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1974/10/12 HR15323 Price-Anderson Act Amendments (vetoed)
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1974/10/12 HR15323 Price-Anderson Act Amendments (vetoed)
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The original documents are located in Box 9, folder "1974/10/12 HR15323 Price-Anderson
Act Amendments (vetoed)" of the White House Records Office: Legislation Case Files at
the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Exact duplicates within this folder were not digitized.
Digitized from Box 9 of the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library
VETaED 10/12/74
THE WHITE HOUSE
ACTION
of to THE THE NOUSE 1:35pm
WASHINGTON
Last Day - October 12
October 10, 1974
MEMORANDUM FOR:
THE PRESIDENT
FROM:
KEN LOTE COLE
SUBJECT:
Enrolled Bill H.R. 15323
Price-Anderson Act Amendments
Attached for your consideration is House bill, H.R. 15323 which
amends the Price-Anderson Act. The basic Act assures the
availability of funds for payment of claims in the event of a
catastrophic nuclear incident. The amendment extends the Act
for 5 years until August 1, 1982, and modifies its provisions,
principally to affect gradual transfer of indemnification from
government to private sources and to increase licensee's
liability. Except for the final section, the bill generally
parallels legislation proposed by the AEC and is acceptable.
The final section of the bill creates a unique and serious
constitutional issue in that it provides that the legislation will
not become effective until the Congress (a) receives a report
from the Joint Committee on Atomic Energy following its review
of the result of a reactor safety study now being completed by the
AEC, and (b) then has a period of 30 days to pass a concurrent
resolution disapproving the extension. Thus, the President is
being asked to act on a bill before the Congress itself has com-
pleted action. Even if signed, the question of unconstitutionality
would undermine the Price-Anderson structure, creating
uncertainty that would jeopardize investments in utilities with
nuclear plants.
AEC recognizes the constitutional problem but believes a veto
would put future extension of the Act at risk and thus severely
impede utility decisions to invest in nuclear power plants.
FORD is LIBRARY 9ERALD
- 2 -
AEC has checked with Senator Pastore, who negotiated the
Section 12 language with a group of strong Senate nuclear safety
critics, and he feels very strongly that (1) there is no chance of
getting a perfected bill during the current Congress, and (2) it
will be very difficult to get an acceptable bill in the next Congress
with a Joint Committee weakened by retirements and with
Congressional nuclear safety critics growing in strength.
RECOMMENDATION
AEC and FEA recommend approval of the bill.
Roy Ash, Justice, Rog Morton, Bill Timmons,
Phil Buchen and Ken Cole recommend disapproval of
the bill. Roy Ash provides additional background
information in his enrolled bill report (TAB A).
Bill Timmons recommends further that if you veto the
bill that you call Senator Pastore and explain your
reasons and try to enlist his help in getting an
acceptable bill.
DECISION - H.R. 15323
Sign (Tab B)
Veto
(Sign veto message at
Tab C)
AEC
Roy Ash
FEA
Justice
Rog Morton
Bill Timmons
Phil Buchen
Ken Cole
FORD
GERALD
THE WHITE HOUSE
WASHINGTON
OCT 1 1 1974
MEMORANDUM FOR THE PRESIDENT
FROM:
ROY L. ASH
SUBJECT: ENROLLED BILL H.R. 15323 -- PRICE-ANDERSON ACT AMENDMENTS
The AEC submitted a draft bill in March 1974 to extend and revise the Price-
Anderson Act, originally enacted in 1957. The Act is designed to protect
the public and the emerging nuclear industry by assuring funds for payment
of claims' in the unlikely event of a catastrophic nuclear accident. Without
such a program, the threat of enormous liability claims would constitute a
major, if not fatal, obstacle to nuclear power plant growth.
How necessary is the bill to us?
The present Act expires in 1977. However, because of long leadtimes required
for design, site approval, and licensing of nuclear power plants (3-5 years),
extension of the Price-Anderson Act is urgently required. Without assurance
that plants can be insured beyond 1977, a hiatus in new commitments to nuclear
plants is a real possibility, unless Price-Anderson coverage is extended
promptly. Senator Pastore and the AEC argue that we will have difficulty
getting the 94th Congress to pass a "clean bill" and therefore should accept
this one.
The main issues raised concerning Section 12
Section 12 would keep the bill from becoming effective until the Joint
Committee on Atomic Energy submits a report to Congress on an AEC Reactor
Safety Study for a 30 day review period. Justice argues that Section 12 is
unconstitutional since it permits "repeal", after Presidential approval of
the legislation, either by the Congress or by the Joint Committee.
Supporters of Section 12 believe that the Reactor Safety Study examines the
rationale behind any extension of the Price-Anderson Act, and Congress should
not act without a thorough review of the study. They recognize the possible
threat to nuclear power growth, but believe "that adequately protecting the
public in the event of a nuclear accident is a paramount concern and that
all available information should be studied before passing such legislation."
Conclusion: A veto (on constitutional grounds) leading to a "clean bill"
within several months would be acceptable.
FORD
Attachment: Enrolled Bill Memorandum
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
OCT 9 1974
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill H.R. 15323 - Price-Anderson Act amendments
Sponsors - Rep. Price (D) Illinois and Rep. Hosmer (R)
California
Last Day for Action
October 12, 1974 - Saturday
Purpose
To amend the Price-Anderson Act to provide for: (1) its
extension for five years until August 1, 1982; (2) a gradual
transfer of indemnification from Government to private sources;
(3) an increase in the limit of licensees' liability; and (4)
a limited extension of indemnity coverage outside the territorial
limits of the United States.
Agency Recommendations
Office of Management and Budget
Disapproval (Veto message
attached)
Atomic Energy Commission
Approval
Federal Energy Administration
Approval
Department of Justice
Disapproval (Veto message
attached)
Council on Environmental Quality
No objection
Department of State
No objection to section
on offshore coverage
Department of Housing and Urban
Development
No objection
Environmental Protection Agency
2
Discussion
The Price-Anderson Act was enacted in 1957 and amended in 1965
and 1966. It was designed to protect the public and the emerging
nuclear industry by assuring the availability of funds for the
payment of claims in the unlikely event of a catastrophic nuclear
incident. Among other things, that Act would indemnify nuclear
licensees for their liability for damages in the event of a
nuclear incident up to a total of $560 million per incident.
Originally, this figure represented $500 million of Government
indemnification, plus the $60 million level of private insurance
available in 1957.
The amount of private insurance available per incident has
gradually risen, so that it now stands at $110 million. Accord-
ingly, the portion of the $560 million which the Government
would now be required to indemnify has been commensurately
decreased to $450 million.
Other features of that Act included no-fault liability by the
licensee and provisions for the advance payment of claims
immediately upon occurrence of a nuclear incident. The Act is
scheduled to expire on August 1, 1977.
Because of the long lead times involved in planning new commit-
ments to nuclear power plants and the need to anticipate contrac-
tual arrangements, the AEC submitted a draft bill to Congress in
March 1974. The enrolled bill is a modified version of the AEC's
proposal and would amend the Price-Anderson Act as follows:
-- extends for an additional five years (from August 1,
1977 to August 1, 1982) the Commission's authority
to require financial protection of and to provide
indemnification for its licensees and contractors.
The AEC draft bill proposed a 10-year extension.
The conference report makes clear, however, that
Congress did not intend to imply that it would
limit the duration of the insurance program
established under the Act. That report asserts
its intention that mandatory no-fault insurance,
consolidation of claims in a single Federal
court, advance payments of claims, contractor
indemnity provisions and retrospective premium
payments should be considered permanent. The
extension to five years was intended to assure
Congressional review, not to end Federal regula-
tion of nuclear liability insurance.
3
--- clarifies existing law to recognize that the total
liability of a licensee may be covered by private
insurance. The Commission is required by August 1,
1976, to determine the maximum amount of private
liability insurance available. Considered in this
determination would be any private insurance coverage
funded by "deferred premiums.' A "deferred premium"
is one which nuclear facilities would be required
to pay if a nuclear incident occurred which resulted
in damages exceeding the amount of insurance in
effect financed by prepaid premiums ("base layer of
insurance").
AEC would be authorized to approve private insur-
ance plans which included a "base layer of insurance"
funded by prepaid premiums and in addition a "second-
ary layer of insurance" funded, only if necessary
and after an incident occurs, by deferred premiums
paid on a pro rata basis by all nuclear facilities.
The bill would provide that such "deferred premiums"
not exceed $5 million chargeable to each facility.
The Commission could establish lower premiums for
individual facilities depending on size, location
and other hazard factors and as the total number
of reactors licensed increases. This latter pro-
vision would reflect the fact that as the number
of participants paying deferred premiums increases,
the pro rata share of each facility can be decreased.
The bill would also authorize the Commission to allow
facilities to fulfill some or all of the indemnity
coverage they are required to provide by means other
than insurance and still be eligible for "deferred
premium" coverage.
requires the Commission to develop a plan to assure
payment of deferred premiums. The Commission would
be authorized to specify the terms on which the
Government would guarantee their availability despite
any defaults. Measures to assure reimbursement,
such as liens on property and revenues of a default-
ing licensee and automatic revocation of any license,
would be permitted.
4
revises the $560 million limitation of liability of
licensees to permit the Commission to increase the
limitation if private insurance is available in
excess of $560 million.
requires that after a nuclear incident that would
probably result in private payment of public liability
claims in excess of $560 million, the Commission make
a survey of the causes and extent of damage, report
its findings to the Joint Committee on Atomic Energy,
and make the findings available to the public. This
section revises the Price-Anderson Act -- which
required such a survey and report when any Government
payments were probable -- to take into account the
possibility that private indemnification could at
some future time completely displace Government
indemnification payments.
broadens the definitions of "nuclear incident" and
"persons indemnified" for the purpose of extending
the indemnity provisions of the bill to offshore
nuclear power plants and to shipments between
licensees in the United States which are routed
beyond territorial waters. In its views letter on
the enrolled bill, AEC states that:
"These amendments will not, however, extend the
Price-Anderson provisions to the import or export
of nuclear material or activities conducted within
the territorial limits of another nation or to any
occurrence resulting from the use of a nuclear
power reactor to propel a U.S. merchant ship.
-- modifies existing law by specifically requiring
that in the event of an extraordinary nuclear
occurrence, the Federal court having jurisdiction
over public liability suits would specifically
establish, in its plan for disbursement of funds
to injured claimants, a system of priorities
between claimants and classes of claims to assure
the most equitable allocation of available funds.
requires the Commission to submit to the Congress
by August 1, 1979, a report and recommendation
concerning the need for continuation or modifica-
tion of the Price-Anderson system based on relevant
5
conditions at the time, including the conditions of
the nuclear industry, availability of private insur-
ance, and the state of knowledge of nuclear safety
among other factors.
provides that the bill would become effective 30
days after the Joint Committee on Atomic Energy
submits its evaluation to Congress of a study en-
titled "An Assessment of Accident Risks in U.S.
Commercial Nuclear Power Plants" (the "Rasmussen
Report") unless within that 30 days the Congress
adopts a concurrent resolution disapproving in
effect this bill.
Although the Rasmussen report will probably not be
submitted to the Joint Committee until February or
March 1975, the general findings of his study are
already known and are favorable to this legislation.
On May 16, 1974, in a statement before the Joint
Committee on Atomic Energy, Dr. Rasmussen concluded:
"
I believe that the proposal before you repre-
sents a reasonable way to phase out the Government
responsibility for nuclear insurance and shift the
responsibility to the insurance companies and the
nuclear industry. I believe that the current $560
million limit is a reasonable value at this time and
will cover all combinations of circumstances which
can reasonably be considered credible."
Thus, allowing time for evaluation of the report by
the Joint Committee and the lapse of 30 days after
submission of its evaluation to the Congress, the
effective date of this bill is not likely to occur
until mid-1975. We understand that Section 12 was
deemed necessary by the bill's supporters to secure
congressional approval. Environmentalists and other
groups had argued that no legislation should be en-
acted until the Rasmussen report had been evaluated
by interested independent parties. Twenty Senators
supported this position.
6
Section 12 was a House floor amendment which was amended
by the Joint Committee before Senate action took place.
The Joint Committee's report to the Senate commented ad-
versely on the Section as follows:
"The Joint Committee does not believe that this
amendment was necessary. The Rasmussen Study, under
the direction of Dr. Norman C. Rasmussen of the
Massachusetts Institute of Technology, does not
deal with insurance or indemnity for nuclear inci-
dents. It is a safety study of the probabilities
and consequences of accidents involving nuclear
power reactors. As such, its only relation to the
Price-Anderson Act is as a possible guide as to the
extent and scope of risk to the public in determin-
ing the amount of protection required. It will
provide no information at all concerning the mechan-
ism for providing the protection.
"Professor Rasmussen has appeared before the
Joint Committee on two occasions. He assured the
Joint Committee in public testimony, which is in-
cluded in appendix II to this report, that the total
of public and private indemnity provided for by the
bill is adequate to cover any credible accident which
might occur. He reaffirmed this point in a reappear-
ance before the committee for the markup session on
H.R. 15323 on June 13. He has testified that the
report will show that the likely consequences of a
nuclear accident involving a core meltdown will not
be a major catastrophe, as is commonly assumed, but
will be no worse than a major airplane crash, and
will generally be less than that. The Rasmussen
Study will show, in effect, that the Price-Anderson
Act provides an even more conservative degree of pro-
tection than was thought when it was enacted.
"The rationale given for Section 12 is that the
results of the Rasmussen Study are not yet available,
and that they are intimately related to this bill's
provisions. Neither of the assumptions is true. The
conclusions insofar as they relate to the Price-
Anderson Act are already public. The technical detail
supporting the report's conclusions is beyond the ken
of the layman and is massive in its volume. This
detail is not essential to and cannot be expected to
7
contribute to a congressional decision. An informed
critique of the report by the scientific peers of
the investigators will take many months and cannot
reasonably be expected to alter the conclusions so
drastically as to affect this legislation.
"The most curious aspect of Section 12 is its
potential deferral of the transfer of responsibility
to the nuclear industry which is the key feature of
this legislation. This is a transfer which has been
almost universally urged for years. An unexpected
delay in the Rasmussen report could have the result,
under Section 12, of postponing the phase-out of
the Government's liability.
"Despite the dubious basis underlying Section 12,
the Joint Committee has perfected the amendment
rather than deleting it, in order to assuage the
doubts of those members of Congress who are not sat-
isfied with the Joint Committee's review and
Dr. Rasmussen's testimony. The provision of Section
12 is very unlikely to delay the actual implementa-
tion of this bill. The draft report is expected to
be released for public comment in mid-August, and
the final report, taking these comments into account,
is expected about January, 1975. The Commission's
rulemaking proceeding to implement this bill would
be unlikely to be completed before mid-1975 at the
very earliest. The Joint Committee considers that
the language of Section 12 would prohibit the Com-
mission from implementing a rule concerning the
deferred premium provisions of the bill prior to a
Joint Committee report to Congress on the Rasmussen
Study, but would not prohibit initiation of a Com-
mission rulemaking proceeding before that time."
*
*
*
*
*
With the exception of section 12, the bill is acceptable to
AEC although the Congress made a number of modifications in
its original proposal. Absent section 12, there would be no
question that all agencies would recommend approval or have
no objection.
Justice believes that section 12 presents a constitutional
issue of such uniqueness and severity and is so unsound as
a matter of policy that it recommends veto of the bill. Its
reasons are set forth in its attached views letter.
8
Basically, its position is that the President is being asked
to act on a bill before Congress itself has completed action,
and it views this as fundamentally inconsistent with consti-
tutional legislative requirements. While Presidents have
frequently approved encroachment provisions in vitally needed
legislation, Justice believes that "
both the novelty and
severity of the encroachment, and the effects of its uncon-
stitutionality argue against a similarly tolerant attitude
in this case. We think it particularly important to scotch
this new type of encroachment on Executive prerogative when
it has first appeared, because its potential use is enormous. =
Justice also makes the significant point that "the unconsti-
tutionality of Section 12 may destroy the entire Price-
Anderson Act structure and impair the validity of the finan-
cial guarantees it provides. "
AEC in its views letter on the enrolled bill recognizes that
the provisions of section 12 may raise a constitutional ques-
tion. It believes, however, that the bill should be signed
because the chance of obtaining reenactment if the bill were
vetoed is so risky that it is not willing to take that chance
of losing the Price-Anderson Act and impairing or terminating
nuclear power growth. It believes that the forces opposing
an extension of the Act are sufficiently strong that it was
only by the inclusion of section 12 that it was possible to
get the bill enacted. However, AEC staff will tomorrow explore
with Senator Pastore the question of whether in his view it
would be possible to get Congress to reenact the bill in a
form which would be acceptable to the Administration.
In summary, there is general agreement among Justice, AEC and
OMB that section 12 is bad law and raises a constitutional
question. The key issue, therefore, is whether the bill
should be signed because of the risk of losing an extension
of the Price-Anderson Act and because of the importance of
that Act to the future of the nuclear power industry, despite
the possibility the Act may be found unconstitutional at a
future time and despite the highly undesirable precedent that
section 12 would establish.
We sympathize with AEC's concern about getting the bill re-
enacted in acceptable form, but concur with Justice that the
bill should be vetoed for the following reasons:
(1) the question of unconstitutionality of section 12,
which cannot be cured by approval of the bill.
(2) the possibility that section 12 may eventually,
because of its unconstitutional nature, undermine the whole
9
Price-Anderson structure. It is difficult to believe that
this question will be overlooked by the industry and that
it will not influence investment decisions. Moreover, it
throws in jeopardy the insurance coverage of third parties
who may be injured by a nuclear incident.
(3) the highly undesirable precedent section 12
would set and the likelihood that Congress would adopt this
device in a variety of situations to the ultimate great
detriment of sound government.
(4) the importance of the Price-Anderson Act to the
nuclear power industry should produce intense pressure from
that industry on the Congress to reenact the bill in
acceptable form.
We have prepared an edited version of Justice's proposed
draft of a veto message. In particular, we think that mes-
sage should urge prompt reenactment of the bill since time
is of the essence. Early enactment will provide the needed
assurance to utilities to proceed expeditiously with their
plans for developing new nuclear power plants.
If you should conclude that approval is warranted under all
the circumstances, we would recommend against the issuance
of a signing statement. However, you should instruct AEC
and Justice to intensively explore the problem section 12
raises to determine what would be the most appropriate course
of action to remove the constitutional infirmity in the Act.
Roy L. Ash
Director
Enclosures
TO THE HOUSE OF REPRESENTATIVES:
I am returning without my approval H.R. 15323,
"To amend the Atomic Energy Act, as amended, to revise
the method of providing public remuneration in the event
of a nuclear incident, and for other purposes."
The first eleven sections of the bill basically
carry out recommendations of the Atomic Energy
Commission, and I would be glad to approve them if
they stood alone.
Section 12, however, would provide that "the provi-
sions of this Act shall become effective thirty (30) days
after the date on which the Joint Committee on Atomic
Energy submits to the Congress an evaluation of the
Reactor Study, entitled 'An Assessment of Accident Risks
in the U. S. Commercial Nuclear Power Plants,' AEC Report
Number WASH-1400, except that it shall not become effective
if within the thirty (30) day period after the Joint
Committee submits its evaluation, the Congress adopts a
concurrent resolution disapproving the extension of the
Price-Anderson Act. " The import of this section is that
after I have approved the bill, the Joint Committee and
the Congress would further consider whether it should
ever become effective.
I cannot approve legislation under these circumstances --
if, indeed, the bill can properly be called legislation
rather than merely the expression of an intent to legislate.
The presentation of a bill to me pursuant to Article I,
section 7 of the Constitution amounts to a representation
by Congress that, as far as it is concerned, the legislation
is ready to become effective, subject perhaps to some
2
extrinsic condition precedent, but not to further con-
gressional deliberation. Here, however, Congress in
effect requests my approval before it has given its own.
In this instance, the clear constitutional infirmity
of the bill not only affects my powers and duties but
directly endangers substantial and important private
rights. If the bill is unconstitutional, it will remain
unconstitutional despite my signing it. As a result, a
sure source of funds for prompt payment of public
liability claims, a primary objective of the Price-Anderson
Act, would be in doubt. The uncertainty over nuclear
liability protection would also adversely affect that
private investment which will be necessary as nuclear
power assumes its vital role in meeting the nation's
energy requirements. The public interest would not be
served by approving legislation which creates these
uncertainties.
I urge the Congress to reenact the bill promptly
so as to remove the problems which Section 12 now
raises.
Hersed R.Ind
THE WHITE HOUSE,
October 12, 1974
THE WHITE HOUSE
RUSH
MEMORANDUM
WASHINGTON
LOG NO.: 643
Date:
October 10, 1974
Time:
9:30 a.m.
FOR ACTION: Michael Duval
CC (for information): Warren K. Hendriks
Phil Buchen
Jerry Jones
Bill Timmons
Glenn Schleede
Paul Theis
NSC/S
FROM THE STAFF SECRETARY
DUE: Date:
Today, October 10, 1974
Time: 4:00 p.m.
SUBJECT:
Enrolled Bill H.R. 15323 - Price-Anderson amendments
ACTION REQUESTED:
For Necessary Action
XX For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
Please return to
Thank you.
Kathy Tindle Director
FORD is LIBRARY GERALD
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
Warren K. Hendriks
telephone the Staff Secretary immediately.
For the President
THE WHITE HOUSE
ACTION MEMORANDUM
LOG RUSH NO.: 643
WASHINGTON
Date:
October 10, 1974
Time:
9:30 a.m.
FOR ACTION: Michael Duval
CC (for information): Warren K. Hendriks
Phil Buchen
Jerry Jones
Bill Timmons
Glenn Schleede
Paul Theis
NSC/S
FROM THE STAFF SECRETARY
DUE: Date: Today, October 10, 1974
Time: 4:00 p.m.
SUBJECT:
Enrolled Bill H.R. 15323 - Price-Anderson amendments
ACTION REQUESTED:
For Necessary Action
XX For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
Please return to Kathy Tindle - West Wing
Thank you.
Concerning
to vets D.C.
FORD LIBRARY j 028/70
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
Warren K. Hendriks
telephone the Staff Secretary immediately.
For the President
THE WHITE HOUSE
ACTION MEMORANDUM
LOG RUSH NO.: 643
WASHINGTON
Date:
October 10, 1974
Time:
9:30 a.m.
FOR ACTION: Michael Duval
cc (for information): Warren K. Hendriks
Dhil Bachen
Jerry Jones
Bill Timmons eftracopy
Glenn Schleede
Paul Theis
NSC/S
TO
FROM
THE STAFF SECRETARY
DUE: Date:
Today, October 10, 1974
Time: 4:00 p.m.
SUBJECT:
Enrolled Bill H.R. 15323 - Price-Anderson amendments
ACTION REQUESTED:
For Necessary Action
XX For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
FORD & LIBRARY GERALD
Please return to Kathy Tindle - West Wing
10/10 Thank you.
VETO. BUT IP SHUD KNOW PASTORE
PROMISES NO NEW LEGISLATION IF VETOED.
QUESTION: CAN WE LIVE WITHOUT BILL?
IF IP VETOES, I RECOMMEND HE CALL
BASTORE & EXPLAIN REASONS. THIS COULD
HELD GET A -NEW BiLL.
BT.
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
Warren K. Hendriks
telephone the Staff Secretary immediately.
For the President
THE WHITE HOUSE
ACTION MEMORANDUM
WASHINGTON
LOG NO.: 643
Date:
October 10, 1974
Time:
9:30 a.m.
FOR ACTION: Michael Duval
commentation
(for information): Warren K. Hendriks
Phi Buchen
Jerry Jones
Bill Timmons
Glenn Schleede
Paul Theis
NSC/S
FROM THE STAFF SECRETARY
DUE: Date:
Today, October 10, 1974
Time: 4:00 p.m.
SUBJECT:
Enrolled Bill H.R. 15323 - Price-Anderson amendments
ACTION REQUESTED:
For Necessary Action
XX For Your Recommendations
-
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
Please return to Kathy Tindle - West Wing
Thank you.
FORD LIBRARY &
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
K. R. COLE, JR.
telephone the Staff Secretary immediately.
For the President
THE WHITE HOUSE
WASHINGTON
10/10/74
TO:
WARREN HENDRIKS
BERNED
ORD
LIBRARY
nor
Robert D. Linder
ATONIC ENERGY COMMISSION
UNITED STATES
ATOMIC ENERGY COMMISSION
WASHINGTON, D.C. 20545
UNITED STATES OF AMERICA
OCT 4 1974
Mr. Wilfred H. Rommel
Assistant Director for
Legislative Reference
ATTN: Mrs. Louise Garziglia
Legislative Reference Division
Office of Management and Budget
Dear Mr. Rommel:
The Atomic Energy Commission is pleased to respond to your request for
its views and recommendations on Enrolled Bill H.R. 15323, a bill "[t]o
amend the Atomic Energy Act of 1954, as amended, to revise the method of
providing for public remuneration in the event of a nuclear incident, and
for other purposes. If
The Atomic Energy Commission recommends that the President sign the
Enrolled Bill.
The Commission believes that enactment of the bill will continue to assure the
availability of a sure source of funds for the payment of public liability claims
arising in the unlikely event of a catastrophic nuclear incident while phasing
out Government indemnity for most licensed commercial facilities as increased
private funds become available.
The principal effect of section 1 would be to amend the definitions of "nuclear
incident" and "person indemnified" to permit the Commission to extend the
provisions of the Price-Anderson Act to certain activities outside of the
territorial limits of the United States involving licensed nuclear facilities.
These amendments will assure Price-Anderson coverage of ocean shipments of
new or spent fuel between Commission licensed facilities while outside United
States' waters and coverage of floating nuclear power plants licensed by the
Commission but situated beyond the territorial limits of the United States.
These amendments will not, however, extend the Price-Anderson provisions
to the import or export of nuclear material or activities conducted within the
territorial limits of another nation or to any occurrence resulting from the
use of a nuclear power reactor to propel a U.S. merchant ship.
Section 2 retains the present statutory requirement that certain Commission
licensees must supply financial protection to cover liability claims resulting
from a nuclear incident, but no longer requires that Government indemnity
be provided for such licensees, thereby allowing the phase-out of Govern-
ment indemnity as private funds become available to replace it.
Mr. Wilfred H. Rommel
-2-
OCT 4 1974
Section 3 revises the method by which required financial protection must be
provided in order to effectuate the phase-out of Government indemnity.
Financial protection will consist of a primary "layer" which may be supplied
through private liability insurance or any other method acceptable to the
Commission and a secondary "layer" which must be supplied through private
liability insurance available under an industry retrospective rating plan
providing for premium charges to be deferred until public liability from
a nuclear incident appears likely to exceed the amount of primary financial
protection required. By August 1, 1976, the Commission must establish
the amount of the deferred premium to be charged at not less than $2 million
nor more than $5 million per facility.
Licensees of large power reactors must still maintain financial protection equal
to the maximum amount available from private sources while the Commission
may require lesser amounts of financial protection of other licensees. The
Commission is authorized, with respect to the secondary layer of financial pro-
tection to set deferred premiums for individual facilities at amounts less than
the maximum depending on such factors as the facility's size and location.
The Commission is also authorized to establish an amount which the aggregate
deferred premiums for each facility for a single year may not exceed.
Requirements to assure the availability of funds to pay public liability claims
up to the limitation on liability in the event of a nuclear incident must be
established by the Commission. To meet this requirement, the Commission
is authorized to reinsure or indemnify licensees and the nuclear liability
insurance companies or otherwise guarantee the availability of funds to
meet any assessment of deferred premiums. The Commission will have the
right to a lien on the assets of a licensee to assure reimbursement of Govern-
ment monies expended on his behalf to pay such deferred premiums.
Sections 4, 5, and 9 of the bill extend for an additional five years (from
August 1, 1977 until August 1, 1982) the Commission's authority to require
financial protection of and indemnify its licensees and its contractors.
Section 6 revises the limitation on liability provisions of the Price-Anderson
Act so that the limit is no longer fixed at $560 million. For any licensee
FORD
required to maintain more than $560 million in financial protection, the
limitation on liability for that licensee is equal to the amount of financial
RALD
protection which he is required to maintain.
Section 7 of the bill authorizes the Commission to reduce the indemnity fee
charged to licensees for Government indemnification as the amount of financial
protection required by the Commission increases. Section 8 requires that
OCT 4 1974
Mr. Wilfred H. Rommel
-3-
after a nuclear incident that will probably result in public liability claims in
excess of $560 million, the Commission must make a survey of the causes and
extent of damage, report its findings to the Joint Committee on Atomic Energy,
and make the findings available to the public. These sections of the bill
modify the existing law to take into account increases in the amount of
financial protection required of licensees and the phase-out of Government
indemnity.
Section 10 modifies the existing law by specifically requiring that in the event
of an' extraordinary nuclear occurrence, the Federal court having jurisdiction
over public liability suits specifically establish in its plan for disbursement of
funds to injured claimants a system of priorities between claimants and classes
of claims to assure the most equitable allocation of available funds.
Section 11 of the bill requires the Commission to evaluate operation of the
Price-Anderson system as it will be modified by the bill and submit a report
to the Congress, including Commission recommendations for modification or
termination of the system, by August 1, 1979.
Section 12 provides that the provisions of the bill shall become effective 30
days after the Joint Committee on Atomic Energy submits its evaluation to
Congress of the reactor study entitled "An Assessment of Accident Risks in
U.S. Commercial Nuclear Power Plants" (AEC Rep. No. WASH-1400), the so-
called "Rasmussen Report", unless within 30 days after the Joint Committee's
report the Congress adopts a concurrent resolution disapproving the extension
of the Price-Anderson Act.
The Commission recommends signature of the Enrolled Bill by the President
in view of the need for continuation of the protection offered by the Price-
Anderson system, the significant improvements in that system contained in
this legislation and the phase-out of Government indemnity which would be
effected thereby. While it is recognized that the provisions of section 12
might raise a Constitutional question, the possibility is a contingent one at
best and is far outweighed by the need for, and improvements in, the Price-
Anderson system which will be met by this legislation.
Sincerely,
Chairman
ASSISTANT ATTORNEY GENERAL
LEGISLATIVE AFFAIRS
Department of Justice
Washington, D.C. 20530
OCT Q 197 &
Honorable Roy L. Ash
Director, Office of Management
and Budget
Washington, D. C. 20503
Dear Mr. Ash:
In compliance with your request, I have examined a facsimile of
the enrolled bill H.R. 15323, "To amend the Atomic Energy Act of 1954,
as amended, to revise the method of providing for public remuneration in
the event of a nuclear incident, and for other purposes."
The enrolled bill primarily would amend section 170 of the Atomic
Energy Act, commonly referred to as the Price-Anderson Act. The Price-
Anderson legislation was originally enacted to assure the availability of
funds to satisfy liability claims in the event of a nuclear accident and
to eliminate the deterrent to the use of atomic energy for power produc-
tion posed by the prospect of such large liability. Broadly, these
purposes have been achieved in the following manner. First, persons
licensed to operate nuclear power reactors or other production and
utilization facilities are required to have and maintain financial pro-
tection in the form of insurance or otherwise to cover liability claims
resulting from a nuclear incident involving the facility. Generally the
amount of financial protection required is equal to the amount of
liability insurance available from private sources. Financial protection
may include private insurance, private indemnities, self-insurance, other
proof of financial responsibility, or a combination of such measures.
Second, the Atomic Energy Commission is required to indemnify licensees
against liability claims in excess of the financial protection required,
up to $500,000,000. Finally, the public liability of indemnified licensees
is limited to the sum of the amount of financial protection required and
the amount of indemnity, not to exceed $560,000,000.
The Price-Anderson Act originally authorized the Commission to
imdemnify licensees for whom licenses were issued prior to August 1, 1967.
This authority was subsequently extended by Public Law 89-210 to licenses
issued prior to August 1, 1977. The enrolled bill would extend the basic
Price-Anderson system for another ten-year period with three major
changes: (1) a phasing out of governmental indemnity, (2) an increase in
the amount to which liability is limited, and (3) an extension of indemnity
coverage to certain nuclear incidents occurring outside the territorial
limits of the United States.
You have specifically asked us to direct our attention to section 12
of the bill, which provides as follows:
The provisions of this Act shall become effective thirty (30)
days after the date on which the Joint Committee on Atomic Energy
submits to the Congress an evaluation of the Reactor Study,
entitled "An Assessment of Accident Risks in the U.S. Commercial
Nuclear Power Plants," AEC Report Number WASH-1400, except that
it shall not become effective if within the thirty (30) day
period after the Joint Committee submits its evaluation, the
Congress adopts a concurrent resolution disapproving the extension
of the Price-Anderson Act.
The effect of this section is to enable a Committee of Congress and the
two Houses of Congress to prevent the bill from ever becoming effective
after it has been approved by the President: the former by not submitting
an evaluation report, and the latter by passing a concurrent resolution
disapproving extension of the Price-Anderson Act. For the reasons
explained below, it is the view of this Department that section 12 is
unconstitutional, and unsound as a matter of policy.
This provision violates the well-established principle that
Committees of Congress cannot perform a legislative function (37 Op A.G.
56, 58 (1933)) and that concurrent resolutions of Congress not presented
to the President cannot have any legal effect outside the confines of the
Capitol. U.S. Constitution Art. 1, Sec. 7, clauses 2 and 3; S. Rept. 1335,
54th Cong. 1st Sess., p. 6. Beyond this, however, the bill has an aspect
which to our knowledge is unprecedented. Past provisions for vetoes by
concurrent resolution or by Committees have had the intended effect of
controlling Executive action or of terminating existing legislation.
Section 12 would prevent legislation presented to the President from ever
becoming effective. In this the clause is unique, and raises a serious
challenge to the integrity of the legislative process.
The presentation of legislation to the President pursuant to Article I,
Section 7 constitutes a representation to the President by the Congress that
the legislation is ready to become law - its effectiveness subject, on
occasion, to external conditions precedent, but not to further deliberation
by the Congress. Here, however, Congress takes the position that the
President should approve the bill, but that Congress will await its
examination of a Reactor study before it determines whether the legislation
should take effect. Contrary to the Constitutional scheme, it seeks to
force the President to make his final decision on the matter before the
Congress -- and, in the circumstances of this case, to expend his veto
option without having before him certain material so relevant that the
Congress is unwilling to act without it. We cannot see how the President
can be expected to approve the bill in this posture.
- 2 -
RALO FORD
We realize, of course, that Presidents have frequently approved
encroachment clauses in vitally needed legislation, especially in
appropriation and authorization acts. For a recent example see
President Nixon's statement of August 5, 1974, relating to the Depart-
ment of Defense Appropriation Authorization Act of 1975, 10 Weekly
Compilation of Presidential Documents 1007 (1974). In our view, however,
both the novelty and severity of the encroachment, and the effects of its
unconstitutionality argue against a similarly tolerant attitude in this
case. We think it particularly important to scotch this new type of
encroachment on Executive perogative when it has first appeared, because
its potential for future use is enormous. It is an attractive device for
shifting initial responsibility for legislation to the President, and for
giving Congress the political credit for legislation which it has not
definitively passed. The doubtful constitutionality of encroachment
clauses that have been allowed to pass in other statutes rarely affects
private rights of citizens. Here, however, the unconstitutionality of
section 12 may destroy the entire Price-Anderson Act structure and impair
the validity of the financial guarantees it provides.
The Department of Justice recommends against Executive approval of
the bill.
Whatraw W. Vincent Rakestraw
Sincerely
Assistant Attorney General
Office of Legislative Affairs
- 3 -
DEPARTMENT
OF
*
*
HOUSING
THE GENERAL COUNSEL OF HOUSING AND URBAN DEVELOPMENT
AND
URBAN
WASHINGTON, D. C. 20410
OCT 8 1974
Mr. Wilfred H. Rommel
Assistant Director
Legislative Reference
Office of Management and Budget
Washington, D. C. 20503
Attention: Mrs. Garziglia
Dear Mr. Rommel:
Subject: H. R. 15323, 93d Congress, Enrolled Enactment
This is in response to your request for our views on the
enrolled enactment of H. R. 15323, an Act "To amend the
Atomic Energy Act of 1954, as amended, to revise the method
of providing for public remuneration in the event of a
nuclear incident, and for other purposes."
The enrolled enactment would extend until August 1, 1982
provisions of the Atomic Energy Act regarding availability
of funds for payment of claims arising from a nuclear
incident. This enactment would also provide for the phasing
out of Government indemnity under that Act proportionate to
the increase in the amount of a secondary source of insurance
under a retrospective rating plan providing for deferred
premiums to cover damages in excess of the primary source of
insurance.
The AEC would be directed to establish measures to assure
that deferred payments will be paid when called for, and for
these purposes would be authorized to provide reinsurance
or otherwise guarantee such payments. The enactment would
2
also allow for an increase, under limited conditions, in
the total amount of liability arising from a single nuclear
incident, and would extend indemnity protection outside
U. S. Territorial limits to AEC-licensed nuclear facilities
and to nuclear materials in transit between AEC-licensed
facilities.
The Department of Housing and Urban Development has no
objection to approval of the enrolled enactment.
Sincerely,
Robut R Cllett
Robert R. Elliott
FEDERAL ENERGY ADMINISTRATION
WASHINGTON, D.C. 20461
October 7, 1974
MEMORANDUM FOR: Wilfred H. Rommel
Assistant Director for
Legislative Reference
Office of Management and Budget
ATTN:
Ina Garten
FROM:
Robert E. Montgomery
General Counsel
SUBJECT:
Enrolled Bill Report on H.R. 15323
"To amend the Atomic Energy Act of
1954, as amended, to revise the
method of providing for public re-
muneration in the event of a nuclear
incident, and for other purposes. "
This is in response to your request for the views of the
Federal Energy Administration on the subject enrolled
bill.
H.R. 15323 would amend section 170 of the Atomic Energy
Act to require licensees of nuclear facilities to secure
additional "deferred premium" liability insurance. The
AEC would be authorized to guarantee the payment of de-
ferred premiums. In addition, the duration of section
170's "indemnification" and "financial protection" pro-
visions would be extended from 1977 to 1982.
The FEA recommends that the President sign H.R. 15323
into law.
EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL ON ENVIRONMENTAL QUALITY
722 JACKSON PLACE, N. W.
WASHINGTON, D. C. 20006
October 8, 1974
MEMORANDUM FOR W. H. ROMMEL, ASSISTANT DIRECTOR
FOR LEGISLATIVE REFERENCE
OFFICE OF MANAGEMENT AND BUDGET
ATTENTION: MRS. GARZIGLIA
RE: H.R. 15323 (Enrolled) -- To amend the
Atomic Energy Act of 1954, as amended,
to revise the method of providing for
public remuneration in the event of a
nuclear incident, and for other purposes.
The Council on Environmental Quality has no objection
to Presidential signature of the above enrolled bill.
Gary Dany L Widman L. Widman
Gary L. Widman
General Counsel
DEPARTMENT OF STATE
Washington, D.C. 20520
OCT 4 - 1974
Honorable Roy L. Ash
Director
Office of Management and Budget
Washington, D. C. 20503
Dear Mr. Ash:
This is in response to Mr. Rommel's request
for the views of the Department of State on an
enrolled bill (H.R. 15323) "To amend the Atomic
Energy Act of 1954, as amended, to revise the
method of providing for public remuneration in
the event of a nuclear incident, and for other
purposes."
The primary purpose of the enrolled bill is
to extend the life of the Price-Anderson Act,
which is otherwise due to expire on August 1, 1977.
The Price-Anderson Act limits the liability of
licenses of civil nuclear installations to
$560,000,000 for damages for each nuclear incident,
and provides for indemnification by the Atomic
Energy Commission for liability incurred in excess
of the amount of private insurance the Commission
requires the licensee to obtain. H.R. 15323 would
continue the Act until August 1, 1982, begin a
phase-down of government indemnity participation,
and increase reliance upon private sector insurance.
On the merits of these primary aspects of the
enrolled bill, we defer to the views of the Atomic
Energy Commission since these provisions do not
affect the areas of responsibility of the Department
of State.
Of interest to the Department of State is the
extension of the coverage of the Act to certain
activities undertaken by licensees on the high seas.
In particular, indemnity, agreements or other finan-
cial protection would be required for incidents
involving offshore stationary nuclear power reac-
tors and nuclear materials transported on the high
seas from one person licensed by the Atomic Energy
Commission to another person so licensed. As the
Conference Committee Report clearly indicates, this
- 2 -
extension of coverage was not intended, and does
not include, exports of nuclear materials or nuclear
materials used for the propulsion of ships.
The Department of State considers that the
extension of Price-Anderson Act coverage to offshore
activities, as limited in this bill to stationary
power reactors and ocean carriage of nuclear sub-
stances, is unobjectionable from the point of view
of our foreign relations.
Thank you for this opportunity to comment.
Cordially,
Linwood Holton
Assistant Secretary
for Congressional Relations
TO THE HOUSE OF REPRESENTATIVES
oh
(I am returning without my approval H.R. 15323, "To
amend the Atomic Energy Act, as amended, to revise the
method of providing public remuneration in the event of a
nuclear incident, and for other purposes."
The first eleven sections of the bill basically carry
out recommendations of the Atomic Energy Commission, and
I would be glad to approve them if they stood alone.
Section 12, however, would provide that "the provi-
the
sions of this Act shall become effective thirty (30) days
after the date on which the Joint Committee on Atomic
Energy submits to the Congress an evaluation of the Reactor
Study, entitled "An Assessment of Accident Risks in the
U. S. Commercial Nuclear Power Plants", AEC Report Number
WASH-1400, except that it shall not become effective if
within the thirty (30) day period after the Joint Committee
submits its evaluation, the Congress adopts à concurrent
resolution disapproving the extension of the Price-Anderson
Act." The import of this section is that after I have
would
approved the bill, the Joint Committee and the Congress will
further consider whether it should ever become effective.
under
I cannot approve legislation in these circumstances--
if, indeed, the bill can properly be called legislation
rather than merely the expression of an intent to legislate
ok
The presentation of a bill to me pursuant to Article I,
ALD
ah
section 7 of the Constitution amounts to a representation
by Congress that, as far as it is concerned, the legislation
is ready to become effective, subject perhaps to some
- 2 -
extrinsic condition precedent, but not to further
congressional deliberation. Here, however, Congress in
effect requests my approval before it has given its own.
In this instance, the clear constitutional infirmity
of the bill not only affects my powers and duties but
directly endangers substantial and important private
rights. If the bill is unconstitutional, it will remain
As a result, a sure source of funds for prompt payment of public
unconstitutional despite my. signing it. Compénsation
liability claims, a primary objective of the Price-Anderson
for injuries incurred as a result of the operation of new
Insurt
Act, would be in doubt. The uncertainty over nuclear liability
atomic facilities will not be assured and the enormous
that
private funds which V anticipate will be invested in the
protection would also adversely affect private investment which
a
future in reliance on the Act will be at risk I see no
will be necessary as nuclear power assumes its vital role in meeting
justification for incurring these dangers by signing the
themation's energy requirements. The public interest would not be
present bill.
served by approving legislation which creates these uncertainties.
I urge the Congress to reenact the bill promptly so
as to remove the problems which Section 12 now raises.
THE WHITE HOUSE
October LADER
GLR8LD FORD LIBRARY
THE WHITE HOUSE RUSH
ACTION MEMORANDUM
WASHINGTON
LOG NO.: 643
Date:
October 10, 1974
Time:
9:30 a.m.
FOR ACTION: Michael Duval
CC (for information): Warren K. Hendriks
Phil Buchen
Jerry Jones
Bill Timmons
Glenn Schleede
Paul Theis
foll 1Ar
NSC/S
FROM THE STAFF SECRETARY
DUE: Date:
Today, October 10, 1974
Time: 4:00 p.m.
SUBJECT:
Enrolled Bill H.R. 15323 - Price-Anderson amendments
ACTION REQUESTED:
For Necessary Action
XX For Your Recommendations
Prepare Agenda and Brief
Draft Reply
For Your Comments
Draft Remarks
REMARKS:
Please return to Kathy Tindle - West Wing
QUALITY FORD LIBRANT
Thank you.
61 OI MA 01 100 716
PLEASE ATTACH THIS COPY TO MATERIAL SUBMITTED.
If you have any questions or if you anticipate a
delay in submitting the required material, please
Warren K. Hendriks
telephone the Staff Secretary immediately.
For the President
To Warren 10 1454.m. of
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
OCT 9 1974
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill H.R. 15323 - Price-Anderson Act amendments
Sponsors - Rep. Price (D) Illinois and Rep. Hosmer (R)
California
Last Day for Action
October 12, 1974 - Saturday
Purpose
To amend the Price-Anderson Act to provide for: (1) its
extension for five years until August 1, 1982; (2) a gradual
transfer of indemnification from Government to private sources;
(3) an increase in the limit of licensees' liability; and (4)
a limited extension of indemnity coverage outside the territorial
limits of the United States.
Agency Recommendations
Office of Management and Budget
Disapproval (Veto message
attached)
Atomic Energy Commission
Approval
Federal Energy Administration
Approval
Department of Justice
Disapproval (Veto message
attached)
Council on Environmental Quality
No objection
Department of State
No objection to section
on offshore coverage
Department of Housing and Urban
Development
No objection
Environmental Protection Agency
GERALD, FORD LIBRARY
93D CONGRESS
HOUSE OF REPRESENTATIVES
REPORT
2d Session
No. 93-1306
REVISING AND AMENDING THE PRICE-ANDERSON
INDEMNITY PROVISIONS OF THE ATOMIC ENERGY
ACT OF 1954
AUGUST 20, 1974.-Ordered to be printed
Mr. PRICE of Illinois, from the committee of conference,
submitted the following
CONFERENCE REPORT
[To accompany H.R. 15323]
The committee of conference on the disagreeing votes of the two
Houses on the amendments of the Senate to the bill (H.R. 15323) to
amend the Atomic Energy Act of 1954, as amended, to revise the
method of providing for public remuneration in the event of a nuclear
incident, and for other purposes, having met, after full and free
conference. have agreed to recommend and do recommend to their
respective Houses as follows:
That the Senate recede from its amendments numbered 1, 2, and 3.
That the House recede from its disagreement to the amendments
of the Senate numbered 4, 5, 6, 7, 8, 9, and 10; and agree to the same.
MELVIN PRICE,
CHET HOLIFIELD,
JOHN YOUNG,
TENO RONCALIO,
MIKE McCormack,
ORVAL HANSEN,
MANUEL LUJAN, Jr.,
Managers on the Part of the House.
JOHN O. PASTORE,
STUART SYMINGTON,
ALAN BIBLE,
GEORGE D. AIKEN,
WALLACE F. BENNETT,
Managers on the Part of the Senate.
FORD i LIBRARY
38-006
JOINT EXPLANATORY STATEMENT OF THE
COMMITTEE OF CONFERENCE
The managers on the part of the House and the Senate at the con-
ference on the disagreeing votes of the two Houses on the amendments
of the Senate to the bill (H.R. 15323) to amend the Atomic Energy
Act of 1954, as amended, to revise the method of providing for public
remuneration in the event of a nuclear incident, and for other pur-
poses, submit the following joint statement to the House and the Sen-
ate in explanation of the effect of the action agreed upon by the man-
agers and recommended in the accompanying conference report:
AMENDMENTS Nos. 1 AND 2
The Senate amended the bill by changing the definition of "extraor-
dinary nuclear occurrence" in subsection 11j. of the Atomic Energy
Act of 1954, as amended, to include incidents involving source, special
nuclear material, or byproduct material "illegally diverted from its
intended place of confinement." The conferees agreed to eliminate this
amendment because the feasibility and ramifications of such inclusion
require detailed study. In particular the role of private insurance in
relation to Governmental indemnity, as well as their relationship to
safeguard regulations, requires further consideration. The conferees
expect the Atomic Energy Commission to conduct a study of this
problem and report to Congress with recommendations by early next
year. The Joint Committee will then conduct hearings to determine
what, if any, legislative changes are required.
The Senate recedes.
AMENDMENT No. 3
The House bill extended the definition of nuclear incidents, as used
in subsection 170 c. of the Atomic Energy Act, dealing with AEC
licensees, to include occurrences outside the United States or any other
nation (e.g. on the high seas) involving material licensed by the AEC
which is used in connection with the operation of a licensed stationary
production or utilization facility (floating nuclear power plant) and/
or moves outside the territorial limits of the U.S. in transit from one
AEC licensee to another.
The Senate amendment replaced the House provision with language
extending the definition to include any extraordinary nuclear occur-
rence outside the U.S. or any other nation which involves material li-
censed by the AEC other than for import or export or for nuclear ship
propulsion. The substantive effect of this provision is believed to be
the same as the effect of the House language. However, the conferees
agreed to the House language because of the possibility that the Senate
language might bring under the definition some unanticipated types
of events.
The Senate recedes.
(3)
H.R. 1306
4
5
AMENDMENTS Nos. 4, 5, 6, 8, AND 9
within 30 days after submission of the Joint Committee's report to
Congress on its evaluation of the AEC report WASH-1400.
The House bill provided for a 10-year extension of the Price-
The House recedes.
Anderson provisions of the Atomic Energy Act, to 1987, with an AEC
MELVIN PRICE,
study and report to Congress in 1983.
CHET HOLIFIELD,
The Senate amendment provided for only a 5-year extension, to
JOHN YOUNG,
1982, with the study and report due in 1979.
TENO RONCALIO,
The conferees agreed to the Senate amendments. However, the con-
MIKE McCormack,
ferees wish to stress that there are a number of features of the Price-
ORVAL HANSEN,
Anderson Act which should be viewed as permanent. These include the
MANUEL LUJAN, Jr.,
mandatory insurance-coverage, the no-fault provisions, the provisions
Managers on the Part of the House.
for consolidation of claims in a single federal court and for advance
JOHN O. PASTORE,
payment of claims, the contractor indemnity provisions, and the man-
STUART SYMINGTON,
datory retrospective premium system. These elements make up a pat-
ALAN BIBLE,
tern of public protection which must be continued. The provision for
GEORGE D. AIKEN,
termination in 1982 should be viewed as a device to ensure that Con-
WALLACE F. BENNETT,
gress will reassess the situation prior to that time and make revisions as
Managers on the Part of the Senate.
required, rather than as a Congressional intent to bring to an end the
federal regulation of nuclear liability insurance.
The House recedes.
AMENDMENT No. 7
The House bill included language which prohibited any indemnifi-
cation for nuclear incidents occurring in any nation other than the
United States. The conferees agreed to the Senate amendment deleting
this provision. The Atomic Energy Act already precludes any indemni-
fication for licensed activities in other nations, and it was considered
essential that the Commission retain its authority to indemnify its con-
tractors for activities carried out in other nations for the benefit of the
United States.
The House recedes.
AMENDMENT No. 10
The House bill identified the study which must be completed before
the bill's provisions go into effect as "The Reactor Safety Study,
announced by the Atomic Energy Commission on June 27, 1973".
The Senate amendment corrected this to read "The Reactor Safety
Study, entitled 'An Assessment of Accident Risks in U.S. Commercial
Nuclear Power Plants,' AEC Report Number WASH-1400". The
Senate amendment also added a provision enabling Congress to pre-
vent the effectuation of this Act by a concurrent resolution passed
H.R. 1306
H.R. 1306
Calendar No. 987
93D CONGRESS
2d Session
}
{
REPORT
SENATE
No. 93-1027
REVISING AND AMENDING THE PRICE-
ANDERSON INDEMNITY PROVISIONS OF
THE ATOMIC ENERGY ACT OF 1954,
AS AMENDED
REPORT
BY THE
JOINT COMMITTEE ON ATOMIC ENERGY
[To accompany H.R. 15323]
FORD & LIBRARY 074039
JULY 23, 1974.-Ordered to be printed
-
U.S. GOVERNMENT PRINTING OFFICE
38-010
WASHINGTON : 1974
JOINT COMMITTEE ON ATOMIC ENERGY
CONTENTS
MELVIN PRICE, Illinois, Chairman
JOHN O. PASTORE, Rhode Island, Vice Chairman
HENRY M. JACKSON, Washington
Page
CHET HOLIFIELD, California
STUART SYMINGTON, Missouri
I. Background
1
JOHN YOUNG, Texas
TENO RONCALIO, Wyoming
ALAN BIBLE, Nevada
II. Hearings
3
JOSEPH M. MONTOYA, New Mexico
III. Provisions of current act
4
MIKE McCORMACK, Washington
GEORGE D. AIKEN, Vermont
IV. Studies
4
CRAIG HOSMER, California
JOHN B. ANDERSON, Illinois
WALLACE F. BENNETT, Utah
V. Need for legislation
5
ORVAL HANSEN, Idaho
PETER H. DOMINICK, Colorado
VI. Discussion of bill
6
MANUEL LUJAN, JR., New Mexico
HOWARD H. BAKER, JR., Tennessee
A. Phaseout of Government indemnity
6
B. Increase in limit on liability
9
EDWARD J. BAUSER, Executive Director
GEORGE F. MURPHY, Jr., Deputy Director
C. Extension of indemnity coverage outside United States
territorial limits
10
JAMES B. GRAHAM, Assistant Director
D. Additional considerations
11
NORMAN P. KLUG, Technical Consultant
E. Explanation of committee amendments
12
Brig. Gen. ALBION W. KNIGHT, Jr. (USA Ret.), Professional Staff Member
VII. Safety of nuclear facilities
15
RANDALL C. STEPHENS, Professional Staff Member
WILLIAM J. MINSCH, Jr., Special Counsel
VIII. Comparison with other Federal programs of disaster assistance and
insurance
17
LOUIS T. URBANCZYK, Consultant
IX. Cost of legislation
18
JAMES T. RAMEY. Consultant
X. Section-by-section analysis
18
JANE R. MAPES, Special Counsel
XI. Changes in existing law
20
LAWRENCE F. ZENKER, GAO Consultant
CHRISTOPHER C. O'MALLEY, Printing Editor
APPENDIX I [tables]
27
APPENDIX II. Testimony of Dr. Norman C. Rasmussen
29
(II)
(III)
93D CONGRESS
SENATE
REPORT
2d Session
No. 93-1027
REVISING AND AMENDING THE PRICE-ANDERSON
INDEMNITY PROVISIONS OF THE ATOMIC ENERGY
ACT OF 1954, AS AMENDED
JULY 23, 1974.-Ordered to be printed
Mr. PASTORE, from the Joint Committee on Atomic Energy,
submitted the following
REPORT
[To accompany H.R. 15323]
The Joint Committee on Atomic Energy, having considered H.R.
15323, to amend Sections 11 and 170 of the Atomic Energy Act of 1954,
as amended, hereby reports favorably thereon, with amendments,
and recommends that the bill do pass.
The amendments to the bill (H.R. 15323) adopted by the Joint
Committee in open mark-up session, July 22, 1974, are as follows:
Page 2, lines 10 through 20: Delete all the material in these lines and
substitute therefor the words: "And provided further, That as the
term is used in subsection 170 c., it shall include any such occurrence
outside the United States if such occurrence arises out of or results
from the radioactive, toxic, explosive, or other hazardous properties
of source, special nuclear, or byproduct material licensed pursuant
to chapters 6, 7, 8, and 10 of this Act, other than for import or export
or for nuclear ship propulsion, which takes place outside the territorial
limits of the United States or any other nation."
Page 8, lines 1 through 4: Strike the material beginning with the colon
in line 1 and ending with the word "States" in line 4.
Page 10, lines 12 through 16: Strike the words, "announced by the
Atomic Energy Commission on June 27, 1973" and substitute therefor
the words "entitled 'An Assessment of Accident Risks in U.S. Com-
mercial Nuclear Power Plants', AEC Report No. WASH-1500".
I. BACKGROUND
The Price-Anderson Act was enacted in 1957, and extended and
amended in 1965 and 1966. The Act was designed to protect the public
and the emerging nuclear industry by assuring the availability of
(1)
2
3
funds for the payment of claims in the unlikely event of a catastrophic
amendments, to perfect the third, and voted 9 to 1 to report the bill
nuclear incident. Among other things, the Act provides funds for
favorably to the Senate.
public liability in the event of a nuclear incident up to a total amount
II. HEARINGS
of $560 million. This figure represents the sum of the amount of
Government indemnity fixed at $500 million by the Congress, and
Public hearings on the possible modification or extension of the
the then-existing (1957) maximum available private liability insur-
Price-Anderson Act were held on January 31, March 27 and 28, 1974,
ance, $60 million. The amount of private insurance has gradually
and hearings on H.R. 14408, S. 3254 and S. 3452 were held on May 9,
risen, SO that it stands now at $110 million; the Government's indem-
10, 14, 15, and 16, 1974. An informal planning committee, drawn
nity has commensurately decreased to $450 million. Other features
from the Joint Committee staff, the Atomic Energy Commission, the
included in the Act by the amendments of 1966 are no-fault liability
legal profession, the commercial power and insurance industries, and
and provisions for accelerated payment of claims immediately upon
public citizen groups, assisted the Committee and staff in regard to
occurrence of a nuclear incident.
the scope of the hearings and potential witnesses.
Since the enactment of the Price-Anderson Act, there has not been
The following witnesses from the Atomic Energy Commission
a single accident which has resulted in indemnity payments for public
appeared before the Joint Committee to present testimony or to
injury under its provision. This outstanding safety record has been
assist in the development of the record: Dr. Dixie Lee Ray, Chairman;
accompanied by a gradual growth in the nuclear power industry which
William O. Doub, Commissioner, Marcus Rowden, General Counsel;
is now accelerating at a rapid pace. Thus the Price-Anderson Act has
L. Manning Muntzing, Director of Regulation; and Jerome Saltzman,
served well its dual purpose of protection of the public and elimination
Deputy Chief, Office of Antitrust and Indemnity, Directorate of
of a potential deterrent to the establishment of a nuclear industry.
Licensing.
The Act is scheduled to expire on August 1, 1977. Because of the
Other non-governmental witnesses who appeared one or more times
long-lead times involved in planning new commitments to nuclear
are:
power, the Joint Committee has been urged to consider the matter of
Elmer Dee Anderson, Private Citizen, Valparaiso, Indiana.
extension and possible modification of the Act during the present ses-
Dr. W. H. Arnold, Jr., General Manager, PWR Systems Division,
sion of Congress in order to prevent an unwarranted disruption in the
Westinghouse Electric Company.
planning process for nuclear powerplants, such as might result from
George K. Bernstein, Federal Insurance Administrator, HUD.
uncertainty over the future of the Price-Anderson Act. In order to
Arthur C. Gehr, Atomic Industrial Forum.
permit early consideration in the current Congress, the Joint Com-
Frank P. Grad, Director, Legislative Drafting Research Fund,
mittee in July 1973, requested the Commission to submit studies and
Columbia University.
alternative proposals in the indemnity area. In response to this call,
Harold P. Green, Professor of Law, National Law Center, George
the Atomic Energy Commission filed a broad based staff study in
Washington University.
January 1974 and the Columbia University Legislative Drafting
Gerald R. Hartman, Professor of Insurance and Risk, Temple
submitted an independent review sponsored by the Atomic Industrial
University.
Forum. Months of informal interchange among members of the Joint
Joseph F. Hennessey, Bechhoefer, Snapp and Trippe, Washing-
Committee, the Atomic Energy Commission, and their staffs, and
ton, D.C.
representatives of private industry and the general public culminated
Larry Hobart, Assistant General Manager, American Public Power
in public hearings beginning on January 31, 1974. On April 22, 1974,
Association.
the Atomic Energy Commission forwarded to the Congress proposed
Mrs. Judith H. Johnsrud, Central Pennsylvania Committee on
legislation which was introduced as H.R. 14408 by Chairman Melvin
Nuclear Power.
Price of the Joint Committee on Atomic Energy on April 25, 1974, and
Dr. Chauncey Kepford, York, Pennsylvania, representing the
as S. 3452 by Senator John O. Pastore, Vice-Chairman of the Joint
Environmental Coalition on Nuclear Power.
Committee, on May 7, 1974. Additionally, a related bill, S. 3254 was
Hubert H. Nexon, Senior Vice-President, Commonwealth Edison
introduced by Senator Mike Gravel on March 27, 1974.
Company, representing Edison Electric Institute.
Following public hearings, held on May 9, 10, 14, 15, and 16, 1974,
Norman C. Rasmussen, Department of Nuclear Engineering,
the full committee met in executive session on June 11, 1974, and
Massachusetts Institute of Technology.
after careful consideration voted to submit a committee bill in lieu
Charles A. Robinson, Jr., Corporate Counsel, National Rural
of the above-mentioned measures. The bill was introduced on June 11,
Electric Cooperative Association.
1974, by Chairman Price (for himself and Mr. Hosmer) as H.R. 15323.
Mrs. Laurie R. Rockett, Greenbaum, Wolff and Ernst, New York
The Joint Committee met again on June 13, 1974, in open session and
City, New York.
voted to report favorably on the bill with amendments by a roll call
Ms. Ann Roosevelt, New York, on behalf of Friends of the Earth.
vote of 11 to 2. On July 10, the House of Representatives considered
Richard A. Schmalz, Hartford Insurance Group, representing
H.R. 15323 and passed the bill with three amendments by a vote of
Nuclear Electric Liability Insurance Association.
360-43. The bill was messaged to the Senate and referred to the Joint
Chauncey Starr, Electric Power Research Institute.
Committee on July 11. The Joint Committee met again in open session
Mark Swann, New Park, Pennsylvania.
on July 22 and voted without dissent to delete two of the three House
Martin Victor, V.P. and Secretary, Babcock & Wilcox Company.
Richard Walker, Partner, Arthur Andersen & Company.
5
4
The major studies were those by the Atomic Energy Commission
Bruce L. Welch, Director Environmental Studies, Friends Medical
and by the Legislative Drafting Research Fund of Columbia Uni-
Science Research Center, Inc.
versity. The latter, an independent study, resulted in a report Decem-
ber 12, 1973, entitled "Major Issues of Financial Protection in Nuclear
III. PROVISIONS OF CURRENT ACT
Activities". Among the proposals which are included in the Joint Com-
The Price-Anderson Act is incorporated in the Atomic Energy Act
mittee print and which were discussed in the AEC and Columbia
in Sections 2, 11, 53, and 170. Its major provisions are described below.
studies was a proposal by the nuclear liability insurance pools for a
The Atomic Energy Commission must require as a condition for
retrospective premium insurance plan. This plan, modified somewhat,
certain licenses, including those for nuclear power plants, that the
became the basis of legislation submitted to the Congress by the
licensee maintain financial protection for payment of third party
Atomic Energy Commission, subsequently introduced by Chairman
liability claims in the event of a nuclear accident, in the amount
Price in the House as H.R. 14408, and by Vice Chairman Pastore in
required by the Commission. The AEC may also at its discretion
the Senate as S. 3452, and which was further modified by the Joint
require the protection for its contractors and other types of licensees.
Committee into the bill now being reported.
For any power reactor with an electric capacity of 100 Mwe or more
Other proposals included a Commission staff study proposal for a
the Commission must require financial protection equal to the maxi-
contingent fee system, and proposals by former AEC General Counsel
mum available from private sources. Currently this is $110 million.
Joseph Hennessey, Professor Harold Green, and former Pennsylvania
The Commission is also required to execute an indemnity agree-
Insurance Commissioner Herbert S. Denenberg. These proposals are
ment with its contractors and with each licensee required to maintain
not discussed in this report, but can be found in the committee print
financial protection, agreeing to indemnify the licensee and any other
described above, and were discussed during the hearings.
parties liable for claims arising from a nuclear incident above the
Senator Gravel's bill constituted an additional proposal which was
amount required, up to $500 million. The indemnity agreement
considered in developing this legislation.
extends for the life of the license (usually 40 years for power reactors).
V. NEED FOR LEGISLATION
The aggregate liability for damages arising from a nuclear incident
is limited to $560 million within the U.S. and $100 million plus the
The Price-Anderson Act applies only to licenses issued prior to
financial protection required of the licensee for incidents occurring
August, 1977. Nuclear power plants now in the planning and design
outside the U.S. All vendors, architect-engineers, subcontractors,
phases would not receive construction permits until about 1977-1978.
and other parties are protected from liability by the omnibus feature
Thus there is uncertainty as to whether these plants would receive
of the licensee insurance and the Government indemnity.
protection in the form of Government indemnity. Reactor manufac-
Non-profit educational institutions licensed to operate reactors are
turers and architect-engineers are already requiring escape clauses in
exempted from the financial protection requirement and are in-
their contracts to permit cancellation in the event some form of pro-
demnified by the Commission for payment of claims exceeding
tection from unlimited potential liability is not provided. Action is
$250,000, in an amount up to $500 million.
required soon to prevent disruption in utility plans for nuclear power.
Damages to offsite property of the licensee are covered by the
The study by the Columbia University Legislative Drafting
insurance and indemnity.
Research Fund examined the situation that would prevail if the
The Commission may require the inclusion in any insurance
Price-Anderson Act were to be allowed to expire. The study concluded
contract or other proof of financial protection and in its indemnity
that the resulting legal situation in the event of a nuclear incident
agreements of provisions waiving any defenses based upon conduct
would be chaotic. Injured parties would be subject to whatever tort
of the claimant or fault of the indemnified person, charitable or
law prevailed in the State in which the incident occurred or in which
governmental immunity, or statutes of limitations which are shorter
they suffered harm. There would be wide variation in the grounds for
than a specified duration. The waivers apply in any instance where
recovery, the standards of proof, and the defenses available to the
the Commission determines there has been an extraordinary nuclear
defendants. Recovery would be uncertain and could be delayed for
occurrence, as defined by the Commission.
Provisions are also included for prompt payments to injured parties
many years. The potential for unlimited liability might drive smaller
manufacturers, architect-engineers, and component suppliers out of
and for consolidation of all claims into a single Federal district court.
the nuclear business and could serve as a deterrent to entry by other
IV. STUDIES
firms. The report's conclusions were summarized as follows:
The primary defect of this alternative is its failure to afford
Various groups have studied the problem of nuclear insurance and
adequate protection to the public in terms of providing either
indemnity in the past year, and several reports and proposals were
a secure source of funds or a firm basis of legal liability. While
reviewed by the Atomic Energy Commission and the informal planning
it does have the theoretical advantage of placing no legal limit
Committee headed by former AEC Commissioner James T. Ramey,
on amount of protection available, as a practical matter, the
serving as a consultant to the Joint Committee. The studies and
public would be less assured of compensation than under the
proposals and related material are included in a Joint Committee
Price-Anderson Act. Adoption of this alternative would also,
Print of March 1974 entitled, "Selected Materials on Atomic Energy
Indemnity and Insurance Legislation."
S.R. 1027-2
6
7
for the reasons discussed in Chapters 3 and 4, tend to dis-
required to maintain the maximum amount of financial protection, in
courage the participation of industry in the nuclear field. If
an insurance retrospective rating plan whereby in the event of a
in other respects Congress adopts a policy of continued en-
nuclear incident resulting in damages exceeding the base layer of
couragement, inaction with respect to financial protection
insurance, each licensee would be assessed a deferred premium which
will not advance, and will probably impede, this policy.
would be a prorated share of the excess damages. A maximum amount
Assuming no significant change in the insurance patterns
would be established which the retrospective premiums for each
of the industry, this alternative also fails to meet the cri-
facility could not exceed. If, for instance, at some time in the future, a
terion of efficient and equitable cost allocation through risk
maximum level of $3 million per reactor were set and a total of 100
spreading. With the possible exception of the approximately
reactors had been licensed up to that time, then $300 million would be
100 million dollars insured by the insurance pools, the entire
available at that time to provide for payment of damages in this
risk of an accident would fall, under the law of most states,
secondary layer over and above the base insurance. As more reactors
either on the victim who was barred from recovery by a
were licensed, the secondary layer would increase proportionately.
technical defense, failure of proof, or inability of the defend-
The Commission will set the maximum premium by rule.
ant to pay a judgment, or on the particular utility involved
The Commission would continue to provide indemnity for payment
and possibly its contractors or suppliers, and on their con-
of damages exceeding the combined primary and secondary layers, up
sumers. And the entire cost would arise after the accident
to a total of $560 million. As the secondary layer increased, it would
had occurred. This alternative thus makes use of little, if
gradually phase out the government indemnity. The date at which
any, intertemporal and, initially, virtually no interpersonal
this would occur would depend on the amount set as the maximum
spreading. Interpersonal spreading might be achieved later
premium and on the rate at which reactors were licensed. The tables in
as the companies held liable shifted the cost onto their con-
the appendix to this report illustrate how this phase out would occur
sumers. Although the allocation of liability to the industry
for various premium levels.
does appear to meet the third criterion of internalization, to
The Joint Committee expects the Commission to require present
the extent that victims of an accident are unable to recover
licensees to enter into the retrospective premium plan under its author-
from the industry, even this criterion is not met. Finally,
ity to establish the maximum financial protection required. The com-
because of the potential problems plaintiffs may encounter
mittee believes that this authority is sufficient to require the participa-
in seeking damages under state law, recovery- is likely to
tion of such licensees in the plan. Exclusion of these licensees would
involve excessive time and expense. In sum, this alternative
result in confusion and would delay the date at which Government
meets only one of the four basic criteria, that of internal-
indemnity can be eliminated.
ization of costs, and meets that only in part.
The Joint Committee has from the time of the inception of the Price-
The Joint Committee has received numerous letters from companies
Anderson Act endorsed the concept of the assumption by the nuclear
and organizations in the nuclear industry, urging extension of the
industry of the risks associated with nuclear incidents. The industry in
Price-Anderson Act in its present or a modified form. These letters as
its early stages of development, however, was not capable of assuming
well as testimony at the hearings have stressed the importance of the
this unique risk, which has generally been considered to have extremely
Act in removing a deterrent to development of the nuclear industry,
low probability but potentially large consequences. While the proba-
bilities of severe nuclear accidents appear now to have been over esti-
and the need for prompt action to clarify the situation that will prevail
mated, the industry is just now reaching the point where the govern-
after 1977.
VI. DISCUSSION OF BILL
ment's role can be phased out without the possibility of unduly disrupt-
ing the industry's development or of leaving the public with inadequate
The bill provides for a ten-year extension of the Price-Anderson
provision for relief from the highly improbable severe nuclear incident
Act and for three major changes-(1) phase out of Government in-
which the Act is designed to protect against. The Commission's pro-
demnity, (2) increase in limit of liability and (3) extension of in-
posal as embodied in the Joint Committee bill is considered the most
demnity coverage outside the territorial limits of the United States
expeditious means for the transfer of responsibility. An abrupt
for certain limited activities.
termination of Government protection is not considered appropriate
The details of the bill are described below.
at this time, in light of the still relatively small number of nuclear
reactors now licensed.
Premium Amounts
A. PHASEOUT OF GOVERNMENT INDEMNITY
Deferred Premium System
The Joint Committee desires that the Government indemnity
be phased out as soon as is reasonably feasible. Consequently, the
The bill provides specific authorization for the commission to estab-
bill provides that the Commission must set the level of the standard
lish by rule, regulation or order the terms and conditions of the
maximum deferred premium at no less than $2 million per facility.
financial protection required of nuclear licensees. AEC is directed,
The bill also establishes an upper level for the premium of $5 million
under this authority, to require participation, by licensees who are
per facility. This limitation was considered necessary to assure that
smaller utilities are not hampered in efforts to raise capital by a too-
8
9
high potential liability. The bill thus establishes a range within which
The bill strengthens the language of Section 170 to stress the
the Commission shall set the maximum premium taking into considera-
tion the objectives on which these statutory limits were based and
Federal preemption of nuclear powerplant licensing and the public
other pertinent factors. The range was further intended to enable the
purposes of the premium system. Furthermore, the deferred premium
termination of the Government indemnity between about 1981 and
should not be interpreted as establishing a responsibility by one
1985. The Commission is directed to consider this time frame as a
licensee for a liability or debt of another. The potential deferred
premiums are considered by the Joint Committee to have funda-
guideline in establishing the premium.
The Commission is authorized to establish a maximum deferred
mentally the same status as any other such insurance premium. The
bill authorizes the Commission to establish a maximum limit on the
premium lower than the standard premium for any facility based
upon such considerations as size and location. This authorization is
amount of deferred premiums which can be charged to a facility in
included to permit such variations if the Commission finds they are
any one year. The purpose of this provision is to clarify the status of
the premiums and to ensure that they can not be construed as the
warranted.
The legislation provides for a target date of August 1, 1976 for
lending of credit and thus raise constitutional problems for some
publicly owned utilities.
completion of Commission action to implement the deferred premium
plan. This should provide ample time for a rulemaking proceeding.
The bill includes requirements that the retrospective premium plan
be available to licensees who elect to provide the basic financial
Assurance of Premium Availability
protection through some means other than insurance, and a pro-
vision that the maximum financial protection required shall be that
Authority and direction has also been provided for the Commission
available under reasonable terms and conditions. The Commission is
to establish measures to ensure that the deferred premiums will be
thus authorized not to require available insurance to the degree that
paid when they are called for following a nuclear incident. The Com-
it determines the rates or terms of such insurance to be unreasonable.
mission is directed to assure these payments to the maximum extent
B. INCREASE IN LIMIT ON LIABILITY
possible through the resources of the nuclear and insurance industries.
Representatives of insurance companies indicate that the insurance
The bill does not provide for an immediate change in the $560
pools could provide coverage for up to $30 million in defaults initially,
million limit on total liability arising from a nuclear incident. That
and that this sum could be increased later. The Joint Committee
limit is retained until the total of primary insurance and assessable
believes the industry and the AEC should make every effort to provide
retrospective premiums reaches the level necessary to completely
additional coverage by insurance and industry.
replace the Government indemnity. From the point, as the primary
In order to prevent a potential gap between the public protection
and secondary levels rise, the limit on liability would be allowed to
pledged and actual payments made, the bill includes authorization
rise correspondingly. No ultimate limitation on the level to which
for the Commission to serve as the ultimate assurance to the public
this coverage could rise is provided for. At a premium level of $3
for these payments, to the extent necessary. This may be done through
million per reactor, the overall limit would be projected to reach a
reinsurance, guarantees, or other means. If the Commission should
billion dollars in about 1987, and rise to $1,346,000,000 in 1990. The
determine that a guarantee of payment is essential, authority has
Commission would have the continuing authority to establish a rule
been provided to permit recovery by the Government from the default-
reducing the standard maximum premium as appropriate when it
ing licensee of any payments made on its behalf.
determines that the total financial protection has risen to an amount
above which further increases are not necessary.
State Constitutional Problem
The Joint Committee does not feel that any increase in or elimina-
tion of the limit is necessary or appropriate at this time. As the Joint
During the hearings on this legislation, a potential constitutional
Committee pointed out when the Act was first proposed:
problem was raised as to public power organizations. Public power
representatives testified that the retrospective premium arrangement
"The limit of the Commission's responsibility under these
might be construed to be in violation of some State constitutions,
(indemnity) agreements is to be $500 million. This limit
which prohibit a State or a subdivision or agency of a State, such
could be subject to upward revision by the Congress in
as a municipal utility, from lending its credit or making expenditures
the event of any one particular incident in which, after
for other than public purposes. They suggested that preemption of this
further congressional study, the Congress felt more appro-
field by the Federal Government or explicit establishment of the pre-
priations would be in order.
mium system as a condition to obtaining a nuclear powerplant license
*
might resolve the problem.
"Subsec. e limits the liability of the persons indemnified for
The Committee feels that the language of Section 170, as amended
each nuclear incident to $500 million, together with the
by this bill, is clear in its establishment of participation in the retro-
amount of financial protection required. Of course, Congress
spective premium system as a firm requirement of a licensee required
can change this act at any time after any particular incident.
to maintain the maximum financial protection.
The Joint Committee wanted to be sure that any such changes
in the act would be considered by it in the light of the particu-
lar incident."
10
11
At the time of the extension of the Act in 1965, the Joint Com-
Any indemnification agreements relating to these activities would
mittee reiterated this point when it said:
be administered in the same manner as the Commission would ad-
"In the event of a national disaster of this magnitude, it
activities. minister the Price-Anderson Act with respect to other licensed
is obvious that Congress would have to review the problem
and take appropriate action. The history of other natural or
The present definition of "nuclear incident" as applied to Com-
man-made disasters, such as the Texas City incident, bears
mission contractors provides indemnity protection only if an occur-
this out. The limitation of liability serves primarily as a
rence outside the United States involves "a facility or device" owned
device for facilitating further congressional review of such a
by, and used by or under contract, with the United States. The
situation, rather than an ultimate bar to further relief of the
amended definition would resolve any possible ambiguities concerning
public."
the Commission's authority to indemnify its contractors for any
Testimony on the preliminary results of the Reactor Safety Study
or byproduct material outside the United States.
occurrence during the course of transporting source, special nuclear,
under the direction of Professor Norman Rasmussen of the Massachu-
With the apparent advent of offshore nuclear powerplants, it is
setts Institute of Technology has indicated that the probabilities of a
essential that the protection intended by the Price-Anderson Act
nuclear incident are much lower and the likely consequences much
not be thwarted by the incidental fact of location beyond the U.S.
less severe than has been thought previously (See Section VII of this
territorial limits. Likewise, the shipment of nuclear materials from
report). The likelihood of an accident with damages exceeding $560
one licensed facility to another within the United States should be
million appears to be quite remote. However, the bill does permit the
limit to increase once the retrospective premiums assessable have
included in the Act's coverage regardless of whether the facility or
route involved is located or involves transportation outside the
completely replaced the government indemnity.
territorial limits.
Testimony at the hearings on this bill included suggestions that
C. EXTENSION OF INDEMNITY COVERAGE OUTSIDE UNITED STATES
nuclear merchant ships be included in the act's coverage. The Joint
TERRITORIAL LIMITS
Committee has not included those activities in this bill. The urgency
The bill amends the definitions of "nuclear incident" and "person
of such inclusion is not considered sufficient to warrant legislation
indemnified" in section 11 of the Atomic Energy Act to permit the
without a more detailed examination. The Joint Committee's de-
Commission to extend the provisions of the Price-Anderson Act to
cision not to take this action at this time is in no way intended to
preclude further consideration at a later time.
certain activities outside the territorial limits of the United States
conducted by commission contractors or involving licensed nuclear
facilities or licensed activities. The bill does not include under Price-
D. ADDITIONAL CONSIDERATIONS
Anderson indemnity coverage the import or export of nuclear material
Activities Covered by Price-Anderson Act
or facilities or activities conducted within the territorial limits of
another nation; nor any occurrence resulting from the use of a nuclear
Financial protection and indemnity for plutonium processing
power reactor to propel a U.S. merchant ship, although nuclear
facilities is discretionary with the Commission under the present
material transported on such a ship as cargo could be covered by the
law. One witness at the hearings, a representative of a company
Price-Anderson indemnity provisions in the same manner as cargo
which operates such a facility, proposed that these provisions of
carried in ships powered by fossil fuel.
the Price-Anderson Act be made mandatory for such facilities.
The existing definitions of "person indemnified" and "nuclear
The Commission does not at this time require financial protection
incident" do not permit indemnity protection for activities licensed
of such licensees or extend indemnity coverage to them. However,
by the Atomic Energy Commission if the nuclear incident occurs
private liability insurance is available. The Commission has indi-
outside the territorial limits of the United States, with the exception
cated that it will undertake a thorough review of this matter. The
of the now retired nuclear ship Savannah. There are two situations
Joint Committee has not proposed a legislative change in this area,
in which the protection afforded by the Price-Anderson Act with
pending the outcome of this review. The Commission is urged to
respect to licensed activities would be extended to nuclear incidents
give appropriate consideration to this matter.
occurring outside the territorial limits of the United States. The
Transportation of nuclear materials is not specifically provided
first situation involves ocean shipments of new or spent fuel which
for under the Price-Anderson Act, although carriers are generally
may move outside the territorial limits of the United States during
covered either as AEC contractors or under the omnibus aspects of
ocean transit from one licensed nuclear facility to another. The second
licensee financial protection and indemnity. The Association of
situation involves nuclear facilities which are physically located
American Railroads has proposed that transportation be specifically
outside of the territorial limits of the United States but whose con-
covered because of gaps in the existing system for such situations as
struction and operation are licensed by the Atomic Energy Com-
transportation of materials for a shipper or receiver not required to
mission, such as a floating nuclear power plant located beyond the
maintain financial protection. Although insurance is available to
limits of the territorial sea of the United States. The legislation would
carriers, it is limited to the amount of $60,000,000. The Joint Com-
authorize the Atomic Energy Commission to extend price-Anderson
mittee has not proposed legislation to deal with this matter, but
indemnity protection to such shipments and such facilities.
13
12
United States. This amendment was redundant insofar as its intended
encourages the Commission to review the situation to determine if
effect and potentially deleterious in other respects.
procedural or legislative changes are in order.
The apparent intent of the amendment's author was to prevent any
potential indemnification for accidents resulting from nuclear power
Priorities Between Claimants and Types of Claims
plants supplied by U.S. manufacturers to other nations such as
The Joint Committee has included in the legislation a direction
Egypt or Israel. Such reactors could not be indemnified under the
Act as it was before the amendment. These reactors are not licensed
and authorization for the court which develops the plan for dis-
by or under contract with the Commission and thus are not within
tribution of funds in the event of a nuclear incident which appears
the provisions of section 170.
to have resulted in damages exceeding the limit on liability to es-
Furthermore, subsection 11(q) of the Atomic Energy Act, as
tablish priorities between classes of claims and claimants. The Joint
amended by this bill, provides that a nuclear incident, for the purposes
Committee wishes to assure that in such a case, where the immediate
of the insurance and indemnification provisions of the Act, is defined, in
recovery by claimants may be less than the full amount of their
relevant part, as "any occurrence,
within the United States
"
losses, the distribution of funds will be made in such a manner as
(emphasis supplied). The only exceptions to this limitation to incidents
to compensate first for the most severe and the most readily computable
within the U.S. are the three provisos in subsection 11(q) which
losses. Thus claims for actual losses to property, for actual and reason-
allow indemnification for incidents occurring outside the United States
able medical expenses, for loss of wages, and other such losses may
merit higher priority than such claims as those for alleged pain and
only if they involve the following:
(1) Subsection 1701 (the nuclear ship Savannah, now being
suffering, emotional harm, and loss of consortium. Likewise, losses
decommissioned).
otherwise compensated for, while not precluded from recovery (under
the collateral source rule) in most jurisdictions, should be accorded
(2) Source, byproduct, or special nuclear material owned by,
and used by or under contract to the United States, and involved
lower priority than uncompensated losses. The Joint Committee also
in activities under contract for the benefit of the United States.
believes that as a matter of equity, in cases where less than full
(3) Occurrences outside the territorial limits of the U.S. and
compensation will be made through the amounts immediately avail-
all other nations (i.e., on the high seas), involving either offshore
able from insurance and government indemnity, losses to offsite
property of the licensee of the responsible facility should be accorded
floating nuclear power plants or transportation of source, special
lower priority than losses to third parties. The court is authorized to
nuclear, or byproduct material from one AEC licensee to another.
establish such additional priorities as are deemed desirable and
This proviso specifically excludes both import and export from
the coverage it provides. It also excludes nuclear ship propulsion.
equitable to further the principles described above.
The above provisions are in no way intended to create any causes of
Obviously, none of the exceptions involves reactors in other nations.
Thus the House amendment to Section 6 was not needed to effect an
action not in accordance with existing law or to derogate any existing
exclusion of such reactors.
causes of action. Nor should these provisions be construed as a retreat
The amendment is undesirable for several reasons. It would weaken
from the belief expressed on many occasions by this Joint Committee
that Congress is committed to thoroughly review the situation and to
the Commission's ability to conduct extraterritorial operations by
provide additional relief in the remote event of a nuclear incident
prohibiting the Commission from indemnifying parties injured by
Commission activities in other nations. It would serve as a deterrent
involving damages in excess of the limit on liability. The priorities are
not intended to preclude ultimate relief for claims of secondary
to participation by contractors in the Commission's military and space
priority, but rather to assure that early relief is applied where most
programs, and thus have a harmful effect on the national security.
Furthermore, this language would preclude the inclusion of nuclear
needed.
ships within the Act's provisions. The Committee has taken pains to
E. EXPLANATION OF AMENDMENTS
make it clear that, although these ships are not now included, this
Amendment to Section 1
issue remains open for further consideration.
The Joint Committee believes that the Commission's overseas
The Joint Committee has amended section 1 of the bill by reinstating
indemnification authority for its own activities is essential. Accord-
the original language provided for section 11 q. of the Atomic Energy
ingly, it has deleted the proviso added by the House to H.R. 15323.
Act of 1954. The House amendment to this section did not make a
substantive change in the bill's provisions, but the Joint Committee
Section 12
feels the original language is somewhat preferable.
Section 12 of the bill was also added on the House floor. It provides
Amendment to Section 6
that the provisions of this Act shall not come into effect until the
"Reactor Safety Study announced by the Atomic Energy Commission
The Joint Committee has amended Section 6 by deleting the
on June 27, 1973 has been completed and the Joint Committee has
proviso, added by an amendment on the House floor, that the in-
reported to the Congress its evaluation of the results of such Study."
demnification provisions of the Price-Anderson Act shall not apply
The apparent intent of this amendment was to defer the effect of the
to any nuclear incident occurring in any country other than the
bill until the Commission's Rasmussen Study has been completed.
S.R. 1027-3
14
15
There was no announcement of this study on the indicated date, so
prohibit the Commission from implementing a rule concerning the
this section has been amended SO as to properly identify the intended
deferred premium provisions, of the bill prior to a Joint Committee
report.
report to Congress on the Rasmussen Study, but would not prohibit
The Joint Committee does not believe that this amendment was
initiation of a Commission rulemaking proceeding before that time.
necessary. The Rasmussen Study, under the direction of Dr. Norman
C. Rasmussen of the Massachusetts Institute of Technology, does not
VII. SAFETY OF NUCLEAR FACILITIES
deal with insurance or indemnity for nuclear incidents. It is a safety
study of the probabilities and consequences of accidents involving
Nuclear power plants contain large amounts of intensely radioactive
nuclear power reactors. As such, its only relation to the Price-Anderson
materials which are produced by nuclear processes which take place
Act is as a possible guide as to the extent and scope of risk to the public
during their operation. Practically all of these materials are produced
in determining the amount of protection required. It will provide no
and contained inside the reactor fuel. Multiple barriers are. provided
information at all concerning the mechanism for providing the
in nuclear plants to assure that undue amounts of radioactivity are
not released to the environment in the event of malfunctions or acci-
protection. Professor Rasmussen has appeared before the Joint Committee on
dents within the plant. The primary barriers are the reactor fuel itself;
two occasions. He assured the Joint Committee in public testimony,
the cladding material which encases the fuel; the reactor pressure ves-
which is included in appendix II to this report, that the total of public
sel and primary coolant boundary; and finally the outside containment
and private indemnity provided for by the bill is adequate to cover
system. In addition to these multiple barriers, each nuclear facility is
any credible accident which might occur. He reaffirmed this point in a
equipped with a multiplicity of special safety systems and devices
reappearance before the committee for the markup session on H.R.
which are intended to either prevent accidents or mitigate their poten-
15323 on June 13. He has testified that the report will show that the
tial consequences. Extensive quality assurance programs covering all
likely consequences of a nuclear accident involving a core meltdown
facets of each facility are followed to assure the initial establishment
will not be a major catastrophe, as is commonly assumed, but will
and continuing maintenance of plant integrity. A comprehensive
be no worse than a major airplane crash, and will generally be less than
description of nuclear power plants, their safety features, and the
that. The Rasmussen Study will show, in effect, that the Price-
Government regulatory system is included in the AEC report "The
Anderson Act provides an even more conservative degree of protection
Safety of Nuclear Power Reactors (Light Water Cooled) and Related
than was thought when it was enacted.
Facilities'-WASH-1250.
The rationale given for Section 12 is that the results of the Ras-
As a result of this careful approach to the design and operation
mussen Study are not yet available, and that they are intimately
of nuclear power plants, coupled with a vigorous Government regula-
related to this bill's provisions. Neither of the assumptions is true.
tory system, the overall safety record of the commercial nuclear power
The conclusions insofar as they relate to the Price-Anderson Act
industry has been excellent. While there have been a number of minor
are already public. The technical detail supporting the report's con-
malfunctions in operating plants, to date no accidents have occurred
clusions is beyond the ken of the layman and is massive in its volume.
which have resulted in deaths or injuries to the general public. Not-
This detail is not essential to and cannot be expected to contribute to a
withstanding this record, the risk of major accidents cannot be said to
congressional decision. An informed critique of the report by the
be zero. There remains a small but finite probability that an accident
scientific peers of the investigators will take many months and cannot
may occur that could result in the release of major amounts of radio-
reasonably be expected to alter the conclusions SO drastically as to
activity to the environment.
affect this legislation.
In most human endeavors, it is possible to estimate the probability
The most curious aspect of Section 12 is its potential deferral of the
and consequences of major accidents based on past experience (sta-
transfer of responsibility to the nuclear industry which is the key
tistics). In the case of nuclear power plants, due to the lack of major
feature of this legislation. This is a transfer which has been almost
accident experience, numbers representing probabilities of severe
universally urged for years. An unexpected delay in the Rasmussen
accidents and associated consequences must be deduced or inferred by
report could have the result, under Section 12, of postponing the
some indirect means. For the past decade or so, a number of individuals
phase-out of the Government's liability.
and groups have been exploring methods for estimating such proba-
Despite the dubious basis underlying Section 12, the Joint Com-
bilities. Until the early 1970's it has not been thought possible through
mittee has perfected the amendment rather than deleting it,
statistical means to adequately estimate probabilities of reactor acci-
in order to assuage the doubts of those members of Congress who are
dents, although it was believed that component failure statistics were
not satisfied with the Joint Committee's review and Dr. Rasmussen's
feasible. Notwithstanding these considerations, the results of these
testimony. The provision of Section 12 is very unlikely to delay the
studies have generally supported the judgments made by experts that
actual implementation of this bill. The draft report is expected to be
the probabilities of severe reactor accidents are exceedingly low.
released for public comment in mid-August, and the final report, taking
The improvements in the development of statistical methods in
these comments into account, is expected about January, 1975. The
the space program and defense program in the past ten years have led
Commission's rulemaking proceeding to implement this bill would be
to the belief that adequate statistical probabilities can be developed
unlikely to be completed before mid-1975 at the very earliest. The
for nuclear plants. Perhaps the most comprehensive effort in this area
Joint Committee considers that the language of Section 12 would
so far is an AEC sponsored study which has been conducted over the
16
17
past year and a half under the direction of Dr. Norman Rasmussen,
VIII. COMPARISON WITH OTHER FEDERAL PROGRAMS OF DISASTER
Professor of Nuclear Engineering at the Massachusetts Institute of
ASSISTANCE AND INSURANCE
Technology. The Joint Committee has been closely following the
conduct of this study, and has received testimony from Dr. Rasmussen
The Joint Committee examined the posture of other Federal pro-
on two occasions. In this most recent appearance before the committee,
grams for relief from disaster. The Federal government has become
Dr. Rasmussen concluded his statement with the following remarks
increasingly involved as the major underwriter of relief for losses due
pertinent to considering the Price-Anderson legislation:
to natural disasters, principally flooding, hurricane and tornado
In summary I believe that the proposal before you repre-
damage. For example, in a ten-year period ending in 1972, allocations
sents a reasonable way to phase out the Government respon-
from the President's disaster fund totaled just over $1.25 billion. In
sibility for nuclear insurance and shift the responsibility to
the first 2½ years of the Disaster Relief Act of 1970, 104 major
the insurance companies and the nuclear industry. I believe
disasters were declared, triggering expenditures from the President's
that the current $560 million limit is a reasonable value at this
fund of about $1 billion, plus loans from two separately administered
time and will cover all combinations of circumstances which
programs in excess of $2 billion.
can reasonably be considered credible. The National Safety
Recent legislation affecting both the Federal Disaster Assistance
Council now reports that accidents in the U.S. are currently
Administration ¹ and the National Flood Insurance Program2 has
causing 100,000 fatalities per year and an economic loss of 30
altered the Government's response to natural disaster, by emphasizing
billion dollars per year. Any reasonable estimate of proba-
the role of insurance as the primary means of compensation for loss.
bility and consequences of nuclear accidents indicates that
In this sense, there is consistency with the amendments to the Price-
they would not have a significant impact on this already large
Anderson legislation which are the subject of this report, whereby
accident burden that society bears.
increased reliance is being placed upon private insurance pools and the
licensees of nuclear facilities themselves for financial protection with
Although the Rasmussen study is not yet complete, general con-
a concomitant decrease in governmental involvement.
clusions have been reached which confirm that the probability of
The Government's approach is consistent also in its emphasis on
major reactor accidents involving reactor core malfunctions is,
loss prevention. The National Flood Insurance Program, for example,
indeed, quite small. It has been concluded that the most likely conse-
provides for mandatory land use criteria for new construction within
quence of a core melt accident, which itself is highly unlikely, would
flood-prone areas. In the nuclear energy field, the rigid licensing
be quite modest, in comparison with the catastrophic results generally
process enforced by the Atomic Energy Commission and the surveil-
discussed as the "worst case" accident. In fact, the likely conse-
lance activities of its regulatory division represent an unprecedented
quences of a core melt would be no worse than many other kinds
program of loss prevention.
of accidents such as fires and airplanes crashes that society has experi-
It is clear from this examination that the Federal Government
enced. While nuclear accidents with more severe consequences could
remains in the business of compensation in many fields, whether as
be postulated, the study indicates that the probability of such events
reinsurer, coinsurer, indemnitor or provider of disaster relief. In-
is extremely low and would require a highly unlikely combination
surance concepts become less valid as the frequency of events decreases
of circumstances.
and as the potential consequences increase.
While the safety record of nuclear powerplants to date has been
With respect to the amendments to the Atomic Energy Act under
excellent, the increasing number of plants expected in the future dic-
consideration, it is envisioned that the Federal Government will
tates the need for industry and Government to be vigilant and
retain its role as indemnitor for the uninsured portion of the statutory
strengthen their performance to assure that nuclear power plants will
amount of $560 million, and, after the combined totals of basic and
continue to provide a safe and reliable source of electrical energy. Over
excess insurance reach that figure and are allowed to float upward, as
the years, the Joint Committee has devoted major attention, through
the ultimate guarantor for defaulted retrospective premiums, while
the conduct of many hearings* and other means, it assure that nuclear
retaining subrogated rights against the defaulting licensees.
power activities are carried out in a safe and environmentally ac-
It is important to note that of all of these Federal programs, only
ceptable manner. In this regard, the committee has strongly supported
the Price-Anderson legislation provides for compensation to the
the major reactor safety research efforts underway in industry and
public for personal injury as well as property damage. All of the other
Government to further increase understanding and knowledge in
insurance and assistance programs are geared solely to property
this field. The Congress has authorized a funding level of approximately
damage.
$100 million in fiscal year 1975 for such efforts. It is expected that the
Finally, it should be pointed out that the panoply of Federal
information from these programs will help provide an improved basis
resources, other than monetary compensation, is available in the
for estimating the probability and consequences of hypothetical
event of a large-scale nuclear accident, just as it would be in cases of
major reactor accidents, and assist in preventing or mitigating the
natural disasters.
consequences of such highly unlikely accidents.
P.L. 93-288, "Disaster Relief Act of 1974."
*Most recently, the Joint Committee held very comprehensive hearings on the subject of nuclear reactor
P.L. 93-324, "Flood Disaster Protection Act of 1973."
safety. Testimony was received from representatives of the Government, the nuclear community, environ-
menta organizations other scientific and technical experts in the field and the public at large. The hearings
were held on the following dates: Jan. 23, 1973; Sept. 25, 26, 27 and Oct. 1, 1973; and Jan. 22, 23, 24, and 28,
1974.
18
19
IX. COST OF LEGISLATION
Section 3 of the bill would amend subsection 170 b. of the Atomic
Energy Act of 1954, as amended, to provide authority for the Atomic
In accordance with section 252(a) of the Legislative Reorganization
Energy Commission to regulate the terms and conditions of nuclear
Act of 1970 (Public Law 91-510), the Joint Committee has determined
liability insurance. This section requires the Commission by August 1,
that, with the exception of minimal administrative costs associated
1976, to include in determining the maximum amount of private
with determining the terms and conditions acceptable in the proposed
liability insurance available any deferred premium plan which meets
retrospective premium plan, the Atomic Energy Commission will
certain requirements. Any such plan must have a standard maximum
incur no additional costs as a result of carrying out this legislation;
retrospective premium within the range of $2 million to $5 million for
except that in the event of a nuclear incident involving a contractor or
each licensed facility required to maintain the maximum financial pró-
a licensee with whom an indemnity agreement has been executed, and
tection available from private sources. In addition, participation in the
resulting in damages exceeding the amount of financial protection
secondary layer must not be conditioned on provision of the basic
required, the Commission may incur costs of up to $500,000,000 for
financial protection through insurance means. This assures that an
each such incident. The probability of such an incident occurring is
individual licensee may fulfill some or all of its base liability by means
considered extremely low. The potential cost to the Government of
other than insurance and yet be eligible for the retrospective coverage.
such an incident involving a licensee other than a nonprofit educa-
Section 3 further requires the Commission to develop a plan to
tional institution will be reduced over a period of years until it reaches
assure payment of such deferred premiums when due in the event of a
essentially zero during the period 1981-1985. The potential liability
nuclear incident, and authorizes the Commission to provide reinsur-
for an incident involving a contractor or nonprofit educational insti-
ance or guaranty to assure the availability of funds despite any de-
tution will remain at a maximum of $500,000,000 per incident. In
faults in retrospective assessments. This provides, in effect, that the
addition, there will be potential costs to the Government in the event
full amount to pay any liability will be available promptly with the
of defaults on retrospective premiums for which the Government
government undertaking the burden of later recovery from the
serves as resinsurer, or as guarantor in cases where full recovery back
defaulter. In connection with the recovery of such funds, Section 3
against the defaulter is not possible.
authorizes the Commission to specify the terms of any guaranty agree-
ment as appropriate to permit reimbursement, including liens on prop-
X. SECTION-BY-SECTION ANALYSIS
erty and revenues of a defaulting licensee, and automatic revocation
of any license.
Section 1 of the bill would amend subsection 11q. of the Atomic
Section 4 of the bill would amend subsection 170 c. of the Atomic
Energy Act of 1954, as amended, to alter the definition of "nuclear
Energy Act of 1954, as amended, by changing the date "August 1,
incident" as that term is used in subsection 170 d., by substituting the
1977' wherever it appears to "August 1, 1987". The purpose of this
words "source, special nuclear, or byproduct material" for "a facility
amendment is to extend for 20 years the Price-Anderson legislation
or device". Its purpose is to gain specificity and consistency. Section 1
as it pertains to AEC licensees other than licensees subject to the
of the bill would also amend subsection 11 q. to specially define "nu-
provisions of subsections 170 k. or 170 I. of the Act.
clear incident" as that term is used in subsection 170 C. The purpose
of this amendment is to extend the full aggregate indemnity to off-
Section 5 amends subsection 170 d. of the Atomic Energy Act of
1954, as amended, by extending until 1987 the authority of the Atomic
shore nuclear power plants and to shipments between licensees in
the United States which are routed beyond territorial waters.
Energy Commission to enter into indemnity agreements with its
contractors.
Section 1 of the bill would also amend subsection 11 t. of the Atomic
Energy Act of 1954, as amended, by broadening the definition of
Section 6 amends subsection 170 e. of the Atomic Energy Act of
"person indemnified", as that term is used in subsection 170 c., to
1954, as amended, by providing that except as to incidents occurring
include nuclear incidents outside the United States. This change pre-
outside the U.S. to which agreements of indemnification entered into
serves consistency within the Act. Section 1 would further amend sub-
under the provisions of subsection 170 d. are applicable, the limit on
section 11 t. by an alternative description of a "person indemnified"
aggregate liability arising from a nuclear incident shall be either (1)
as a person "who is required to maintain financial protection". This
$500,000,000 plus the amount of financial protection required of the
provides for the situation in which the $560 million limit on liability
licensee, if the financial protection required is less than $60,000,000
is provided wholly by private insurance protection, in which case the
or (2) $560,000,000, or the amount of financial protection required
execution of an indemnity agreement may no longer be required.
of the licensee, whichever is greater, in cases where the financial pro-
Section 2 of the bill would amend subsection 170 a. of the Atomic
tection required is $60,000,000 or more.
Energy Act of 1954, as amended, by substituting the word "may" for
Section 7 amends subsection 170 f. of the Atomic Energy Act of
"shall" in the second sentence. The purpose of this change is to provide
1954, as amended, to authorize the Commission to reduce the indem-
consistency with subsection 170 c., as amended. Additional language
nity fee for persons with whom agreements of indemnification have
has been added in the first sentence of subsection 170 a. to emphasize
been executed in reasonable relation to increases in financial protection
the public purposes of the Price-Anderson provisions, as stated in sub-
above a level of $60,000,000.
section 2 i. of the Act.
20
21
Section 8 amends subsection 170 i. of the Atomic Energy Act of
1954, as amended, to require a report by the Commission to the Con-
explosive, or other hazardous properties of source, special nuclear, or
gress on any nuclear incident which will probably result in public
byproduct material: Provided. however, That as the term is used in
liability claims in excess of $560,000,000. The Act presently provides
subsection 170 1, it shall include any such occurrence outside of the
for such a report for any nuclear incident which will probably result
United States: And provided further, That as the term is used in sub-
in payments by the United States.
section 170 d., it shall include any such occurrence outside the United
States if such occurrence involves [a facility or device] source, special
Section 9 amends subsection 170 k. of the Atomic Energy Act to
nuclear, or byproduct material owned by, and used by or under con-
extend until 1987 the authority for the Commission to indemnify
tract with, the United States: And provided further, That as the term
licensees found by the Commission to be nonprofit educational insti-
is used in subsection 170 c., it shall include any such occurrence outside
tutions for public liability in excess of $250,000 arising from a nuclear
the United States if such occurrence arises out of or results from the
incident.
radioactive toxic, explosive, or other hazardous properties of source,
Section 10 amends subsection 170 O. of the Atomic Energy Act of
special nuclear, or byproduct material licensed pursuant to chapters
1954, as amended, by authorizing and directing the establishment, in
6, 7, 8, and 10 of this Act, other than for import or export or for nuclear
any plan for disposition of claims, of priorities between classes of
ship propulsion, uhich takes place outside the territorial limits of the
claims and claimants, to the extent necessary to ensure the most
United States or any other nation."
equitable allocation of available funds.
Section 11 adds a new subsection 170 p. which provides that the
"t. The term 'person indemnified' means (1) with respect to a nuclear
Commission shall submit to the Congress by August 1, 1983, a report
incident occurring within the United States or outside the United States
and recommendations concerning the need for continuation or modi-
as the term is used in subsection 170 c., and with respect to any nuclear
fication of section 170 based upon relevant conditions at that time,
incident in connection with the design, development, construction,
including the condition of the nuclear industry, availability of private
operation, repair, maintenance, or use of the nuclear ship Savannah,
insurance, and the state of knowledge concerning nuclear safety at
the person with whom an indemnity agreement is executed or who is
that time, among other factors.
required to maintain financial protection, and any other person who
Section 12 provides that the provisions of this bill shall not come
may be liable for public liability; or (2) with respect to any other
into effect unless and until the Reactor Safety Study under the
nuclear incident occurring outside the United States, the person with
direction of Dr. Norman Rasmussen, WASH-1400, is completed and
whom an indemnity agreement is executed and any other person who
the Joint Committee has submitted to Congress its evaluation of that
may be liable for public liability by reason of his activities under any
study. This provision does not preclude the Commission from pre-
contract with the Commission or any project to which indemnification
liminary efforts to prepare for implementation of the bill's provisions,
under the provisions of subsection 170 d. has been extended or under
but prevents the substantive changes from coming into force until
any subcontract, purchase order or other agreement, of any tier, under
the Joint Committee's report to the Congress on the Rasmussen
any such contract or project.
Study.
XI. CHANGES IN EXISTING LAW
"SEC. 170. INDEMNIFICATION AND LIMITATION OF LIABILITY.-
In accordance with subsection (4) of rule XXIX of the Standing
"a. Each license issued under section 103 or 104 and each construc-
Rules of the Senate, changes in existing law recommended by the
tion permit issued under section 185 shall, and each license issued
bill accompanying this report are shown as follows (deleted matter is
under section 53, 63, or 81 may, for the public purposes cited in Section
shown enclosed in black brackets and new matter is printed in italic;
2 i. of the Atomic Energy Act of 1954, as amended, have as a condition
and existing law in which no change is proposed is shown in roman)
of the license a requirement that the licensee have and maintain
financial protection of such type and in such amounts as the Com-
PUBLIC LAW 83-703
mission in the exercise of its licensing and regulatory authority and
responsibility shall require in accordance with subsection 170 b. to
(Atomic Energy Act of 1954, as amended)
cover public liability claims. Whenever such financial protection is
required, it [shall] may be a further condition of the license that the
"SEC. 11. DEFINITIONS.-The intent of Congress in the definitions
licensee execute and maintain an indemnification agreement in accord-
as given in this section should be construed from the words or phrases
ance with subsection 170 c. The Commission may require, as a further
used in the definitions. As used in this Act:
condition of issuing a license, that an applicant waive any immunity
from public liability conferred by Federal or State law.
"q. The term 'nuclear incident' means any occurrence, including
an extraordinary nuclear occurrence, within the United States caus-
"b. The amount of financial protection required shall be the
ing, within or outside the United States, bodily injury, sickness,
amount of liability insurance available from private sources, except
disease, or death, or loss of or damage to property, or loss of use of
that the Commission may establish a lesser amount on the basis of
property, arising out of or resulting from the radioactive toxic,
criteria set forth in writing, which it may revise from time to time,
22
23
taking into consideration such factors as the following: (1) the cost
and terms of private insurance, (2) the type, size, and location of the
their interest may appear, from public liability arising from nuclear
licensed activity and other factors pertaining to the hazard, and (3)
incidents which is in excess of the level of financial protection required
the nature and purpose of the licensed activity: Provided, That for
of the licensee. The aggregate indemnity for all persons indemnified in
connection with each nuclear incident shall not exceed $500,000,000
facilities designed for producing substantial amounts of electricity
and having a rated capacity of 100,000 electrical kilowatts or more,
including the reasonable costs of investigating and settling claims and
the amount of financial protection required shall be the maximum
defending suits for damage: Provided, however, That this amount of
amount available at reasonable cost and on reasonable terms from
indemnity shall be reduced by the amount that the financial protection
private sources. Such financial protection may include private in-
required shall exceed $60,000,000. Such a contract of indemnification
shall cover public liability arising out of or in connection with the
surance, private contractual indemnities, self insurance, other proof
of financial responsibility, or a combination of such measures and
licensed activity. With respect to any production or utilization facility
for which a construction permit is issued between August 30, 1954, and
shall be subject to such terms and conditions as the Commission may,
August 1, 1977 August 1, 1987, the requirements of this subsection
by rule, regulation or order, prescribe. In prescribing such terms and
shall apply to any license issued for such facility subsequent to
conditions for licensees required to have and maintain financial protection
equal to the maximum amount of liability insurance available from private
[August 1, 1977 August 1, 1987.
sources, the Commission shall, by rule initially prescribed not later than
August 1, 1976, include in determining such maximum amount, private
"d. In addition to any other authority the Commission may have,
liability insurance available under an industry retrospective rating plan
the Commission is authorized until [August 1, 1977 August 1, 1987,
providing for premium charges deferred in whole or major part until
to enter into agreements of indemnification with its contractors for
public liability from a nuclear incident exceeds, or appears likely to
the construction or operation of production or utilization facilities
exceed, the level of the primary financial protection required of the licensee
or other activities under contracts for the benefit of the United States
involved in the nuclear incident; Provided, That such insurance is avail-
involving activities under the risk of public liability for a substantial
able to, and required of, all of the licensees of such facilities without
nuclear incident. In such agreements of indemnification the Com-
regard to the manner in which they obtain other types or amounts of such
mission may require its contractor to provide and maintain financial
financial protection, And provided further, That the maximum amount of
protection of such a type and in such amounts as the Commission
any deferred premium which may be charged following any nuclear
shall determine to be appropriate to cover public liability arising out
incident under such a plan shall be not less than $2 million nor more
of or in connection with the contractual activity, and shall indemnify
than $5 million for each facility required to maintain the maximum
the persons indemnified against such claims above the amount of the
amount of financial protection. The Commission is authorized to establish
financial protection required, in the amount of $500,000,000, including
a maximum amount which the aggregate deferred premiums charged for
the reasonable costs of investigating and settling claims and defending
each facility within any one year may not exceed. The Commission may
suits for damage in the aggregate for all persons indemnified in con-
establish amounts less than the standard maximum premium for individual
nection with such contract and for each nuclear incident: Provided,
facilities taking into account such factors as the facility's size, location,
That this amount of indemnity shall be reduced by the amount that
and other factors pertaining to the hazard. The Commission shall establish
the financial protection required shall exceed $60,000,000: Provided
such requirements as are necessary to assure availability of funds to
further, That in the case of nuclear incidents occurring outside the
meet any assessment of deferred premiums within a reasonable time
United States, the amount of the indemnity provided by the Com-
when due, and may provide reinsurance or otherwise guarantee the pay-
mission shall not exceed $100,000,000. The provisions of this subsection
ment of such premiums in the event it is not feasible to establish procedures
may be applicable to lump sum as well as cost type contracts and to
to assure their payment on a timely basis through the resources of private
contracts and projects financed in whole or in part by the Commission.
industry and insurance. Any agreement by the Commission with a licensee
A contractor with whom an agreement of indemnification has been
or indemnitor to guarantee the payment of deferred premiums may con-
executed and who is engaged in activities connected with the under-
tain such terms as the Commission deems appropriate to carry out the
ground detonation of a nuclear explosive device shall be liable, to the
purposes of this section and to assure reimbursement to the Commission
extent so indemnified under this section, for injuries or damage sus-
for its payments made due to the failure of such licensee or indemnitor
tained as a result of such detonation in the same manner and to the
to meet any of its obligations arising under or in connection with financial
same extent as would a private person acting as principal, and no
protection required under this subsection, including without limitation
immunity or defense founded in the Federal, State, or municipal char-
terms creating liens upon the licensed facility and the revenues derived
acter of the contractor or of the work to be performed under the con-
therefrom or any other property or revenues of such licensee to secure such
tract shall be effective to bar such liability.
reimbursement and consent to the automatic revocation of any license.
"e. The aggregate liability for a single nuclear incident of persons
"c. The Commission shall, with respect to licenses issued between
indemnified, including the reasonable costs of investigating and
August 30, 1954 and [August 1, 1977] August 1, 1987, for which it
settling claims and defending suits for damage, shall not exceed (1)
requires financial protection of less than $560,000,000, agree to indem-
the sum of $500,000,000 together with the amount of financial pro-
nify and hold harmless the licensee and other persons indemnified, as
tection required of the licensee or contractors or (2) if the amount of
24
25
financial protection required of the licensee exceeds $60,000,000, : Pro-
"(2) such contracts of indemnification shall cover public
vided however, That such aggregate liability shall [in] not [event]
liability arising out of or in connection with the licensed activity;
exceed the sum of $560,000,000 or the amount of financial protection
and shall include damage to property of persons indemnified,
required of the licensee, whichever amount is greater: Provided [further]
except property which is located at the site of and used in con-
That with respect to any nuclear incident occurring outside of the
nection with the activity-where the nuclear incident occurs; and
United States to which an agreement of indemnification entered into
"(3) such contracts of indemnification, when entered into with
under the provisions of subsection 170d is applicable, such aggregate
a licensee having immunity from public liability because it is a
liability shall not exceed the amount of $100,000,000 together with the
State agency, shall provide also that the Commission shall make
amount of financial protection required of the contractor.
payments under the contract on account of activities of the
*
licensee in the same manner and to the same extent as the
*
*
"f. The Commission is authorized to collect a fee from all persons
Commission would be required to do if the licensee were not such
with whom an indemnification agreement is executed under this sec-
a State agency.
tion. This fee shall be $30 per year per thousand kilowatts of thermal
"Any licensee may waive an exemption to which it is entitled under
this subsection. With respect to any production or utilization facility
energy capacity for facilities licensed under section103: Provided, That
for which a construction permit is issued between August 30, 1954,
the Commission is authorized to reduce the fee for such facilities in reason-
and [August 1, 1977 August 1, 1987, the requirements of this sub-
able relation to increases in financial protection above a level of $60,000,-
000. For facilities licensed under section 104, and for construction
section shall apply to any license issued for such facility subsequent
permits under section 185, the Commission is authorized to reduce
to [August 1, 1977 August 1, 1987.
*
*
the fee set forth above. The Commission shall establish criteria in
*
*
*
*
writing for determination of the fee for facilities licensed under section
"o. Whenever the United States district court in the district where
104, taking into consideration such factors as (1) the type, size, and
a nuclear incident occurs, or the United States District Court for the
location of facility involved, and other factors pertaining to the
District of Columbia in case of a nuclear incident occurring outside
hazard, and (2) the nature and purpose of the facility. For other
the United States, determines upon the petition of any indemnitor
licenses, the Commission shall collect such nominal fees as it deems
or other interested person that public liability from a single nuclear
appropriate. No fee under this subsection shall be less than $100 per
incident may exceed the limit of liability under subsection 170 e.:
year.
"(1) Total payments made by or for all indemnitors as a result
*
of such nuclear incident shall not exceed 15 per centum of such
"i. After any nuclear incident which will probably require payments
limit of liability without the prior approval of such court;
by the United States under this section or which will probably result in
"(2) The court shall not authorize payments in excess of 15 per
public liability claims in excess of $560,000,000, the Commission shall
centum of such limit of liability unless the court determines that
make a survey of the causes and extent of damage which shall forth-
such payments are or will be in accordance with a plan of distri-
with be reported to the Joint Committee, and, except as forbidden by
bution which has been approved by the court or such payments
the provisions of chapter 12 of this Act or any other law or Executive
are not likely to prejudice the subsequent adoption and imple-
order, all final findings shall be made available to the public, to the
mentation by the court of a plan of distribution pursuant to
parties involved and to the courts. The Commission shall report to
subparagraph- (3) of this subsection (o); and
the Joint Committee by April 1, 1958, and every year thereafter on
"(3) The Commission shall, and any other indemnitor or other
the operations under this section.
interested person may, submit to such district court a plan for the
disposition of pending claims and for the distribution of remaining
*
*
*
*
funds available. Such a plan shall include an allocation of appro-
"k. With respect to any license issued pursuant to section 53, 63, 81,
priate amounts for personal injury claims, property damage
104 a. or 104 c. for the conduct of educational activities to a person
claims, and possible latent injury claims which may not be dis-
found by the Commission to be a nonprofit educational institution,
covered until a later time, and shall include establishment of
the Commission shall exempt such licensee from the financial protec-
priorities between classes of claimants or claims, as necessary to
tion requirement of subsection 170 a. With respect to licenses issued
ensure the most equitable allocation of available funds.
between August 30, 1954, and [August 1, 1977 August 1, 1987, for
Such court shall have all power necessary to approve, disapprove, or
which the Commission grants such exemption:
modify plans proposed, or to adopt another plan; and to determine
"(1) the Commission shall agree to indemnify and hold harmless
the proportionate share of funds available for each claimant. The Com-
the licensee and other persons indemnified, as their interests may
mission, any other indemnitor, and any person indemnified shall be
appear, from public liability in excess of $250,000 arising from
entitled to such orders as may be appropriate to implement and enforce
nuclear incidents. The aggregage indemnity for all persons indem-
the provisions of this section, including orders limiting the liability of
nified in connection with each nuclear incident shall not exceed
the persons indemnified, orders approving or modifying the plan,
$500,000,000, including the reasonable cost of investigating and
orders staying the payment of claims and the execution of court
settling claims and defending suits for damage;
judgments, orders apportioning the payments to be made to claimants,
26
and orders permitting partial payments to be made before final
determination of the total claims. The orders of such court shall be
effective throughout the United States."
"p. The Commission shall submit to the Congress by August 1, 1983 a
detailed report concerning the need for continuation of or modification to
the provisions of this section, taking into account the condition of the
APPENDIX I
nuclear industry, availability of private nuclear liability insurance, and
the state of knowledge concerning nuclear safety at that time, among other
relevant factors, and shall include recommendations as to the repeal or
TABLE 1.-OPERATING REACTORS ASSESSED AT $2,000,000 EACH
modification of any of the provisions of this section."
[Dollar amounts in millions]
Number of
Total,
Remain
operating
assessment
AEC
Year
reactors 1
Assessment
Insurance
plus insurance
indemnity
1977
96
$192
$125
$317
$243
1978
112
224
125
349
211
1979
129
258
125
383
177
1980
146
292
125
417
143
1981
159
318
125
443
117
1982
179
358
125
483
77
1983
202
404
125
529
31
1984
228
456
125
581
0
1985
257
514
125
639
0
1986
283
566
125
691
0
1987
312
624
125
749
0
1988
342
684
125
809
0
1989
373
746
125
871
0
1990
407
814
125
939
0
1 Based on estimates in WASH-1139 (December 1972).
TABLE 2.-OPERATING REACTORS ASSESSED AT $3,000,000 EACH
(Dollar amounts in millions]
Number of
Total,
Remain
operating
assessment
AEC
Year
reactors
1
Assessment
Insurance
plus insurance
indemnity
1977
96
$288
$125
$143
$147
1978
112
336
125
461
99
1979
129
387
125
512
48
1980
146
438
125
563
0
1981
151
477
125
602
0
1982
179
537
125
662
0
1983
202
606
125
731
0
1984
228
684
125
809
0
1985
257
771
125
896
0
1986
283
849
125
974
0
1987
312
936
125
1,061
0
1988
342
1,026
125
1,151
0
1989
373
1,119
125
1, 244
0
1990
407
1,221
125
1, 346
0
1 Based on estimates in WASH-1139 (December 1972).
(27)
28
TABLE 3.-OPERATING REACTORS ASSESSED AT $5,000,000 EACH
[Dollar amounts in millions]
Number of
Total,
Remain
operating
assessment
AEC
Year
reactors 1
Assessment
Insurance
plus insurance
indemnity
APPENDIX II
1977
96
$480
$125
$605
0
112
560
125
685
0
1978,
1979
129
645
125
770
0
1980
146
730
125
855
0
1981
159
795
125
920
0
1982
179
895
125
1,020
0
STATEMENT OF N. C. RASMUSSEN, DIRECTOR, REACTOR SAFETY
202
1,010
125
1,135
0
1983
1,265
0
STUDY BEFORE THE JOINT COMMITTEE ON ATOMIC ENERGY HEAR-
1984
228
1,140
125
1985
257
1,285
125
1,410
0
283
1,415
125
0
INGS ON PRICE-ANDERSON AcT, MAY 16, 1974
1,540
1986
1987
312
1,560
125
1,685
0
342
1,710
125
1,835
0
1988
373
1,865
125
1,990
0
Mr. Chairman, I am Dr. Norman C. Rasmussen, Professor of Nu-
1989
1990
407
2,035
125
2,160
0
clear Engineering at the Massachusetts Institute of Technology. For
the last year and a half I have been a consultant to the Atomic Energy
1 Based on estimates in WASH-1139 (December 1972).
Commission, and, during that time, I have been the director of a study
TABLE 4.-OPERATING REACTORS ASSESSED AT $10,000,000 EACH
to assess the risks to the public from accidents in nuclear power plants
of the type being built in the United States today. I am happy to say
[Dollar amounts in millions]
that the study is now nearly complete. We are now in the process of
Total
reviewing and checking the numerous calculations in this risk analysis.
Number of
assessment
Remain
operating
AEC
Until that process is finished and we are completely satisfied that, to
plus
Indemnity
the best of our knowledge, the results are accurate, I do not think it
Year
reactors
1
Assessment
Insurance
insurance
would be appropriate to discuss the specific results in detail. I antici-
96
$960
$125
$1,085
0
1977
112
1,120
125
1,245
0
pate that a draft of this report will be issued for comment from inter-
1978
1979
129
1,290
125
1,415
0
ested parties early this summer. Nevertheless, I am prepared to discuss
146
1,460
125
1,585
0
1980
159
1,590
125
1,715
0
here today some general conclusions that the study has produced that
1981
1982
179
1,790
125
1,915
0
1983
202
2,020
125
0
may be useful to you in your consideration of the renewal of the Price-
2,145
228
280
125
2,405
0
Anderson legislation.
1984
0
1985
257
570
125
2,695
Let me start by reviewing the nature of the risk to the public from
1986
283
830
125
2,955
0
312
3,120
125
3,245
0
1987
power reactors, and then discuss factors that effect the magnitude of
1988
342
3,420
125
3,545
0
373
3,730
125
855
0
the consequences. The latter part of this testimony will discuss the
1989
407
4,070
125
4,195
0
1990
broader question of the total risks to society and some of my personal
observations about the insurance question.
1 Based on estimates in WASH-1139 (December 1972).
An operating nuclear power station contains a large quantity of
radioactivity which is produced by the nuclear processes that take
place during its operation. The vast majority of this radioactivity is
produced inside the uranium dioxide fuel. Relatively small amounts of
radioactivity collect in other parts of the system during its operation.
These sources outside the fuel are SO small that their accidental release
would not have a serious effect on the public health and safety, al-
though they might contaminate the plant and its immediate surround-
ings and the decontamination process could represent an economic loss
to the utility. In order to have an accident large enough to produce
serious public consequences, it is necessary to release a significant
fraction of the radioactivity contained within the fuel. Considerable
experimental work has shown that to do this requires heating the fuel
to its melting point of about 5,000° F.
The above facts have long been recognized by the designers, opera-
tors and regulators of nuclear reactors and SO a great deal of attention
has been paid to this problem with the intent of making the probability
of accidents leading to core melt very small. Our study's preliminary
indications are that the probability of such accidents is, indeed, quite
small. Not surprisingly, however, we have identified some ways where
(29)
30
31
with modest effort the probability could apparently be made somewhat
highest. The very high populations cover only 1 percent of the area.
smaller if that is determined to be necessary. These matters will be
Thus, given a release of radioactivity, we would expect the high
discussed in detail in the final report and I shall not go into them in
population areas to be exposed 1 percent of the time and on the average
detail here today, pending our final review of all calculations.
(i.e., 50 percent of the time) the exposed population to be a factor of
Let me turn my attention now to the consequences of melting the
100 smaller. This, of course, means that, other factors being equal,
core. The consequences of core melting depend principally upon three
the consequence would be a factor of 100 less.
factors: (1) how much radioactivity gets released into the environment,
From the above discussion we see that three random factors, the
(2) how this radioactivity gets dispersed in the environment by
type of release, the type of weather, and the population density
existing weather conditions, and (3) the number of people and the
exposed, affect the overall consequences of a core melt accident. On
amount of property exposed.
the average we have found that these combine to give modest conse-
The amount of radioactivity that gets released from the nuclear
quences following core melt. Only under very unlikely circumstances
plant into the environment depends upon how much is released from
would we expect to see the worst release combined with the worst
the core during the melting process and how much of this is trapped
weather combined with the highest population density exposed.
inside the containment prior to its escape. All plants have provisions
Although the analysis done in WASH-740 showed a number of cases
to trap radioactivity within the containment. In addition there are
with very small consequences no attempt was made to estimate the
natural processes that lead to deposition of many of the radioactive
likelihood of these cases relative to the worst case that was calculated.
species on the walls and other surfaces in the containment building.
As a result attention focused on this worst case and many people
In most core melt accidents these processes would be expected to be
came to believe that if a reactor core should melt these very serious
quite effective in reducing the amount of radioactivity released. How-
consequences would surely result. From the above discussion we see
ever if an analyst were asked that the worst possible release could be,
this is not the case. In fact the likelihood of various consequences
he could imagine a series of unlikely circumstances where the processes
of a nuclear accident show a distribution that is characteristic of all
for removing radioactivity would not be very effective and a much
other types of man-caused accidents which can be studied from
larger release would result. Our analysis of core melt accidents shows
historical data. That is, the likelihood of small consequences are much
just this effect, namely, that the most likely course of events following
higher than the likelihood of large consequences, and the most likely
core melt results in rather modest releases and larger releases are
consequence of a given type of accident is much smaller than the
even less likely to occur. This means, of course, that the largest release
worst accident that clever people can imagine.
is considerably less likely than the expected or typical release in such
The nuclear industry is to some extent the victim of its excellent
an accident.
safety record. We have accumulated in the United States well over
Now let us consider the weather conditions that cause the dispersal
1,500 reactor years of experience in water reactors. This includes
of airborne radioactivity into the environment. There are many
about 200 reactor years with commercial power stations; the rest are
weather conditions in which there is very rapid dilution of released
military reactors. There has never been an accident that has led to
pollutants. Under these conditions even a large release would be
injury of the public, let alone an accident involving core melting. Many
dispersed SO quickly that the public consequences would be rather
critics of nuclear power take advantage of this lack of experience
small. Of course, during a small percent of the time, unfavorable
with serious accidents such as core melt by saying that if it occurs
weather conditions associated with strong inversions and low wind
it will be a catastrophe in terms of public consequences. The catas-
speeds exists. In such weather the radioactivity is diluted more slowly
trophe they describe is one associated with the worst set of events they
and public consequences can be more severe. Not only must this
can imagine, regardless of how unlikely the events. This has led to the
unfavorable weather exist, but it must continue to exist for many
belief by many people that power reactors present a public risk with
hours after the accident for the worst consequences to occur. Of
consequences much larger than any of the other activities society
course the likelihood of the most unfavorable weather, therefore,
pursues. Our study has shown that this is not the case, and, in fact, a
becomes quite small. Thus, as in the case of the release from contain-
number of other activities of society could produce under very unlikely
ment, we find that the average weather effect for a large release is to
circumstances accidents of similar consequences.
produce modest consequences and more severe consequences are
One example of interest regarding large non-nuclear risks in our
associated with weather conditions that are less likely to occur.
society comes from the consideration of earthquakes. We have all
Next let us look at the people and property exposed. The number
heard of the very large 1906 San Francisco earthquake in which there
of people in a particular direction from a reactor site varies from
were approximately 750 fatalities. The question has often been asked
close to zero for those directions out over the ocean or over large
about what consequence an earthquake of a similar size would cause
bodies of water to a few cases where the population density is several
today. A recent study by the National Oceanic and Atmospheric
thousands of people per square mile within 10 or 20 miles of the site.
Administration has estimated that an earthquake of such size could
Since the value of real property is about proportional to population
occur on the average of every 100 years and could cause fatalities in
density, both health effects and property damage will depend on the
the range of 10,000 to 20,000.* The study also notes that if the earth-
number of people over which the radioactivity is dispersed. An
quake were to also cause dam failures in the area another 10,000 or so
analysis of the population density near reactors shows that 90
people would be killed.
percent of the area has populations a factor of 10 smaller than the
highest and 50 percent has populations a factor of 100 less than the
*"A Study of Earthquake Losses in the Los Angeles, California Area", prepared by NOAA for the Federal
Disaster]Assistance Administration, 1973.
32
33
Let me give another illustration of these points based on my own
$560 million limit. Of course, completion of the Reactor Safety Study
experience. During the last year I have asked many non-technical
may shed more light on this matter.
people what they feel is the largest possible consequence of an airplane
While it is possible there may be nuclear accidents with more severe
crash in terms of fatalities. Almost all gave an answer in the range of
consequences, SO are there accidents possible in many other industries
300 to 400. When asked how they arrived at this number most said
that go beyond the levels of insurance obtainable. It is also possible to
they had heard of many airplane crashes and none had killed more
imagine very unlikely circumstances in many industries that would
people than 300, and, besides, the largest planes could carry only this
lead to public consequences beyond the financial capabilities of these
number. I then pointed out it might be possible for two planes to
companies. This is true of some of those companies that process and
collide. Most then revised the number upward to 600 or SO. I then
transport large quantities of explosive, poisonous, or flammable ma-
suggested that a plane might crash into a crowded place on the ground.
terials. It may also apply to some of those companies that supply large
Most then increased their estimate by 100 or SO more. Finally I
quantities of food and medicine.
suggested that the crash might be into a crowded sports stadium and
Society accepts these risks because the commodity being handled is
kill 10,000 or more. Although they recognized that this was hypo-
considered essential, because the event is SO unlikely that it is not
thetically possible almost all felt it was unrealistic to believe that it
considered to be credible, or, perhaps in a few cases, because it is not
would really ever happen. None of these people realized that the very
understood how large the consequences might be.
serious postulated reactor accidents that they have heard about involve
Past history has shown that when natural or man-caused events such
an even more unlikely combination of circumstances. This has come
as this occur, society, usually through its government, acts to help the
about because there has been a tendency, in the absence of any real
victims of the unfortunate event. I have no doubt that should an event
experience with serious nuclear accidents, to ask what is the worst
of this type happen in the nuclear or any other industry the Congress
that could happen and clever people can think of some very unlikely
and the Government would take whatever action was necessary to help
combinations of circumstances. The safety philosophy applied to
those involved.
nuclear power plants which uses a number of hypothetical accidents
In summary, I believe that the proposel before you represents a
to set safety design requirements has also been in part responsible
reasonable way to phase out the Government responsibility for nuclear
for this.
insurance and shift the responsibility to the insurance companies and
I hope our study will help people understand that the most likely
the nuclear industry. I believe that the current $560 million limit
consequence of a core melt accident, which itself is unlikely, would be
is reasonable value at this time and will cover all combinations of
quite modest, in fact, no worse than many other kinds of accidents
circumstances which can reasonably be considered credible. The Na-
such as fires and airplane crashes that society has experienced. Just
tional Safety Council now reports that accidents in the U.S. are cur-
as it is possible to imagine an airplane crash producing 10 or 100
rently causing 100,000 fatalities per year and an economic loss of $30
times more serious consequence than the average under a very unlikely
billion per years. Any reasonable estimate of probability and con-
set of circumstances, it is also possible to identify an unlikely set of
sequences of nuclear accidents indicates that they would not have a
circumstances in which reactor accidents could produce much more
significant impact on this already large accident burden that society
serious consequences.
bears.
The question that now arises is whether Price-Anderson legislation
is needed. We now have about 40 nuclear plants in operation and more
than 110 more under construction or on order. These 150 plants rep-
resent about a $70 billion investment. According to several recent
studies, they can be expected to produce electricity for about one-half
a cent a kilowatt-hour less than fossil fuel plants at current fuel prices.
If these plants have a load factor of 70 percent they will represent an
annual saving to society of more than $4 billion over the cost of
electricity produced by fossil plants. It should thus be clear that, even
if a reactor accident were to occur that caused significant property
damage, the saving in cost of electricity due to use of nuclear power
combined with the low likelihood of such an accident indicates that
the property damage costs would not represent a large burden on our
economy. It seems to me that by the middle 1980's the nuclear power
industry should be quite capable of dealing with any loss it might
possibly encounter.
I believe the present legislation you are considering, which provides
for a gradual phasing-out of the Price-Anderson insurance and a take-
over by the insurance pools and the nuclear industry, is a good approach
to this problem. At this time, I see no reason for changing the current
1974 : NOLDNIHSVM
34-761
U.S. GOVERNMENT PRINTING OFFICE
on the State of the Union and ordered to be printed
JUNE 18, 1974.-Committed to the Committee of the Whole House
LIBRARY
GERALD
&
oyos
[To accompany H.R. 15323]
SEPARATE VIEW
TOGETHER WITH
JOINT COMMITTEE ON ATOMIC ENERGY
BY THE
REPORT
AS AMENDED
THE ATOMIC ENERGY ACT OF 1954,
ANDERSON INDEMNITY PROVISIONS OF
REVISING AND AMENDING THE PRICE-
No. 93-1115
}
-
Session 2dd
HOUSE OF REPRESENTATIVES
REPORT
Congress p86
CONTENTS
JOINT COMMITTEE ON ATOMIC ENERGY
Page
MELVIN PRICE, Illinois, Chairman
I. Background
2
JOHN O. PASTORE, Rhode Island, Vice Chairman
II. Hearings
3
CHET HOLIFIELD, California
HENRY M. JACKSON, Washington
III. Provisions of current act
4
JOHN YOUNG, Texas
STUART SYMINGTON, Missouri
IV. Studies
4
TENO RONCALIO, Wyoming
ALAN BIBLE, Nevada
V. Need for legislation
5
MIKE McCORMACK, Washington
JOSEPH M. MONTOYA, New Mexico
VI. Discussion of bill
6
CRAIG HOSMER, California
GEORGE D. AIKEN, Vermont
A. Phaseout of Government indemnity
6
JOHN B. ANDERSON, Illinois
WALLACE F. BENNETT, Utah
B. Increase in limit on liability
9
ORVAL HANSEN, Idaho
PETER H. DOMINICK, Colorado
C. Extension of indemnity coverage outside United States
MANUEL LUJAN, JR., New Mexico
HOWARD H. BAKER, JR., Tennessee-
territorial limits
10
EDWARD J. BAUSER, Executive Director
D. Additional considerations
12
GEORGE F. MURPHY, Jr., Deputy Director
VII. Safety of nuclear facilities
13
JAMES B. GRAHAM. Assistant Director
VIII. Comparison with other Federal programs of disaster assistance and
NORMAN P. KLUG, Technical Consultant
insurance
15
Brig. Gen. ALBION W. KNIGHT, Jr., (USA Ret.), Professional Staff Member
IX. Cost of legislation
16
RANDALL C. STEPHENS, Professional Staff Member
X. Section-by-section analysis
16
JAMES T. RAMEY, Consultant
XI. Changes in existing law
18
JANE R. MAPES. Special Counsel
Separate views of Representative Teno Roncalio
25
LAWRENCE F. ZENKER, GAO Consultant
Exhibit I
30
CHRISTOPHER C. O'MALLEY, Printing Editor
Exhibit II
31
(II)
APPENDIX [tables]
33
(III)
93D CONGRESS
HOUSE OF REPRESENTATIVES
REPORT
2d Session
No. 93-1115
REVISING AND AMENDING THE PRICE-ANDERSON
INDEMNITY PROVISIONS OF THE ATOMIC ENERGY
ACT OF 1954, AS AMENDED
JUNE 18, 1974. Committed to the Committee of the Whole House on the State
of the Union and ordered to be printed
Mr. PRICE of Illinois, from the Joint Committee on Atomic Energy,
submitted the following
REPORT
together with
SEPARATE VIEW 1
[To accompany H.R. 15323]
The Joint Committee on Atomic Energy, having considered H.R.
15323, to amend Sections 11 and 170 of the Atomic Energy Act of 1954,
as amended, hereby reports favorably thereon, with amendments,
and recommends that the bill do pass.
The amendments to the bill (H.R. 15323) adopted by the Joint
Committee in open mark-up session, June 13, 1974, are as follows:
Page 2, line 5: delete "Unted" and insert "United".
Page 5, line 14: delete the word "standard".
Page 5, line 16: after the word "charged", insert the phrase, "fol-
lowing any nuclear incident".
Page 5, line 18: Following the sentence ending with the word,
"protection.", add a new sentence, to read as follows: "The Commis-
sion is authorized to establish a maximum amount which the aggregate
deferred premiums charged for each facility within one year may not
exceed."
Page 6, line 21: delete the figure "1997" and substitute therefor
the figure "1987".
Page 6, line 22: Following line 22, insert the phrase, "August 1,
1977" in the last sentence wherever it appears".
Page 6, line 23: delete the figure "1997" and substitute therefor the
figure "1987".
Page 7, line delete the figure "1997" and substitute therefor
the figure "1987".
1 See p. 25.
(1)
2
3
Page 9, line 9: delete the figure "1997" and substitute therefor the
1974, by Chairman Price (for himself and Mr. Hosmer) as H.R. 15323.
figure "1987".
The Joint Committee met again on June 13, 1974, in open session and
Page 9, line 20: delete the figure "1987" and substitute therefor
voted to report favorably on the bill with amendments by a roll call
"1983".
vote of 11 to 2.
I. BACKGROUND
II. HEARINGS
The Price-Anderson Act was enacted in 1957, and extended and
Public hearings on the possible modification or extension of the
amended in 1965 and 1966. The Act was designed to protect the public
Price-Anderson Act were held on January 31, March 27 and 28, 1974,
and the emerging nuclear industry by assuring the availability of
and hearings on H.R. 14408, S. 3254 and S. 3452 were held on May 9,
funds for the payment of claims in the unlikely event of a catastrophic
10, 14, 15, and 16, 1974. An informal planning committee, drawn from
nuclear incident. Among other things, the Act provides funds for
the Joint Committee staff, the Atomic Energy Commission, the legal
public liability in the event of a nuclear incident up to a total amount
profession, the commercial power and insurance industries, and public
of $560 million. This figure represents the sum of the amount of
citizen groups, assisted the Committee and staff in regard to the scope
Government indemnity fixed at $500 million by the Congress, and
of the hearings and potential witnesses.
the then-existing (1957) maximum available private liability insur-
The following witnesses from the Atomic Energy Commission
ance, $60 million. The amount of private insurance has gradually
appeared before the Joint Committee to present testimony or to
risen, so that it stands now at $110 million; the Government's indem-
assist in the development of the record: Dr. Dixy Lee Ray, Chairman;
nity has commensurately decreased to $450 million. Other features
William O. Doub, Commissioner; Marcus Rowden, General Counsel;
included in the Act by the amendments of 1966 are no-fault liability
L. Manning Muntzing, Director of Regulation; and Jerome Saltzman,
and provisions for accelerated payment of claims immediately upon
Deputy Chief, Office of Antitrust and Indemnity, Directorate of
occurrence of a nuclear incident.
Licensing.
Since the enactment of the Price-Anderson Act, there has not been
Other non-governmental witnesses who appeared one or more times
a single accident which has resulted in indemnity payments for public
are:
injury under its provisions. This outstanding safety record has been
Elmer Dee Anderson, Private Citizen, Valparaiso, Indiana.
accompanied by a gradual growth in the nuclear power industry which
Dr. W. H. Arnold, Jr., General Manager, PWR Systems Division,
is now accelerating at a rapid pace. Thus the Price-Anderson Act has
Westinghouse Electric Company.
served well its dual purpose of protection of the public and elimination
George K. Bernstein, Federal Insurance Administrator, HUD.
of a potential deterrent to the establishment of a nuclear industry.
Arthur C. Gehr, Atomic Industrial Forum.
The Act is scheduled to expire on August 1, 1977. Because of the
Frank P. Grad, Director, Legislative Drafting Research Fund,
long-lead times involved in planning new commitments to nuclear
Columbia University.
power, the Joint Committee has been urged to consider the matter of
Harold P. Green, Professor of Law, National Law Center, George
extension and possible modification of the Act during the present ses-
Washington University.
sion of Congress in order to prevent an unwarranted disruption in the
Gerald R. Hartman, Professor of Insurance and Risk, Temple
planning process for nuclear powerplants, such as might result from
University.
uncertainty over the future of the Price-Anderson Act. In order to
Joseph F. Hennessey, Bechhoefer, Snapp and Trippe, Washing-
permit early consideration in the current Congress, the Joint Com-
ton, D.C.
mittee in July 1973, requested the Commission to submit studies and
Larry Hobart, Assistant General Manager, American Public Power
alternative proposals in the indemnity area. In response to this call,
Association.
the Atomic Energy Commission filed a broad based staff study in
Mrs. Judith H. Johnsrud, Central Pennsylvania Committee on
January 1974 and the Columbia University Legislative Drafting Fund
Nuclear Power.
submitted an independent review sponsored by the Atomic Industrial
Dr. Chauncey Kepford, York, Pennsylvania, representing the
Forum. Months of informal interchange among members of the Joint
Environmental Coalition on Nuclear Power.
Committee, the Atomic Energy Commission, and their staffs, and
Hubert H. Nexon, Senior Vice-President, Commonwealth Edison
representatives of private industry and the general public culminated
Company, representing Edison Electric Institute.
in public hearings beginning on January 31, 1974. On April 22, 1974,
Norman C. Rasmussen, Department of Nuclear Engineering,
the Atomic Energy Commission forwarded to the Congress proposed
Massachusetts Institute of Technology.
legislation which was introduced as H.R. 14408 by Chairman Melvin
Charles A. Robinson, Jr., Corporate Counsel, National Rural
Price of the Joint Committee on Atomic Energy on April 25, 1974, and
Electric Cooperative Association.
as S. 3452 by Senator John O. Pastore, Vice-Chairman of the Joint
Mrs. Laurie R. Rockett, Greenbaum, Wolff and Ernst, New York
Committee, on May 7, 1974. Additionally, a related bill, S. 3254 was
City, New York.
introduced by Senator Mike Gravel on March 27, 1974.
Ms. Ann Roosevelt, New York, on behalf of Friends of the Earth.
Following public hearings, held on May 9, 10, 14, 15, and 16, 1974,
Richard A. Schmalz, Hartford Insurance Group, representing
the full committee met in executive session on June 11, 1974, and
Nuclear Electric Liability Insurance Association.
after careful consideration voted to submit a committee bill in lieu
Chauncey Starr, Electric Power Research Institute.
of the above-mentioned measures. The bill was introduced on June 11,
Mark Swann, New Park, Pennsylvania.
4
5
Martin Victor, V.P. and Secretary, Babcock & Wilcox Company.
Print of March 1974 entitled, "Selected Materials on Atomic Energy
Richard Walker, Partner, Arthur Andersen & Company.
Indemnity and Insurance Legislation".
Bruce L. Welch, Director Environmental Studies, Friends Medical
The major studies were those by the Atomic Energy Commission
Science Research Center, Inc.
and by the Legislative Drafting Research Fund of Columbia Uni-
versity. The latter, an independent study, resulted in a report
III. PROVISIONS OF CURRENT ACT
December 12, 1973, entitled "Major Issues of Financial Protection
in Nuclear Activities". Among the proposals which are included in
The Price-Anderson Act is incorporated in the Atomic Energy Act
the Joint Committee print and which were discussed in the AEC
in Sections 2, 11, 53, and 170. Its major provisions are described below.
and Columbia studies was a proposal by the nuclear liability insurance
The Atomic Energy Commission must require as a condition for
pools for a retrospective premium insurance plan. This plan, modified
certain licenses, including those for nuclear power plants, that the
somewhat, became the basis of legislation submitted to the Congress
licensee maintain financial protection for payment of third party
by the Atomic Energy Commission, subsequently introduced by
liability claims in the event of a nuclear accident, in the amount
Chairman Price in the House as H.R. 14408, and by Vice Chairman
required by the Commission. The AEC may also at its discretion
Pastore in the Senate as S. 3452, and which has been further modified
require the protection for its contractors and other types of licensees.
by the Joint Committee into the bill now being reported.
For any power reactor with an electric capacity of 100 Mwe or more
Other proposals included a Commission staff study proposal for a
the Commission must require financial protection equal to the maxi-
contingent fee system, and proposals by former AEC General Counsel
mum available from private sources. Currently this is $110 million.
Joseph Hennessey, Professor Harold Green, and former Pennsylvania
The Commission is also required to execute an indemnity agree-
Insurance Commissioner Herbert S. Denenberg. These proposals are
ment with its contractors and with each licensee required to maintain
not discussed in this report, but can be found in the committee print
financial protection, agreeing to indemnify the licensee and any other
described above, and were discussed during the hearings.
parties liable for claims arising from a nuclear incident above the
Senator Gravel's bill constituted an additional proposal which was
amount required, up to $500 million. The indemnity agreement
considered at the hearings and is discussed in this report.
extends for the life of the license (usually 40 years for power reactors).
The aggregate liability for damages arising from a nuclear incident
V. NEED FOR LEGISLATION
is limited to $560 million within the U.S. and $100 million plus the
The Price-Anderson Act applies only to licenses issued prior to
financial protection required of the licensee for incidents occurring
August, 1977. Nuclear power plants now in the planning and design
outside the U.S. All vendors, architect-engineers, subcontractors,
phases would not receive construction permits until about 1977-1978.
and other parties are protected from liability by the omnibus feature
Thus there is uncertainty as to whether these plants would receive
of the licensee insurance and the Government indemnity.
protection in the form of Government indemnity. Reactor manufac-
Non-profit educational institutions licensed. to operate reactors are
turers and architect-engineers are already requiring escape clauses in
exempted from the financial protection requirement and are in-
their contracts to permit cancellation in the event some form of pro-
demnified by the Commission for payment of claims exceeding
tection from unlimited potential liability is not provided. Action is
$250,000, in an amount up to $500 million.
required soon to prevent disruption in utility plans for nuclear power.
Damages to offsite property of the licensee are covered by the
The study by the Columbia University Legislative Drafting
insurance and indemnity.
Research Fund examined the situation that would prevail if the Price-
The Commission may require the inclusion in any insurance
Anderson Act were to be allowed to expire. The study concluded that
contract or other proof of financial protection and in its indemnity
the resulting legal situation in the event of a nuclear incident would be
agreements of provisions waiving any defenses based upon conduct
chaotic. Injured parties would be subject to whatever tort law pre-
of the claimant or fault of the indemnified person, charitable or
vailed in the State in which the incident occurred or in which they
governmental immunity, or statutes of limitations which are shorter
suffered harm. There would be wide variation in the grounds for
than a specified duration. The waivers apply in any instance where
recovery, the standards of proof, and the defenses available to the
the Commission determines there has been an extraordinary nuclear
defendants. Recovery would be uncertain and could be delayed for
occurrence, as defined by the Commission.
many years. The potential for unlimited liability might drive smaller
Provisions are also included for prompt payments to injured parties
manufacturers, architect-engineers, and component suppliers out of
and for consolidation of all claims into a single Federal district court.
the nuclear business and could serve as a deterrent to entry by other
firms. The report's conclusions were summarized as follows:
IV. STUDIES
"The primary defect of this alternative is its failure to afford
Various groups have studied the problem of nuclear insurance and
adequate protection to the public in terms of providing either a
indemnity in the past year, and several reports and proposals were
secure source of funds or a firm basis of legal liability. While it
reviewed by the Atomic Energy Commission and the informal planning
does have the theoretical advantage of placing no legal limit on
Committee headed by former AEC Commissioner James T. Ramey,
amount of protection available, as a practical matter, the public
serving as a consultant to the Joint Committee. The studies and
would be less assured of compensation than under the Price-
proposals and related material are included in a Joint Committee
Anderson Act. Adoption of this alternative would also, for the
H.R. 1115-2
7
6
reasons discussed in Chapters 3 and 4, tend to discourage the
exceeding the base layer of insurance, each licensee would be
participation of industry in the nuclear field. If in other respects
assessed a deferred premium which would be a prorated share of
Congress adopts a policy of continued encouragement, inaction
the excess damages. A maximum amount would be established
with respect to financial protection will not advance, and will
which the retrospective premiums for each facility could not
probably impede, this policy.
exceed. If, for instance, at some time in the future, a maximum
Assuming no significant change in the insurance patterns of the
level of $3 million per reactor were set and a total of 100 reactors
industry, this alternative also fails to meet the criterion of efficient
had been licensed up to that time, then $300 million would be
and equitable cost allocation through risk spreading. With the pos-
available at that time to provide for payment of damages in this
sible exception of the approximately 100 million dollars insured by
secondary layer over and above the base insurance. As more
the insurance pools, the entire risk of an accident would fall, under
reactors were licensed, the secondary layer would increase pro-
the law of most states, either on the victim who was barred from
portionately. The Commission proposed to set the maximum
recovery by a technical defense, failure of proof, or inability of
premium by rule.
The Commission would continue to provide indemnity for
the defendant to pay a judgment, or on the particular utility
involved and possibly its contractors or suppliers, and on their
payment of damages exceeding the combined primary and second-
consumers. And the entire cost would arise after the accident
ary layers, up to a total of $560 million. As the secondary layer
had occurred. This alternative thus makes use of little, if any,
increased, it would gradually phase out the government in-
intertemporal and, initially, virtually no interpersonal spreading.
demnity. The date at which this would occur would depend on
Interpersonal spreading might be achieved later as the companies
the amount set as the maximum premium and on the rate at
held liable shifted the cost onto their consumers. Although the
which reactors were licensed. The tables in the appendix to this
allocation of liability to the industry does appear to meet the
report illustrate how this phase out would occur for various pre-
third criterion of internalization, to the extent that victims of an
mium levels.
accident are unable to recover from the industry, even this cri-
The Commission proposes to require present licensees to enter
terion is not met. Finally, because of the potential problems plain-
into the retrospective premium plan under its authority to
tiffs may encounter in seeking damages under state law, recovery
establish the maximum financial protection required. The Com-
is likely to involve excessive time and expense. In sum, this al-
mission believes that this authority is sufficient to require the
ternative meets only one of the four basic criteria, that of internal-
participation of such licensees in the plan.
ization of costs, and meets that only in part".
S-3254
The Joint Committee has received numerous letters from companies
and organizations in the nuclear industry, urging extension of the
S. 3254 would immediately terminate the authority of the Com-
Price-Anderson Act in its present or a modified form. These letters as
mission to enter into agreements to indemnify licensees of nuclear
well as testimony at the hearings have stressed the importance of the
Act in removing a deterrent to development of the nuclear industry,
power plants and other facilities. The Commission's authority
to enter into indemnity agreements with its contractors would
and the need for prompt action to clarify the situation that will
terminate on August 1, 1977. The financial protection require-
prevail after 1977.
ments for licensees would remain. No specific treatment is given
VI. DISCUSSION OF BILL
to licensees who have entered into indemnification agreements
The bill proposed by the Atomic Energy Commission provided for
before that date.
a ten-year extension of the Price-Anderson Act and for three major
Joint Committee Comments:
changes-(1) phase out of Government indemnity, (2) increase in
The Joint Committee has from the time of the inception of the
limit of liability, and (3) extension of indemnity coverage outside the
Price-Anderson Act endorsed the concept of the assumption by
territorial limits of the United States for certain limited activities.
the nuclear industry of the risks associated with nuclear incidents.
The Committee generally concurs in the Commission's proposal
The industry in its early stages of development, however, was
except as described below.
not capable of assuming this unique risk, which has generally
been considered to have extremely low probablility but potentially
A. PHASEOUT OF GOVERNMENT INDEMNITY
large consequences. While the probabilities of severe nuclear
AEC Proposed Bill
accidents appear now to have been overestimated, the industry is
just now reaching the point where the government's role can be
The AEC Bill provides specific authorization for the commission
phased out without the possibility of unduly disrupting the
to establish by rule, regulation or order the terms and conditions
industry's development or of leaving the public with inadequate
of the financial protection required of nuclear licensees. AEC
provision for relief from the highly improbable severe nuclear
proposes, under this authority, to require participation, by
incident which the Act is designed to protect against. The Com-
licensees who are required to maintain the maximum amount of
mission's proposal as embodied in the Joint Committee billis
financial protection, in an insurance retrospective rating plan
considered the most expeditious means for the transfer of re-
whereby in the event of a nuclear incident resulting in damages.
sponsibility. An abrupt termination of Government protection
8
9
such as S-3254 provides for is not considered appropriate at this
or agency of a State, such as a municipal utility, from lending
time, in light of the still relatively small number of nuclear
its credit or making expenditures for other than public purposes.
reactors now licensed.
They suggested that preemption of this field by the Federal
The Joint Committee desires that the Government indemnity
Government or explicit establishment of the premium system
be phased out as soon as is reasonably feasible. Consequently, the
as a condition to obtaining a nuclear power plant license might
bill provides that the Commission must set the level of the
resolve the problem.
standard maximum deferred premium at no less than $2 million
The Committee feels that the language of Section 170, as
per facility. The Joint Committee has also established an upper
amended by this bill, is clear in its establishment of participation
level for the premium of $5 million per facility. This limitation
in the retrospective premium system as a firm requirement of a
was considered necessary to assure that smaller utilities are not
licensee required to maintain the maximum financial protection.
hampered in efforts to raise capital by a too-high potential
The Joint Committee has strengthened the language of Sec-
liability. The bill thus establishes a range within which the
tion 170 to stress the Federal preemption of nuclear powerplant
Commission shall set the maximum premium taking into con-
licensing and the public purposes of the premium system. Further-
sideration the objectives on which these statutory limits were
more, the deferred premium should not be interpreted as estab-
based and other pertinent factors. The range was further in-
lishing a responsibility by one licensee for a liability or debt of
tended to enable the termination of the Government indemnity
another. The potential deferred premiums are considered by the
between about 1981 and 1985. The Commission is directed to
Joint Committee to have fundamentally the same status as any
consider this time frame as a guideline in establishing the pre-
other such insurance premium. The committee has amended the
mium.
bill to authorize the Commission to establish a maximum limit on
The Commission is authorized to establish a maximum deferred
the amount of deferred premiums which can be charged to a
premium lower than the standard premium for any facility
facility in any one year. The purpose of this amendment is to
based upon such considerations as size and location. This author-
clarify the status of the premiums and to ensure that they can
ization is included to permit such variations if the Commission
not be construed as the lending of credit and thus raise constitu-
finds they are warranted.
tional problems for some publicly owned utilities.
The Joint Committee has added to the legislation a target
The Joint Committee concurs in the Commission's belief that
date of August 1, 1976 for completion of Commission action to
the Commission's authority to establish the financial protection
implement the deferred premium plan. This should provide ample
required is sufficient to require participation by present licensees
time for a rulemaking proceeding.
in the deferred premium plan. The Joint Committee expects the
Authority and direction has also been provided for the Com-
Commission to do SO. Exclusion of present licensees would result
mission to establish measures to ensure that the deferred pre-
in confusion and would delay the date at which Government in-
miums will be paid when they are called for following a nuclear
demnity can be eliminated.
incident. The Commission is directed to assure these payments
The Joint Committee modified the Commission's proposal by
to the maximum extent possible through the resources of the
including requirements that the retrospective premium plan be
nuclear and insurance industries. Representatives of insurance
available to licensees who elect to provide the basic financial
companies indicate that the insurance pools could provide
protection through some means other than insurance, and a pro-
coverage for up to $30 million in defaults initially, and that this
vision that the maximum financial protection required shall be
sum could be increased later. The Joint Committee believes the
that available under reasonable terms and conditions. The Com-
industry and the AEC should make every effort to provide ad-
mission is thus authorized not to require available insurance to
ditional coverage by insurance and industry.
the degree that it determines the rates or terms of such insurance
In order to prevent a potential gap between the public pro-
to be unreasonable.
tection pledged and actual payments made, the Joint Committee
added authorization for the Commission to serve as the ultimate
B. INCREASE IN LIMIT ON LIABILITY
assurance to the public for these payments, to the extent neces-
sary. This may be done through reinsurance, guarantees, or
AEC Proposed Bill
other means. If the Commission should determine that a guarantee
The Commission does not propose an immediate change in the
of payment is essential, authority has been provided to permit
$560 million limit on total liability arising from a nuclear incident.
recovery by the Government from the defaulting licensee of any
It proposes to retain that limit until the total of primary insurance
payments made on its behalf.
and assessable retrospective premiums reaches the level necessary
During the hearings on this legislation, a potential constitu-
to completely replace the Government indemnity. From the point,
tional problem was raised as to public power organizations.
as the primary and secondary levels rise, the limit on liability
Public power representatives testified that the retrospective
would be allowed to rise correspondingly. No ultimate limitation
premium arrangement might be construed to be in violation of
on the level to which this coverage could rise is proposed. At a
some State constitutions, which prohibit a State or a subdivision
11
10
the Atomic Energy Act to permit the Commission to extend
premium level of $3 million per reactor, the overall limit would
the provisions of the Price-Anderson Act to certain activities
be projected to reach a billion dollars in about 1987, and rise to
outside the territorial limits of the United States conducted by
$1,346,000,000 in 1990. The Commission would have the con-
commission contractors or involving licensed nuclear facilities or
tinuing authority to establish a rule reducing the standard
licensed activities. The Commission does not propose to include
maximum premium as appropriate when it determines that the
under Price-Anderson indemnity coverage the import or export
total financial protection has risen to an amount above which
of nuclear material or facilities or activities conducted within the
further increases are not necessary.
territorial limits of another nation, nor any occurrence result-
ing from the use of a nuclear power reactor to propel a U.S.
S-3254
merchant ship, although nuclear material transported on such
S-3254 would eliminate the limit on liability entirely. The
a ship as cargo could be covered by the Price-Anderson in-
waiver of defense provisions would be retained. The result would
demnity provisions in the same manner as cargo carried in ships
be unlimited strict liability.
powered by fossil fuel.
The existing definitions of "person indemnified" and "nuclear
Joint Committee Comments:
incident" do not permit indemnity protection for activities
The Joint Committee does not feel that any increase in or
licensed by the Atomic Energy Commission if the nuclear incident
elimination of the limit is necessary or appropriate at this time.
occurs outside the territorial limits of the United States, with the
As the Joint Committee pointed out when the Act was first
exception of the now retired nuclear ship Savannah. There are
proposed:
two situations in which the Commission proposes that the protec-
"The limit of the Commission's responsibility under these (indemnity)
tion afforded by the Price-Anderson Act with respect to licensed
agreements is to be $500 million. This limit could be subject to upward
activities be extended to nuclear incidents occurring outside the
revision by the Congress in the event of any one particular incident in which,
territorial limits of the United States. The first situation involves
after further congressional study, the Congress felt more appropriations
ocean shipments of new or spent fuel which may move outside
would be in order.
the territorial limits of the United States during ocean transit
from one licensed nuclear facility to another. The second situation
"Subsec. e limits the liability of the persons indemnified for each nuclear
involves nuclear facilities which are physically located outside of
incident to $500 million, together with the amount of financial protection
required. Of course, Congress can change this act at any time after any
the territorial limits of the United States but whose construction
particular incident. The Joint Committee wanted to be sure that any such
and operation are licensed by the Atomic Energy Commission,
changes in the act would be considered by it in the light of the particular
such as a floating nuclear power plant located beyond the limits
incident."
of the territorial sea of the United States. The proposed legisla-
At the time the extension of the Act in 1965, the Joint Com-
tion would authorize the Atomic Energy Commission to extend
mittee reiterated this point when it said:
Price-Anderson indemnity protection to such shipments and such
"In the event of a national disaster of this magnitude, it is obvious that
facilities.
Congress would have to review the problem and appropriate action.
Any indemnification agreements relating to these activities
The history of other natural or man-made disasters, such as the Texas City
would be administered in the same manner as the Commission
incident, bears this out. The limitation of liability serves primarily as a
device for facilitating further congressional review of such a situation, rather
would administer the Price-Anderson Act with respect to other
than an ultimate bar to further relief of the public."
licensed activities.
Testimony on the preliminary results of the Reactor Safety
The present definition of "nuclear incident" as applied to
Commission contractors provides indemnity protection only if an
Study under the direction of Professor Norman Rasmussen of
the Massachusetts Institute of Technology has indicated that
occurrence outside the United States involves "a facility or de-
the probabilities of a nuclear incident are much lower and the
vice" owned by, and used by or under contract, with the United
States. The amended definition would resolve any possible am-
likely consequences much less severe than has been thought
previously (See Section VII of this report). The likelihood of an
biguities concerning the Commission's authority to indemnify its
accident with damages exceeding $560 million appears to be quite
contractors for any occurrence during the course of transporting
remote. However, the committee did decide to permit the limit
source, special nuclear, or byproduct material outside the United
States.
to increase once the retrospective premiums assessable have
completely replaced the government indemnity.
Joint Committee Comments:
The Joint Committee concurs in the Commission's proposals.
C. EXTENSION OF INDEMNITY COVERAGE OUTSIDE UNITED
With the apparent advent of offshore nuclear powerplants, it is
STATES TERRITORIAL LIMITS
essential that the protection intended by the Price-Anderson Act
not be thwarted by the incidental fact of location beyond the U.S.
AEC Proposed Legislation
territorial limits. Likewise, the shipment of nuclear materials
The proposed legislation would amend the definitions of
from one licensed facility to another within the United States
"nuclear incident" and "person indemnified" in section 11 of
should be included in the Act's coverage regardless of whether
13
12
of their losses, the distribution of funds will be made in such a man-
the facility or route involved is located or involves transportation
ner as to compensate first for the most severe and the most readily
outside the territorial limits.
computable losses. Thus claims for actual losses to property, for
Testimony at the hearings on this bill included suggestions
actual and reasonable medical expenses, for loss of wages, and
that nuclear merchant ships be included in the act's coverage.
other such losses may merit higher priority than such claims as
The Joint Committee has not included those activities in this
those for alleged pain and suffering, emotional harm, and loss of
bill. The urgency of such inclusion is not considered sufficient
consortium. Likewise, losses otherwise compensated for, while not
to warrant legislation without a more detailed examination.
precluded from recovery (under the collateral source rule) in
The Joint Committee's decision not to take this action at this
most jurisdictions, should be accorded lower priority than un-
time is in no way intended to preclude further consideration at
compensated losses. The Joint Committee also believes that as a
a later time.
matter of equity, in cases where less than full compensation will
D. ADDITIONAL CONSIDERATIONS
be made through the amounts immediately available from in-
surance and government indemnity, losses to offsite property of
Duration of Extension
the licensee of the responsibile facility should be accorded lower
The Commission proposed a further 10-year extension of the
priority than losses to third parties. The court is authorized to
Price-Anderson Act, as modified by this legislation. The Joint
establish such additional priorities as are deemed desirable and
Committee concurs, and adds a provision for a formal review and
equitable to further the principles described above.
report to Congress after six years, in 1983.
The above provisions are in no way intended to create any
causes of action not in accordance with existing law or to derogate
Activities Covered by Price-Anderson Act
any existing causes of action. Nor should these provisions be
construed as a retreat from the belief expressed on many occasions
Financial protection and indemnity for plutonium processing
by this Joint Committee that Congress is committed to thoroughly
facilities is discretionary with the Commission under the present
review the situation and to provide additional relief in the remote
law. One witness at the hearings, a representative of a company
event of a nuclear incident involving damages in excess of the
which operates such a facility, proposed that these provisions of
limit on liability. The priorities are not intended to preclude
the Price-Anderson Act be made mandatory for such facilities.
ultimate relief for claims of secondary priority, but rather to
The Commission does not at this time require financial protection
assure that early relief is applied where most needed.
of such licensees or extend indemnity coverage to them. However,
private liability insurance is available. The Commission has
VII. SAFETY OF NUCLEAR FACILITIES
indicated that it will undertake a thorough review of this matter.
The Joint Committee has not proposed a legislative change in
Nuclear power plants contain large amounts of intensely radioactive
this area, pending the outcome of this review. The Commission
materials which are produced by nuclear processes which take place
is urged to give appropriate consideration to this matter.
during their operation. Practically all of these materials are produced
Transportation of nuclear materials is not specifically pro-
and contained inside the reactor fuel. Multiple barriers are provided
vided for under the Price-Anderson Act, although carriers are
in nuclear plants to assure that undue amounts of radioactivity are
generally covered either as AEC contractors or under the omni-
not released to the environment in the event of malfunctions or acci-
bus aspects of licensee financial protection and indemnity. The
dents within the plant. The primary barriers are the reactor fuel itself;
Association of American Railroads has proposed that transporta-
the cladding material which encases the fuel; the reactor pressure ves-
tion be specifically covered because of gaps in the existing system
sel and primary coolant boundary; and finally the outside containment
for such situations as transportation of materials for a shipper or
system. In addition to these multiple barriers, each nuclear facility is
receiver not required to maintain financial protection. Although
equipped with a multiplicity of special safety systems and devices
insurance is available to carriers, it is limited to the amount of
which are intended to either prevent accidents or mitigate their poten-
$60,000,000. The Joint Committee has not proposed legislation
tial consequences. Extensive quality assurance programs covering all
to deal with this matter, but encourages the Commission to
facets of each facility are followed to assure the initial establishment
review the situation to determine if procedural or legislative
and continuing maintenance of plant integrity. A comprehensive
changes are in order.
description of nuclear power plants, their safety features, and the
Government regulatory system is included in the AEC report "The
Priorities Between Claimants and Types of Claims
Safety of Nuclear Power Reactors (Light Water Cooled) and Related
The Joint Committee has included in the legislation a direction
Facilities'-Wash-1250.
and authorization for the court which develops the plan for dis-
As a result of this careful approach to the design and operation
tribution of funds in the event of a nuclear incident which appears
of nuclear power plants, coupled with a vigorous Government regula-
to have resulted in damages exceeding the limit on liability to
tory system, the overall safety record of the commercial nuclear power
establish priorities between classes of claims and claimants. The
industry has been excellent. While there have been a number of minor
Joint Committee wishes to assure that in such a case, where the
malfunctions in operating plants, to date no accidents have occurred
immediate recovery by claimants may be less than the full amount
H.R. 1115-3
14
15
which have resulted in deaths or injuries to the general public. Not-
While the safety record of nuclear powerplants to date has been
withstanding this record, the risk of major accidents cannot be said to
excellent, the increasing number of plants expected in the future
be zero. There remains a small but finite probability that an accident
dictates the need for industry and Government to be vigilant and
may occur that could result in the release of major amounts of radio-
strengthen their performance to assure that nuclear power plants will
activity to the environment.
continue to provide a safe and reliable source of electrical energy.
In most human endeavors, it is possible to estimate the probability
Over the years, the Joint Committee has devoted major attention,
and consequences of major accidents based on past experience (sta-
through the conduct of many hearings* and other means, to assure
tistics). In the case of nuclear power. plants, due to the lack of major
that nuclear power activities are carried out in a safe and environ-
accident experience, numbers representing probabilities of severe
mentally acceptable manner. In this regard, the committee has
accidents and associated consequences must be deduced or inferred by
strongly supported the major reactor safety research efforts underway
some indirect means. For the past decade or so, a number of individuals
in industry and Government to further increase understanding and
and groups have been exploring methods for estimating such proba-
knowledge in this field. The Congress has authorized a funding level
bilities. Until the early 1970's it has not been thought possible through
of approximately $100 million in fiscal year 1975 for such efforts.
statistical means to adequately estimate probabilities of reactor acci-
It is expected that the information from these programs will help
dents, although it was believed that component failure statistics were
provide an improved basis for estimating the probability and conse-
feasible. Notwithstanding these considerations, the results of these
quences of hypothetical major reactor accidents, and assist in pre-
studies have generally supported the judgments made by experts
venting or mitigating the consequences of such highly unlikely
that the probabilities of severe reactor accidents are exceedingly low.
accidents.
The improvements in the development of statistical methods in
the space program and defense program in the past ten years have led
VIII. COMPARISON WITH OTHER FEDERAL PROGRAMS OF DISASTER
to the belief that adequate statistical probabilities can be developed
ASSISTANCE AND INSURANCE
for nuclear plants. Perhaps the most comprehensive effort in this
area so far is an AEC sponsored study which has been conducted
The Joint Committee examined the posture of other Federal pro-
over the past year and a half under the direction of Dr. Norman
grams for relief from disaster. The Federal government has become
Rasmussen, Professor of Nuclear Engineering at the Massachusetts
increasingly involved as the major underwriter of relief for losses due
Institute of Technology. The Joint Committee has been closely
to natural disasters, principally flooding, hurricane and tornado
following the conduct of this study, and has received testimony from
damage. For example, in a ten-year period ending in 1972, allocations
Dr. Rasmussen on two occasions. In his most recent appearance
from the President's disaster fund totaled just over $1.25 billion. In
before the committee, Dr. Rasmussen concluded his statement with
the first 2½ years of the Disaster Relief Act of 1970, 104 major
the following remarks pertinent to considering the Price-Anderson
disasters were declared, triggering expenditures from the President's
legislation:
fund of about $1 billion, plus loans from two separately administered
"In summary I believe that the proposal before you represents a reasonable
programs in excess of $2 billion.
way to phase out the Government responsibility for nuclear insurance and
Recent legislation affecting both the Federal Disaster Assistance
shift the responsibility to the insurance companies and the nuclear industry. I
Administration¹ and the National Flood Insurance Program² has
believe that the current $560 million limit is a reasonable value at this time and will
altered the Government's response to natural disaster, by emphasizing
cover all combinations of circumstances which can reasonably be considered
credible. The National Safety Council now reports that accidents in the U.S.
the role of insurance as the primary means of compensation for loss.
are currently causing 100,000 fatalities per year and an economic loss of 30 billion
In this sense, there is consistency with the amendments to the Price-
dollars per year. Any reasonable estimate of probability and consequences of
Anderson legislation which are the subject of this report, whereby
nuclear accidents indicates that they would not have a significant impact on this
already large accident burden that society bears."
increased reliance is being placed upon private insurance pools and the
licensees of nuclear facilities themselves for financial protection with
Although the Rasmussen study is not yet complete, general con-
a concomitant decrease in governmental involvement.
clusions have been reached which confirm that the probability of
The Government's approach is consistent also in its emphasis on
major reactor accidents involving reactor core malfunctions is,
loss prevention. The National Flood Insurance Program, for example,
indeed, quite small. It has been concluded that the most likely conse-
provides for mandatory land use criteria for new construction within
quence of a core melt accident, which itself is highly unlikely, would
flood-prone areas. In the nuclear energy field, the rigid licensing
be quite modest, in comparison with the catastrophic results generally
process enforced by the Atomic Energy Commission and the surveil-
discussed as the "worst case" accident. In fact, the likely conse-
lance activities of its regulatory division represent an unprecedented
quences of a core melt would be no worse than many other kinds
program of loss prevention.
of accidents such as fires and airplane crashes that society has experi-
enced. While nuclear accidents with more severe consequences could
*Most recently, the Joint Committee held very comprehensive hearings on the subject of nuclear reactor
safety. mental organizations, other scientific and technical experts in the field and the public at large. These hearings
Testimony was received from representatives of the Government, the nuclear community, environ-
be postulated, the study indicates that the probability of such events
were held on the following dates: Jan. 23, 1973; Sept. 25, 26, 27 and Oct. 1, 1973; and Jan. 22, 23, 24, and 28,
is extremely low and would require a highly unlikely combination
1974.
of circumstances.
1 P.L. 93-288, "Disaster Relief Act of 1974."
2 P.L. 93-324, 'Flood Disaster Protection Act of 1973."
16
17
It is clear from this examination that the Federal Government
shore nuclear power plants and to shipments between licen sees in
remains in the business of compensation in many fields, whether as
the United States which are routed beyond territorial waters.
reinsurer, coinsurer, indemnitor or provider of disaster relief. In-
Section 1 of the bill would also amend subsection 11 t. of the Atomic
surance concepts become less valid as the frequency of events decreases
Energy Act of 1954, as amended, by broadening the definition of
and as the potential consequences increase.
"person indemnified", as that term is used in subsection 170 c., to
With respect to the amendments to the Atomic Energy Act under
include nuclear incidents outside the United States. This change pre-
consideration, it is envisioned that the Federal Government will
serves consistency within the Act. Section 1 would further amend sub-
retain its role as indemnitor for the uninsured portion of the statutory
section 11 t. by an alternative description of a "person indemnified"
amount of $560 million. and, after the combined totals of basic and
as a person "who is required to maintain financial protection". This
excess insurance reach that figure and are allowed to float upward, as
provides for the situation in which the $560 million limit on liability
the ultimate guarantor for defaulted retrospective premiums, while
is provided wholly by private insurance protection, in which case the
retaining subrogated rights against the defaulting licensees.
execution of an indemnity agreement may no longer be required.
It is important to note that of all of these Federal programs, only
Section 2 of the bill would amend subsection 170 a. of the Atomic
the Price-Anderson legislation provides for compensation to the
Energy Act of 1954, as amended, by substituting the word "may" for
public for personal injury as well as property damage. All of the other
"shall" in the second sentence. The purpose of this change is to provide
insurance and assistance programs are geared solely to property
consistency with subsection 170 c., as amended. Additional language
damage.
has been added in the first sentence of subsection 170 a. to emphasize
Finally, it should be pointed out that the panoply of Federal
the public purposes of the Price-Anderson provisions, as stated in sub-
resources, other than monetary compensation, is available in the
section 2 i. of the Act.
event of a large-scale nuclear accident, just as it would be in cases of
Section 3 of the bill would amend subsection 170 b. of the Atomic
natural disasters.
IX. COST OF LEGISLATION
Energy Act of 1954, as amended, to provide authority for the Atomic
Energy Commission to regulate the terms and conditions of nuclear
Pursuant to Clause 7 of Rule XIII of the Rules of the House of
liability insurance. This section requires the Commission by August 1,
Representatives, the Joint Committee has determined that, with the
1976, to include in determining the maximum amount of private
exception of minimal administrative costs associated with determining
liability insurance available any deferred premium plan which meets
the terms and conditions acceptable in the proposed retrospective
certain requirements. Any such plan must have a standard maximum
premium plan, the Atomic Energy Commission will incur no additional
retrospective premium within the range of $2 million to $5 million for
costs as a result of carrying out this legislation; except that in the event
each licensed facility required to maintain the maximum financial pro-
of a nuclear incident involving a contractor or a licensee with whom an
tection available from private sources. In addition, participation in the
indemnity agreement has been executed, and resulting in damages
secondary layer must not be conditioned on provision of the basic
exceeding the amount of financial protection required, the Commission
financial protection through insurance means. This assures that an
may incur costs of up to $500,000,000 for each such incident. The
individual licensee may fulfill some or all of its base liability by means
probability of such an incident occurring is considered extremely low.
other than insurance and yet be eligible for the retrospective coverage.
The potential cost to the Government of such an incident involving a
Section 3 further requires the Commission to develop a plan to
licensee other than a nonprofit educational institution will be reduced
assure payment of such deferred premiums when due in the event of a
over & period of years until it reaches essentially zero during the period
nuclear incident, and authorizes the Commission to provide reinsur-
1981-1985. The potential liability for an incident involving a con-
ance or guaranty to assure the availability of funds despite any de-
tractor or nonprofit educational institution will remain at a maximum
faults in retrospective assessments. This provides, in effect, that the
of $500,000,000 per incident. In addition, there will be potential costs
full amount to pay any liability will be available promptly with the
to the Government in the event of defaults on retrospective premiums
government undertaking the burden of later recovery from the
for which the Government serves as reinsurer, or as guarantor in
defaulter. In connection with the recovery of such funds, Section 3
cases where full recovery back against the defaulter is not possible.
authorizes the Commission to specify the terms of any guaranty agree-
ment as appropriate to permit reimbursement, including liens on prop-
X. SECTION-BY-SECTION ANALYSIS
erty and revenues of a defaulting licensee, and automatic revocation
of any license.
Section 1 of the bill would amend subsection 11q. of the Atomic
Section 4 of the bill would amend subsection 170 C. of the Atomic
Energy Act of 1954, as amended, to alter the definition of "nuclear
Energy Act of 1954, as amended, by changing the date "August 1,
incident" as that term is used in subsection 170 d., by substituting the
1977" wherever it appears to "August 1, 1987". The purpose of this
words "source, special nuclear, or byproduct material" for "a facility
amendment is to extend for 20 years the Price-Anderson legislation
or device". Its purpose is to gain specificity and consistency. Section 1
as it pertains to AEC licensees other than licensees subject to the
of the bill would also amend subsection 11 q. to specially define "nu-
provisions of subsections 170 k. or 170 1. of the Act.
clear incident" as that term is used in subsection 170 C. The purpose
Section 5 amends subsection 170 d. of the Atomic Energy Act of
of this amendment is to extend the full aggregate indemnity to off-
1954, as amended, by extending until 1987 the authority of the Atomic
Energy Commission to enter into indemnity agreements with its
contractors.
18
19
Section 6 amends subsection 170 e. of the Atomic Energy Act of
PUBLIC LAW 83-703
1954, as amended, by providing that except as to incidents occurring
outside the U.S. to which agreements of indemnification entered into
(Atomic Energy Act of 1954, as amended)
under the provisions of subsection 170 d. are applicable, the limit on
"SEC. 11. DEFINITIONS.-The intent of Congress in the definitions
aggregate liability arising from a nuclear incident shall be either (1)
$500,000,000 plus the amount of financial protection required of the
as given in this section should be construed from the words or phrases
used in the definitions. As used in this Act:
licensee, if the financial protection required is less than $60,000,000
or (2) $560,000,000, or the amount of financial protection required
of the licensee, whichever is greater, in cases where the financial
"q. The term 'nuclear incident' means any occurance, including
protection required is $60,000,000 or more.
an extraordinary nuclear occurrence, within the United States caus-
Section 7 amends subsection 170 f. of the Atomic Energy Act of
ing, within or outside the United States, bodily injury, sickness,
1954, as amended, to authorize the Commission to reduce the indem-
disease, or death, or loss of or damage to property, or loss of use of
nity fee for persons with whom agreements of indemnification have
property, arising out of or resulting from the radioactive toxic,
been executed in reasonable relation to increases in financial protection
explosive, or other hazardous properties of source, special nuclear, or
above a level of $60,000,000.
byproduct material: Provided however, That as the term is used in
Section 8 amends subsection 170 i. of the Atomic Energy Act of
subsection 170. 1, it shall include any such occurrence outside of the
1954, as amended, to require a report by the Commission to the Con-
United States: And provided further, That as the term is used in sub-
gress on any nuclear incident which will probably result in public
section 170 d., it shall include any such occurrence outside the United
liability claims in excess of $560,000,000. The Act presently provides
States if such occurrence involves [a facility or device] source, special
for such a report for any nuclear incident which will probably result
nuclear, or byproduct material owned by, and used by or under con-
in payments by the United States.
tract with, the United States: And provided further, That as the term
Section 9 amends subsection 170 k. of the Atomic Energy Act to
is used in subsection 170 c., it shall include any such occurrence outside
extend until 1987 the authority for the Commission to indemnify
the United States if such occurrence arises out of or results from the
licensees found by the Commission to be nonprofit educational insti-
radioactive, toxic, explosive or other hazardous properties of source,
tutions for public liability in excess of $250,000 arising from a nuclear
special nuclear or byproduct material licensed pursuant to Chapters 6,
incident.
7, 8 and 10 of this Act, other than for import or export or for nuclear ship
propulsion, which takes place outside the territorial limits of the United
Section 10 amends subsection 170 O. of the Atomic Energy Act of
States or any other nation.
1954, as amended, by authorizing and directing the establishment, in
*
*
any plan for disposition of claims, of priorities between classes of
claims and claimants, to the extent necessary to ensure the most
"t. The term 'person indemnified' means (1) with respect to a nuclear
equitable allocation of available funds.
incident occurring within the United States or outside the United States
Section 11 adds a new subsection 170 p. which provides that the
as the term is used in subsection 170 c., and with respect to any nuclear
Commission shall submit to the Congress by August 1, 1983, a report
incident in connection with the design, development, construction,
and recommendations concerning the need for continuation or modi-
operation, repair, maintenance, or use of the nuclear ship Savannah,
fication of section 170 based upon relevant conditions at that time,
the person with whom an indemnity agreement is executed or who is
including the condition of the nuclear industry, availability of private
required to maintain financial protection, and any other person who
insurance, and the state of knowledge concerning nuclear safety at
may be liable for public liability; or (2) with respect to any other
that time, among other factors.
nuclear incident occurring outside the United States, the person with
whom an indemnity agreement is executed and any other person who
XI. CHANGES IN EXISTING LAW
may be liable for public liability by reason of his activities under any
contract with the Commission or any project to which indemnification
In compliance with clause (3) of rule XIII of the Rules of the
under the provisions of subsection 170 d. has been extended or under
House of Representatives, changes in existing law recommended by
any subcontract, purchase order or other agreement, of any tier, under
the bill accompanying this report are shown as follows (deleted
any such contract or project.
material is enclosed in black brackets and new matter is printed in
italic, and existing law in which no change is proposed is shown in
roman):
20
21
"SEC. 170. INDEMNIFICATION AND LIMITATION OF LIABILITY.-
"a. Each license issued under section 103 or 104 and each construc-
meet any assessment of deferred premiums within a reasonable time
tion permit issued under section 185 shall, and each license issued
when due, and may provide reinsurance or otherwise guarantee the pay-
under section 53, 63, or 81 may, for the public purposes cited in Section
ment of such premiums in the event it is not feasible to establish procedures
2 i of the Atomic Energy Act of 1954, as amended, have as a condition
to assure their payment on a timely basis through the resources of private
of the license a requirement that the licensee have and maintain
industry and insurance. Any agreement by the Commission with a licensee
financial protection of such type and in such amounts as the Com-
or indemnitor to guarantee the payment of deferred premiums may con-
mission in the exercise of its licensing and regulatory authority and
tain such terms as the Commission deems appropriate to carry out the
responsibility shall require in accordance with subsection 170 b. to
purposes of this section and to assure reimbursement to the Commission
cover public liability claims. Whenever such financial protection is
for its payments made due to the failure of such licensee or indemnitor
required, it [shall] may be a further condition of the license that the
to meet any of its obligations arising under or in connection with financial
licensee execute and maintain an indemnification agreement in accord-
protection required under this subsection, including without limitation
ance with subsection 170 c. The Commission may require, as a further
terms creating liens upon the licensed facility and the revenues derived
condition of issuing a license, that an applicant waive any immunity
therefrom or any other property or revenues of such licensee to secure such
from public liability conferred by Federal or State law.
reimbursement and consent to the automatic revocation of any license.
*
"b. The amount of financial protection required shall be the
"c. The Commission shall, with respect to licenses issued between
amount of liability insurance available from private sources, except
August 30, 1954, and [August 1, 1977 August 1, 1987, for which it
that the Commission may establish a lesser amount on the basis of
requires financial protection of less than $560,000,000, agree to indem-
criteria set forth in writing, which it may revise from time to time,
nify and hold harmless the licensee and other persons indemnified, as
taking into consideration such factors as the following: (1) the cost
their interest may appear, from public liability arising from nuclear
and terms of private insurance, (2) the type, size, and location of the
incidents which is in excess of the level of financial protection required
licensed activity and other factors pertaining to the hazard, and (3)
of the licensee. The aggregate indemnity for all persons indemnified in
the nature and purpose of the licensed activity Provided, That for
connection with each nuclear incident shall not exceed $500,000,000
facilities designed for producing substantial amounts of electricity
including the reasonable costs of investigating and settling claims and
and having a rated capacity of 100,000 electrical kilowatts or more,
defending suits for damage: Provided, however, That this amount of
the amount of financial protection required shall be the maximum
indemnity shall be reduced by the amount that the financial protection
amount available at reasonable cost and on reasonable terms from
required shall exceed $60,000,000. Such a contract of indemnification
private sources. Such financial protection may include private in-
shall cover public liability arising out of or in connection with the
surance, private contractual indemnities, self insurance, other proof
licensed activity. With respect to any production or utilization facility
of financial responsibility, or a combination of such measures and
for which a construction permit is issued between August 30, 1954, and
shall be subject to such terms and conditions as the Commission may,
[August 1, 1977 August 1, 1987, the requirements of this subsection
by rule, regulation or order, prescribe. In prescribing such terms and
shall apply to any license issued for such facility subsequent to
conditions for licensees required to have and maintain financial protection
[August 1, 1977 August 1, 1987.
equal to the maximum amount of liability insurance available from private
sources, the Commission shall, by rule initially prescribed not later than
"d. In addition to any other authority the Commission may have,
August 1, 1976, include in determining such maximum amount, private
the Commission is authorized until [August 1, 1977 August 1, 1987,
liability insurance available under an industry retrospective rating plan
to enter into agreements of indemnification with its contractors for
providing for premium charges deferred in whole or major part until
the construction or operation of production or utilization facilities
public liability from a nuclear incident exceeds, or appears likely to
or other activities under contracts for the benefit of the United States
exceed, the level of the primary financial protection required of the licensee
involving activities under the risk of public liability for a substantial
involved in the nuclear incident; Provided, That such insurance is avail-
nuclear incident. In such agreements of indemnification the Com-
able to, and required of, all of the licensees of such facilities without
mission may require its contractor to provide and maintain financial
regard to the manner in which they obtain other types or amounts of such
protection of such a type and in such amounts as the Commission
financial protection, And provided further, That the maximum amount of
shall determine to be appropriate to cover public liability arising out
any deferred premium which may be charged following any nuclear
of or in connection with the contractual activity, and shall indemnify
incident under such a plan shall be not less than $2 million nor more
the persons indemnified against such claims above the amount of the
than $5 million for each facility required to maintain the maximum
financial protection required, in the amount of $500,000,000, including
amount of financial protection. The Commission is authorized to establish
the reasonable costs of investigating and settling claims and defending
a maximum amount which the aggregate deferred premiums charged for
suits for damage in the aggregate for all persons indemnified in con-
each facility within any one year may not exceed. The Commission may
nection with such contract and for each nuclear incident: Provided,
establish amounts less than the standard maximum premium for individual
That this amount of indemnity shall be reduced by the amount that
facilities taking into account such factors as the facility's size, location,
and other factors pertaining to the hazard. The Commission shall establish
such requirements as are necessary to assure availability of funds to
22
23
the financial protection required shall exceed $60,000,000: Provided
further, That in the case of nuclear incidents occurring outside the
make a survey of the causes and extent of damage which shall forth-
United States, the amount of the indemnity provided by the Com-
mission shall not exceed $100,000,000. The provisions of this subsection
the provisions of chapter 12 of this Act or any other law or Executive
with be reported to the Joint Committee, and, except as forbidden by
may be applicable to lump sum as well as cost type contracts and to
order, all final findings shall be made available to the public, to the
contracts and projects financed in whole or in part by the Commission.
parties involved and to the courts. The Commission shall report to
A contractor with whom an agreement of indemnification has been
the Joint Committee by April 1, 1958, and every year thereafter on
executed and who is engaged in activities connected with the under-
the operations under this section.
ground detonation of a nuclear explosive device shall be liable, to the
extent SO indemnified under this section, for injuries or damage
sustained as a result of such detonation in the same manner and to the
"k. With respect to any license issued pursuant to section 53, 63, 81,
same extent as would a private person acting as principal, and no
104 a. or 104 c. for the conduct of educational activities to a person
immunity or defense founded in the Federal, State, or municipal
found by the Commission to be a nonprofit educational institution,
character of the contractor or of the work to be performed under the
tion requirement of subsection 170 With respect to licenses issued
the Commission shall exempt such licensee from the financial protec-
contract shall be effective to bar such liability.
which the Commission grants such exemption:
between August 30, 1954, and [August 1, 1977] August 1, 1987, for
"e. The aggregate liability for a single nuclear incident of persons
(1) the Commission shall agree to indemnify and hold harmless
indemnified, including the reasonable costs of investigating and
the licensee and other persons indemnified, as their interests may
settling claims and defending suits for damage, shall not exceed (1)
appear, from public liability in excess of $250,000 arising from
the sum of $500,000,000 together with the amount of financial pro-
nuclear incidents. The aggregate indemnity for all persons indem-
tection required of the licensee or contractor or (2) if the amount of
nified in connection with each nuclear incident shall not exceed
financial protection required of the licensee exceeds $60,000,000, [: Pro-
vided however, That] such aggregate liability shall [in] not [event]
settling claims and defending suits for damage;
$500,000,000, including the reasonable cost of investigating and
exceed the sum of $560,000,000 or the amount of financial protection
"(2) such contracts of indemnification shall cover public
required of the licensee, whichever amount is greater: Provided [further]
liability arising out of or in connection with the licensed activity;
That with respect to any nuclear incident occurring outside of the
and shall include damage to property of persons indemnified,
United States to which an agreement of indemnification entered into
property which is located at the of and used in connec-
under the provisions of subsection 170d. is applicable, such aggregate
tion with the activity where the nuclear incident occurs; and
liability shall not exceed the amount of $100,000,000 together with the
(3) such contracts of indemnification, when entered into with
amount of financial protection required of the contractor.
a licensee having immunity from public liability because it is a
State agency, shall provide also that the Commission shall make
"f. The Commission is authorized to collect a fee from all persons
payments under the contract on account of activities of the
with whom an indemnification agreement is executed under this sec-
licensee in the same manner and to the same extent as the Com-
tion. This fee shall be $30 per year per thousand kilowatts of thermal
mission would be required to do if the licensee were not such a
State agency.
energy capacity for facilities licensed under section 103: Provided, That
Any licensee may waive an exemption to which it is entitled under
the Commission is authorized to reduce the fee for such facilities in reason-
able relation to increases in financial protection above a level of $60,000,-
this subsection. With respect to any production or utilization facility
000. For facilities licensed under section 104, and for construction
and [August 1, 1977] August 1, 1987, the requirements of this sub-
for which a construction permit is issued between August 30, 1954,
permits under section 185, the Commission is authorized to reduce
the fee set forth above. The Commission shall establish criteria in
section shall.apply to any license issued for such facility subsequent to
[August 1, 1977 August 1, 1987.
writing for determination of the fee for facilities licensed under section
104, taking into consideration such factors as (1) the type, size, and
location of facility involved, and other factors pertaining to the
"o. Whenever the United States district court in the district where
hazard, and (2) the nature and purpose of the facility. For other
a nuclear incident occurs, or the United States District Court for the
licenses, the Commission shall collect such nominal fees as it deems
appropriate. No fee under this subsection shall be less than $100 per
the United States, determines upon the petition of any indemnitor
District of Columbia in case of a nuclear incident occurring outside
year.
incident may exceed the limit of liability under subsection 170
or other interested person that public liability from a single nuclear
(1) Total payments made by or for all indemnitors as a e.: result
"i. After any nuclear incident which will probably require payments
of such nuclear incident shall not exceed 15 per centum of such
by the United States under this section or which will probably result in
limit of liability without the prior approval of such court;
public liability claims in excess of $560,000,000, the Commission shall
(2) The court shall not authorize payments in excess of 15 per
centum of such limit of liability unless the court determines that
24
such payments are or will be in accordance with a plan of distribu-
tion which has been approved by the court or such payments
are not likely to prejudice the subsequent adoption and imple-
mentation by the court of a plan of distribution pursuant to sub-
paragraph (3) of this subsection (o) and
SEPARATE VIEW OF REPRESENTATIVE TENO RONCALIO
(3) The Commission shall, and any other indemnitor or other
interested person may, submit to such district court a plan for the
I did not vote to report H.R. 15323 because I think that more time
disposition of pending claims and for the distribution of remaining
is needed to consider such an important piece of energy legislation.
funds available. Such a plan shall include an allocation of appro-
Specifically, time is needed-and is available-to assimilate the find-
priate amounts for personal injury claims, property damage
ings of a soon-to-be-released Atomic Energy Commission report on the
claims, and possible latent injury claims which may not be dis-
probabilities and consequences of large accidents at nuclear power
covered until a later time, and shall include establishment of
plants.
priorities between classes of claimants or claims, as necessary to
During the course of Joint Committee hearings on the question of
ensure the most equitable allocation of available funds.
insurance to protect the public in the event of a nuclear catastrophe,
Such court shall have all power necessary to approve, disapprove, or
several witnesses mentioned this report, the Reactor Safety Study,
modify plans proposed, or to adopt another plan; and to determine
conducted under the supervision of Dr. Norman Rasmussen of the
the proportionate share of funds available for each claimant. The Com-
Massachusetts Institute of Technology. The report, we have been
mission, any other indemnitor, and any person indemnified shall be
told, will "provide a more precise quantification of the probabilities
entitled to such orders as may be appropriate to implement and enforce
and implications of nuclear accidents
1
the provisions of this section, including orders limiting the liability of
Dr. Rasmussen testified before the Joint Committee on May 16,
the persons indemnified, orders approving or modifying the plan,
1974. He reported that the Reactor Safety Study is nearing comple-
orders staying the payment of claims and the execution of court
tion and that he is now in the process of reviewing and checking his
judgments, orders apportioning the payments to be made to claimants,
calculations. He said: "Until that process is finished and we are com-
and orders permitting partial payments to be made before final
pletely satisfied that, to the best of our knowledge, the results are
determination of the total claims. The orders of such court shall be
accurate, I do not think it would be appropriate to discuss the specific
effective throughout the United States."
results in detail." 2
"p. The Commission shall submit to the Congress by August 1, 1983 a
Dr. Rasmussen did discuss some general conclusions of his study
detailed report concerning the need for continuation of or modification to
as they pertain to renewal or modification of the Price-Anderson Act,
the provisions of this section, taking into account the condition of the
but the testimony contained little specific data. He said: "At this time,
nuclear industry, availability of private nuclear liability insurance, and
I see no reason for changing the current 560 million dollar limit
Of
the state of knowledge concerning nuclear safety at that time, among other
course, completion of the Reactor Safety Study may shed more light
relevant factors, and shall include recommendations as to the repeal or
on this matter.' 3
modification of any of the provisions of this section."
I oppose the reporting of these bills out of committee until the
completion of this study which, its director says, "may shed more
light on this matter. I believe that it is an abdication of its responsi-
bility for this committee to report these bills without the benefit of
having all the information currently available on which to base a
decision on a policy question of such magnitude. The Reactor Safety
Study will be completed and published within one or two months, and
the committee intends to hold hearings on the Study's findings
shortly thereafter. I think that it best serves the public interest to
examine the results of this study, to hear the public comment on
these results, and then, on the basis of all the information, to construct
nuclear insurance legislation. It would be unfortunate for the Com-
mittee not to avail itself of this new information, developed over the
last eighteen months at a cost to the tax-payers of over two million
dollars. Currently, we do not have enough specific data on which to
make informed decisions regarding a comprehensive insurance scheme
1 AEC News Release, June 27, 1973.
2 Testimony of Norman Rasmussen before the Joint Committee on Atomic Energy, May 16, 1974, page 9.
3 Op. cit.
(25)
26
27
that will adequately protect the public. Therefore, I urge that we not
Protection of the Public
report this legislation until the completion of the Rasmussen Report
and until we study its conclusions and recommendations in detail.
My major concern with this legislation is that the public will not
Rationale for Quickly Reporting This Bill:
This committee has been urged by some to consider the matter of
The first problem is the retention of an artificial limit on the amount
plant accident. I believe there are two major defects in this legislation.
be adequately compensated in the event of a major nuclear power
possible modification or extension of the Price-Anderson Act during
of money which will be available to compensate the public in the event
the present session of Congress, "Because of the long lead times
in
of an accident. This problem as it existed over the last twenty years.
involved in planning new commitments to nuclear power
order to prevent an unwarranted disruption in the planning process
Nuclear Activities.
the Columbia University Study; Issues of Financial Protection in
was highlighted in a discussion of the current Price-Anderson Act by
for nuclear power plants, such as might result from uncertainty over
the future of the Price-Anderson Act.
4
ing compensation to the public
The Act thus did not fully achieve the legislative goal of assur-
Let us examine this rationale. The argument states that the Price-
Anderson Act must be enacted immediately SO that there will be no
the decision to limit liability-
represents a determination that a major share of the costs of an:
disruption in the planning process for new nuclear reactors. It is
accident should be borne by its victims
6
argued that because of the long lead times necessary for the planning
and construction of nuclear plants, we cannot wait until even early
relatively low level. For the near term, in fact, the liability will still be
Further, in the new legislation, we continue to limit liability at a
next year to pass this legislation without causing substantial harm to-
placed at $560 million. It will gradually float upward to $1-2 billion.
the industry.
From AEC estimates of the possible damages resulting from a nuclear
I submit that this is a specious argument. The lead times required
power plant disaster, these amounts are woefully inadequate. In sev-
for obtaining construction permits (after which a plant is covered)
eral places the committee hints that, in the case of an accident which
are often less than two years. Even if this argument were true, with
surpasses in damages the limit of financial protection afforded nuclear
over three years still to run until expiration of the current Act, there
reactors, the Congress would pass a supplementary appropriation to
is ample time to consider the Act. But the fact that the nuclear
compensate the victims. This appears to negate the purpose for which
industry has been planning for nuclear reactors well into the mid-1980's
the Price-Anderson Act was originally enacted: that is, to provide
clearly shows that this "uncertainty" is not affecting their actions.⁵
Furthermore, if it is argued that knowledge of the specific insurance
and grief which would attend a delay in obtaining relief, and to mini-
quick, adequate compensation for the public, to spare them the anxiety
method is necessary before utilities can plan for the future, this argu-
mize and expedite the administrative and legal complications that are
ment is incompatible with the current legislation. This bill gives the
always involved in trying to mitigate the effects of a disaster. I believe
Atomic Energy Commission until August 1, 1976, to determine what
that in order to fulfill these goals, full compensation should be
the exact retrospective premium plan will be. The bill sets broad
anteed to the public by this law. Reliance on quick Congressional guar-
limits of $2-5 million per reactor. The Commission is ordered to
response to a catastrophe is inappropriate and is not supported by
establish, through a rule-making proceeding, the retrospective pre-
history. Because of this, I believe that we should more fully explore
mium that would lie somewhere in between. It is likely that this
other possible insurance programs which would provide full liability
decision will not be forthcoming until shortly before its deadline,
August 1, 1976.
This aspect of the legislation further buttresses my contention that
asked in an interview in the National Journal of March, 1973 if she
the Price-Anderson to lapse. After all, Chairman Dixy Lee Ray was
coverage or we should explore the possibilities more fully of allowing
haste in enacting this legislation is not as important as we have been
led to believe. The nuclear industry is willing to wait until one year
answered: thought the Price-Anderson Act should be allowed to lapse. She-
before the expiration of the Price-Anderson Act to learn what pre-
I think it's absolutely the thing to do. The Price-Anderson Act.
miums will be required. And, as I have stated, the utilities are planning
to go nuclear in time frames where construction permits would be
all, at a time when we didn't really know whether it was commer-
came into effect at a time when there was no nuclear industry at
granted long after August 1, 1977, the expiration date. Therefore, I
cially feasible to develop nuclear power plants, but now it's
conclude that no good reason exists to warrant reporting this legisla-
tion before the release and review of the Reactor Safety Study. I am
insurance companies are willing to insure them.
been proved that it is. It's been proved they can operate; the
joined in this sentiment by many of my colleagues in both Houses, and
She said there were no difficulties with nuclear industry as-
I am including letters from them expressing this support in an
suming full liability; "No, in fact the plan is that they will do the
appendix to my views.
same thing they do in a great many industries, have pool insur-
4 Committee Report, page 2.
ance. The only thing that has prevented it is the Price-Anderson
$ Many plants which will come on line years after the expiration of the current Price-Anderson Act have.
already been ordered. 1980: 26 plants, 1981: 29 plants, 1982: 20 plants, 1983: 14 plants, 1984: 6 plants, 1985: 1.
Act. Why should the industry do it if the Government has been?" T
plant, and 1986: 2 plants.
7 # Columbia University Study, Issues of Financial Protection in Nuclear Activities, pp. 2-4.
Statement of Dixy Lee Ray, National Journal, March 1973.
28
29
The second defect in this legislation concerns what I feel must be
the cornerstone of this coverage: the quick and orderly compensation
of a nuclear catastrophe. Extending this Act until 1997 does not
of victims of a nuclear accident. In order to compensate the public
acknowledge that the potential changes over the next twenty years-
quickly, there must be available liquid assets from which to draw.
the introduction of a breeder economy, commercial fuel enrichment
Unfortunately this bill proposes the establishment of a "retrospec-
plants, possible use of fusion-may be SO great as to warrant, long
tive" or "deferred" premium in which premiums would only be as-
before 1997, radical changes in this legislation. Without the assurance-
sessed by the Commission in the event of a nuclear power plant disas-
provided by an earlier expiration date, that the Congress, the elected
ter. The licensees would not be required to hold these premiums as
representatives directly responsible to the people, and not the agency,
cash. Thus, in order to pay its premium on demand by the Commis-
will review this legislation, we are abdicating our public trust.
sion each utility would either have to use whatever assets are cur-
On June 12, this committee called Chairman Ray back before it
rently available, or more likely would have to immediately raise a
to give her an opportunity to refute her remarks of March 1973 which
substantial amount of funds. Not only would this process take a great
I have quoted herein. This strategy was used after the Joint Committee
deal of time, but it could wreak havoc within our financial system.
examined my separate views in an attempt to negate them. I find this
Consider the scenario of several hundred utilities borrowing substan-
procedure extraordinary to recall Dr. Ray to testify after hearings
tial sums of money or floating new bond issues at the same time. For
have ended; one day after mark-up was originally scheduled, and the
these reasons I feel that the retrospective premium system as outlined
day prior to an open mark-up of this legislation.
in this legislation is inadequate. It is eminently more reasonable to
Dr. Ray noted that she has had time to reassess her views on the
require the Atomic Energy Commission to assess these premiums on
need for the Price-Anderson Act since her remarks of last year. The
the utility at the time of licensing or on a yearly basis, and hold the
previous Chairman of the Atomic Energy Commission, James R.
funds in escrow.
Schlesinger, made the following remarks as he was leaving the AEC
There is a further flaw in the committee's system of retrospective
in a statement before this committee on January 23, 1973:
premiums. The possibility exists for a gap in coverage. This gap
would occur if any utility defaulted on its obligation to pay its premium
Let me say this, in passing, since I am on my way out of
and if the full amount, or more than the full amount of financial
this job, that I would recommend, I would personally feel
protection was needed. This legislation addresses this problem in a
that when the Price-Anderson Act comes up for reexamina-
vague manner:
tion that we substantially amend or phase out that act
The Commission shall establish such requirements as are
because this industry has built up to the point that it can
necessary to assure availability of funds to meet any assessment
underwrite the cost itself of these very improbable accidents.
of deferred premiums within a reasonable time when called for,
This committee could do greater service to the best interests of the
and may provide reinsurance or guarantee the payment of such
American public if this bill were delayed. After weighing all of the
premiums in the event it is not feasible to assure their payment
defects in this legislation and after listening to the scientific and
through the resources of private industry and insurance.
consumer testimony which spoke against this legislation, I feel that
Thus this section allows the Government to guarantee any
I must oppose the enactment of this renewal of the Price-Anderson
defaulted premiums. The ultimate insurer, then, is still the Federal
Act at this time.
Government, contrary to the expressed wish of this Joint Committee.
TENO RONCALIO.
If this is allowed to continue in this legislation, at least the Com-
mission should be explicitly given the power to order whatever sanc-
[Exhibits supplied by Representative Roncalio follow:]
tions are necessary, including fines and revocation of licenses of those
plants who default on their premium payments after a major
catastrophe.
My final comment concerns the desire of this committee to break
with precedent and tradition and extend the coverage provided by
this Act for twenty years, until August 1, 1977. I firmly believe that
such a step would be wrong and dangerous. The past few years have
amply demonstrated that the rate of change in the field of nuclear
energy is accelerating. Who can be sure what lies ahead? What new
developments may render this Act, or the coverage it provides,
obsolete or inadequate? The requirement of this proposed legislation
that the agency review the insurance system in ten years is not
satisfactory. The members of the Joint Committee have the ultimate
responsibility to the people of this Nation for protection in the event
8 Section 3.
31
more informed analysis of the very questions the Price-Anderson Act
attempts to address, and it may clear some of the mist clouding this
very complex issue.
Much of the impetus for such an early renewal has come from those
EXHIBIT I
who fear that delay will cause uncertainty in the industry and may
hinder some plans to go nuclear. However, we think that adequately
protecting the public in the event of a nuclear accident is a paramount
UNITED STATES SENATE,
concern and that all available information should be studied before
Washington, D.C., June 10, 1974.
passing important legislation.
DEAR CHAIRMAN AND MEMBERS OF THE JOINT COMMITTEE ON
For these reasons, then, we urge you not to report out at this time
ATOMIC ENERGY: Recently, the Joint Committee on Atomic Energy
a bill which would extend the Price-Anderson Nuclear Indemnity Act.
completed hearings on the extension of the Price-Anderson Nuclear
Sincerely,
Indemnity Act and moved to mark up a bill that would extend the
Act to 1987, with certain modifications. While it is entirely within
HUBERT H. HUMPHREY
WALTER F. MONDALE
the purview of the committee to report this bill, we urge that you
GEORGE McGovern
RICHARD S. SCHWEIKER
postpone consideration until after the release of the draft of the
WILLIAM D. HATHAWAY
CHARLES McC. MATHIAS, Jr.
Rasmussen Report, which is scheduled for July, and until adequate
DICK CLARK
MARK O. HATFIELD
time has been provided to study the results of this report. In light of
MIKE GRAVEL
PHILIP A. HART
the fact that the current Price-Anderson Act still has more than three
LEE METCALF
FRANK E. Moss
years to run-until August, 1977-we do not think that such a post-
EDWARD W. BROOKE
JOSEPH R. BIDEN
ponement would be against the national interest, or detrimental to the
FLOYD K. HASKELL
WILLIAM V. ROTH, Jr.
nuclear power industry.
WILLIAM PROXMIRE
JACOB K. JAVITS
In announcing the existence of the Rasmussen study on June 27,
HOWARD M. METZENBAUM
ABRAHAM A. RIBICOFF
1973, the Atomic Energy Commission said that this study will provide
a "realistic assessment" and "a more precise quantification of the
EXHIBIT II
probabilities and implications of nuclear accidents." As you know,
this study, compiled at a cost of over $2 million, will look at the
probabilities and consequences of potential accidents at nuclear power
CONGRESS OF THE UNITED STATES,
plants. Thus, it will examine the rationale behind any new Price-
HOUSE OF REPRESENTATIVES,
Anderson legislation. Indeed, witnesses for the AEC have referred
Washington, D.C., June 11, 1974.
to preliminary conclusions of the Report in testifying for a slightly
MEMBERS,
modified extension of the Price-Anderson Act. This testimony, we
The Joint Committee on Atomic Energy,
feel, is not enough disclosure for the Congress to make an informed
Washington, D.C.
decision. There is a paucity of reliable information regarding the
DEAR MEMBERS: Recently, the Joint Committee on Atomic Energy
risks of nuclear accidents and the potential consequences of such
completed hearings on the extension of the Price-Anderson Nuclear
accidents. Studies previously endorsed by the AEC are now repudiated
indemnity Act and moved to mark up a bill that would extend the
by the Commission as technically naive, or based on incorrect assump-
Act to 1987, with certain modifications. We urge that you postpone
tions. Although we do not necessarily agree with this conclusion,
consideration until after the release of the Rasmussen Report, which
the imminent release of the Rasmussen Report is the most up-to-date
is scheduled for early July, and until adequate time has been provided
attempt to provide a means by which the Congress can examine the
to study the results of this report. In light of the fact that the current
potential damage from a catastrophic nuclear power plant accident
Price-Anderson Act still has more than three years to run, we think
and the probability of such an accident. It seems eminently reasonable
that such a postponement would not be harmful to the national
that the results of this Report should be used in fashioning new
interest or detrimental to the nuclear power industry.
llegislation regulating nuclear insurance and indemnity.
In announcing the existence of the Rasmussen study on June 27,
It is for these reasons that we urge the committee to postpone
1973, the Atomic Energy Commission said that this study would pro-
reporting out a renewal of the Price-Anderson Act. We feel that time
vide a "realistic assessment" and "a more, precise quantification of the
should be allowed to consider the relationship between the results of
probabilities and implications of nuclear accidents." As you know,
the Rasmussen Report and new Price-Anderson legislation. A com-
this study, compiled at considerable cost, will look at the probabilities
ment period of 60-90 days and new hearings on the results of the
and consequences of potential accidents at nuclear power plants.
Report as they affect this legislation seem to be indicated. Such a
Thus, it will examine the rationale behind any new Price-Anderson
delay can only further the protection of the public. It will provide a
legislation. Indeed, witnesses for the AEC have referred to preliminary
(30)
conclusions of the Report in testifying for a slightly modified exten-
32
sion of the Price-Anderson Act. This testimony, we feel, is not enough
disclosure for the Congress to make an informed decision. There is a
paucity of reliable information regarding the risks of nuclear accidents
and the potential consequences of such accidents. The Rasmussen
Report is the most up-to-date means by which the Congress can
APPENDIX
examine the potential damage from a catastrophic nuclear power
plant accident and the probability of such an accident. It seems
eminently reasonable that the results of this Report should be used in
fashioning new legislation regulating nuclear insurance and indemnity.
TABLE 1.-OPERATING REACTORS ASSESSED AT $2,000,000 EACH
It is for these reasons that we urge the Committee to postpone
[Dollar amounts in millions]
reporting out a renewal of the Price-Anderson Act. We feel that time
should be allowed to consider the relationship between the results of
Number of
Total,
Remain
operating
assessment
AEC
the Rasmussen Report and new Price-Anderson legislation. A com-
Year
reactors
1
Assessment
Insurance
plus insurance
indemnity
ment period of 60-90 days and new hearings on the results of the
Report as they affect this legislation seem to be indicated. Such a
1977
96
$192
$125
$317
$243
1978
112
224
125
349
211
delay can only further the protection of the public. It will provide a
1979
129
258
125
383
177
1980
more informed analysis of the very questions the Price-Anderson Act
146
292
125
417
143
1981
159
318
125
443
117
attempts to address, and it may clear some of the mist clouding this
1982
179
358
125
483
77
1983
202
404
125
529
31
very complex issue.
1984
228
456
125
581
0
1985
Much of the impetus for such an early renewal has come from those
257
514
125
639
0
1986
283
566
125
691
0
who fear that a delay will cause uncertainty in the industry and may
1987
312
624
125
749
0
1988
342
684
125
809
0
hinder some plans to go nuclear. However, we think that adequately
1989
373
746
125
871
0
1990
protecting the public in the event of a nuclear accident is a paramount
407
814
125
939
0
concern and that all available information should be studied before
1 Based on estimates in WASH-1139 (December 1972).
passing such important legislation.
For these reasons, then, we urge you not to report out at this time a
TABLE 2.-OPERATING REACTORS ASSESSED AT $3,000,000 EACH
bill which would extend the Price-Anderson Nuclear Indemnity Act.
[Dollar amounts in millions]
Sincerely,
Total,
DONALD M. FRASER
BENJAMIN S. ROSENTHAL
Number of
assessment
operating
plus
Remain AEC
BELLA S. ABZUG
JOSHUA EILBERG
Year
reactors
1
Assessment
Insurance
insurance
indemnity
JOHN D. DINGELL
JAMES W. SYMINGTON
JOHN C. CULVER
1977
PAUL S. SARBANES
96
$288
$125
$413
$147
1978
112
336
125
461
99
GEORGE E. BROWN, Jr.
PARREN J. MITCHELL
1979
129
387
125
512
48
1980
146
438
125
563
BILL FRENZEL
JOE MOAKLEY
0
1981
151
477
125
602
0
1982
EDWARD G. BIESTER, Jr.
CHARLES A. VANIK
179
537
125
662
0
1983
202
606
125
731
0
PETER W. RODINO, Jr.
DAVID R. OBEY
1984
228
684
125
809
0
1985
257
771
125
896
MICHAEL HARRINGTON
0
DANTE B. FASCELL
1986
283
849
125
974
0
1987
YVONNE BRATHWAITE BURKE
GERRY E. STUDDS
312
936
125
1,061
0
1988
342
1,026
125
1,151
0
RONALD V. DELLUMS
BERTRAM L. PODELL
1989
373
1,119
125
1,244
0
1990
407
1,221
125
346
JEROME R. WALDIE
ROBERT F. DRINAN
0
DANIEL J. FLOOD
SILVIO O. CONTE
1 Based on estimates in WASH-1139 (December 1972).
BoB BERGLAND
PATRICIA SCHROEDER
(33)
JOHN F. SEIBERLING
MORRIS K. UDALL
THOMAS M. REES
ELIZABETH HOLTZMAN
ANDREW YOUNG
34
TABLE 3.-OPERATING REACTORS ASSESSED AT $5,000,000 EACH
[Dollar amounts in millions]
Total,
Number of
assessment
operating
plus
Remain AEC
Year
reactors 1
Assessment
Insurance
insurance
indemnity
1977
96
$480
$125
$605
0
1978
112
560
125
685
0
1979
129
645
125
770
0
1980
146
730
125
855
0
1981
159
795
125
920
0
1982
179
895
125
1,020
0
1983
202
1,010
125
1,135
0
1984
228
1,140
125
1,265
0.
1985
257
1,285
125
1,410
0
1986
283
1,415
125
1,540
0
1987
312
1,560
125
1,685
0
1988
342
1,710
125
1,835
0
1989
373
1,865
125
1,990
0
1990
407
2,035
125
2,160
0
1 Based on estimates in WASH-1139 (December 1972).
TABLE 4.-OPERATING REACTORS ASSESSED AT $10,000,000 EACH
[Dollar amounts in millions]
Total,
Number of
assessment
Remain
operating
plus
AEC
Year
reactors 1
Assessment
Insurance
insurance
Indemnity
0.
1977
96
$960
$125
$1,085
0
1978
112
1,120
125
1,245
0
1979
129
1,290
125
1,415
1980
146
1,460
125
0
1,585
1981
159
1,590
125
1,715
0
1982
179
1,790
125
1,915
0
1983
202
2,020
125
2,145
0
1984
228
2,280
125
405
0
1985
257
2,570
125
2,695
0
1986
283
2,830
125
2,955
0
1987
312
3,120
125
3,245
0
1988
342
3,420
125
3,545
0
1989
373
3,730
125
3,855
0
1990
407
4,070
125
4,195
0
1 Based on estimates in WASH-1139 (December 1972).
LIBRARY
FORD
H.R. 15323
Ninety-third Congress of the United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Monday, the twenty-first day of January,
one thousand nine hundred and seventy-four
An Act
To amend the Atomic Energy Act of 1954, as amended, to revise the method of
providing for public remuneration in the event of a nuclear incident, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That section 11 of
the Atomic Energy Act of 1954, as amended, is amended by amending
subsections q. and t. to read as follows:
"q. The term 'nuclear incident' means any occurrence, including an
extraordinary nuclear occurrence, within the United States causing,
within or outside the United States bodily injury, sickness, disease, or
death, or loss of or damage to property, or loss of use of property,
arising out of or resulting from the radioactive, toxic, explosive, or
other hazardous properties of source, special nuclear, or byproduct
material: Provided, however, That as the term is used in subsection
170 1., it shall include any such occurrence outside of the United States:
And provided further, That as the term is used in subsection 170 d., it
shall include any such occurrence outside the United States if such
occurrence involves source, special nuclear, or byproduct material
owned by, and used by or under contract with, the United States: And
provided further, That as the term is used in subsection 170 c., it shall
include any such occurrence outside the United States or any other
nation if such occurrence arises out of or results from the radioactive,
toxic, explosive or other hazardous properties of source, special
nuclear, or byproduct material licensed pursuant to Chapters 6, 7, 8,
and 10 of this Act, which is used in connection with the operation of a
licensed stationary production or utilization facility and/or moves
outside the territorial limits of the U.S. in transit from one person
licensed by the Commission to another person licensed by the
Commission.
"t. The term 'person indemnified' means (1) with respect to a nuclear
incident occurring within the United States or outside the United
States as the term is used in subsection 170 c., and with respect to any
nuclear incident in connection with the design, development, construc-
tion, operation, repair, maintenance, or use of the nuclear ship
Savannah, the person with whom an indemnity agreement is executed
or who is required to maintain financial protection, and any other
person who may be liable for public liability; or (2) with respect to
any other nuclear incident occurring outside the United States, the
person with whom an indemnity agreement is executed and any other
person who may be liable for public liability by reason of his activities
under any contract with the Commission or any project to which
indemnification under the provisions of subsection 170 d. has been
extended or under any subcontract, purchase, order, or other agree-
ment, of any tier, under any such contract or project.".
SEC. 2. Subsection 170 a. of the Atomic Energy Act of 1954 as
amended, is amended to read as follows:
"a. Each license issued under section 103 or 104 and each construction
permit issued under section 185 shall, and each license issued under
section 53, 63, or 81 may, for the public purposes cited in section 2 i. of
the Atomic Energy Act of 1954, as amended, have as a condition of
the license a requirement that the licensee have and maintain financial
protection of such type and in such amounts as the Commission in the
exercise of its licensing and regulatory authority and responsibility
shall require in accordance with subsection 170 b. to cover public
liability claims. Whenever such financial protection is required, it
may be a further condition of the license that the licensee. execute
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H. R. 15323-2
and maintain an indemnification agreement in accordance with sub-
section 170 C. The Commission may require, as a further condition of
issuing a license, that an applicant waive any immunity from public
liability conferred by Federal or State law."
SEC. 3. Subsection 170 b. of the Atomic Energy Act of 1954, as
amended, is amended to read as follows:
"b. The amount of financial protection required shall be the amount
of liability insurance available from private sources, except that the
Commission may establish a lesser amount on the basis of criteria set
forth in writing, which it may revise from time to time, taking into
consideration such factors as the following: (1) the cost and terms
of private insurance, (2) the type, size, and location of the licensed
activity and other factors pertaining to the hazard, and (3) the nature
and purpose of the licensed activity: Provided, That for facilities
designed for producing substantial amounts of electricity and having
a rated capacity of 100,000 electrical kilowatts or more, the amount
of financial protection required shall be the maximum amount avail-
able at reasonable cost and on reasonable terms from private sources.
Such financial protection may include private insurance, private con-
tractual indemnities, self-insurance, other proof of financial responsi-
bility, or a combination of such measures and shall be subject to such
terms and conditions as the Commission may, by rule, regulation, or
order, prescribe. In prescribing such terms and conditions for licensees
required to have and maintain financial protection equal to the maxi-
mum amount of liability insurance available from private sources, the
Commission shall, by rule initially prescribed not later than August 1,
1976, include, in determining such maximum amount, private liability
insurance available under an industry retrospective rating plan pro-
viding for premium charges deferred in whole or major part until
public liability from a nuclear incident exceeds or appears likely to
exceed the level of the primary financial protection required of the
licensee involved in the nuclear incident: Provided, That such insur-
ance is available to, and required of, all of the licensees of such facil-
ities without regard to the manner in which they obtain other types or
amounts of such financial protection: And provided further, That
the maximum amount of any deferred premium which may be charged
following any nuclear incident under such a plan shall be not less than
$2,000,000 nor more than $5,000,000 for each facility required to main-
tain the maximum amount of financial protection. The Commission
is authorized to establish a maximum amount which the aggregate
deferred premiums charged for each facility within one year may not
exceed. The Commission may establish amounts less than the standard
maximum premium for individual facilities taking into account such
factors as the facility's size, location, and other factors pertaining to
the hazard. The Commission shall establish such requirements as are
necessary to assure availability of funds to meet any assessment of
deferred premiums within a reasonable time when due, and may pro-
vide reinsurance or otherwise guarantee the payment of such premiums
in the event it appears that the amount of such premiums will not be
available on a timely basis through the resources of private industry
and insurance. Any agreement by the Commission with a licensee or
indemnitor to guarantee the payment of deferred premiums may con-
tain such terms as the Commission deems appropriate to carry out the
purposes of this section and to assure reimbursement to the Commis-
sion for its payments made due to the failure of such licensee or
indemnitor to meet any of its obligations arising under or in connec-
tion with financial protection required under this subsection including
without limitation terms creating liens upon the licensed facility and
the revenues derived therefrom or any other property or revenues of
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H. R. 15323-3
such licensee to secure such reimbursement and consent to the auto-
matic revocation of any license.
SEC. 4. Subsection 170 C. of the Atomic Energy Act of 1954, as
amended, is amended by deleting the phrase "and August 1, 1977, for
which it requires financial protection," in the first sentence and sub-
stituting therefor the phrase "and August 1, 1982, for which it requires
financial protection of less than $560,000,000," and by deleting the date
"August 1, 1977" in the last sentence wherever it appears and substi-
tuting therefor the date "August 1, 1982".
SEC. 5. Subsection 170 d. of the Atomic Energy Act of 1954, as
amended, is amended by deleting the phrase "until August 1, 1977,"
in the first sentence and substituting therefor the phrase "until
August 1, 1982,"
SEC. 6. Subsection 170 e. of the Atomic Energy Act of 1954, as
amended, is amended to read as follows:
"e. The aggregate liability for a single nuclear incident of persons
indemnified, including the reasonable costs of investigating and setting
claims and defending suits for damage, shall not exceed (1) the sum
of $500,000,000 together with the amount of financial protection
required of the licensee or contractor or (2) if the amount of financial
protection required of the licensee exceeds $60,000,000, such aggregate
liability shall not exceed the sum of $560,000,000 or the amount of
financial protection required of the licensee, whichever amount is
greater Provided, That with respect to any nuclear incident occurring
outside of the United States to which an agreement of indemnification
entered into under the provisions of subsection 170 d. is applicable,
such aggregate liability shall not exceed the amount of $100,000,000
together with the amount of financial protection required of the
contractor.".
SEC. 7. Subsection 170 f. of the Atomic Energy Act of 1954, as
amended, is amended to read as follows:
"f. The Commission is authorized to collect a fee from all persons
with whom an indemnification agreement is executed under this sec-
tion. This fee shall be $30 per year per thousand kilowatts of thermal
energy capacity for facilities licensed under section 103: Provided,
That the Commission is authorized to reduce the fee for such facilities
in reasonable relation to increases in financial protection required
above a level of $60,000,000. For facilities licensed under section 104,
and for construction permits under section 185, the Commission is
authorized to reduce the fee set forth above. The Commission shall
establish criteria in writing for determination of the fee for facilities
licensed under section 104, taking into consideration such factors as
(1) the type, size, and location of facility involved, and other factors
pertaining to the hazard, and (2) the nature and purpose of the
facility. For other licenses, the Commission shall collect such nominal
fees as it deems appropriate. No fee under this subsection shall be less
than $100 per year."
SEC. 8. Subsection 170 i. of the Atomic Energy Act of 1954, as
amended, is amended to read as follows:
"i. After any nuclear incident which will probably require pay-
ments by the United States under this section or which will probably
result in public liability claims in excess of $560,000,000, the Com-
mission shall make a survey of the causes and extent of damage which
shall forthwith be reported to the Joint Committee, and, except as
forbidden by the provisions of chapter 12 of this Act or any other law
of Executive order, all final findings shall be made available to the
public, to the parties involved and to the courts. The Commission shall
report to the Joint Committee by April 1, 1958, and every year there-
after on the operations under this section."
H. R. 15323-4
SEC. 9. Subsection 170 k. of the Atomic Energy Act of 1954, as
amended, is amended by deleting the date "August 1, 1977" wherever
it appears and substituting therefor the date "August 1, 1982".
SEC. 10. Subsection 170 O. of the Atomic Energy Act of 1954, as
amended, is amended by adding at the end of the second sentence in
subparagraph (3) the words "and shall include establishment of pri-
orities between claimants and classes of claims, as necessary to insure
the most equitable allocation of available funds.
SEC. 11. Section 170 of the Atomic Energy Act of 1954, as amended,
is amended by adding subsection p., to read as follows:
"p. The Commission shall submit to the Congress by August 1, 1979,
a detailed report concerning the need for continuation or modification
of the provisions of this section, taking into account the condition of
the nuclear industry availability of private insurance, and the state of
knowledge concerning nuclear safety at that time, among other relevant
factors, and shall include recommendations as to the repeal or modi-
fication of any of the provisions of this section.
SEC. 12. The provisions of this Act shall become effective thirty
(30) days after the date on which the Joint Committee on Atomic
Energy submits to the Congress an evaluation of the Reactor Study,
entitled "An Assessment of Accident Risks in the U.S. Commercial
Nuclear Power Plants", AEC Report Number WASH-1400, except
that it shall not become effective if within the thirty (30) day period
after the Joint Committee submits its evaluation, the Congress adopts
a concurrent resolution disapproving the extension of the Price-
Anderson Act.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.
FOR IMMEDIATE RELEASE
October 12, 1974
Office of the White House Press Secretary
THE WHITE HOUSE
TO THE HOUSE OF REPRESENTATIVES:
I am returning without my approval H.R. 15323,
"To amend the Atomic Energy Act, as amended, to revise
the method of providing public remuneration in the event
of a nuclear incident, and for other purposes."
The first eleven sections of the bill basically
carry out recommendations of the Atomic Energy
Commission, and I would be glad to approve them if
they stood alone.
Section 12, however, would provide that "the provi-
sions of this Act shall become effective thirty (30) days
after the date on which the Joint Committee on Atomic
Energy submits to the Congress an evaluation of the
Reactor Study, entitled 'An Assessment of Accident Risks
in the U. S. Commercial Nuclear Power Plants, AEC Report
Number WASH-1400, except that it shall not become effective
if within the thirty (30) day period after the Joint
Committee submits its evaluation, the Congress adopts a
concurrent resolution disapproving the extension of the
Price-Anderson Act. The import of this section is that
after I have approved the bill, the Joint Committee and
the Congress would further consider whether it should
ever become effective.
I cannot approve legislation under these circumstances --
if, indeed, the bill can properly be called legislation
rather than merely the expression of an intent to legislate.
The presentation of a bill to me pursuant to Article I,
section 7 of the Constitution amounts to a representation
by Congress that, as far as it is concerned, the legislation
is ready to become effective, subject perhaps to some
extrinsic condition precedent, but not to further con-
gressional deliberation. Here, however, Congress in
effect requests my approval before it has given its own.
In this instance, the clear constitutional infirmity
of the bill not only affects my powers and duties but
directly endangers substantial and important private
rights. If the bill is unconstitutional, it will remain
unconstitutional despite my signing it. As a result, a
sure source of funds for prompt payment of public
liability claims, a primary objective of the Price-Anderson
Act, would be in doubt. The uncertainty over nuclear
liability protection would also adversely affect that
private investment which will be necessary as nuclear
power assumes its vital role in meeting the nation's
energy requirements. The public interest would not be
served by approving legislation which creates these
uncertainties.
I urge the Congress to reenact the bill promptly
so as to remove the problems which Section 12 now
raises.
GERALD R. FORD
THE WHITE HOUSE,
October 12, 1974
# # # #
October 12, 1974
Received from the White House a sealed envelope
said to contain H.R. 15323, An Act to amend the Atomic
Energy Act of 1954, as amended, to revise the method of
providing for public remuneration in the event of a
nuclear incident, and for other purposes, and a veto
message thereon.
Clerk of the House of Representatives
Time received
October 1, 1974
Dear Mr. Director:
The following bills were received at the
White House on October lst:
H.R. 15301
H.R. 15323
H.R. 16032
Please let the President have reports and
recommendations as to the approval of these
bills as soon as possible.
Sincerely,
Robert D. Linder
Chief Executive Clerk
The Honorable Roy L. Ash
Director
Office of Management and Budget
Washington, D. C.