look at other no-fault systems to find out whether such nuisance suits were a problem?

Ms. ROCKETT. No; we did not consider that question. We did not actually draw any conclusions as to the validity of the argument that nuisance suits would result if the ENO concept were eliminated. Rather, we did look at the history of claims under the existing law to examine the nature of suits that have been brought, and did conclude that suits that have been brought, except, of course, those arising out of the TMI incident, were mainly restricted to onsite forms of releases, or rather injuries incurred by employees of contractors onsite rather than by the kind of accident Price-Anderson Act was originally designed to cover.

My suggestion that Congress may want to consider whether some distinction should be made between the onsite sort of claim which I think is what the original ENO provision was designed to do, but perhaps the existing definition does not accomplish that.

Mr. SEIBERLING. You also state that removing the ENO concept would not change the law that much in many jurisdictions.

Ms. ROCKETT. Most jurisdictions have today adopted the concept of strict liability. So the defense that it is the fault of the operator does not have as much meaning today as it did when enacted. Assumption of risk, a statute of limitations, could be important, and acts of God, which are waived under Price-Anderson Act claims coming within the ENO concept, and which would not be available in the absence of those waivers.

SAFETY INCENTIVES

Mr. SEIBERLING. Mr. Wood, what evidence do you have that imposition of a potentially bankrupting liability would add to safety? In other words, the point was made by some of the witnesses here that this would bankrupt a lot of companies if we in effect took off the annual limit.

Mr. Wood. The evidence I have is in chapter 3 of "Insuring Nuclear Power," my first book. That calculates the best known and most accepted model of the behavior of the regulating utility, and it shows what happens when the liability is changed for that regulated utility. It envisions a regulated utility producing two products, electricity and safety. Since changing liability is a lot like changing the price of safety, this model comes to the conclusion there would be greater safety produced if the amount of liability were greater. As I say, it is a model, but it is the most widely accepted model of the behavior of an electric utility.

Mr. SEIBERLING. Suppose we just phased out the liability limit instead of saying we not are going to renew Price-Anderson or we are going to pass my bill. Suppose we provided for a phaseout over, say, 5 years and gradually extended the amount of liability over the 5year period, how would you feel that would work?

Mr. WOOD. Well, those methods of altering safety in the short run, again within the context of the model

Mr. SEIBERLING. I am not talking about safety now. I am talking about whether the industry could handle it?

Mr. Wood. Whether the industry could handle it?

Mr. SEIBERLING. Yes, sir. Whether the insurance industry and the utility industry could handle a phaseout of the liability limits as distinct from a repeal?

Mr. Wood. My research does not directly address that question. I can only suggest that if we have an industry that cannot handle being liable for the consequences of its actions on third parties, then that is an industry that we do not need.

Mr. SEIBERLING. I am going to have to adjourn this because there is a vote going on right now, but thank you very much, and the hearing is now adjourned.

[Whereupon, at 5:20 p.m., the subcommittee was adjourned.]

APPENDIX

MONDAY, JUNE 11, 1984

ADDITIONAL MATERIAL SUBMITTED FOR THE HEARING RECORD

U.S. HOUSE OF REPRESENTATIVES

COMMITTEE ON INTERIOR AND INSULAR AFFAIRS
SUBCOMMITTEE ON ENERGY AND THE ENVIRONMENT

HEARING ON H.R. 421, H.R. 3277, AND THE NUCLEAR REGULATORY COMMISSION (NRC) REPORT ON THE PRICE-ANDERSON ACT

STATEMENT OF THE HON. MORRIS K. UDALL, CHAIRMAN

Monday, June 11, 1984

This morning we are gathered here to ring the opening bell for the next round of the Price-Anderson debate. This hearing was called to explore some new proposals that have entered the ring. My colleagues John Seiberling and Ted Weiss have each introduced bills which would make significant changes in the Price-Anderson system. The report which the NRC published last December also contained some innovative recommendations. We are going to hear from a great number of people today who represent a wide variety of interests, and I hope they all will comment on these proposals.

Before we begin, I'd like to make a few brief comments on where we have been with Price-Anderson and where we are going.

In the thirty years since the original Price-Anderson Act was enacted, the number of commercial reactors has grown to

85.

The percentage of electricity generated by nuclear energy has risen to about 13 percent. The industry is no longer in its infancy--you might say it has reached middle age.

The intent behind the original Price-Anderson legislation was twofold: Congress acted to encourage private development of nuclear energy and to provide an orderly system to compensate the public in the event of a nuclear accident. far it appears that the act has achieved both purposes.

So

This may

Another change is that since 1978 there have been no new orders for nuclear power plants, and the NRC says that none are likely to be ordered in the foreseeable future. suggest that perhaps there is no need to extend the Act since there will not be any new reactors. If the act is not extended beyond 1987, current reactors (which is to say those licensed before 1987) will continue to covered by the provisions of the Act.

The nuclear industry, however, says that even though they are now a mature industry there is still a need for a limit on liability. They point to the fact that the NRC and others

still say there is a very small chance of a very large accident that could produce astronomical damages claims. This small chance of an accident which could mean bankruptcy for a utility or a contracor is still, according to the industry, disincentive to participation in the nuclear sector.

a

It is also asserted that the Act has been very successful in providing prompt, orderly processing and satisfaction of claims, particularly the claims arising out of the Three Mile Island accident.