Besides the benefits offered to the public, many argue that extension of the Act is necessary to allow the hundreds of nuclear contractors who work for the Nuclear Regulatory Commission and the Department of Energy to remain in the field. On the other hand, many economists and environmentalists and some of my colleagues argue that the limit on liability disrupts the energy markets. They claim that we are not paying the true cost for the electricity we generate with nuclear power. I think everyone recognizes that times have changed since the last extension of the act. The Committee has some innovative proposals before it today which take into account these changes. The Committee will hear from representatives of many groups. It is my hope that we can find out where all of you are and whether your positions have changed since we heard from you last. STATEMENT OF U.S. NUCLEAR REGULATORY COMMISSION, HON. NUNZIO MR. CHAIRMAN, I AM PLEASED TO HAVE THIS OPPORTUNITY TO APPEAR BEFORE THE SUBCOMMITTEE TO TESTIFY ON THE PRICE-ANDERSON ACT AND THE NRC'S DECEMBER 1983 REPORT TO CONGRESS ENTITLED, "THE INTO THREE PARTS. FIRST, I WILL BRIEFLY DESCRIBE THE PRICE ANDERSON ACT IN GENERAL. SECOND, I WILL DISCUSS THE PRICE-ANDER SON REPORT SUBMITTED IN DECEMBER OF LAST YEAR. FINALLY, I WILL COMMENT ON H.R. 3277 AND H.R. 421. THIS NATION'S DECISION, IN THE MID-1950S, TO DEVELOP THE PEACEFUL USES OF THE ATOM THROUGH PRIVATE ENTERPRISE PRESENTED TWO BROAD POLICY ISSUES RELATING TO COMPENSATION FOR DAMAGES SUFFERED BY THE PUBLIC IN THE EVENT OF A NUCLEAR ACCIDENT: How TO ENCOURAGE PRIVATE INDUSTRY TO ENTER A FIELD IN WHICH POTENTIAL LIABILITY FROM LOW PROBABILITY ACCIDENTS WITH POSSIBLY HIGH CONSEQUENCES MIGHT ACT AS A SUBSTANTIAL DETERRENT; AND HOW TO COMPENSATE THE PUBLIC ADEQUATELY FOR DAMAGES WHICH MIGHT RESULT IN THE EVENT OF A SERIOUS NUCLEAR ACCIDENT. THE PRICE-ANDERSON ACT WAS THE LEGISLATION DEVELOPED TO MEET THESE PROBLEMS. INITIALLY ENACTED IN 1957 FOR A TEN-YEAR PERIOD, THE ACT WAS AMENDED AND EXTENDED IN 1965 AND IN 1975, AND WILL EXPIRE ON AUGUST 1, 1987 ABSENT CONGRESSIONAL ACTION. THE ACT REQUIRES LICENSEES OF COMMERCIAL NUCLEAR POWER PLANTS HAVING A RATED CAPACITY OF 100,000 ELECTRICAL KILOWATTS OR MORE TO PROVIDE PROOF TO THE NRC THAT THEY HAVE FINANCIAL PROTECTION IN THE FORM OF PRIVATE NUCLEAR INSURANCE, OR IN SOME OTHER FORM APPROVED BY THE COMMISSION, IN AN AMOUNT EQUAL TO THE MAXIMUM AMOUNT OF LIABILITY INSURANCE AVAILABLE AT REASONABLE COST AND ON REASONABLE TERMS FROM PRIVATE SOURCES. THAT FINAN CIAL PROTECTION, CURRENTLY $585 MILLION, CONSISTS OF A PRIMARY LAYER OF NUCLEAR LIABILITY INSURANCE OF $160 MILLION AND A SECONDARY RETROSPECTIVE PREMIUM INSURANCE LAYER. IN THE EVENT OF A NUCLEAR ACCIDENT CAUSING DAMAGES EXCEEDING $160 MILLION, THE LICENSEE OF EACH COMMERCIAL NUCLEAR POWER PLANT LICENSED TO OPERATE WOULD BE ASSESSED A PRORATED SHARE OF DAMAGES IN EXCESS OF THE PRIMARY INSURANCE LAYER UP TO $5 MILLION PER REACTOR PER INCIDENT. WITH 85 COMMERCIAL REACTORS OPERATING UNDER THIS SYSTEM, THE SECONDARY INSURANCE LAYER NOW TOTALS $425 MILLION. THE PRICE-ANDERSON ACT ALSO DIRECTS THE COMMISSION TO ENTER INTO INDEMNITY AGREEMENTS WITH REACTOR LICENSEES. THESE AGREEMENTS SPECIFY THE AMOUNT OF FINANCIAL PROTECTION REQUIRED OF LICENSEES, IF ANY, AND THE OBLIGATION OF THE FEDERAL GOVERNMENT TO PROVIDE FUNDS, I.E., "GOVERNMENT INDEMNITY", IN THE EVENT THAT A NUCLEAR ACCIDENT EXHAUSTS THE PRIVATE LIABILITY INSURANCE OR WHERE NO PRIVATE LIABILITY INSURANCE IS REQUIRED. THE PRICE-ANDERSON ACT PLACES A CEILING ON THE TOTAL AMOUNT OF PUBLIC LIABILITY RESULTING FROM A NUCLEAR ACCIDENT. FOR LARGE COMMERCIAL REACTORS, THIS "LIMIT OF LIABILITY" IS CURRENTLY TIED TO THE MAXIMUM AMOUNT OF INSURANCE AVAILABLE THROUGH PRIVATE SOURCES. MILLION. FOR MANY YEARS, THE LIMIT OF LIABILITY WAS $560 THIS CEILING WAS ARRIVED AT IN 1957 BY ADDING $500 MILLION OF GOVERNMENT INDEMNITY TO THE AMOUNT OF LIABILITY INSURANCE AVAILABLE FROM PRIVATE SOURCES, WHICH WAS AT THAT TIME $60 MILLION. IN NOVEMBER 1982, WHEN THE SUM OF PRIMARY AND SECONDARY INSURANCE LAYERS REACHED $560 MILLION FOR LARGE POWER REACTORS, THE GOVERNMENT'S INDEMNITY WAS ESSENTIALLY ELIMINATED. THE PRESENT LIMIT OF $585 MILLION WILL CONTINUE TO INCREASE IN INCREMENTS OF $5 MILLION FOR EACH NEW COMMERCIAL REACTOR LICENSED TO OPERATE. IN 1975, WHEN CONGRESS EXTENDED THE PRICE-ANDERSON PROVI SIONS OF THE ATOMIC ENERGY ACT, IT ADDED A NEW SUBSECTION 170P. REQUIRING THE COMMISSION TO SUBMIT TO THE CONGRESS A DETAILED REPORT ON THE NEED FOR CONTINUATION OR MODIFICATION OF THE PRICE-ANDERSON ACT. THE REPORT SUBMITTED TO CONGRESS IN DECEMBER 1983, ENTITLED "THE PRICE-ANDERSON ACT - THE THIRD DECADE," IS DIVIDED INTO FOUR SECTIONS WITH DETAILED STAFF SUBJECT REPORTS APPENDED TO THE MAIN REPORT. SECTION I OF THE REPORT PROVIDES AN OVERVIEW OF THE PRICE-ANDERSON SYSTEM WITH A DETAILED DISCUSSION |