For more than 40 years, the Department of Energy has failed to collect spent nuclear fuel it legally agreed to remove. The latest court ruling closes off its most creative escape route yet.
In 1982, Congress struck a deal with the nuclear power industry: utilities would pay into a federal waste fund, and the Department of Energy would permanently dispose of their spent nuclear fuel. The deadline was January 31, 1998.
That deadline passed 28 years ago. DOE has not removed a single rod of spent fuel from any power plant. There is still no approved permanent repository. Yucca Mountain, the designated site, remains mired in a political stalemate with no resolution in sight.
On September 4, 2026, the U.S. Court of Appeals for the Federal Circuit handed down its fifth ruling in this long-running series of cases, affirming a $145 million judgment against the United States in favor of three decommissioned New England nuclear utilities: Connecticut Yankee Atomic Power Company, Maine Yankee Atomic Power Company, and Yankee Atomic Electric Company, collectively known as “the Yankees.”
The government did not dispute that it had breached its contract. It argued instead that it shouldn’t have to pay.
The Arithmetic of an Ongoing Breach
The Yankees stopped generating electricity in 1996 and completed decommissioning their plants by 2007. They continue to exist for one reason: the federal government has not collected the spent nuclear fuel sitting at their sites, stored in steel casks on concrete pads known as Independent Spent Fuel Storage Installations, or ISFSIs.
Maintaining those ISFSIs costs money. Security, radiation monitoring, regulatory compliance, licensing. During the 2017 to 2021 claim period at the center of this appeal, those costs totaled $145 million. Because DOE has insisted it still intends to eventually perform under the contract, courts have treated the breach as “partial” and ongoing. That status prevents the Yankees from seeking a final, comprehensive damages award; instead, the litigation proceeds in five-year installments. This appeal was the fifth round.
Four prior rounds produced nearly $500 million in judgments. Approximately $396 million of that has been returned to ratepayers.
The Government’s Argument: Your Investment Gains Are Our Defense
Federal regulations require nuclear utilities to maintain Nuclear Decommissioning Trusts (NDTs), segregated funds built from ratepayer contributions, to cover decommissioning and ongoing SNF storage costs. The Yankees’ NDTs have received $405 million in ratepayer contributions since their establishment in the early 1980s and have generated $339 million in investment earnings since 2009 alone.
During the 2017 to 2021 claim period, the NDTs earned nearly $185 million in investment gains, more than enough to cover the $145 million in ISFSI expenses.
The government’s argument was straightforward, if audacious: the Yankees used NDT funds to pay their breach-related costs, and those funds earned $185 million in that same period. Award them $145 million in damages on top of that, the government said, and you’re giving them a windfall. The NDT investment gains should offset the damages to zero.
The Court of Federal Claims rejected that argument in February 2024. The Federal Circuit, in an opinion authored by Judge Stark and joined by Judges Lourie and Prost, agreed.
Why the Argument Failed
The Federal Circuit identified two independent reasons the government’s offset theory doesn’t hold up.
The gains didn’t mitigate anything. Mitigation, in contract law, means taking actions that actually reduce or avoid a loss. The Yankees’ ISFSI expenses did not go down because the NDTs had a good investment year. The costs mounted regardless. The government couldn’t identify a single expense that decreased as a result of the NDT gains. A funding source that pays for costs without reducing them is a checkbook, not mitigation.
The court drew a sharp contrast with prior SNF cases where offsets were appropriate: utilities that upgraded to higher-enrichment fuel assemblies and saved money per cycle; utilities that reduced wet storage fees; utilities that pursued off-site storage arrangements. In each of those cases, the non-breaching party took action that actually reduced the damage caused by the breach. The Yankees’ NDT investment returns did neither.
The gains aren’t connected to the breach. The mitigation offset rule requires a direct relationship, in time and subject matter, between the breach and the event the government wants to use as an offset. The NDTs were established in 1984, more than a decade before DOE’s breach began in 1998. They were created because federal law required them, not as a response to anything DOE did or failed to do. The court rejected the government’s argument that the relevant moment is the claim period rather than when the trusts were created, finding no legal authority supporting that reframing.
The investment gains, the court wrote, are a “remote consequence” of the breach. A favorable one, but not one that reduces the government’s liability.
The Windfall That Isn’t
The government’s windfall argument had intuitive appeal: if the Yankees have $185 million sitting in their trust accounts and only owe $145 million in expenses, why should taxpayers also cut them a $145 million check?
The court’s answer was precise: because the money in those trusts doesn’t belong to the Yankees. The NDTs are held in trust for ratepayers. Federal regulation requires that when DOE finally performs under the Standard Contract and the Yankees’ SNF storage obligations end, the NDT funds, including investment gains, must be returned to the ratepayers who contributed them. When the Yankees draw on NDTs to cover breach-related costs, they are borrowing against a fund that belongs to someone else. The damages award reimburses that fund.
Reducing the damages award to zero, as the government asked, would leave ratepayers $145 million short. That is not preventing a windfall. That is engineering one, for the government.
The Symmetry Problem
The court added a final reason rooted in logical consistency.
If NDT investment gains offset damages, NDT investment losses must increase them. That is not a novel legal principle; it is arithmetic. The same activity cannot be mitigation only when it is profitable. At oral argument, the government strongly implied it would never accept liability for NDT losses during partial breach periods. The court held that position disqualifies the government from claiming credit for the gains.
“The NDTs and their investments are either mitigation activities or they are not,” the court wrote, citing prior Federal Circuit precedent. The government chose to disclaim responsibility for the downside. It cannot benefit from the upside.
Where Things Stand
The $145 million judgment stands. The Yankees, which exist solely to store nuclear waste the federal government contracted to remove a quarter-century ago, will receive that amount, which flows back to the ratepayers who funded the trust in the first place.
DOE has no timeline for SNF removal. Yucca Mountain has no funding, no NRC license, and no political pathway. The courts have now awarded nearly $650 million in damages across five rounds of litigation, with more claim periods accumulating and more rounds ahead.
The Standard Contract was supposed to solve the national problem of permanent nuclear waste disposal. Instead, it has become a perpetual litigation machine. The government loses, pays, and then tries to find new ways not to pay in the next round.
This was the fifth round. It will not be the last.
Connecticut Yankee Atomic Power Company, et al. v. United States, No. 25-1395 (Fed. Cir. Sept. 4, 2026). Panel: Lourie, Prost, and Stark, Circuit Judges. Opinion by Judge Stark.
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