Duke Power Co. v. Carolina Environmental Study Group, Inc.

438 U.S. 59, 98 S. Ct. 2620, 57 L. Ed. 2d 595, 1978 U.S. LEXIS 38, 8 Envtl. L. Rep. (Envtl. Law Inst.) 20545, 11 ERC (BNA) 1753
Supreme Court of the United States·Decided June 26, 1978·No. 77-262·Published·Cited by 1,928 cases

Opinions

Mr. Chief Justice Burger

delivered the opinion of the Court.

These appeals present the- question of whether Congress may, consistent with the Constitution, impose a limitation on [63]*63liability for nuclear accidents resulting from the operation of private nuclear power plants licensed by the Federal Government.

I

A

When Congress passed the Atomic Energy Act of 1946, it contemplated that the development of nuclear power would be a Government monopoly. See Act of Aug. 1, 1946, ch. 724, 60 Stat. 755. Within a decade, however, Congress concluded that the national interest would be best served if the Government encouraged the private sector to become involved in the development of atomic energy for peaceful purposes under a program of federal regulation and licensing. See H. R. Rep. No. 2181, 83d Cong., 2d Sess., 1-11 (1954). The Atomic Energy Act of 1954, Act of Aug. 30, 1954, ch. 1073, 68 Stat. 919, as amended, 42 U. S. C. §§ 2011-2281 (1970 ed. and Supp. V), implemented this policy decision, providing for licensing of private construction, ownership, and operation of commercial nuclear power reactors for energy production under strict supervision by the Atomic Energy Commission (AEC).1 See Power Reactor Development Co. v. Electrical Workers, 367 U. S. 396 (1961), rev’g and remanding 108 U. S. App. D. C. 97, 280 P. 2d 645 (I960).

Private industry responded to the Atomic Energy Act of 1954 with the development of an experimental power plant constructed under the auspices of a consortium of interested companies. It soon became apparent that profits from the private exploitation of atomic energy were uncertain and the accompanying risks substantial. See Green, Nuclear Power: [64]*64Risk, Liability, and Indemnity, 71 Mich. L. Rev. 479-481 (1973) (Green). Although the AEC offered incentives to encourage investment, there remained in the path of the private nuclear power industry various problems — the risk of potentially vast liability in the event of a nuclear accident of a sizable magnitude being the major obstacle. Notwithstanding comprehensive testing and study, the uniqueness of this form of energy production made it impossible totally to rule out the risk of a major nuclear accident resulting in extensive damage. Private industry and the AEC were confident that such a disaster would not occur, but the very uniqueness of nuclear power meant that the possibility remained, and the potential liability dwarfed the ability of the industry and private insurance companies to absorb the risk. See Hearings before the Joint Committee on Atomic Energy on Government Indemnity for Private Licensees and AEC Contractors Against Reactor Hazards, 84th Cong., 2d Sess., 122-124 (1956). Thus, while repeatedly stressing that the risk of a major nuclear accident was extremely remote, spokesmen for the private sector informed Congress that they would be forced to withdraw from the field if their liability were not limited by appropriate legislation. Id., at 9, 109-110, 115, 120, 136-137, 148, 181, 195, and 240.

Congress responded in 1957 by passing the Price-Anderson Act, 71 Stat. 576, 42 U. S. C. § 2210 (1970 ed. and Supp. V). The Act had the dual purpose of “protect [ing] the public and . . . encouraging] the development of the atomic energy industry.” 42 U. S. C. § 2012 (i). In its original form, the Act limited the aggregate liability for a single nuclear incident2 to $500 million plus the amount of liability insurance [65]*65available on the private market — some $60 million in 1957. The nuclear industry was required to purchase the maximum available amount of privately underwritten public liability insurance, and the Act provided that if damages from a nuclear disaster exceeded the amount of that private insurance coverage, the Federal Government would indemnify the licensee and other “persons indemnified” 3 in an amount not to exceed $500 million. Thus, the actual ceiling on liability was the amount of private insurance coverage plus the Government’s indemnification obligation which totaled $560 million.

Since its enactment, the Act has been twice amended, the first occasion being on the eve of its expiration in I960.4 These amendments extended the basic liability-limitation provisions for another 10 years, and added a provision which had the effect of requiring those indemnified under the Act to waive all legal defenses in the event of a substantial nuclear accident.5 This provision was based on a congressional concern that state tort law dealing with liability for nuclear incidents was generally unsettled and that some way of insuring a common standard of responsibility for all jurisdictions — strict liability — was needed. A waiver of defenses was thought to be the preferable approach since it entailed less [66]*66interference with state tort law than would the enactment of a federal statute prescribing strict liability.6 See S. Rep. No. 1605, 89th Cong., 2d Sess., 6-10 (1966).

In 1975, Congress again extended the Act’s coverage until 1987, and continued the $560 million limitation on liability. However a new provision was added requiring, in the event of a nuclear incident, each of the 60 or more reactor owners to contribute between $2 and $5 million toward the cost of compensating victims.7 42 U. S. C. § 2210 (b) (1970 ed., Supp. V). Since the liability ceiling remained at the same level, the effect of the “deferred premium” provision was to reduce the Federal Government’s contribution to the liability pool.8 In its amendments to the Act in 1975, Congress also explicitly provided that “in the event of a nuclear incident involving damages in excess of [the] amount of aggregate liability, the Congress will thoroughly review the particular incident and will take whatever action is deemed necessary and appropriate to protect the public from the consequences of a [67]*67disaster of such magnitude . . . 42 U. S. C. § 2210 (e) (1970 ed., Supp. Y).

Under the Price-Anderson Act as it presently stands, liability in the event of a nuclear incident causing damages of $560 million or more would be spread as follows: $315 million would be paid from contributions by the licensees of the 63 private operating nuclear power plants; $140 million would come from private insurance (the maximum now available); the remainder of $105 million would be borne by the Federal Government.9

B

Appellant in No. 77-262, Duke Power Co., is an investor-owned public utility which is constructing one nuclear power plant in North Carolina and one in South Carolina.

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Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 98 S. Ct. 2620, 57 L. Ed. 2d 595, 1978 U.S. LEXIS 38, 8 Envtl. L. Rep. (Envtl. Law Inst.) 20545, 11 ERC (BNA) 1753 (1978).

438 U.S. 59 (Duke Power Co. v. Carolina Environmental Study Group, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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