Exelon Generation Co. v. Local 15, International Brotherhood of Electrical Workers

676 F.3d 566
CourtCourt of Appeals for the Seventh Circuit
DecidedMay 9, 2012
Docket11-2423
StatusPublished
Cited by40 cases

This text of 676 F.3d 566 (Exelon Generation Co. v. Local 15, International Brotherhood of Electrical Workers) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Exelon Generation Co. v. Local 15, International Brotherhood of Electrical Workers, 676 F.3d 566 (7th Cir. 2012).

Opinion

HAMILTON, Circuit Judge.

To work at one of the nation’s privately-owned nuclear power plants, many employees must receive a security clearance with “unescorted access” privileges. When such access is denied or revoked, the Nuclear Regulatory Commission requires owner-licensees of nuclear facilities to provide the aggrieved worker with a review procedure. For plants whose employees are unionized, a longstanding issue has been whether labor arbitrators deciding grievances under collective bargaining agreements can review access denial decisions and order unescorted access as a remedy for a wrongful denial. From 1991 to 2009, the Commission took the unequivocal position that labor arbitrators have that power, and courts agreed.

In 2009, the Commission completed a comprehensive post-9/11 overhaul of nuclear power plant security requirements. Although it modified some of the regulatory provisions dealing with review of unescorted access denials, the new language was at best ambiguous as to whether the Commission had changed its policy to prohibit arbitral review. A close look at the text and the rulemaking record shows that it did not. Among other factors we consider, neither the Commission nor any other participant suggested in the notice-and-comment process that the new language would modify, let alone overturn, the Commission’s established policy permitting arbitral review.

Nevertheless, plaintiff-appellee Exelon Generation Company maintains that the amended regulation quietly overruled the Commission’s prior position. In the district court, Exelon sought and won a declaratory judgment that the 2009 amendments prohibit arbitration of access denial decisions. Exelon Generation Co. v. Local 15, Int’l B’hood of Elec. Workers, No. 10 C 4846, 2011 WL 2149624 (N.D.Ill. May 25, 2011). We reverse. The Commission did not flip-flop on an important, longstanding, and controversial policy without clearly indicating either in the text of the rule or at any point in the rulemaking history that it was doing so.

I. Factual and Regulatory Background

Pursuant to its statutory mandate under the Atomic Energy Act, 42 U.S.C. § 2011 et seq., the Commission requires all licensees operating nuclear generators to implement access authorization programs in *569 their facilities. 10 C.F.R. § 73.56(a). Licensees’ programs must provide “high assurance” that individuals with unescorted access privileges “are trustworthy and reliable, such that they do not constitute an unreasonable risk to public health and safety or the common defense and security.” 10 C.F.R. § 73.56(c). The Commission first promulgated these regulations in 1991 and amended them in 2009, each time via the notice-and-comment rulemaking procedures of the Administrative Procedure Act, 5 U.S.C. § 553.

Two separate provisions of section 73.56 are disputed here. The first is paragraph (a)(4), which allows a “contractor or vendor” of the licensee “to satisfy appropriate elements of the licensee’s access authorization program.” 10 C.F.R. § 73.56(a)(4). Although it allows licensees to delegate some responsibilities over access programs to contractors and vendors, the provision also says: “Only a licensee shall grant an individual unescorted access.” The second is subsection (Z), which specifically addresses the review procedures that licensees must provide to employees whose unescorted access privileges are denied or revoked. 1 The rule requires the licensee to give the aggrieved employee notice of “the grounds for the denial,” “an opportunity to provide additional relevant information,” and “an opportunity for an objective review of the information upon which the denial ... was based.” 10 C.F.R. § 73.56(Z). The new 2009 version of subsection (Z) also states: “The procedure must provide for an impartial and independent internal management review.” Id. The 1991 version had provided: “The procedure may be an impartial and independent internal management review.” 56 Fed.Reg. 18997, 19008 (emphasis added).

In May 2009, after the Commission issued the final amended regulation, a private consortium of nuclear power operators called the Nuclear Energy Institute (NEI) updated a set of “standard industry criteria” for implementing the amended regulation. The document, called “NEI 03-01 (Revision 3),” asserted: “the licensee internal management review process is final, shall be the exclusive means by which [unescorted access] decisions may be reviewed, and may not be reviewed or overturned by any third party.” App. 58. In July 2009 the Commission staff reviewed NEI 03-01 (Revision 3) in “Regulatory Guide 5.66.” The staff found NEI 03-01 (Revision 3) to “meet the intent and substance of’ the amended access regulations. App. 382. Regulatory Guide 5.66 stated that the “NRC staff considers conformance with the provisions of NEI 03-01 to be an acceptable approach to meet the requirements of 10 C.F.R. § 73.56.” App. 385. The guide also cautioned: “Regulatory guides are not substitutes for regulations and compliance with them is not required.” App. 383.

Plaintiff Exelon is a licensee that owns and operates nuclear generating facilities in Pennsylvania, New Jersey, and Illinois. IBEW Local Union 15 (“Local 15”) represents 1,600 employees at Exelon’s six Illinois plants. Since at least 2001, Exelon and Local 15’s collective bargaining agreements have provided for a grievance procedure culminating in arbitration with respect to “any dispute” over “working conditions.” App. 126. Pursuant to the access regulations, Exelon maintains a program for granting and denying current and prospective employees unescorted access privileges in its facilities. Exelon did not collectively bargain with Local 15 over *570 its unescorted access program. In an earlier lawsuit between these parties, however, District Judge Lefkow ruled that access denials were grievable under the collective bargaining agreement and that the 1991 access regulations then in force did not preclude arbitral review. Exelon Generation Co. v. Local 15, Int’l B’hood of Elec. Workers, No. 06 CV 6961, 2008 WL 4442608 (N.D.Ill. Sept. 29, 2008). There was no appeal, and Exelon does not challenge either holding here.

Instead, Exelon filed a new action in the district court (assigned to Judge Gettleman) seeking a declaratory judgment that the 2009 amendments to the access regulations changed the Commission’s policy to prohibit third-party review of a licensee’s denial of unescorted access. The case was prompted by Exelon’s termination of the unescorted access privileges and employment of several Local 15 members. Local 15 counterclaimed to compel arbitration of those decisions.

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676 F.3d 566, Counsel Stack Legal Research, https://law.counselstack.com/opinion/exelon-generation-co-v-local-15-international-brotherhood-of-electrical-ca7-2012.