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General Public Utilities Corp. v. United States

September 28, 1984

GENERAL PUBLIC UTILITIES CORPORATION, JERSEY CENTRAL POWER & LIGHT COMPANY, METROPOLITAN EDISON COMPANY, PENNSYLVANIA ELECTRIC COMPANY, APPELLEES
v.
UNITED STATES OF AMERICA, APPELLANT



Appeal from the United States District Court for the Eastern District of Pennsylvania

Author: Weis

Before: WEIS, HIGGINBOTHAM, and SLOVITER, Circuit Judges.

Opinion OF THE COURT

WEIS, Circuit Judge.

Alleging that the Nuclear Regulatory Commission failed to warn them of equipment defects, the owners of the Three Mile Island nuclear facility seek substantial damages attributed to a valve failure at the plant. We conclude that the claims against the government are barred by the discretionary function exception of the Federal Tort Claims Act.

The plaintiffs' complaint asserts a right to recover under the Tort Claims Act, 28 U.S.C. § 2671 et seq., because the Commission did not comply with statutory directives or its own regulations. The government moved to dismiss, asserting the discretionary function and misrepresentation exceptions to the Act, id. §§ 2680(a), (h). The district court denied the motion but sua sponte certified its order as one involving a controlling issue of law under 28 U.S.C. § 1292(b). We accepted the appeal.

Plaintiffs own and operate the Three Mile Island Unit No. 2 nuclear facility in Londonderry Township, Pennsylvania.*fn1 Their complaint seeks more than four billion dollars in damages.

On March 28, 1979, a pilot-operated valve at Unit No. 2 failed to close properly, causing the reactor's coolant system to lose significant quantities of water and steam. The instruments that should have indicated that the valve remained open incorrectly showed it as being closed. A series of procedures undertaken in the belief that the valve was closed deprived the reactor of proper coolant, and it began to overheat. The nuclear core and protective claddings were severely damaged, resulting in the staggering financial losses to plaintiffs.

The complaint is in two counts. The first alleges that the Nuclear Regulatory Commission failed to exercise due care to discover, analyze, and warn of safety hazards. In particular, Count I alleges that in September 1977, 18 months before the Three Mile Island incident, a similar event occurred at the Davis-Besse nuclear power plant in Ohio. That facility was operated by the Toledo Edison Company and had been designed by the Babcock & Wilcox Company, which also prepared the plans for Three Mile Island.*fn2 Plaintiffs contend that the Commission failed to properly forward information to them about the cause of the Davis-Besse failure as well as the corrective measures developed to prevent similar occurrences.

The second count complains that the Commission negligently approved the Three Mile Island design and construction plans at a time when it knew or should have known that the pilot-operated relief valve could stick and cause a loss-of-coolant accident. Plaintiffs allege that the agency failed to require the manufacturer, Babcock & Wilcox, to analyze small breaks in a coolant system such as the one that was caused by the faulty valve at Three Mile Island.

In ruling on the government's motion to dismiss, the district court reviewed the Commission's statutory authority and the methods it uses to collect and disseminate safety information. Owners and operators are required to notify the Commission of defects in a facility that would create a substantial safety hazard, and the Commission is obligated to submit reports to Congress listing "abnormal occurrences." This information is also to be given wide dissemination to the public.

In carrying out its responsibility, the Commission has developed a series of mechanisms for the exchange of information with licensees. When the most serious events occur, a Bulletin is issued. It requires a response and may direct licensees to take specific action on a one time basis. For lesser degrees of danger, the Commission distributes a Circular, which does not mandate action or necessitate a reply. Other information worthy of general distribution is provided in Licensee Event Reports, NRC Inspection and Enforcement Manual, Chap. 1125 (1977).

A Licensee Event Report was used to describe the Davis-Besse incident and was sent to plaintiffs and other licensees in January 1978.*fn3 No further warning or information was given to plaintiffs, and their operating license was issued by the Commission in February 1978.

The theories of liability asserted in the complaint are negligence, negligence per se, and the "Good Samaritan" rule of the Restatement (Second) of Torts §§ 323 and 324A. Plaintiffs allege that they relied on the Commission but it failed to exercise due care in the performance of its undertakings. The district court concluded that the Energy Reorganization Act imposed a duty on the Commission to monitor the nuclear energy industry and alert licensees to safety problems.

Although the district court construed the complaint to essentially allege a failure to warn, it determined that the misrepresentation exception to the Tort Claims Act did not apply because the plaintiffs' losses were the result of the government's failure to disclose safety, not commercial, information. The district judge also rejected the Commission's contention that the discretionary function exemption barred the suit, observing that the "governing standards are not so vague or inexact as to call for unfettered scientific "discretion." When decisionmakers exceed the scope of applicable regulations, he reasoned, the government cannot invoke the discretionary function exception.

After denying the motion to dismiss, the court certified the following question for immediate interlocutory review: "Is our decision correct that neither the misrepresentation nor the discretionary function exception bars this suit?"

Because the statutory exceptions constitute retentions of the sovereign immunity that is otherwise waived in the Act, a negative answer to either of the grounds for the district court's decision will require dismissal of the plaintiffs' suit. We do not discuss the misrepresentation issue because we conclude that the discretionary function exception applies to this case.*fn4

One of the cases relied on by the district court in reaching its conclusion was United Scottish Insurance Co. v. United States, 692 F.2d 1209 (9th Cir. 1982). Shortly after the district court issued its order, the Supreme Court granted certiorari in United Scottish and consolidated it with S.A. Empresa De Viacao Aerea Rio Grandense (Varig Airlines) v. United States, 692 F.2d 1205 (9th Cir. 1982). The Supreme Court had not decided those cases when the case at bar was presented to this panel. In view of their relevancy, we chose to await the Court's action. Following the Court's reversal of both cases, United States v. S.A. Empresa De ...


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