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Suffolk, County of v. Long Island Lighting Co.

Citation: 14 ELR 20284
No. No. 83-7122, 728 F.2d 523/(2d Cir., 01/25/1984)

The court holds that appellant's tort and contract claims on behalf of ratepayers, alleging that defective construction of the Shoreham Nuclear Power Facility poses a public safety risk and unreasonably high electric rates, are preempted by federal and state law and insufficient under New York common law. First, the court holds that to the extent appellant seeks relief for safety reasons, its claims are preempted by the Atomic Energy Act (AEA). Also, under § 221 of the AEA, the United States government has exclusive authority to enforce Nuclear Regulatory Commission (NRC) regulations implementing its AEA licensing authority. Thus, Suffolk may enforce NRC regulations only through the established administrative process. In addition, Suffolk's request for an injunction against operation of the facility and an inspection of alleged defects is preempted by NRC's exclusive authority over facility construction and operation. Judicial intervention in the NRC's authority to license and inspect facilities, which it has chosen not to delegate to the states, would retard the AEA goal of encouraging energy development. The court holds that appellant's request for retroactive and prospective electric power rate relief is preempted by the New York Public Service Law, which grants exclusive ratemaking power to the Public Services Commission (PSC). Any challenge to rates must be pursued through administrative channels. Next, the court holds that Suffolk's common law claims also fail. Its claims based on theories of negligence and strict liability are insufficient because Suffolk has alleged only an economic loss, not an injury to persons or property. Appellant's claims for breach of warranty and contract fail because there is no contractual or fiduciary relationship between Suffolk County ratepayers and appellee's contractors. The ratepayers and the suppliers of facility equipment are not in privity of contract, nor are the ratepayers third-party beneficiaries of appellee's contract with equipment suppliers and construction contractors. Although appellee has a fiduciary responsibility to its shareholders, it has no such responsibility to ratepayers. Finally, a cause of action based on misrepresentation does not lie because appellee made representations only to the PSC, not to its ratepayers.

Counsel for Appellant
Irving Like
Reilly, Like & Schneider
P.O. Box 218, Babylon NY 11702
(__) 669-3000

Counsel for Appellees
Joseph M. Spivey III, W. Taylor Revely III, D. Alan Rudlin, Lewis F. Powell III
Hunton & Williams
P.O. Box 1535, Richmond VA 23212
(804) 788-8200

William A. Gordon, John M. Carrol
Mayor, Brown & Platt
211 S. La Salle St., Chicago IL 60604
(312) 782-0600

Robert J. Bagdasarian, Thomas A. Shaw Jr.
Breed, Abbott & Morgan
Citicorp Ctr., 151 E. 53rd St., New York NY 10022
(212) 888-0800

Joined by Kearse, and Winter, JJ.