DATE: February 7, 1996
Case No.: 94-ERA-27
In the Matter of
EDWARD F. BEACHAM
Complainant
v.
PAI CORPORATION
Respondent
BEFORE: ROBERT L. HILLYARD
Administrative Law Judge
ORDER DENYING RESPONDENT'S REQUEST FOR DISMISSAL OF
COMPLAINT DUE TO LACK OF SUBJECT MATTER JURISDICTION
This case involves a complaint by Edward F. Beacham
(Complainant or Beacham) brought under the Energy Reorganization
Act (ERA), 42 U.S.C. §5851, alleging discrimination and
wrongful termination of employment by the Respondent, PAI
Corporation.
This matter comes before the undersigned Administrative Law
Judge at this time for a ruling on the Respondent's request for
dismissal of the complaint based on an Affirmative Defense Of Lack
Of Subject Matter Jurisdiction. The Complainant has filed an
Opposition to the Respondent's request for dismissal. The matter
has been fully briefed by both parties.
BACKGROUND
PAI Corporation (PAI), Respondent, is a scientific and
technical consulting firm. The Complainant, Edward F. Beacham, was
hired by PAI as a Quality Assurance Specialist and worked on a
temporary or part-time basis from May 1993 to September 1993, when
he was made a permanent, full-time employee. Shortly thereafter,
on November 19, 1993, his employment was terminated. As a PAI
employee, Mr. Beacham performed work in connection with two PAI
contracts. The first contract was between the United States
[PAGE 2]
Department of Energy (DOE) and PAI. In accordance with the
contract, PAI was to provide consulting services to the staff of
the DOE Assistant Manager for Facility Operations at the DOE's
Savannah River Operations Office. The second contract involved a
subcontract for PAI to provide technical services to PRC Environ-
mental Management, Inc. (PRC). PRC had a prime contract with DOE
to provide technical support services for Environmental Restoration
and Waste Management Organization at the DOE's Savannah River
Operations Office. While employed by PAI, Beacham worked in
connection with tasks assigned to PAI pursuant to these two
contracts - the DOE/PAI contract and the PRC/PAI subcontract.
In the case of the Savannah River Plant, the contractor,
Westinghouse Savannah River Company (WSRC), received a report from
the DOE Tiger Team[1] listing deficiencies found. WSRC prepared
responses and guidelines for corrections of the deficiencies and
gave anticipated dates for completion of the corrections. PAI
contracted with DOE to evaluate WSRC's response packages. PAI also
contracted with PRC for further evaluation. Beacham's job was to
review the WSRC response packages for PAI.
Beacham alleges that in one particular instance, he visited
the site to test whether the employees in that area had been
informed of "new evacuation plans." He determined that only a
small number of the employees knew of the plan and based on these
findings, he refused to approve the package. He was advised that
he overstepped his authority and was asked to revise his evalua-
tion. Complainant revised his evaluation although he still
rejected the package on October 22, 1993. He was terminated on
November 19, 1993. Complainant alleges that he was fired after he
declined to accept inadequate packages, as directed by his
employer, PAI. Beacham then brought this action alleging that his
employment was terminated in violation of the employee protection
provisions of the Energy Reorganization Act.
Respondent alleges that Beacham's technical skills were poor;
that his supervisors found his reports to be unacceptable due to
errors in grammar, spelling, format, organization and style; and
that when PAI had no more work available for which Mr. Beacham was
qualified, PAI terminated his employment.
DISCUSSION AND APPLICABLE LAW
The Respondent argues that Beacham's complaint against PAI
should be dismissed for lack of subject matter jurisdiction because
PAI is not an "employer" as defined by 42 U.S.C. §5851, and
therefore, is not subject to the Act.
[PAGE 3]
The Energy Reorganization Act provides as follows:
§ 5851. Employee protection
(a) Discrimination against employee
(1) No employer may discharge any employee or otherwise
discriminate against any employee with respect to his
compensation, terms, conditions, or privileges of
employment because the employee (or any person acting
pursuant to a request of the employee)-
(A) notified his employer of an alleged
violation of this chapter or the Atomic Energy
Act of 1954 (42 U.S.C. 2011 et seq.);
(B) refused to engage in any practice
made unlawful by this chapter or the Atomic
Energy Act of 1954 [42 U.S.C.A. § 2011 et
seq.], if the employee has identified the
alleged illegality to the employer;
(C) testified before Congress or at any
Federal or State proceeding regarding any
provision (or proposed provision) of this
chapter or the Atomic Energy Act of 1954 [42
U.S.C.A. § 2011 et seq.];
(D) commenced, caused to be commenced, or
is about to commence or cause to be commenced
a proceeding under this chapter or the Atomic
Energy Act of 1954, as amended [42 U.S.C.A.
§ 2011 et seq.], or a proceeding for the
administration or enforcement of any require-
ment imposed under this chapter or the Atomic
Energy Act of 1954, as amended;
(E) testified or is about to testify in
any such proceeding or;
(F) assisted or participated or is about
to assist or participate in any manner in such
a proceeding or in any other manner in such a
proceeding or in any other action to carry out
the purposes of this chapter or the Atomic
Energy Act of 1954, as amended [42 U.S.C.A.
§ 2011 et seq.].
[PAGE 4]
(2) For purposes of this section, the term "employer
includes-
(A) a licensee of the Commission or of an
agreement State under section 274 of the
Atomic Energy Act of 1954 (42 U.S.C. 2021);
(B) an applicant for a license from the
Commission or such an agreement State;
(C) a contractor or subcontractor of such
a licensee or applicant; and
(D) a contractor or subcontractor of the
Department of Energy that is indemnified by
the Department under section 170 d. of the
Atomic Energy Act of 1954 (42 U.S.C. 2210(d)),
but such term shall not include any contractor
or subcontractor covered by Executive Order
No. 12344.
The parties agree that PAI is not an employer as defined by
subsections (A) "a licensee of the Commission ....." ; (B) "an
applicant for a license from the Commission .... ;" or (C) "a
contractor or subcontractor of such licensee or applicant."
Respondent's argument lies in the interpretation of subsection (D)
"a contractor or subcontractor of the Department of Energy that is
indemnified under section 170 d. of the Atomic Energy
Act of 1954 (42 U.S.C. 2210(d))...." Respondent argues that
because the contract between the parties does not include an
indemnification provision, then it does not come within the
definition of an "employer" as required by 42 U.S.C. §5851.
In support of its argument, Respondent cites Adams v. Dole,
927 F.2d 771 (4th Cir.), cert. denied, 502 U.S. 837
(1991), in which the United States Court of Appeals for the Fourth
Circuit adopted the Secretary of Labor's interpretation of the
definition of "employer". At the time Adams v. Dole was
decided by the Fourth Circuit, 42 U.S.C. §5851 provided in
pertinent part:
(a) Discrimination against employ-
ee
No employer, including a Commission licens-
ee, an applicant for a Commission license, or
a contractor or a subcontractor of a Commis-
sion licensee or applicant, may discharge any
employee or otherwise discriminate against any
[PAGE 5]
employee with respect to his compensation,
terms, conditions, or privileges of employment
because the employee (or any person acting
pursuant to a request of the employee)--
In Adams, the petitioner was employed by B.F. Shaw
Company which was under contract to operate the Department of
Energy owned Savannah River Plant. The Secretary of Labor
dismissed the complaint filed by Adams for "lack of jurisdiction"
stating that the employee protection provisions of §210 of the
Energy Reorganization Act applied only to employees of Nuclear
Regulatory Commission licensees, licensee applicants, and their
contractors. The Secretary stated that these provisions did not
apply to employees of the Department of Energy contractors who
operated facilities owned by the Department of Energy noting that
the Department of Energy had its own "whistle-blower procedure".
The Fourth Circuit discussed the matter at some length and affirmed
the Secretary's interpretation that the "including" clause which
follows the term "employer" at 42 U.S.C. §5851 (a) is not
meant to be illustrative, but rather definitional and concluded
that Congress, by so defining "employer," intended to exclude all
persons who do not fall within the specified categories from the
application of the employee protection provisions, including
employees of DOE contractors. Adams, 927 F.2d at 777.
In 1992, Congress amended 42 U.S.C. §5851. The amendment
placed the definition of "employer" into four separate subsections.
Added to the definition of "employer" at subsection 5851(a)(2) was:
(D) a contractor or subcontractor of the
Department of Energy that is
indemnified by the Department under
section 170 d. of the Atomic Energy Act of
1954 (42 U.S.C. 2210(d)), .....
The Respondent argues that PAI is not indemnified and,
therefore, is not an employer within the meaning of the Act. The
Complainant argues that even though the contract and subcontract
with PAI contain no specific indemnification clause, PAI is
indemnified and therefore, subject to the whistleblower protection
provisions of 42 U.S.C. §5851. Complainant argues that PAI is
indemnified under:
1. DOE acquisition regulations interpreting the Price
Anderson Act Amendments of 1988, namely, the February 1991
Department of Energy Acquisition Regulations (DEARs) governing
contractor indemnification.
[PAGE 6]
2. Government procurement contract doctrine, the "Christian
Doctrine" holds that "a mandatory contract clause that expresses a
significant or deeply ingrained strand of public procurement policy
is deemed included in a contract by operation of law"
3. Case law governing the statutory protection of nuclear
quality controls inspectors. As a matter of public policy, the
conduct of nuclear quality control inspectors is an internal
protected activity for safety reasons and to exempt PAI from the
requirements of the Price Anderson Act would set a dangerous
precedent and conflict with established case law. Mackowiak v.
University Nuclear Systems, Inc., 735 F.2d 1159 (9th Cir.
1984).
The Price Anderson Act Amendments of 1988 (PAAA) state
that "[t]he Secretary shall, until August 1, 2002, enter into
agreements of indemnification . . . with any person who may conduct
activities under a contract with the Department of Energy that
involve the risk of public liability, . . .." 42 U.S.C.
§2210(d)(1)(A).
42 U.S.C. §2210(d)(1)(A) provides as follows:
(d) Indemnification of contractors by
Department of Energy
(1)(A) In addition to any other authority
the Secretary of Energy may have, . . . the
Secretary shall, until August 1, 2002, enter
into agreements of indemnification under this
section with any person who may conduct activ-
ities under a contract with the Department of
Energy that involve the risk of public liabil-
ity and that are not subject to financial
protection requirements under subsection (b)
of this section or agreements of indemnifi-
cation under subsection (c) or (k) of this
section.
The Department of Energy Acquisition Regulation ("DEAR")
implementing Section 170(d) of the Atomic Energy Act defines
"public liability" as:
Public liability means any legal lia-
bility arising out of or resulting from a
nuclear incident or precautionary evacuation
(including all reasonable additional costs
incurred by a State, or a political subdivi-
sion of a State, in the course of responding
to a nucle
[PAGE 7]
ar incident or precautionary evacuation),
except: (1) Claims under State of Federal
workmen's compensation acts of employees of
persons indemnified who are employed at the
site of and in connection with the activity
where the nuclear incident occurs; (2) claims
arising out of an act of war; and (3) whatever
used in subsections a., c., and k. of section
170 of the Atomic Energy Act of 1954, as
amended, claims for loss of, or damage to, or
loss of use of property which is located at
the site of and used in connection with the
licensed activity where the nuclear incident
occurs. Public liability also includes
damage to property of persons indemnified:
Provided, that such property is covered under
the terms of the financial protection re-
quired, except property which is located at
the site of and used in connection with the
activity where the nuclear incident occurs.
In response to the Price Anderson Act, DOE drafted a Nuclear
Hazard Indemnity Agreement mandating indemnification clauses in all
DOE contracts involving the risk of public liability.
Department of Energy Acquisition Regulation 952.250-
70(c)(1). In implementing the rule, which was subject to Notice
and Comment per the Administrative Procedure Act, 5 U.S.C. 552
et seq, DOE wrote: "Generally, after the enactment
of the PAAA, the indemnification applies mandatorily to DOE
contractors and any other person who may be liable for public
liability from a nuclear incident or precautionary evacuation
arising out of contractual activities." Acquisition
Regulation: Nuclear Hazard Indemnity Clauses, 56 Fed. Reg.
57824 (1991)(to be codified at 48 C.F.R. §§950, 952,
970).
The Complainant cites the case of G.L. Christian
and Assoc. v. United States, 312 F.2d 418, aff'd on
reh'g, 320 F.2d 345, 160 Ct. Cl. 58 (1963), as "authority for
`reading in' the nuclear hazards indemnity provision into the PAI
contracts." In Christian, the Court of Claims held
that "a mandatory contract clause that expresses a significant or
deeply ingrained strand of public procurement policy is considered
to be included in the contract by operation of law." S.J.
Amoroso Constr. Co. v. United States, 12 F.3d 1072, 1075 (Fed.
Cir. 1993), citing Christian, 320 F.2d at 345.
A review of the legislative history surrounding the 1992
amendments reveals that the purpose of Part D was to "broaden the
[PAGE 8]
coverage of existing whistleblower protection provisions to include
. . . the Department of Energy, a contractor or subcontractor at a
Department of Energy Nuclear facility, or any other employer
engaged in any other activity under the ERA or Atomic Energy Act of
1954." H.R. Rep. No. 102-474, 102d Cong., 2d Sess. at 78-79 (1992),
reprinted in 1992 U.S.C.C.A.N. 1954, 2296-97. It was cases
like Adams, 927 F.2d at 771, and Bricker v. Rockwell
Intern. Corp., 22 F.3d 871 (9th Cir.), cert denied, 115
S. Ct. 195 (1993), which both held that §5851, as originally
written, did not apply to DOE contractors or subcontractors, that
prompted Congress to add Part D to the Act. See 138 Cong.
Rec. H11376 (daily ed. Oct. 5, 1992) (statement of Rep. Wyden).
The present case, involving an employee of a DOE contractor,
mirrors the situation envisioned by Congress when they amended the
Act. To find that the lack of indemnification language in the
contract prevents the Complainant from availing himself to the Act
would be in direct conflict with both the overall purpose of the
amendment[2] and the long held principles that the Act is to be
liberally construed in favor of the complainant. Brock v.
Roadway Express, 481 U.S. 252 (1987); Passaic Valley
Sewerage Comm'rs v. Department of Labor, 992 F.2d 474, 479 (3d
Cir.), cert. denied, 114 S. Ct. 439 (1993).
Beyond the intent enumerated by Congress, the Price Anderson
Act Amendments and the resulting DOE acquisition regulations
command inclusion of indemnification clauses in DOE contracts. The
Price Anderson Act Amendments of 1988 state that "[t]he Secretary
shall . . . enter into agreements of indemnification . . .
with any person who may conduct activities under a contract with
the Department of Energy that involve the risk of public liability,
. . .." 42 U.S.C. §2210(d)(1)(A). For their part, DOE drafted
a Nuclear Hazard Indemnity Agreement mandating indemnification
clauses in all DOE contracts involving the risk of public liabili-
ty. Department of Energy Acquisition Regulation 952.250-
70(c)(1). DOE reiterated this belief in subsequent Notice and
Comment submissions per the Administrative Procedures Act.
Acquisition Regulation: Nuclear Hazard Indemnity Claus-
es, 56 Fed. Reg. 57824 (1991)(to be codified at 48 C.F.R.
§§950, 952, 970). The mandatory inclusion language
contemplated in both the PAAA and DOE acquisition regulations
facilitates a "reading in" of the indemnification language into the
PAI contract. A narrow reading of the Act would encourage
employers to intentionally leave out indemnity language in an
effort to evade the whistleblower protection provisions of the Act.
The legislative history shows that this was not Congress' intended
result when they amended the Act to include Part D.
Incumbent with the "reading in" of an indemnification clause
is a showing that the work performed under the contract involved a
risk of public liability. While I make no specific finding on the
issue, my review of the record shows that the Complainant's duties
under the contract arguably involved a risk of public liability.
Given the overall intent of the amendment, and charged with the
duty to liberally construe the Act in favor of the complainant,
this is enough to support the Act's application to PAI.
For the foregoing reasons, I find that PAI is an employer
within the meaning of the Energy Reorganization Act, and
Respondent's Request for Dismissal of the Complaint on the basis of
lack of Subject Matter Jurisdiction is hereby DENIED.
_____________________________
ROBERT L. HILLYARD
Administrative Law Judge
[ENDNOTES]
[1] "Tiger Teams" were special audit teams, commissioned by the
Department of Energy in the early 1990's, to assess and evaluate
conditions at nuclear weapons production sites such as the
Savannah River Plant.
[2]
Indeed, the legislative history surrounding the amendment makes no
mention of the indemnification clause; instead, it centered on the
purpose of the amendment - to broaden the coverage of the Act by
including contractors and subcontractors as DOE employers.
