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COUNTY OF SUFFOLK v. LONG ISLAND LIGHTING CO.

October 27, 1982

COUNTY OF SUFFOLK, in behalf of itself and all other ratepayers of the Long Island Lighting Company similarly situated, Plaintiff, against LONG ISLAND LIGHTING COMPANY, GENERAL ELECTRIC CORPORATION, STONE & WEBSTER ENGINEERING CORP., COURTER & COMPANY INCORPORATED, DRAVO UTILITY CONSTRUCTORS, INC. and COMSTOCK-JACKSON, Defendants.


The opinion of the court was delivered by: BARTELS

BARTELS, District Judge

This is a motion to remand, pursuant to 28 U.S.C. § 1447(c), and action commenced in the Supreme Court of the State of New York, Suffolk County, on June 23, 1982, and removed to this Court under 28 U.S.C. § 1441(a) and (b) on the ground that it is founded on a claim or right "arising under" the laws of the United States. Defendants maintain that this Court has original jurisdiction under 28 U.S.C. §§ 1331 and 1337 *fn1" because this action arises under the Atomic Energy Act ("the Act"), 42 U.S.C. §§ 2011 et seq., and its complementing regulations as adopted by the Nuclear Regulatory Commission ("NRC").

I

 The underlying dispute invloves the construction and operation of the Shoreham Nuclear Power Station ("Shoreham"), an electric power generating facility located at Shoreham, Long Island, New York, owned by defendant Long Island Lighting Company ("LILCO"). *fn2" Plaintiff, County of Suffolk, a municipal corporation representing a population of over 1.3 million people, brought this action on behalf of itself and all other similarly situated LILCO ratepayers. The crux of its complaint is that Shoreham suffers from serious deficiencies in its design and construction that remain undetected because of inadequate inspection, *fn3" and that ratepayers have been, in effect, overcharged in order to finance the enormously escalated construction costs attributable to the wrongfully caused defects. *fn4" The complaint predicates liability on negligence, strict liability, breach of warranty, breach of contract, and misrepresentation and concealment. It seeks both legal and equitable relief, including enjoing the operation of Shoreham pending the outcome of a court-ordered and supervised physical inspection.

 Paragraph seventeen states that defendants have "violated their statutory and common law duties of reasonable care in that they have been negligent in the design, fabrication, construction, installation, management, oversight, inspection, and testing of Shoreham." The subparagraphs that follow elaborate on this charge in only slightly greater detail, their essence being that defendants' negligence in all phases of the Shoreham project has led to unnecessary and unreasonable construction costs. Plaintiff also charges negligence in that

 Defendants have seriously and persistently violated the NRC's quality control (QC) and quality assurance (QA) regulations governing construction of Shoreham. (10 C.F.R. 50.55(e) and Part 50 Apps. A, B (Subparts I to VIII), C, D, G, I) and applicable codes such as the ASME code. The pattern of QA/QC breakdowns at Shoreham has involved other systems essential to reliability and economy of operation.

 Id. *fn5"

 Claiming strict liability and breach of warranty, plaintiff alleges that Shoreham is defective and unreasonably dangerous, not reasonably fit for the ordinary purposes for which it was constructed, and that defendants had breached express and implied warranties that Shoreham was free of design and construction defects and fit for the purposes for which it was constructed. The injury alleged as a result of defendants' negligence and strict liability is higher electric rates and the risk of major accident if Shoreham is allowed to operate. PP29-32.

 Asserting breach of contract and third-party beneficiary status, plaintiff in paragraph thirty-five states that defendants General Electric Corp. ("G.E."), Stone & Webster Engineering Corp. ("S&W"), Courter & Co. ("Courter"), Dravo Utility Constructors, Inc. ("Dravo"), and Comstock-Jackson ("C-J") breached their contracts with LILCO "to sell, deliver, design and construct . . . Shoreham free of defects, capable of performing safely, reliably, and economically, and at a price which did not include unnecessary and unreasonable costs caused by design and construction defects."

 Finally, plaintiff asserts misrepresentation and concealment arising from LILCO's actions in failing to disclose to the New York State Public Service Commission ("PSC") and ratepayers design and construction defects in Shoreham which misled the PSC into enlarging LILCO's rate base to include construction costs arising from such defects. *fn6" PP40-44.

 The relief sought in the complaint is threefold. The complaint (1) demands a court-ordered and supervised "design review and physical inspection of all the critical safety systems of the Shoreham plant, as such systems are defined, pursuant to NRC regulations and those systems essential to reliability and economy of operation, as such are defined pursuant to PSC regulations . . .," P1A at 31; (2) seeks damages for past "overcharges" in electric rates, reflecting increases in Shoreham construction costs attributable to design or construction defects, P2 at 32; *fn7" and (3) an injunction against LILCO enjoining LILCO "from commencing operation of Shoreham pending submission of the report of inspection to this court and the final disposition of any further judicial proceedings thereon." P7 at 33.

 In support of its motion, plaintiff claims that its complaint states traditional common law causes of action between private parties and therefore affords no basis for removal from state court. While conceding that the Act could preempt any state claims predicated upon the radiological safety aspects of Shoreham, plaintiff maintains that its action is a "pocketbook" action and not a "safety" action. As for the complaint's multiple references to federal regulatory law, plaintiff maintains that alleged noncompliance therewith merely creates evidentiary issues bearing on its various state law theories of liability. It argues that the Act provides no express or implied private cause of action and that consequently, in order to assert federal question jurisdiction, the Court would be compelled to fashion a federal common law remedy which, according to the plaintiff, is prohibited by In re "Agent Orange" Product Liability Litigation, 635 F.2d 987 (2d Cir. 1980), cert. denied, 454 U.S. 1128, 102 S. Ct. 980, 71 L. Ed. 2d 116 (1981).

 In support of removal, defendants contend that the true objective of the complaint is to regulate the safety of Shoreham, which is peculiarly within the province of the Act and its regulations. *fn8" Therefore, defendants say that plaintiff is asserting an implied private cause of action under the Act which creates federal question jurisdiction. They add that the Act and its regulations have preempted all state law causes of action, ...


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