Sixth and Eighth Circuits Confirm the Broad Applicability of the Price-Anderson Nuclear Industries Indemnity Act

In January 2022, the Eighth Circuit issued its decision in Banks v. Cotter Corp. The Court applied a plain meaning of the term nuclear “occurrence,” which is undefined, in supporting its broad grant of federal jurisdiction under the Price-Anderson Act. Under this interpretation, Banks held that the Act gives federal courts original jurisdiction over claims arising from nuclear incidents even in the absence of an applicable license or indemnity agreement. 

Matthews and Banks strengthen the protection nuclear facilities receive from the Price-Anderson Act by establishing their right to remove certain actions from state to federal court, affirming that allegations of damages resulting from long-term, slow or periodic releases of radioactive material fall squarely within the ambit of the Act, and holding that it provides federal jurisdiction even in the absence of a license or indemnity agreement.

Matthews v. Centrus Energy Corporation
In Matthews, Plaintiffs—three individuals and the estate of a decedent—lived in Ohio near the Portsmouth Gaseous Diffusion Plant, a uranium enrichment and conversion facility. Plaintiffs alleged that Portsmouth expelled radioactive materials into the surrounding community, and that the Plaintiffs suffered physical injury and property damage as a result of those releases. Plaintiffs filed suit in Ohio state court asserting several claims under Ohio law, but expressly disclaimed reliance on the Act, asserting that their “claims do not fall within the scope of the Price-Anderson Act.”

The Defendants (seven entities involved in operations at Portsmouth) successfully removed the action to the federal district court on the grounds that the Plaintiffs’ claims related to a nuclear incident and thus were governed by the Price-Anderson Act, which provides for removal to federal court. Defendants next requested dismissal, arguing that the Act preempted Plaintiffs’ state law claims, and as Plaintiffs had disclaimed applicability of the Price-Anderson Act, they had failed to state any cognizable claim. The district court agreed, and the Plaintiffs appealed.

On appeal, the Sixth Circuit found that a fundamental question was whether the Plaintiffs had, in fact, asserted a public liability action arising from a nuclear incident, even though Plaintiffs had not alleged that a nuclear incident within the scope of the Act had occurred.[1] (The Price-Anderson Act governs “any public liability action arising out of or resulting from a nuclear incident,” 42 U.S.C. § 2210(n)(2), and preempts any claims for such an action not brought under the Act.)

The court found it necessary to “look beyond the labels” used in the complaint and determine the substance of Plaintiffs’ claim. The court determined that the Plaintiffs’ allegations “fit comfortably” within the Act’s definition, as their claims clearly alleged legal liability for damages suffered from exposure to radioactive materials.

The court’s decision affirmed an expansive reading of federal removal under the Price-Anderson Act. Although Plaintiffs argued that their complaint should never have been removed and should be remanded to state court, the Sixth Circuit held that the Act’s removal provisions applied to claims arising out of nuclear incidents, even if such claims were not stated on the face of the complaint. 

Matthews also affirmed that the Price-Anderson Act applies to allegations related to slow leaks or other long-term, non-obvious releases of nuclear material. On appeal, Plaintiffs challenged the district court’s finding that their complaint alleged a nuclear incident, arguing that their claims involved a facility which had been “leaking toxic materials into the environment for decades” and such “ongoing releases” are not subject to the Act. However, the Sixth Circuit rejected this argument, concluding that there was no basis for finding that the Price-Anderson Act excluded claims regarding ongoing releases.  

Banks v. Cotter Corporation
In Banks, property owners in St. Louis, Missouri, brought a state court action against the Cotter Corporation (“Cotter”), the St. Louis Airport Authority, and other defendants for allegedly polluting the Coldwater Creek and floodplain with radioactive nuclear material. Plaintiffs did not initially sue Mallinckrodt LLC, the company that produced the radioactive material, but after an initial removal and remand back to state court, Defendants brought third-party claims for contribution against Mallinckrodt, at which point Mallinckrodt again removed the case back to federal court under the Price-Anderson Act and other bases.

Plaintiffs requested a remand for all claims except the third-party action against Mallinckrodt on the grounds these were all state-law claims. The district court agreed, holding that the Price-Anderson Act only applies to nuclear incidents if the defendant has an applicable indemnity agreement. Defendants did not have such an agreement, and so the district court found that Defendants failed to establish federal subject matter jurisdiction and remanded the case back to state court. Defendants appealed.

On appeal, the Eighth Circuit in Banks held that the district court’s determination that the Price-Anderson Act does not apply absent a license or indemnity agreement was an error that constituted an abuse of discretion. In particular, the Court found that the Act “provides federal question jurisdiction over all ‘nuclear incidents,’ regardless of whether the defendant had an applicable license or indemnity agreement.” Banks at *4 (emphasis added). Banks explained that the Act defines “nuclear incident” to include “any occurrence,” but does not define “occurrence.” The Eighth Circuit accordingly found the district court erred in departing from the ordinary meaning of this term, which the Eighth Circuit held means “something that takes place.” Applying the plain meaning of “occurrence” in the definition of “nuclear incident” means the Price-Anderson Act applies to something that takes place in the U.S., causing bodily injury or property damage, and arising from nuclear byproducts. The Eighth Circuit thus found it was not necessary for the Defendants to have indemnity agreements for the Price-Anderson Act to apply, as such agreements were not required under the definition of nuclear occurrence, and it reversed and remanded the district court’s decision.

Conclusion
The decisions in Matthews v. Centrus Energy Corporation and Banks v. Cotter cement the Price-Anderson Act’s broad preemption of state law claims for injuries arising out of “nuclear incidents.” The circuits’ analyses of the litigation history of the Price-Anderson Act provides would-be litigants with thoughtful and persuasive precedent for injury claims allegedly arising from nuclear incidents and strong arguments for removal to federal court and preemption of certain state law claims. However, the cases also highlight how existing language in the Act invites uncertainty and litigation risk in the context of complex nuclear liability scenarios.