United States Court of Appeals

For the Seventh Circuit

Chicago, Illinois 60604

May 31, 2012

Before

MICHAEL S. KANNE, Circuit Judge

DIANE S. SYKES, Circuit Judge

DAVID F. HAMILTON, Circuit Judge

No. 11-2423

EXELON GENERATION COMPANY, LLC, 

 Plaintiff/Counter-Defendant-Appellee,

v.

LOCAL 15, INTERNATIONAL BROTHERHOOD

OF ELECTRICAL WORKERS, AFL-CIO,

Defendant/Counter-Plaintiff-Appellant.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 1:10-cv-4846—Robert W. Gettleman, Judge.

O R D E R

On consideration of the petition for rehearing en banc,

filed on April 13, 2012, all judges on the original panel
2 No. 11-2423

Judges Rovner and Williams did not participate in the 

consideration of the Petition for Rehearing En Banc.

have voted to deny the petition for panel rehearing, and

no judge in active service has requested a vote for rehearing en banc. 



Accordingly, the petition for rehearing en banc is DENIED.

POSNER, Circuit Judge. Although I asked for a response

to the petition for rehearing, I am persuaded that the

panel decision is sound and that the criteria for granting

rehearing en banc have not been satisfied. But the result

is disturbing, and while there is nothing judges can

do without exceeding the proper bounds of our office,

Congress and the Nuclear Regulatory Commission can

do something and one or both of them should.

Federal law prescribes stringent requirements that

operators of nuclear facilities must follow before

granting persons, including plant employees, “unescorted

access” to the facility. 10 C.F.R. §§ 73.56, -.57. Exelon,

however, which is one of these operators, has signed a

collective bargaining agreement with a union representing its employees that provides for binding arbitration

of disputes over “working conditions,” a term that has

been interpreted (Exelon does not challenge the inter-
No. 11-2423 3

pretation) to include disputes over whether a worker

deprived of his right of unescorted access (that is, his

security clearance) was properly deprived of it.

Exelon discharged two employees, the first for failing

a drug and alcohol test and lying about his substance

abuse, and the second for lying about his alcohol

abuse. Exelon’s Nuclear Security Department further determined that the employees’ lies revealed them to

be untrustworthy, and on that ground it revoked the

right of unescorted access that they had needed to

perform their jobs. The two employees filed grievances

with the union, seeking reinstatement and return of

their clearances, and the grievances were moving toward

arbitration when Exelon brought this declaratory judgment action against the union, claiming that although

arbitrators can order reinstatement of terminated employees they are forbidden by regulations of the Nuclear

Regulatory Commissions to restore unescorted access

privileges that Exelon has revoked—which would preclude

reinstatement of employees, like the two just mentioned,

whose jobs require that they have unescorted access.

The Commission does not review grants or denials of

these security clearances. The nuclear energy companies

grant them, and claim the right to revoke them subject

to no judicial or administrative review. The union disagrees only to the extent that it thinks an arbitrator—a

private citizen, not a government employee—can restore

a security clearance yanked by the employer. Under

either view the government plays no role. The result is

a void that is both strange and dangerous. The safety of
4 No. 11-2423

nuclear energy facilities cannot be taken for granted. See,

e.g., Carl Behrens & Mark Holt, “Nuclear Power Plants:

Vulnerability to Terrorist Attack” (CRS [Congressional

Research Service] Report for Congress, Feb. 4, 2005),

www.fas.org/irp/crs/RS21131.pdf (visited May 18,

2012). The employer should have a right to invoke administrative review of a labor arbitrator’s restoration

of a revoked security clearance. Equally an employee

claiming to have been wrongfully deprived of his

security clearance should have a right to administrative

review because the deprivation may bar him from

future employment in his chosen line of work. But it is

the failure to provide public remedies for grants of

security clearances that is especially disturbing. An

errant employee of a nuclear power plant, including a

substance abuser who is also a liar, could do catastrophic

damage.

Arbitrators are selected by or with the consent of the

parties. An arbitrator who gets a reputation for favoring

one side in a class of cases, such as cases of employment termination, or disputes between investors and

brokers or between management and unions, will be

unacceptable to one of the parties in any future dispute,

and so the demand for his services will wither. A resulting

tendency of arbitrators to split the difference in their

awards—that is, to give each side a partial victory (and

therefore partial defeat)—has been observed. Armendariz v.

Foundation Health Psychcare Services, Inc., 6 P.3d 669, 693

(Cal. 2000); Donald Wittman, “Lay Juries, Professional

Arbitrators, and the Arbitrator; Selection Hypothesis,” 5

American Law & Econ. Rev. 61, 81 (2003); Estelle D. Franklin,
No. 11-2423 5

“Maneuvering Through the Labyrinth: The Employers’

Paradox in Responding to Hostile Environment Sexual

Harassment—A Proposed Way Out,” 67 Fordham L. Rev.

1517, 1565 (1999); Robert Haig, “Corporate Counsel’s

Guide: Legal Development Report on Cost-Effective

Management of Corporate Litigation,” 610 PLI/Lit 177, 186-

87 (1999). Splitting the difference makes it difficult for

parties on either side in a class of disputes to infer a pattern

of favoritism. Risk-averse disputants like the split-thedifference approach because it truncates both the upside

risk and the downside risk of the dispute-resolution

process. This in turn helps differentiate arbitration from

adjudication, typically an all-or-nothing affair. Differentiation is essential to the success of arbitration as an alternative to adjudication because adjudication is subsidized

by the government and arbitration is not. The public

subsidy of the courts places arbitrators at a cost disadvantage. One way to overcome it is to offer a service

unavailable from the courts, and split-the-difference

decisionmaking is such a service.

Tugging the other way is the incentive of arbitrators

to cultivate a reputation for competence, which may

hold the split-the-difference tendency at bay. A recent

study finds that the tendency does not characterize

“investment treaty” arbitration, Daphna Kapeliuk, “The

Repeat Appointment Factor: Exploring Decision Patterns

of Elite Investment Arbitrators,” 96 Cornell L. Rev. 47, 83

(2010), though that is an esoteric area of dispute

resolution, remote from labor arbitration, and so

Kapeliuk’s findings may not be applicable to the latter.
6 No. 11-2423

There are enough indications of split-the-difference

behavior in labor arbitration to make one worry about

the possible tendency of an arbitrator reviewing a

nuclear facility’s revocation of an employee’s security

clearance to impose a sanction that would enable him

to retain a right of unescorted access to the facility even

if he were a drug addict, a drunkard, and a congenital

liar all rolled up into one.

The Commission could amend its regulations to

forbid collective bargaining agreements to empower

arbitrators to resolve disputes over security clearances.

See 42 U.S.C. §§ 2201(b), (i), (p). It could establish the

type of administrative process that I have suggested. See

id. As could Congress. So far the Commission has been

content with requiring its licensees to establish security

clearance systems with one layer of internal review and

allowing arbitration pursuant to collective bargaining

agreements to (in effect) overrule a licensee’s revocation of

a clearance. It is time that the Commission, or failing that

Congress, instituted administrative review of decisions by

private arbitrators granting or denying security clearances

to employees of nuclear facilities. 

An alternative would be to forbid split-the-difference

awards. The common split award in labor arbitration is

reinstatement without back pay but with a last-chance

clause. The Commission might provide by regulation that

unless the arbitrator decides that the employee is right in

all respects—for example, never had a drinking problem

and always told the truth and so is entitled to reinstatement with full back pay—the security clearance cannot be

reinstated.
No. 11-2423 7

Not all nuclear facilities are unionized. In those that

are not, employers have carte blanche to revoke security

clearances. Those decisions too should be subject to

administrative review.

But whatever the correct solution to the problems created

by the mysterious absence of government review of

decisions involving security clearances for employees

of nuclear facilities, it is beyond judicial authority to

command.

5-31-12