmed England, distinguishing it from cases where the Government has been held liable for interest. 641 F.3d 1300, 1310-12 (Fed. Cir. 2011). England therefore controls this case. Because the trial court properly applied England, this court affirms the trial court’s denial of the cost of borrowed funds.

IV.

Plaintiffs incurred additional overhead costs when managing the six capital work operations. Plaintiffs maintained a separate accounting for overhead costs, consistent with the Generally Accepted Accounting Principles and Federal Energy Regulatory Commission (“FERC”) regulations. The separate accounting, referred to as the “capital suspense loader,” includes the cost of administrative and engineering personnel supporting capital construction projects. J.A. 348-49, 351. These overhead costs consist of two pools: (1) administrative and general costs for personnel at corporate headquarters and (2) nuclear-specific costs for personnel at the Nuclear South headquarters and Grand Gulf site. J.A. 349. The trial court acknowledged that “DOE was aware that Plaintiffs were required to account to FERC for all costs incurred.” SFI II, 78 Fed. Cl. at 791. Originally, the trial court withheld these costs for lack of proof with “reasonable certainty.” Id. at 800. Plaintiffs then provided additional analysis showing that costs associated with the “capital suspense loader” were $497,619. The trial court then offset the overall damages awarded to Plaintiffs by this amount. SFI III, 92 Fed. Cl. at 104-05, 108.

As explained in Indiana Michigan, “[d]amages for a breach of contract are recoverable where: (1) the damages were reasonably foreseeable by the breaching party at the time of contracting; (2) the breach is a substantial causal factor in the damages; and (3) the damages are shown with reasonable certainty.” 422 F.3d at 1373 (citing Energy Capital Corp. v. United States, 302 F.3d 1314, 1320 (Fed. Cir. 2002)). In Carolina Power & Light Co. v. United States, this court affirmed the trial court’s awarding of overhead costs to a utility whose “internal accounting system uses specific codes to allocate a portion of [the overhead expenses] to particular projects . . . .” 573 F.3d 1271, 1276-77 (Fed. Cir. 2009). This court has previously determined that “the amount of damages need not be `ascertainable with absolute exactness or mathematical precision,’ [but that] recovery for speculative damages is precluded.” Ind. Mich., 422 F.3d at 1373 (quoting San Carlos Irrigation & Drainage Dist. v. United States, 111 F.3d 1557, 1563 (Fed. Cir. 1997)). In Energy Northwest, this court found that “mitigation activities generally were supported by certain overhead services that Energy Northwest provided for the benefit of all its operations (not only its mitigation activities).” 641 F.3d at 1309. This court made such a determination based on testimony “estimating the portion of . . . overhead costs fairly allocated to support . . . the mitigation via generally accepted accounting practices . . .” Id.

Thus, Plaintiffs may recover overhead costs incurred for mitigation-related work. The record shows that Plaintiffs used an internal accounting system with particular codes for the “capital suspense loader.” Further, the record shows that the internal accounting system allocates on a monthly basis the overhead associated with the pool and charges accounts for the appropriate project. J.A. 348-50. Thus, Plaintiffs used accounting procedures “as mandated by FERC,” J.A. 349, and “consistent with Generally Accepted Accounting Principles,” J.A. 351. The trial court clearly erred in finding that these accounting records did not “demonstrate the effect of the mitigation project on the capital pools entitlement with `reasonable particularity.'”

Therefore, because the record fully supports Plaintiffs’ proof of overhead costs, this court reverses the trial court’s grant of offset of damages for the “capital suspense loader” overhead costs.

V.

In Yankee Atomic, this court determined that a SNF utility company “had the burden to provide the contractual acceptance rate and apply that rate before suggesting that the Government’s breach was a substantial factor in causing the [Plaintiffs’] claimed expenses.” 536 F.3d at 1273. This court went further to state that “[w]ithout record evidence about the [utility’s] condition with full Government performance, the Court of Federal Claims could not perform the necessary comparison between the breach and non-breach worlds and thus could not accurately assess the [Plaintiffs’] damages.” Id. Plaintiffs bear the burden to establish the alleged mitigation costs were caused by the breach. Energy Nw. v. United States, 641 F.3d 1300, 1307 (Fed. Cir. 2011). “[A] defendant must move forward by pointing out the costs it believes the plaintiff avoided because of its breach,” but “with respect to both claimed costs and avoided costs, plaintiffs bear the burden of persuasion.” S. Nuclear Operating Co. v. United States, 637 F.3d 1297, 1304 (Fed. Cir. 2011); see also Boston Edison Co. v. United States, 658 F.3d 1361, 1369 (Fed. Cir. 2011) (the Government “may be responsible for affirmatively pointing out costs that were avoided” due to the breach, but once the Government has identified the plaintiff’s avoided costs, “the plaintiff must incorporate them into a plausible model of the damages”); Energy Nw., 641 F.3d at 1308 n.5 (“Once the defendant has properly articulated an offset, the burden shifts to the plaintiff to incorporate those saved costs into its formulation of a plausible but-for world.” (internal quotation marks omitted)). While in some places the trial court, without the benefit of our most recent cases, inaccurately placed the burden of proof on the Government, we do not think that this error affected the result.

In SFI II, the trial court determined that Plaintiffs’ mitigation was foreseeable:

[T]he record contains clear and convincing evidence that on June 30, 1983, it was “foreseeable” to DOE that, if performance could not be commenced by January 31, 1998, Plaintiffs would have to make interim arrangements to store SNF and HLW and DOE could have foreseen that such interim arrangements could entail the need to plan, design, and construct dry fuel storage and the [sic] incur costs to borrow funds to finance those mitigation efforts.

78 Fed. Cl. at 791. Additionally, the trial court determined that the costs of modification of the auxiliary building were “incurred to mitigate the Government’s partial breach.” Id. at 801. The trial court analyzed the costs associated with the auxiliary building modifications, procedures and programs to use the casks and dose assessment, implementation of the transfer and haul paths for the casks, and scaffolding. Id. at 800-06. The trial court’s analysis was based on the costs included in Plaintiffs’ claims for damages, offsets asserted by the Government, and comparison of “the real world versus the costs of the modifications in the non-breach world.” Id. at 800. The trial court determined that Plaintiffs’ costs were reasonable for several of the auxiliary building modifications and implementation of the transfer and haul paths for the casks. Id. at 801-04, 805. In contrast, the trial court awarded offsets for (i) the procedures and programs to use the casks and dose assessment and (ii) a portion of the scaffolding costs. Id. at 804, 805-06.

In SFI III, the trial court weighed evidence concerning causation of the contested damages and application of the 1987 Annual Capacity Report Rate. 92 Fed. Cl. at 103-04. The trial court heard testimony concerning Grand Gulf in breach and non-breach worlds and “determine[d] that [Plaintiffs] would have performed the cell recovery project even if DOE accepted SNF at Grand Gulf in 2006” and offset Plaintiffs’ award for damages based on the “appropriate `related’ costs.” Id. at 104. The trial court stated that Plaintiffs “advised the court that three adjustments should be made to the prior costs claimed,” which related to offsetting costs associated with Plaintiffs’ claims for “payroll loader,” “capital suspense loader,” and “equipment purchased, sequence design, and dose assessment.” Id. at 104-05.

The trial court also weighed evidence regarding the “cell recovery effort.” After comparing the breach and non-breach worlds, the trial court determined that Plaintiffs were “not entitled to include[ ] $184,208 for the cell recovery effort as damages.” Id. at 105-06. The trial court then applied this court’s holding in Yankee Atomic, 536 F.3d at 1268, and determined that the “reasonable foreseeability element was satisfied” and “the necessity to proceed with dry fuel storage at Grand Gulf . . . was caused by both the partial breach and DOE’s inability to guarantee the commencement of performance by 2005, when the spent fuel pool would reach capacity.” SFI III, 92 Fed. Cl. at 107. The trial court discredited Plaintiffs’ expert testimony regarding performance in a non-breach world because the expert was “not qualified to testify about nuclear power plant operations.” Id. at 108. The trial court offset Plaintiffs’ damages by $184,208 and awarded Plaintiffs $9,735,634 in nominal damages because the trial court determined that Plaintiffs did not meet their burden to prove that Plaintiffs would not have engaged in “cell recovery efforts” but for the Government’s breach. Id. at 108.

Review of the record shows that the trial court’s damages analysis in SFI II included comparison between breach and non-breach worlds, and offsets were awarded where appropriate. In SFI III, the record confirms the trial court’s application of the 1987 Annual Capacity Report Rate and also applicable additional adjustments. The record evidence further supports the trial court’s comparison between the breach and non-breach worlds for the assessment of damages. This court discerns no error in these determinations. Thus, the trial court accurately addressed causation as set forth by Yankee Atomic and applied offsets as necessary. This court affirms the trial court’s causation analysis and its revised nominal damages award.

VI.

Because the trial court properly adhered to the decision of England, this court affirms the denial of Plaintiffs’ claim for the cost of borrowed funds. This court reverses the trial court’s denial of overhead costs. This court affirms the trial court’s causation analysis and revised award of nominal damages.

AFFIRMED-IN-PART AND REVERSED-IN-PART.

COSTS

Each party shall bear its own costs.

NEWMAN, Circuit Judge, concurring in part, dissenting in part.

In this arena of varied Federal Circuit pronouncements on diverse facts, the court now carves an exception into the rule that damages due to breach of contract shall render the injured party monetarily whole. The rule, applicable to the government as to all contracting entities, is that when the non-breaching party is required to incur expenditures in order to mitigate the consequences of breach, the cost of those expenditures is compensable as damages. That cost of mitigation is not “interest on a claim,” but a component of damages. Thus the “no-interest rule” is inapplicable. I respectfully dissent from the portion of the court’s decision that denies recovery of such damages.

DISCUSSION

Analytical care is required to avoid blurring the distinction between the cost of money expended to mitigate a breach and interest awarded on a judgment for damages. The “non-interest” statute is directed to interest on an adjudicated claim:

28 U.S.C. §2516. Interest on claims and judgments

(a) Interest on a claim against the United States shall be allowed in a judgment of the United States Court of Federal Claims only under a contract or Act of Congress expressly providing for payment thereof.

This statute does not apply to the System Fuels situation. System Fuels incurred capital costs to construct an Independent Spent Fuel Storage Installation, a facility that was required to be constructed in view of the government’s partial breach of the Standard Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste. “All capital raised by a corporation has a cost . . . .” LaSalle Talman Bank, F.S.B. v. United States, 317 F.3d 1363, 1375 (Fed. Cir. 2003). The Court of Federal Claims stated that the record establishes that System Fuels incurred $1,587,000 as cost of the capital expended to mitigate this breach.1 This cost is not “[i]nterest on a claim . . . in a judgment,” and denial of recovery of this cost contravenes the principle that “[t]he remedy for breach of contract is damages sufficient to place the injured party in as good a position as it would have been had the breaching party fully performed.” Indiana Michigan Power Co. v. United States, 422 F.3d 1369, 1373 (Fed. Cir. 2005). System Fuels’ cost of the capital required to mitigate the government’s breach is substantive damages, not interest on a claim.

This distinction has long been recognized. In Library of Congress v. Shaw, 478 U.S. 310, 314 (1986), the Court explained that “interest is an element of damages separate from damages on the substantive claim.” In Shaw the Court denied the enlargement in Title VII attorney fees due to delay in payment of the fees; the Court did not state a rule about costs of capital. Precedent well illustrates that the “no-interest rule” is not a bar to substantive damages. E.g., Peoria Tribe of Indians of Okl. v. United States, 390 U.S. 468, 471, 473 (1968) (rejecting the government’s invocation of the no-interest rule, and holding the government liable “for its failure to invest the proceeds that would have been received had the United States not violated the treaty”); Larson v. United States, 274 F.3d 643, 646 (1st Cir. 2001) (explaining that the award by the United States of investment proceeds on seized funds in United States v. Kingsley, 851 F.2d 16 (1st Cir. 1988) was not an award of prejudgment interest because “the award was in the form of damages directly caused by” the government’s breach of a plea agreement).

Recognition that damages include the cost of the money expended in mitigation is exemplified in the FIRREA cases, e.g., Bluebonnet Sav. Bank, F.S.B. v. United States, 266 F.3d 1348, 1357 (Fed. Cir. 2001) (“the increased financing costs” represented in the Economic Benefits Agreement are recoverable as damages); LaSalle Talman, 317 F.3d at 1374-75 (damages can include “the cost of capital”); Citizen Fed. Bank v. United States, 474 F.3d 1314, 1320 (Fed. Cir. 2007) (damages include the “expenses it incurred in replacing its regulatory capital after FIRREA had precluded thrifts from using regulatory goodwill or subordinated debt as regulatory capital”). The analogy is apt, for here System Fuels expended capital to provide storage facilities after the government breached its contract to store the spent fuel.

“Government liability in contract is viewed as perhaps `the widest and most unequivocal waiver of federal immunity from suit.'” United States v. Mitchell, 463 U.S. 206, 215 (1983) (quoting Developments in the Law — Remedies Against the United States and Its Officials, 70 Harv. L. Rev. 827, 876 (1957)); see United States v. Emery, Bird, Thayer Realty Co., 237 U.S. 28, 32 (1915) (the Tucker Act is a “great act of justice”).

Law and precedent establish government liability for the cost of mitigation, where government breach requires expenditures in mitigation. In Mobil Oil Exploration & Producing Se., Inc. v. United States, 530 U.S. 604, 607-08 (2000) the Court reinforced that “[w]hen the United States enters into contract relations, its rights and duties therein are governed generally by the law applicable to contracts between private individuals,” quoting United States v. Winstar Corp., 518 U.S. 839, 895 (1996) (plurality opinion). This court in Indiana Michigan applied “the general principle is that all losses, however described, are recoverable.” 422 F.3d at 1373 (quoting Restatement (Second) of Contracts § 347 cmt. c (1981)). The Restatement explains that “the injured party is entitled to recover for all loss actually suffered. . . . includ[ing] costs incurred in a reasonable effort, whether successful or not, to avoid loss.” §347 cmt. c.

The government’s argument that recovery of mitigation costs is precluded by its reinterpreted “no-interest rule” is as inappropriate as it is incorrect, and should be rejected by the court, not adopted and enlarged. As stated in Indian Towing Co. v. United States, 350 U.S. 61, 69 (1955), the court is not a “self-constituted guardian of the Treasury.” My colleagues err in holding that the cost of mitigation of governmental breach of contract cannot include the cost of the money expended in mitigation. I respectfully dissent.


Leonard Bentz says The whole (Mississippi Power Coal Plant) story is not getting told

Commentary: Big questions for Kemper County coal plant come down to who knew what and when

MBJ Staff

In May of 2010 we wrote, “For better or worse, the economic future for the next 40 years in southeastern Mississippi will be greatly impacted by the decision of Public Service Commissioner Leonard Bentz. ”

Justices with the Mississippi Supreme Court may be asking now how he came to his decision when he changed his vote from no to yes in a rehearing to approve the $2.8-billion Mississippi Power Company Kemper County coal plant.

Bentz and Lynn Posey have been for the project all along while Northern District Commissioner Brandon Presley has steadfastly been against Kemper, calling it, among other things, “Corporate Socialism. ”

However, Bentz has had questions before, particularly concerning rate impacts, which Mississippi Power has never fully disclosed.

“The whole story is not getting told,” Bentz told the Mississippi Business Journal prior to the second vote of the PSC. “It is frustrating. I want to build this plant, but I want everybody to know exactly what is going to happen when we build this plant. I have to look Gulf Coast residents in the eye and tell them I did everything I could to get the information on the table. ”

Yet, the entire story has not been told, and Bentz voted for the plant after publicly questioning its validity a year and half ago.

This case is before the Supreme Court because of the Sierra Club, which is trying to stop the construction of the plant already underway near Liberty. Sierra argues that the PSC broke the law by failing to lay out a clear reason for easing financial terms in its second vote.

“I did not see and still do not find anywhere where the commission explained to the court why this was now not too risky,” said Associate Justice Randy “Bubba” Pierce. “I want to know what happened between April 29 and May 26. What additional facts were submitted to the record?”

That’s a great question for Bentz, who is on the record saying, “The whole story is not getting told. ”

There are two more questions that should be asked.

Is the plant needed?

Will it work?

First, the plant is not needed, because Mississippi Power can supply energy to South Mississippi with natural gas, which the MBJ has reported will be less expensive over a 30 year period than the energy supplied at Kemper.

Second, in an editorial board meeting with Mississippi Power executives and its construction experts, they were not completely secure in the ability of the Kemper technology to work.

We asked if they could guarantee the technology would work when they flipped the switch for the first time at Kemper.

The answer, after a long pause, was no.

With that information, how could the PSC vote for, what amounts to, a $2.88 billion tax on the people of South Mississippi for energy that can gotten elsewhere — and for less money?

We suspect Mississippi’s Supreme Court will ask those question when all is said and done, and maybe, just maybe Bentz or someone will tell the rest of the story.

(here)

Mississippi Supreme Court Questions Kemper Coal Plant

Supremes Question Kemper

Residents near a planned 582-megawatt coal plant protested the project that threatens to raise their electric rates by 45 percent.

by R.L. Nave
Dec. 21, 2011

In all the pages of court records regarding a dispute between environmentalists and an electric utility company–pages that one Mississippi Supreme Court justice characterized as the most voluminous he has seen in his eight years on the court–one important piece of information eluded the justices.

What changed between April and May for the Mississippi Public Service Commission to reverse itself and allow Mississippi Power Co. jack up the cap on a 582-megawatt Kemper County coal plant by $480 million dollars?

“So far I don’t find anything in the commission’s order itself–and haven’t yet found in the record–what it is that would help me understand that the commission is justified in making this factual conclusion that the risks are now balanced,” presiding Justice Jess H. Dickinson said last week.

Brandon Presley, the PSC’s northern district commissioner, has an idea. Presley voted against fellow commissioners Lynn Posey and Leonard Bentz, of the central and southern district respectively, on the cap increase.

“The only thing I saw change was letters came in from Barack Obama’s energy secretary and Haley Barbour,” Presley said.

Last summer, Energy Secretary Steven Chu and Gov. Barbour wrote letters asking Presley to reconsider his opposition to Mississippi Power raising the price tag of the plant, which is now under construction. Presley balked at the idea, calling the project a bad deal for consumers.

“If President Obama or Governor Barbour like this plant so much, let them come up with a way to pay for it,” he told the Jackson Free Press last week.

Presley, along with consumer and environmental advocacy groups, has fought to oppose the plant, albeit for slightly different reasons at times.

“I have no problem whatsoever with clean coal technology,” Presley said. “I have a problem with asking the people of Mississippi to be guinea pigs.”

The Sierra Club opposes the 582-megawatt plant because it is slated to use experimental internal gasification combined technology to burn low-grade lignite coal. As the basis for its lawsuit against Mississippi Power and the PSC, the suit before the Mississippi Supreme Court, the Sierra Club also argued that the commission failed in its obligation to publicly explain its rationale for the reversal.

On April 29, 2010, Commissioners Posey and Bentz issued a decision limiting the ratepayer cost of the plant to $2.4 billion. Mississippi Power stockholders of Company would have to pick up any costs above $2.4 billion, they said at the time.

The Atlanta-based utility complained that it should be able to pass any additional costs down to the ratepayers, and warned that it could not afford to build the plant if not allowed to pass on all the costs, including those above $2.4 billion.

Less than one month later, the commission revised its decision May 26, allowing the company to charge ratepayers up to $2.88 billion for the plant. Mississippi Power did not publicly release the amount of the rate increase customers would shoulder as a result.

After being pressed by justices at the hearing, Sierra Club attorney Robert Wiygul said he obtained confidential information showing that ratepayers’ energy bills could rise as much as 45 percent.

Since the hearing, the justices are reviewing the remainder of the court documents and could bring the parties back to clarify some points before the three-judge panel or the full nine-member court. From there, they can remand the issue back to the PSC for review or strike provisions of the deal.

PSC Commissioners Posey and Bentz did not return calls by press time.

“I’m not counting any chickens before they hatch,” said Louie Miller, state director of the Mississippi Sierra Club. “I’m going to remain cautiously optimistic.”

CEI Analyst Describes Obama’s Plan To Bankrupt The Coal Industry Mississippi Power / Southern Company

Obama is following through on his campaign promise to his radical environmentalist base to bankrupt the coal industry once he gained power.

Liberty Fuels, North American Coal Corp, Mississippi Power, Southern Company, and Public Private Partnerships

 

Liberty Fuels Co. LLC – a wholly owned subsidiary of North American Coal Corp. of Bismarck, N.D might be participating in the Public Private Partnership with Southern Company bleeding the life out of American Businesses. Any perspective?

It was a question asked at the hearing for Liberty Fuel Contract in DeKalb.

Sun Herald Comment On IGCC Kemper County Coal Plant

Readers of the Sun Herald should be familiar with the controversy surrounding Mississippi Power’s expensive and highly experimental power plant in Kemper County. Designed for Integrated Gasification Combined Cycle (IGCC) power production and carbon capture and storage, the plant was touted as “clean coal” and would be the first in the world of its kind.

However, Mississippi Power ratepayers — whose power bills will increase 30-50 percent to pay for the Kemper plant — should note that construction has been cancelled on a similar IGCC plant in Australia, the ZeroGen plant near Rockhampton, Queensland.

After the Queensland government had invested $108 million, the company building the plant has declared bankruptcy. Queensland Deputy Premier Andrew Fraser told the Australian Broadcasting Corporation last month that the IGCC technology was simply “not financially viable.” He expressed worry that the billions of dollar slated for developing IGCC technology would be wasted.

Mississippi needs to learn from the Australians’ mistakes with their “clean coal” boondoggle. We must stop construction on the Kemper plant before ratepayers pour billions of dollars into a highly experimental IGCC process that has now been exposed as “not financially viable.”

“Clean coal” is the pipe dream of coal and utilities fat cats who have had far too much say in how Mississippi is governed. It’s time we woke them up. The Kemper IGCC project needs to end. Now.

WILL WATSON

Long Beach

The EPA’s War on America: Draining our Nation’s Lifeblood

The EPA’s War on America: Draining our Nation’s Lifeblood

A Special Report for the Committee For A Constructive Tomorrow
By Paul Driessen

Abundant, reliable, affordable energy is America’s lifeblood. Everything we make, ship, eat, drive, enjoy and do requires energy – 85% of which is still hydrocarbon-based. Nearly half of all our electricity is generated with coal; for 26 states, 48-98% of their electricity comes from coal. Another 25% of U.S. electricity is generated with natural gas. Cars, trucks, trains and airplanes would go nowhere without oil, nor would we have plastics, paints, synthetic fabrics or countless other products without hydrocarbons.

From the lights, televisions, streaming movies, heating and air conditioning, refrigerators, vacuum cleaners, computers and Internet service in our homes; to the lights and equipment in our factories, schools, hospitals, offices and houses of worship; to our water purification and sewage treatment plants; and increasingly our vehicles – electricity brings America to life … 24/7/365.

Drive up the price of electricity, shackle its reliability, and the cost of goods and services will skyrocket. Millions of jobs will disappear. The American dream will be rudely interrupted, and economic, health, civil rights and environmental progress will be rolled back.

Download this explosive expose on the EPA’s war on the American way of life!

HERE

Obama Jobs Destruction Plan to Accelerate in 2012

Saturday, November 12, 2011

By the numbers: Obama jobs destruction plan to accelerate in 2012

If you do a Google search on President Obama’s oft-repeated statement — “I will not rest until every American has a good job” — you’ll get 6.6 million results.

Yet three years after the mortgage meltdown and the vaunted Obama stimulus program, the real unemployment rate (U-6) actually worsened even if we look at the year of 2011 alone. The U-6 unemployment rate remains over 16% and could actually be far worse because of some of the tricks used by the Bureau of Labor Statistics.

In fact, ShadowStats.com puts unemployment in excess of 22 percent.

Unfortunately, this is only the tip of the iceberg. The job losses we’ll see in the coming years will make what we’ve seen thus far look like a jaunt in the park. A quick review of recent articles describing the impact of the massive regulatory state (the EPA alone has grown 120 percent under Obama) offers some ominous projections for future job losses.

Description Jobs Destroyed Source
Delaying the Keystone XL Pipeline until after the 2012 election 20,000 LA Times
Forcing  coal plants in Texas to close (EPA) 14,000 Heritage
Gulf Drilling Moratorium (Interior) 72,000 LA Times
EPA’s Cross-State Air Pollution Rule 1,440,000 Daily Caller
EPA’s determination that coal ash is a “hazardous waste” 250,000 Western Caucus
EPA’s shutdown of AEP plants 5,000 CAPPS Online
EPA’s commercial and industrial boiler regulations 800,000 Clatskanie Chief
Interior Department’s protection of lizards and smelt fish 75,000 Human Events
Jobs killed by the Obama environmental machine 2,676,000

That’s nearly 3,000,000 jobs that President Obama’s policies will have un-saved and un-created. Middle-class jobs. Blue-collar and white-collar jobs. Trucking jobs, manufacturing jobs, union jobs.

Liberals, drones, progressives and other anti-American malcontents would be hard-pressed to prove that this President isn’t intentionally trying to establish a permanent underclass, whose subsistence is dependent upon the largesse of the federal government.

Because every action this president seems to tack seems to prove that the destruction of the middle class is among his chief goals.

And, further: President Obama is ‘historic’ only in the sense that he is the most effective job destroyer ever.

Mississippi Public Service Commission Schedule No. 55

SMALL BUSINESS EXPANSION RIDER
RIDER SCHEDULE “SBE” (PILOT)

Mississippi Public Service Commission Schedule No. 55
PAGE EFFECTIVE DATE DATE OF VERSION SUPERSEDED
1 of 3 November 16, 2011 Original

 

APPLICABILITY
Applicable as a rider to the following base rates of the Company: GS-LVS, GSEH-LVS, GS-LVT, GSEHLVT,
GS-HV, and GSEH-HV (each individually a Small Business Base Rate and collectively Small
Business Base Rates). All terms and conditions of the Small Business Base Rates under which the
customer takes service shall remain applicable, except that the incentive specified below shall apply in
accordance with the terms and conditions of this Rider. A customer can receive only one (1) incentive
per premises. Rider SBE shall not be combined with the following Rate Riders of the Company: CR, SA,
and SR.
AVAILABILITY
Available in all areas served by the Company. This Rider is available to any premises served under the
Small Business Base Rates above that experiences a permanent growth in electrical demand of at least 5
kW (for rates GS-LVS and GSEH-LVS) or 10 kW (for rates GS-LVT, GSEH-LVT, GS-HV, and GSEH-HV)
that is placed into service prior to January 1, 2013. This Rider is not available in instances of customer
load growth that results from the relocation of existing load currently served by the Company at another
location.
MONTHLY BILLING DISCOUNT
Subject to compliance with the terms and conditions hereof and the execution of an associated contract
for service under the Rider, the customer will be eligible to receive one of the following incentives in the
form of a monthly discount on such customer’s electric bill applicable to the first twenty-four (24) months
of service to the new load by Company:
1. Customer will receive a discount equal to fifteen percent (15%) of the Incremental Base
Revenues as defined in this Rider.
2. A discount of twenty percent (20%) of the Incremental Base Revenues as defined in this Rider is
provided for qualifying customers who experience a net increase in permanent full-time jobs of at
least three (3) above their highest level of employment during the most recent twelve (12) months
prior to requesting a discount provided under this Rider.
Only net increases in jobs will qualify. Transfers of jobs between commonly owned, controlled, or leased
facilities within the State of Mississippi will not be deemed to be a net increase in jobs. Any jobs added
prior to the effective date shall not be counted when determining whether a net increase in jobs has
occurred.
The customer’s monthly Base Revenue as defined in this Rider will be reduced by the applicable
discount(s) calculated above; provided, however, that no monthly bill shall be reduced beyond the
minimum bill amount calculated under the applicable Small Business Base Rate.

SMALL BUSINESS EXPANSION RIDER
RIDER SCHEDULE “SBE” (PILOT)
Mississippi Public Service Commission Schedule No. 55
PAGE EFFECTIVE DATE DATE OF VERSION SUPERSEDED
2 of 3 November 16, 2011 Original

DEFINITIONS
Base Revenue – Revenue as calculated from monthly billing on the applicable rate excluding the fuel
adjustment clause, miscellaneous rate adjustments, and the tax clause.
Incremental Base Revenues – Monthly base revenues from the customer after incremental new load is
added that are in excess of the monthly base revenues before load was added. This is calculated as
follows:
(a) A Monthly Benchmark Usage profile is created which consists of the billing kW and kWh
from each of the twelve billing months immediately prior to customer requesting the
discounts provided under this Rider. These twelve months of usage will be the
benchmark for all bills calculated during the term of the Rider.
(b) The difference between the base bill as calculated on the present month’s power usage
and the base bill as calculated on the Monthly Benchmark Usage for the corresponding
month is determined (ex., January’s actual base bill minus base bill calculated for the
monthly benchmarked January). Both bills will be calculated using the applicable rate
schedule in effect at time of billing. The result is the Incremental Base Revenue for the
present month.
If the calculated incremental base revenue is less than or equal to zero, customer will receive no discount
and will be billed in accordance with terms of the applicable rate.
Full-time Job – A position filled by a new employee working 30 hours or more per week constitutes one
full-time job.
TERM
Service under the Rider requires a contract that is consistent with the provisions hereof, including a
minimum two (2) year term. This SBE rider will terminate at the earlier of: (i) expiration of two (2) years
following initial service under the Small Business Base Rate or (ii) termination by the Commission as
provided by law, and the customer will continue to be served under the applicable Small Business Base
Rate schedule without the monthly discount provided herein. Should the customer wish to terminate
service anytime during the initial two (2) years of service, customer shall be subject to the minimum bill
charges of the Small Business Base Rate schedule for the balance of the initial two (2) year term of
service.
The contract for service under this rider must be executed by an authorized representative of customer’s
company. To be eligible for the twenty percent (20%) credit, the contract must be accompanied by a
written statement attesting to the number of new permanent full-time jobs and the date of addition. The
customer must also include a statement of the highest level of employment at the facility during the
previous twelve (12) months prior to initiation of service under the Rider. At the Company’s discretion
during the term of the Rider, Company will request and customer will provide evidence satisfactory to the
Company of the actual increase in employment. Customer will also inform Company of reduced
employment at any time during the rider term. Should the actual increase in employment drop below the
jobs required for rider eligibility at any time during the rider term, the additional five (5) percent rider credit
will be immediately terminated.

SMALL BUSINESS EXPANSION RIDER
RIDER SCHEDULE “SBE” (PILOT)
Mississippi Public Service Commission Schedule No. 55
PAGE EFFECTIVE DATE DATE OF VERSION SUPERSEDED
3 of 3 November 16, 2011 Original

TERM (Cont’d)
If during the term this Rider is in effect another rate for which the customer qualifies should become
available that is more cost-effective for the customer and to which this Rider does not apply, the customer
may elect to change to the more cost-effective rate with no penalty under this Rider, except that the
incentive provided hereunder shall cease when the rate change is made effective.
Customers may apply for this rider only once during the period that it is available

 

http://www.mississippipower.com/pricing/pdf/sbe_rider.pdf

https://mississippicoal.wordpress.com/gov/obama/psc-info/

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