TWO YEARS AGO, people living near the reactor at Three Mile Island asked the Nuclear Regulatory Commission to consider the psychological stress they suffered as a result of the nuclear accident there, in deciding whether to allow the facility's undamaged reactor to resume operations. The request was seconded by the commission's own Atomic Safety and Licensing Board. Though the board believed that neither the Atomic Energy Act nor the National Environmental Policy Act (NEPA) required the NRC to take the community's mental health into account, it concluded that NEPA allowed this to be done, and it recommended that this unusual step be taken in this special case.

The NRC, in a split vote, disagreed. With visions of adding the testimony of contending psychiatrists and psychologists to its already tortuous licensing process, and with anxiety about creating a difficult precedent, the commission forbade its licensing board to consider psychological stress. TMI's neighbors responded with a lawsuit that last week produced a court order requiring the NRC to conduct an environmental assessment, and perhaps a fullfledged environmental impact statement, on the psychological effects of starting up the undamaged reactor.

It is too early to assess the legal impact of the decision, since the two-judge majrity has not yet provided its opinions. In his dissent, however, Judge Malcolm Wilkey asserts that the decision adds "an 'impact' which has never before been considered as covered" by NEPA. If he is correct, and if the ruling stands, it is likely to do serious damage to a good law. NEPA is an important tool for improving the quality of federal decisions that affect what the law calls the "human environment." But there are limits to what it should control--and, in our view, psychological stress is beyond them. If NEPA is forced to do too much, it will become impossible to administer and will inevitably be swept away.

The effects of the decision on the Three Mile Island reactor and its near-bankrupt owner are much clearer: the hoped-for March start-up date will most probably be delayed at a cost of millions per month. With the advantage of hindsight it is easy to see that NRC Commissioners Peter Bradford and Victor Gilinsky were correct two years ago in urging their agency to go beyond its strict legal requirements. Had the plant's worried neighbors been given the opportunity to vent their anxieties--reasonable or not--the lawsuit with its unfortunate precedent could have been avoided. Steps could have been taken--though admittedly unnecessary in the strict technical sense--to mitigate local fears for a fraction of the cost of the delay the utility now faces.

The lesson is clear enough--though this is by no means the first time it has been forced on the nuclear industry and its friends at the NRC. For a combination of good reasons and bad, a large number of Americans have lost confidence in this industry and in the capacity of its government regulators to ensure public safety. Winning back that confidence will be a long, slow process requiring some extraordinary steps. Obviously, to people who understand and have faith in this technology, many of these steps will seem wasteful, unneccessary or just plain silly. But the longer the industry resists acknowledging the reality of public fears, the harder the task is eventually going to be.