Price-Anderson Act Reauthorization: Due Diligence Is in Order

Dan Guttman

Dan Guttman, a practicing attorney, is a Fellow at the Washington Center for the Study of American Government at Johns Hopkins University and at the National Academy of Public Administration. He has represented nuclear weapons workers, municipally and cooperatively owned owners of nuclear power plants, and has served as the Executive Director of the President's Advisory Committee on Human Radiation Experiments. He may be contacted at [email protected].

[32 ELR 10594]

The Price-Anderson Act (the Act)¹ is the legal backbone for the development of civilian nuclear power in the United States, and for the conduct of nuclear weapons complex environmental cleanup. Initially enacted in 1957, and amended since, the Act was intended to limit the accident liability of nongovernmental entities that produce nuclear power and/or work with nuclear materials and provide compensation for injury and damages caused by accidents.²

The Act is scheduled to expire on August 1, 2002, in the absence of congressional reauthorization.³ On the surface, this year's debate over reauthorization might seem another set piece debate between proponents and opponents of nuclear power. Proponents of the Act point out that the Act is essential to the continued operation of the nuclear power plants which provide 20% of the nation's electric power supply and that the total amounts paid out under the Act since the 1950s has been relatively small.⁴ Opponents argue that the Act is a subsidy that puts the public's thumbs on scale in favor of nuclear power (as opposed to alternatives such as renewable resources) and that, after decades of operation, the industry should be able to sink or swim on its own.

Lost in this debate is the reality that, whether one is, or is not, a proponent of the Act's renewal, developments since the last (1988) reauthorization raise basic questions that beg public and congressional review prior to any reauthorization.

Summary of the Important Issues

In the interim since the 1988 reauthorization, federal court decisions construing the law, electric utility industry restructuring, and inquiries and revelations of cold war-era radiation exposures to citizens, soldiers, and nuclear weapons workers have all highlighted issues that merit attention during congressional consideration of the Act. This Dialogue identifies some of these questions, which, of course, are now framed by the events of September 11, 2001.

Courts have agreed that the Act's 1988 Amendments fundamentally restructured the law by: (1) creating a federal cause of action (public liability) for claims related to nuclear incidents; where such claim exists, state law-based claims on the facts are, with limited exception, precluded;⁵ and (2) providing that the legal principles, or rules of decision, for determining public liability are rooted in state law. However, in the context of this agreement, and with further developments since 1988 in mind, issues that warrant current attention include:

What Conduct Will Trigger and Require the Act's Jurisdiction?

Court decisions call into question numerous issues, such as whether the Act covers conduct that is intentional (as well as conduct that is accidental), whether the Act requires that the defendant(s) be party to an indemnification agreement with the government, and whether the Act reaches into disputes regarding common commercial products (for example, watch dials).

[32 ELR 10595]

Are Acts of Terrorism Covered by the Act?

The Act (through the definition of "public liability") excludes claims "arising out of acts of war," raising obvious questions about the Act's coverage of damage and injuries stemming from acts of terrorism.

Does, or should, the Act cover "acts of terrorism"? If so, is the current statutory wording clear enough to embrace this intent? If the intent is not to cover nuclear accidents caused by acts of terrorism, how will they be covered? Assuming the intent is to cover such acts, what kind of finding or declaration will be required to trigger the Act—and who shall be empowered to make this finding?

Will the Retrospective Unit Owner Funding Required by the Act Be Available in the Deregulation Era?

The Act relies on nuclear unit owners to make "retrospective," i.e., post-accident, contributions where the initial tier of insurance is exhausted by an accident. Under the Act's present terms, and given the current number of operating units, this obligation may be in the range of $ 80-90 million per unit, or over $ 9 billion. The "retrospective" nuclear plant owner obligation, in short, is relied on to provide the lion's share of funding for relief in a major accident.

Since 1988, the utility industry has undergone profound restructuring hallmarked by nuclear unit divestitures, corporate restructuring, and the consolidation of nuclear unit ownership. This restructuring, particularly when coupled with the well-known financial difficulties of major California utilities and Enron, raises questions about the premises of retrospective funding. The basic concern was identified in the Nuclear Regulatory Commission's (NRC's) 1998 report to the U.S. Congress, and has been underscored by a December 2001, U.S. Government Accounting Office (GAO) report,⁶ which found that NRC reviews of license transfer applications did not provide adequate assurance that new corporate owners will have sums needed to provide for future decommissioning costs.

Indeed, the form restructuring is taking may render the public particularly vulnerable to funding shortfalls. As the GAO report observed, nuclear units are being consolidated under a limited number of "fleet" owners.⁷ This consolidation may yield important benefits in safety, reliability, and accountability. On the other hand, consolidation of ownership raises the possibility that the owner may have to bear a retrospective payment burden measured in the hundreds, not tens, of millions, and the further possibility that the ripple of effects of any nuclear accident on any utility system may cause across-the-board unit shutdowns that will leave the "fleet" owner without revenue sources to pay retrospective commitments.⁸

Congress should act to assure that industry restructuring does not come at the cost of the integrity of the Act's funding, whether by assuring that NRC license transfers provide for the needed commitments, specifying particular commitments, e.g.,prepayment or reserve for Act obligations as a condition for license transfer, or by providing for a review and further steps thereafter.

Should There Be Clear and Consistent Treatment of Willful or Reckless Misconduct?

Potential liability for willful or reckless misconduct appears to differ depending upon whether the actor is an NRC licensee, a U.S. Department of Defense (DOD) contractor, or a U.S. Department of Energy (DOE) contractor. In the first case, courts have indicated that actors may, to some degree that itself may benefit from clarification, be liable for punitive damages; in the second case, procurement rules provide for limitation on indemnification in the case of willful misconduct; in the third case there is no evident limitation on indemnification.

Congress may wish to consider whether there is reason for the differing set of rules and, if not, to provide for a clear and consistent set.

When Should State-Established Duty(ies) of Care Be Preempted?

Courts agree that the 1988 Amendments create a federal cause of action that is rooted in state law rules of decision, but have generally held that the duty of care owed by the Act's defendants is that stated in federal dose exposure regulations, to the exclusion of state law duty of care standards.⁹

Congress may wish to consider whether this exception to the Act's reliance on state standards is warranted, particularly where the state standard may supplement, but not conflict with, the federal standard of care.

What Is the Burden of Proof to Show Causation of Injury When Records Are Inadequate?

In order to obtain Act compensation, an individual may need to show not only that he was exposed to radiation hazard and that he is now sick, but also that the exposure caused the sickness. The difficulties of determining that harm to a specific individual, e.g., cancer, was caused by a specific exposure(s) to radiation are well understood, particularly when the injury manifests itself years after the exposure. We now know that when the government (and its contractors) exposed citizens, soldiers, and workers to radiation during the cold war those responsible for exposures too often failed to keep applicable records, and provide for the monitoring, that might help determine cause and effect—and provide for compensation—years later. In light of this new understanding, Congress and the executive branch have adopted the principle that where injured citizens show that they were likely exposed to potentially injurious amounts of radiation, the government (or contractors or further designees) bears the burden of providing exposure and [32 ELR 10596] monitoring data needed to defeat claims that the injury was caused by the exposure.¹⁰

Congress may wish to consider the express incorporation into the Act of the principle that those who expose citizens to radiation risk without providing for recordkeeping and monitoring bear the burden of showing that their conduct is not the cause of resulting injury.

Is Justice Done by Current Statutes of Limitations Provisions Which May Preclude Recovery Where Injury Is Latent for Years?

At least one court has indicated that adherence to the letter of the Act required it to do injustice by dismissing a case involving an alleged "nuclear incident" because of the failure of the state statute of limitations to contemplate injury from radiation exposure—i.e., injury that may be latent for many years before visible manifestation.¹¹

Congress should revisit the workings of the Act's statutes of limitations to reflect the fact that state law frequently does not adequately contemplate the reality that some radiation injuries may be hidden for years before discovery.

Jurisdictional Requirements

Is an Indemnification Agreement a Prerequisite to the Triggering of the Act's Jurisdiction?

Is an indemnification agreement a prerequisite for the triggering of the Act? In Gilberg v. Stepan Co.,¹² the court found that the existence of an Act indemnity agreement with the government is key to the determination of whether a radiation release is covered by the Act.

The case dealt with alleged contamination of the surrounding community from thorium tailings at a chemical plant that operated from 1918 to 1956. The court noted that the Atomic Energy Act authorized the NRC to license the production and possession of nuclear materials. The Act did not mandate, as it does in regard to power plant licensees, that these further licensees be subject to assured pools of coverage. The Stepan court concluded that an "occurrence," under the definition of "nuclear incident," "can only be an event at 'the location' or 'the contract location' as those terms are defined as an applicable indemnity agreement."¹³ In the absence of such agreement, the court found, the Act does not apply.

The court explained:

While it is true that any thorium or thorium tailings at the facility may have been the subject of [Atomic Energy Commission (AEC)] or NRC licenses for source and/or byproduct materials . . . licenses for these types of materials have never been subject to [the Act's] financial protection provisions. Therefore, neither the AEC nor the NRC would have entered into an indemnification agreement covering activity conducted under such licenses. In the absence of an indemnification agreement, entered into under 42 U.S.C. § 2210 and covering the activities which gave rise to the liability alleged, there can be no "occurrence," that is, no event at the site of "licensed activity" that would constitute a "nuclear incident." Without a nuclear incident, there is no claim for public liability, and without a claim for public liability there is no federal jurisdiction under [the Act].¹⁴

Stepan's conclusion was embraced in Heinrich v. Sweet,¹⁵ which involved claims related to human radiation experiments conducted by doctors and universities under AEC contract. However, Stepan's conclusion has been rejected elsewhere,¹⁶ most notably in Carey v. Kerr-McGee Chemical Corp.¹⁷ Carey concerned allegations of contamination from thorium tailings at Kerr-McGee's West Chicago plant. Plaintiffs argued that for the Act to apply there had to be a release of radioactive material from a facility that is both (1) licensed by the NRC; and (2) covered by an indemnification agreement with the NRC. Because the facility, while subject to certain licensing, was not signatory to an indemnification agreement, plaintiffs contended that there was no "occurrence," as required by the Act, and therefore the Act did not apply. The court, noting that the Act does not define "occurrence," looked to a dictionary's definition and concluded that an occurrence had been alleged.

Is Intentional, in Addition to Accidental, Conduct Covered by the Act?

In re Cincinnati Radiation Litigation¹⁸ involved claims of injury caused by human radiation experiments conducted by government-supported experimental treatments of cancer patients. The court found that a "public liability" claim requires unintended, or accidental, conduct. Thus, even though radiation might have caused injury, there was no Act claim. The court explained:

While the alleged conduct of the experiments and the alleged failure to inform the subjects of the experiments may be reprehensible, the operation of the Teletherapy Unit was an application of nuclear medicine. Thus, in [32 ELR 10597] this case the nuclear source at issue was employed as intended and cannot give rise to a claim under [the Act]. Moreover, liability under [the Act] turns on the existence of a "nuclear incident," which does not occur when there is no unintended escape or release of nuclear energy.¹⁹

In a subsequent human radiations experiment decision, Heinrich,²⁰ the court determined that the Act's jurisdiction was not governed by the intentionality of the conduct, but rather by whether the alleged conduct is subject to an indemnification agreement. Responding to the decision in In re Cincinnati, the court explained:

Several reported cases, however, appear to undermine this interpretation of the statute. See Day v. NLO, Inc., 851 F. Supp. 869 (S.D. Ohio 1994) (Act applies to claims of occupational exposure to radiation not alleged to have been caused by accidental release); Sawyer v. Commonwealth Edison Co., 847 F. Supp. 96 (N.D. Ill. 1994) (Act applies to claim for injuries resulting from alleged ongoing occupational exposure); Coley v. Commonwealth Edison Co., 768 F. Supp. 625 (N.D. Ill. 1991) (same); Building [&] Constr. Trades Dep't v. Rockwell Int'l, 756 F. Supp. 492 (D. Colo. 1991) (Act applies to intentional and tort claims related to occupational exposure).²¹

Following the analysis in Stepan, as discussed above, the Heinrich court held that the determinative issue was not intentionality, but indemnification.

Is the Act's Coverage Commensurate With the Use of AEC, or NRC Licensing Jurisdiction?

Some courts appear to find that the Act's jurisdiction broadly attaches to activities that are, or may be, within NRC jurisdiction. Kerr-McGee Corp. v. Farley²² involved Navajo tribal court jurisdiction over a claim that tribe members had been injured by exposure to radioactive and toxic materials released from a Kerr-McGee facility on land leased from the tribe. Those alleging injury claimed that because there was no indemnification agreement, the Act's jurisdiction did not apply (and, therefore, there was no question of whether the case had to be heard in federal court, not tribal court). The court rejected the claim, noting that

nothing in [Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 14 ELR 20077 (1984)] suggests that the absence of an indemnity agreement makes [the Act's] jurisdictional provisions inapplicable. Furthermore, as quoted . . . the jurisdictional provisions of [the Act], as amended by the 1988 Amendments, appear broad enough to create a federal forum for any tort claim even remotely involving atomic energy production.²³

Gassie v. SMH Swiss Corp.²⁴ was a class action claiming injury from the leak of tritium (a radioisotope used to produce luminescence) from Swatch watches. The defendant was an NRC licensee. The court found that the allegation constituted a public liability claim arising out of a nuclear incident—and, under the Act, therefore subject to removal from state to federal court and treatment under the Act.

Although the words "any nuclear incident" were employed by Congress to convey the broad scope of the jurisdictional grant, there is little support in the legislative history or in other legal precedent for the idea that a products liability case, such as the one Plaintiffs have filed in this one, to conclude that the leaking of tritium from Swatch watches constitutes a nuclear incident in terms of [the Act]. However, there is also little support to negate Defendants' argument that Plaintiffs' claims constitute a public liability action arising from a nuclear incident. In fact, the unambiguous words of [the Act] indicate that Plaintiffs' claims do constitute a public liability action arising from a nuclear incident.²⁵

The court concluded that the Act would apply to tritium leaks from watches, unless plaintiffs could establish (which the court found they did not) that the NRC permitted regulatory control of byproducts to be assumed by the state in question.

Post-September 11: Are Acts of Terrorism

Covered by the Act, or Are They Excluded as "Acts of War"?

After September 11, 2001, there is obvious need to consider the applicability of the Act to nuclear incidents stemming from terrorist activity. It is not clear whether, and under what circumstances, the Act would cover damage and injury resulting from terrorist conduct. The Act's definition of "public liability" excludes "claims arising out of an act of war."²⁶ Thus, depending on the definition of "act of war," the Act may include or exclude the consequences of terrorist activity. Congress should consider whether it wishes to revisit the "act of war" exclusion, to provide clarification of what is intended in light of recent events. For example:

Does Congress intend that the "act of war" exclusion is also intended to exclude "terrorist" conduct? If so, does the Act currently make this clear? If Congress intends the Act to provide for terrorist accidents, does the current language make that clear? Where there is uncertainty about particular "terrorist" conduct, who, e.g., Congress and/or the executive branch or the U.S. Supreme Court, will be responsible for determining the scope of the exclusion, and by what means, e.g., presidential directive, NRC review? In the absence of clarification, the answers to such questions may fall by default to the courts, which would plainly benefit from congressional guidance.

[32 ELR 10598]

Is the Act's Reliance on Retrospective Funding Reliable in Light of Utility Industry Restructuring?

Retrospective premium payments comprise the lion's share of potential funding in the case of a severe accident. Given current industry deregulation, there is need to assure that (if needed) these payments will be available.

The Act creates a two-tier system to provide funding to the current liability limit of approximately $ 9.4 billion. Prepaid private insurance set at $ 200 million is to be supplemented by retrospective deferred payments on each unit in the event of an accident requiring additional sums. The deferred payments are based on a formula where reactor owners each provide an equal amount per unit per accident to the limit of $ 9.4 billion. (For example, assuming 110 reactors are operating, a per unit payment of $ 83.9 million would yield $ 9.23 billion.)

At the time of the 1988 Amendments, the landscape was still dominated by vertically integrated utilities with names that likely incorporated the name of the locality or region long served. Since 1988, names and corporate structures have changed beyond ready recognition. Some vertically integrated utilities have divested themselves of nuclear units, others have sought to build fleets of units, and new entrants into the business have considered purchasing units. Moreover, as experiences in California and with Enron show, the once unthinkable prospect of the bankruptcy of a purveyor of electric "utility" service has now become quite possible.

In theory, the NRC will assure the continued adequacy of funding through reviews conducted in the transfer of unit licenses to new owners. In December 2001, the GAO reported on the adequacy of NRC oversight of decommissioning funding in the restructuring environment.²⁷ The GAO found that "for the most part" NRC reviews of new owners' financial qualifications "enhanced the level of assurance that they will safely own and operate their plants in the deregulated environment."²⁸ However, the GAO found substantial basis for concern that financial reviews may not be adequate where the transfer is not predicated on the precommitment of the amounts potentially required.²⁹ Thus, in the case of the NRC review of a merger that has yielded the nation's largest "fleet" of nuclear units, the GAO noted:

The new owner did not provide, and the NRC did not request, guaranteed additional sources of revenue above the market sale of its electricity, as other new owners had. Moreover, NRC did not document its review of the financial information—including revenue projections, which were inaccurate—that the new owner submitted to justify its qualifications to safely own and operate 16 plants.³⁰

The GAO concluded:

NRC's inconsistent review and documentation of license transfer requests creates the appearance of different requirements for different owners or different types of transfers . . . . While its standard review plan offers a sound basis for obtaining consistency, [the] NRC is clearly not consistently achieving the desired results.³¹

Moreover, the 1998 NRC report to Congress records that, even prior to deregulation, studies showed that utilities could not be expected to "afford" retrospective payments in excess of $ 32 million (in 1996 dollars).³² The report pointed out that deregulation might reduce this amount further.

The current deregulatory environment, which may lead to restructuring within the nuclear power industry, may impact the ability of some nuclear power entities to handle a $ 20 million annual retrospective premium assessment.³³

In sum, Congress should act to ensure that industry restructuring does not render the retrospective payment obligation that is at the core of the Act an illusion. In substance, as well as form, NRC reviews of nuclear unit ownership changes must provide assurance that the new owner(s) will be capable of making such Act payments as may be called for. If, as the GAO report on decommissioning funding indicates, the NRC cannot uniformly provide this assurance, then Congress should consider alternatives, perhaps including demonstration of guaranteed availability of Act funding.

[32 ELR 10599]

Punitive Damages: How Should Willful or Reckless Misconduct Be Treated?

An actor whose willful or reckless misconduct causes harm may be treated differently depending upon whether the actor is a DOE contractor, a DOD contractor, or an NRC licensee. In the first case, under present laws and rules, the government will generally pick up the costs of all litigation and damage payments—regardless of the actor's culpability. In the latter cases, the actor who engages in willful or reckless misconduct is on notice that it may be responsible for payments in its own right.

The standard nuclear indemnification clause applied by the DOD³⁴ provides, in part³⁵

(d) When the claim, loss, or damage is caused by willful misconduct or lack of good faith on the part of any of the Contractor's principal officials, the Contractor shall not be indemnified for—

(1) Government claims against the Contractor (other than those arising through subornation); or

(2) Loss or damage affecting the Contractor's property.

Thus, DOD contractors (many of whom, of course, are also DOE contractors) are not completely off the hook for damages stemming from "willful misconduct or lack of good faith."

Similarly, courts have found that NRC licensees may themselves be liable for punitive damages in cases where the sums involved are beyond those which the federal government is obligated to pay. In Silkwood v. Kerr-McGee,³⁶ which directly involved the question of federal preemption of state causes of action and did not directly involve the Act, the Court held that punitive damages under state laws would not frustrate the federal scheme for regulation of nuclear matters. The 1988 Amendments, addressing the Silkwood decision's provision of punitive damage, expressly limited punitive damages.³⁷ However, some post-1988 decisions provide that punitive damages may still be in order when, in essence, they do not come out of the government's hide.³⁸ In In re TMI,³⁹ the U.S. Court of Appeals for the Third Circuit considered the availability of punitive damages in light of the 1988 Amendments. The court concluded that "it is clear from the unambiguous language of those [1988] Amendments that Congress did not intend to change the result the Supreme Court had reached in Silkwood."⁴⁰ The court noted that in enacting the 1988 Amendments Congress "did not hesitate to overturn" certain court decisions, but "only partially limited Silkwood's holding."⁴¹ The court also reviewed the legislative history of the 1988 Amendments, finding "lucid declarations" of congressional intent to allow punitive damages.⁴² Smith v. General Electric Co.,⁴³ finding that a claim for punitive damages may be asserted directly against a defendant who "supplied materials or services" to a nuclear power plant so long as such an award is authorized by the law of the forum⁴⁴ and Corcoran v. New York Power Authority⁴⁵ are consistent.⁴⁶

[32 ELR 10600]

In sum, by contrast to the DOD rules and the potential for punitive damages awaiting NRC licensees, it appears that the current operations of the Act and procurement law may provide some deterrence (and/or post-accident punitive damages) where an NRC licensee or DOD contractor engages in willful misconduct, but no such deterrence or relief in the case of a DOE contractor. If this is so, what basis is there for permitting DOE contractors to continue to be the exception to the rule?

Duty of Care: Should Federal Numerical Dose Regulations Be the Duty of Care to the Exclusion of State Standards?

A predicate to recovery under tort law is a finding that the defendant has breached its "duty of care." The majority of courts have found that the duty of care is measured by the applicable federal numerical dose regulations, to the exclusion of further duty(ies) of care provided by normally governing state tort law.⁴⁷ The exclusive application of the federal duty of care appears to be in conflict with underlying Act policy that, while federal courts will have jurisdiction over claims arising from nuclear incidents, principles of state law are to be applied in determining compensatory damage claims. There is obvious wisdom in assuring that federal nuclear safety standards are not undermined by conflicting state law. However, the question is whether this principle should govern without consideration of whether state standards are in conflict with federal standards.

The tension between state-law standards and federal safety standards was crystallized and addressed in the seminal Silkwood case. There, the Court permitted claims for damages, even punitive damages, to proceed even where the plaintiff did not claim that maximum radiation exposure levels had been exceeded.⁴⁸ The Court observed:

Although [the Act] does not apply to the present situation, the discussion preceding its enactment and subsequent amendment indicated that persons injured by nuclear incidents were free to utilize existing tort law remedies.

In sum, it is clear that in enacting and amending the Act Congress assumed that state-law remedies, in whatever form they might take, were available to those injured by nuclear incidents. This was so even though it is well aware of the NRC's exclusive authority to regulate safety matters. No doubt there is tension between the conclusion that safety regulation is the exclusive concern of the federal law and the conclusion that a state may nevertheless award damages based on its own law of liability. But as we understand what was done over the years in the legislation concerning nuclear energy Congress intended to stand by both concepts and to tolerate whatever tension there was between them. It may be that the award of damages based on the state law of negligence or strict liability is regulatory in the sense that a nuclear plant will be threatened with damages liability if it does not conform to state standards, but that regulatory consequence was something that Congress was quite willing to accept.⁴⁹

Since the 1988 Amendments, however, courts have generally found that federal standards govern to the exclusion of state ones, without the need for analysis ofthe potential for conflict between the two. For example, in Roberts v. Florida Power & Light Co.,⁵⁰ the plaintiff—a former nuclear power plant worker suffering from terminal cancer—alleged, among other things, that the defendant unreasonably exposed him to more radiation than was necessary, that the company did not help him take precautionary steps, such as buying appropriate clothing, and that the utility did not warn him of the danger of working at the plant.⁵¹ The plaintiff alleged that these failures were violations of duties owed to him under the common law of the state of Florida. The utility obtained dismissal of Roberts' suit on grounds that the plaintiff did not plead that the plant had exceeded federally determined radiation standards.⁵²

A related question is whether a plaintiff in a case in which there is no extraordinary nuclear occurrence determination must show that his/her exposure exceeded the federal numerical dose limit. In In re TMI, the court considered whether individual plaintiffs had to show that they were exposed in excess of the permissible level. Defendants argued that even where the defendant admittedly violated the permissible level, each plaintiff had to show that he/she was exposed in excess of the permissible level.⁵³ The court held that "the duty of care is measured by whether defendants released radiation in excess of §§ 20.105 or 20.106, as measured by the boundary of the facility, not whether each plaintiff was exposed to those excessive radiation levels."⁵⁴ It added that "of course, plaintiffs must still prove causation and damages before they may recover."⁵⁵

In Roberts, however, as the court of appeals summarized, the district court found that "since there was no extraordinary nuclear occurrence involved in this case, . . . under the Amendments Act, the plaintiffs must allege and prove that the defendant breached its duty of care by exposing Bertram Roberts to an amount of radiation in excess of federally defined permissible radiation dose standards."⁵⁶ This holding was affirmed by the court of appeals, which noted that "as the plaintiffs have failed to allege that [FP&L] breached its duty of care by exposing Bertram Roberts to an amount of radiation in excess of the permissible amount allowed by [32 ELR 10601] federal regulation, they have failed to state causes of action for negligence, strict liability or loss of consortium."⁵⁷

In sum, Congress may wish to consider whether state-law duty of care standards should support claims where they are not in conflict with the numerical standards set by the federal government.

Who Bears the Burden of Proof of Causation in the Absence of Adequate Records?

As the cold war recedes into history, there have been new inquiries into the radiation exposures of "cold war veterans," those workers, servicemen, and further citizens who served in the development, production, and testing of nuclear weapons. It is useful to place the Act's scheme in the context of the findings of these inquiries, and the evolving burden of proof principles that they have led to.

In 1995, the President's Advisory Committee on Human Radiation Experiments (Advisory Committee) reported that from the 1940s to the early 1970s numerous citizens were unknowingly exposed to radiation risk by virtue of being made subject to human radiation experiments. In a nutshell⁵⁸:

1. From the 1942 to 1943 dawn of the Manhattan Project, the government, its contractors, and biomedical researchers were well aware that radiation posed potential risk to weapons workers, and that such risk had to be understood and monitored.

2. At its 1947 creation, the AEC and its contractors engaged in a long hidden policy and practice of hiding risks from affected citizens to avoid liability and embarrassment—even where national security itself did not require secrecy. The Advisory Committee recommended, and the Administration accepted, that where such coverup occurred, research subjects (or survivors) be compensated even in the absence of physical injury.

3. The Advisory Committee found that the hidden policy and practice of keeping secrets to avoid embarrassment and liability applied to workers, and their communities, as well as to experimental subjects. Ongoing disclosures show that the policy and practice was not effectively countermanded, and continued well past mid-century.

4. The Advisory Committee found that the government and its contractors were well aware that radiation risks might be latent for years, with injury occurring long after exposure. However, they failed to provide for monitoring and recordkeeping sufficient to assure that risk would be minimized and that its dimensions could be known at years remove. This finding, recent disclosures show, applies to weapons workers as well.

The Advisory Committee recommended, and the Administration accepted, that in circumstances where citizens are exposed to nontherapeutic radioactive risk and the government (and/or private entities assisting it) fail to provide or withhold the information needed by citizens to protect themselves, there should be a presumption of compensation where: (1) the individual can demonstrate that he or she was present within the zone of exposure; and (2) injury that is potentially related to the exposure is shown.

The Advisory Committee's findings and the consequence for the burden of proof were part of the underpinnings of the 2000 Nuclear Workers' Compensation Act.⁵⁹ The Nuclear Workers' Compensation Act finds that:

(2) Workers were put at risk without their knowledge and consent for reasons that, documents reveal, were driven by fears of adverse publicity, liability, and employee demands for hazardous duty pay.

(3) Many previously secret records have documented unmonitored exposures to radiation and beryllium and continuing problems at these [nuclear weapons complex cites].

In light of these findings, the Nuclear Workers' Compensation Act provides that, upon a finding that data is not adequate to render determinations with regard to particular claimants, the burden shifts to the government.⁶⁰

Contests over causation of potentially radiation-induced injury are often difficult, costly, and controversial. Recent experience shows that it may be wise to give notice that the burden of proof will be borne by those exposing citizens to radiation risk without keeping records or providing monitoring needed to show cause and effect at some later date.

Statute of Limitation: Three Years From Discovery?

At what point will the Act's claims be barred because they are filed too late, particularly in cases in which individuals could not reasonably have known of their illness and its cause at an earlier time? In Lujan v. Regents of the University of California,⁶¹ the plaintiff brought suit to recover for the death of her daughter, who died at the age of 21 as the result of recurrent brain cancers experienced since she was 18 months old. The brain cancers were alleged to result from releases from the Los Alamos National Laboratory. The suit was brought six years after the daughter's death.

Following the New Mexico state rule that wrongful death actions must be brought within three years of death, the district court dismissed the case. The U.S. Court of Appeals for the Ninth Circuit recognized that application of the [32 ELR 10602] three-year statute of limitation to radiation exposures was potentially unjust, but concluded that the result was dictated by Congress.

We recognize, as did the district court, that exposure to radiation "can occur without the slightest indication of its presence and the effects of such exposure may lie dormant for years," . . . Congress was not unaware of the potential for injustice in cases such as this . . . . Yet it chose not to extend the three-years-from discovery rule to all public liability actions when it extended federal jurisdiction to cover all such actions. It is not for us to correct Congress' alleged oversight.⁶²

Congress may wish to assure itself that the Act does not work to prevent the bringing of otherwise meritorious claims because some state limitations statutes may not contemplate the long-term latency of radiation risk.

Conclusion

Prior to September 11, 2001, the debate on reauthorization of the Act had the hallmarks of a set piece, with a foregone conclusion; when cast as a vote for or against the nation's continued reliance on nuclear power, the Act would be reauthorized.

September 11 gives new meaning and urgency to the discussion; the best intentions of nuclear facilities operators and regulators notwithstanding. As daily press reports tell us, the possibility of a terrorist attack directed at a nuclear power plant, or nuclear weapons complex facility, must be contemplated. In light of September 11, there is no good reason why, prior to reauthorization of the Act, its coverage of such an eventuality should not be given full and reasoned consideration—whatever the disposition of this consideration might be.

Similarly, the bankruptcy of Enron, following on the heels of California utility financial distress, shows that the retrospective payment component of the Act requires careful review as well.

In considering these essential questions, those involved in the Act's reauthorization discussion would do well to consider and address questions and conflicts raised by recent judicial interpretations of the Act, and by principles recently established for government treatment of cold war-era radiation victims, as well.

1. The Act was initially passed as an amendment to the Atomic Energy Act. The body of the Act appears in 42 U.S.C. § 2210 (Indemnification and Limitation on Liability) with relevant definitions appearing at 42 U.S.C. § 2014 (Definitions). The most recent amendments, the 1998 Amendments, appear at Pub. L. No. 100-408, 102 Stat. 1067.

2. The Act is funded by a two-tier system; nuclear unit owner pre-purchased insurance and retrospective payments after accident. At present, the nuclear power industry is insured to a maximum per incident dollar level of approximately $ 9.43 billion, which includes a maximum available primary insurance coverage of $ 200 million plus maximum available secondary insurance of approximately $ 9.23 billion, i.e., 110 units multiplied by $ 83.9 million each.

3. In fact, currently operating nuclear power plants would continue to be covered should the law not be reauthorized. However, it would not be available for new units, thereby profoundly affecting the likelihood that they may be built. In addition, it would not be available to new U.S. Department of Energy (DOE) nuclear weapons complex cleanup contractors.

4. The Nuclear Regulatory Commission's (NRC's) 1998 statutorily required report to the U.S. Congress summarized the history of claims under the Act as such:

From 1957 to December 1997, claims for 195 alleged incidents involving nuclear material under various liability policies were filed. Most, but not all, of the reported claims experience is related to indemnified nuclear facilities. The insured losses and expenses paid through this period total approximately $ 131 million. Of this amount, about $ 70 million ($ 42 million in indemnity and $ 28 million in expenses) arose out of the Three Mile Island Unit 2 (TMI-2) accident that began on March 28, 1979.

NRC, THE PRICE-ANDERSON ACT: CROSSING THE BRIDGE TO THE TWENTY-FIRST CENTURY: A REPORT TO CONGRESS xix (1998) [hereinafter NRC REPORT TO CONGRESS].

5. For example, the U.S. Court of Appeals for the Third Circuit, in In re TMI, 940 F.2d 832 (3d Cir. 1991), cert. denied, 112 S. Ct. 1262 (1992), held:

The Amendments Act creates a federal cause of action which did not exist prior to the Act, establishes federal jurisdiction for that cause of action, and channels all legal liability to the federal courts through that cause of action . . . . Congress clearly intended to supplant all possible state causes of action when the factual prerequisite of the statute are [sic] met.

Id. at 856-57.

6. U.S. GAO, NRC'S ASSURANCE OF DECOMMISSIONING FUNDING DURING UTILITY RESTRUCTURING COULD BE IMPROVED (2001) (GAO-02-48) [hereinafter U.S. GAO, UTILITY RESTRUCTURING].

7. The GAO report noted that the merger of Commonwealth Edison and PECO placed 20 units in the hands of the newly formed Exelon. Id. at 27-28.

8. For example, a "fleet" owner may face the shutdown of much or all of its fleet if an accident elsewhere is caused by a design flaw common to the fleet units. When nuclear unit ownership was relatively dispersed, it might be hypothesized that individual utilities could offset the impact of across-the-board nuclear unit shutdowns by generation (and related revenues) from other generation sources; will this be the case under restructuring?

9. See, e.g., In re TMI, 67 F.3d 1103, 26 ELR 20006 (3d Cir. 1995).

10. In 1996, the President's Advisory Committee on Human Radiation Experiments (Advisory Committee) recommended, and the president adopted, the principle that when the government (or its contractors) covered up information about risk from human experimental subjects, the subjects were entitled to compensation—even in the absence of physical harm. See COMMITTEE RECOMMENDATION ONE; PRESIDENTIAL ADVISORY COMMITTEE ON HUMAN RADIATION EXPERIMENTS (Oxford Univ. Press 1996), available at http://tis.eh.doe.gov/ohre/roadmap/achre/chap18_1.html (last visited Feb. 25, 2002).

Consistent with, and on reflection on, the principle enunciated by the Advisory Committee, in enacting the Energy Employees Occupational Illness Program Act of 2000, Pub. L. No. 106-398, tit. 36, Congress provided that, where a worker shows that (1) he/she worked at a weapons complex site during the relevant time period and (2) he/she has sustained an illness that, as provided by the law, may have been caused by exposure to radiation at the site, then (3) the worker (or survivors) will be entitled to compensation in cases where the government lacks the data necessary to reasonably assess causality. See id. § 3626 (designation of additional members of Special Exposure Cohort).

11. Lujan v. Regents of the Univ. of Cal., 69 F.3d 1511 (9th Cir. 1995).

12. 24 F. Supp. 2d 325 (D.N.J. 1998).

13. Id. at 332.

14. Id. at 339-40 (footnote omitted).

15. 62 F. Supp. 2d 282 (D. Mass. 1999).

16. Stepan notes that the vast majority of litigated cases either dealt with indemnified facilities, e.g., power plants, or did not address the issue of whether indemnification was a requisite to the Act's jurisdiction. Stepan addressed two prior cases, including Kerr-McGee Corp. v. Farley, 115 F.3d 1498, 27 ELR 21522 (10th Cir. 1997), cert. denied, 118 S. Ct. 880 (1998) discussed below, which appeared to find the Act's jurisdiction commensurate with NRC licensing authority.

17. 60 F. Supp. 2d 800 (N.D. Ill. 1999).

18. 874 F. Supp. 796, 830-32 (S.D. Ohio 1995).

19. Id. at 832. See also McCafferty v. Centerior Serv. Co., 983 F. Supp. 715 (N.D. Ohio 1997) ("All of Plaintiffs' claims which arise as a result of their unintended exposure to radiated materials are preempted by the Amendments Act, and must be analyzed for inconsistencies with that legislation.").

20. 62 F. Supp. 2d at 282.

21. Id. at 297. See also Bohrmann v. Maine Yankee, 926 F. Supp. 211 (D. Me. 1996), where the court found that an intentional tort theory, as provided by Maine law, could be pursued under the Act ("There is no reason apparent to this court to believe that Congress intended that a defendant be insulated from liability for intentional acts solely by complying with the federal safety standards . . . ."); Caputo v. Boston Edison Co., 924 F.2d 11 (1st Cir. 1991) (worker injury claim for intentional infliction of emotional distress removed to federal court pursuant to the 1998 Amendments, case dismissed for lack of factual support).

22. 115 F.3d 1498, 27 ELR 21522 (10th Cir. 1997), cert. denied, 118 S. Ct. 880 (1998).

23. Id. at 1504, 27 ELR at 21524.

24. No. Civ. A. 97-3557, 1998 U.S. Dist. LEXIS 2003 (E.D. La. Feb. 17, 1998).

25. Id.

26. See 42 U.S.C. § 2014(w)(ii).

27. U.S. GAO, UTILITY RESTRUCTURING, supra note 6.

28. Id. at 6.

29. Id.

30. Id. The GAO elaborated, noting:

When plant owners requested that their operating licenses for eight plants be transferred to a contractor, NRC maintained the existing level of assurance by continuing to hold the plant owners responsible for collecting decommissioning funds. In addition, when [the] NRC approved requests to transfer licenses related to the sale of 15 plants, decommissioning funding assurances were increased because the selling utilities prepaid all or most of the projected decommissioning costs, and either the sellers or the new owners provided additional financial guarantees for those projected costs that were not prepaid. However, when [the] NRC approved requests to transfer licenses in which the new licensee intended to rely on periodic deposits into external sinking funds for decommissioning, it did not always obtain the same level of financial assurance . . . . Among other things, [the] NRC approved two requests to transfer ownership of 25 plants without verifying that the new owners would have guaranteed access to the decommissioning charges that their affiliated entities would collect.

Id. at 21.

31. Id. at 6.

32. NRC REPORT TO CONGRESS, supra note 4, app. A.

33. Id. at 151. The report explained:

The 1979 NRC staff study determined that assessments at the $ 10 million level were manageable but that problems might arise at the $ 20 million, and higher, assessment levels. The 1983 Report to Congress, using financial data from 1981, demonstrated that assessments at the $ 50 million level per reactor could pose major problems for all four of the utilities and especially for the two with more than one reactor each. It also showed how utilities began to evidence financial distress at assessment levels ranging between $ 10 and $ 20 million. That finding supported the 1979 NRC staff study's findings that recommended limiting the maximum assessments to $ 10 million per year, because higher assessments could cause financial distress.

Using the Melicher method to evaluate the four utilities, this analysis concludes that the maximum annual assessment that all four utilities could afford seems to range between $ 20 and $ 50 million. This is consistent with the previous analyses' findings concluding that the maximum assessment level utilities could afford was between $ 10 and $ 20 million, which equal $ 16 and $ 32 million, respectively, in 1996 dollars when adjusted for inflation. However, the current deregulatory environment, which may lead to restructuring within the nuclear power industry, may impact the ability of some nuclear power entities to handle a $ 20 million annual retrospective premium assessment.

Id.

34. Under 50 U.S.C. § 1431.

35. See 48 C.F.R. pt. 52; id. § 52.250-1 (Indemnification Under Public Law 85-804).

36. 464 U.S. 238, 14 ELR 20077 (1984).

37. 42 U.S.C. § 2210(s) provides:

No court may award punitive damages in any action with respect to a nuclear incident or precautionary evacuation against a person on behalf of whom the United States is obligated to make payments under an agreement of indemnification covering such incident or evacuation.

38. Court decisions which indicate that punitive damages are still available make plain that punitive damages cannot be had against the government, but make less plain what this means. For example: (1) If punitive damages must come from funding other than that provided by the government, what does this mean when the government stands as ultimate indemnitor? (2) Is the test whether the funding comes from the first or second tier of payments, and, if so, by what rationale does one determine which pot the punitive damages come from? (3) Are punitive damages always available from those who are not directly indemnified by the government, e.g., a contract supplier to an indemnified utility?

39. 67 F.3d 1119, 26 ELR 20014 (3d Cir. 1995).

40. Id. at 1125, 26 ELR at 20016.

41. Id. (citing district court opinion).

42. Id. at 1127, 26 ELR at 20017. The court concluded:

Because there is no conflict between the Amendments Act and the substantive laws of Pennsylvania which allow punitive damages, we will instruct the district court to proceed with the litigation of these matters in a manner consistent with this opinion. In so doing, we emphasize that the district court has authority to prioritize the various claims if punitive damages are awarded and that [the Act's] tri-level insurance scheme is easily adaptable to such a prioritization of claims. It cannot be gainsaid that "if there is a limited fund, priority should be given to compensating those who have been injured rather than conferring windfalls on those who have already been compensated." . . . We see nothing in the Act that precludes a district court from using its discretion to limit or even preclude punitive damages in accordance with the financial constraints of the fund and the Act's prohibition against punitive damage awards being paid out of the federal layer of insurance. However, we do not express any view as to whether the district court should so exercise its discretion.

Id. at 1128, 26 ELR at 20018.

43. 938 F. Supp. 70 (D. Mass. 1996) ("a claim for punitive damages may be asserted directly against a defendant who 'supplied materials or services' to a nuclear power plant so long as such an award is authorized by the law of the forum").

44. In Smith, the court, in denying General Electric's motion to dismiss the claims against it, explained:

The purpose of the channeling provision of [the Act] is to make third-party vendors like GE indemnitees of nuclear plant operators like Boston Edison. The Act does not exonerate GE of its legal liability, it merely shifts the obligation to pay damages to Boston Edison. The distinction between an indemnitee and a party immune from suit is critical, especially in a punitive damages context . . . . As the Third Circuit pointed out in TMI . . . the limitation on punitive damages in the 1988 Amendments Act applies only when the United States is an indemnifying party . . . .

The basis of plaintiff's punitive damages claim is the allegation that GE knowingly and recklessly sold defective fuel rods to Boston Edison. While it is true that [the Act] will eventually require Boston Edison to indemnify GE for any damages, to dismiss GE at this stage as a party would hinder plaintiffs from developing proof of knowing or reckless conduct on GE's part.

Id. at 77-78.

45. 935 F. Supp. 376 (S.D.N.Y. 1996) (denying motion to dismiss claims against non-licensee because "it is incongruous to argue that contractors cannot be subject to suit simply because they may be indemnified [by the licensee]").

46. Perhaps by contrast, in O'Conner v. Commonwealth Edison Co., 13 F.3d 1090, 24 ELR 20689 (7th Cir.), cert. denied, 512 U.S. 1222 (1994) (pipefitter sues utility), the U.S. Court of Appeals for the Seventh Circuit noted, in dicta, that "Silkwood's holding regarding damages was overruled by the Amendments Act which specifically bars punitive damages." Id. at 1105 n. 13, 24 ELR at 20696 n. 13. See also Nieman v. NLO Indus., 108 F.3d 1546, 1551 n.5 (6th Cir. 1997).

47. The courts have further held that the federal standard to be applied is the applicable numerical standard, and not the as low as reasonably achievable (ALARA) principle. See, e.g., In re TMI, 67 F.3d 1103, 26 ELR 20006 (3d Cir. 1995) (noting that no court appears to have actually applied ALARA as part of the duty of care); Carey v. Kerr-McGee Chem. Corp., 60 F. Supp. 2d 800, (N.D. Ill. 1999) (identifying McCafferty v. Centerior Serv. Co., 983 F. Supp. 715, 718 (N.D. Ohio 1997), as a decision which finds ALARA to be applicable. However, that decision agreed that the occupation dose limits—not ALARA—defines the standard of care.

48. The Court observed that the NRC had "determined that Kerr-McGee's only violation of regulations throughout the incident was its failure to maintain a record of the dates of two urine samples submitted by Silkwood." 464 U.S. at 244, 14 ELR at 20079.

49. Id. at 251-52, 256, 14 ELR at 20081, 20082.

50. 146 F.3d 1305 (11th Cir. 1998).

51. Id. at 1307.

52. Id. at 1308.

53. 67 F.3d at 1116, 26 ELR at 20012.

54. Id. at 1117-18, 26 ELR at 20013.

55. Id. at 1118, 26 ELR at 20013.

56. 146 F.3d at 1307.

57. Id. at 1308. Similarly, in Lokos v. Detroit Edison, 67 F. Supp. 2d 740 (E.D. Mich. 1999) (individual claim of cancer related to occupational and community exposure to Fermi Power Plant), the court stated that "to prevail in their [public liability action], plaintiffs must prove two essential elements: (1) Mrs. Lokos' exposure exceeded the federal numerical dose limits; and (2) such overexposure caused her to suffer a compensable injury under the Amendments Act." Id. at 743. The plaintiff, pointing to the TMI decision, argued that a breach of duty occurs whenever excessive radiation is released, "whether or not anyone is present in the area exposed." Id. The court stated that in TMI the defendants admitted that the permissible levels were exceeded at the site boundary, but there was no such evidence in the case at hand. Id.

58. The Advisory Committee's report is available as THE HUMAN RADIATION EXPERIMENTS: FINAL REPORT OF THE PRESIDENT'S ADVISORY COMMITTEE (Oxford Univ. Press 1996). The report contains a "Citizen's Guide" to accessing the documents and other materials reviewed by the Advisory Committee.

59. Energy Employees Occupational Illness Program Act of 2000, Pub. L. No. 106-398, tit. 36.

60. Section 3626 (Designation of Additional Members of Special Co-hort) empowers an expert panel to determine whether there are classes of workers "who likely were exposed to radiation but for whom it is not feasible to estimate with sufficient accuracy the dose of radiation they received."

61. 69 F.3d 1511 (9th Cir. 1995).

62. Id. at 1518.