SAFETY INCENTIVE

Removing the limit on liability is a direct, simple way to improve safety in the construction and operation of power plants. Insuring companies would have the incentive to assume the active role they have played in other areas in monitoring the industry, and the industry would have the incentive to use every improvement in design and operational safety. The result will be the improved protection of the public health and safety, and improved public confidence in the safety of nuclear power plant operations.

STRICT LIABILITY

The current Price-Anderson provisions distinguish between "extrordinary nuclear occurrences" and a "nuclear incident", providing for strict liability where the NRC determines that an accident is serious enough to constitute an "extraordinary nuclear occurrence" and requiring state laws of tort liability to apply when an accident is of a less serious nature. The distribution essentially requires a victim of a "less serious" accident to meet tougher conditions in order to recover damages. From the victim's perspective, there is no difference at all whether his or her injuries resulted from a minor accident or a serious accident, and the elimination of this distinction will provide for strict liability by the utility for all injuries resulting from a nuclear power plant accident.

STATUTE OF LIMITATIONS

The proposal to eliminate the existing 20-year statute of limitations addresses the fact that injuries caused by radiation exposure, one possible effect of a nuclear power plant accident, may not manifest themselves for a period of time longer than 20 years. Genetic damage, for example, may take one generation or more to appear. This new statute of limitations enables all victims to seek recovery for their injuries whether they are latent or apparent.

The CHAIRMAN. Anyone else?

Mrs. VUCANOVICH. Mr. Chairman, I simply would like to submit for the record a letter from the Governor of my State, Richard Bryan.

[EDITOR'S NOTE.-The letter referred to above, dated June 7, 1984, from Gov. Richard H. Bryan of Nevada, to Hon. Barbara Vucanovich may be found in the appendix. See table of contents for page number.]

The CHAIRMAN. We are glad to have Governor Bryan's statement for the record. I apologize for not going to you before the Commissioners.

Chairman Palladino, proceed.

[Prepared statements of Hon. Nunzio J. Palladino and Hon. James K. Asselstine may be found in the appendix.]

PANEL FROM THE U.S. NUCLEAR REGULATORY COMMISSION CONSISTING OF HON. NUNZIO J. PALLADINO, CHAIRMAN; COMMISSIONERS VICTOR GILINSKY, THOMAS M. ROBERTS, JAMES K. ASSELSTINE, FREDERICK M. BERNTHAL; AND JEROME SALTZMAN, ASSISTANT DIRECTOR, OFFICE OF STATE PROGRAMS

Mr. PALLADINO. Thank you, Mr. Chairman.

EXTENSION OF PRICE-ANDERSON

First, with regard to our comments, the Commission recommends that the Congress extend the Price-Anderson Act. The Commission believes that the act provides a valuable public benefit by establishing a system for the prompt and equitable settlement of public liability claims resulting from a nuclear accident. The act should be

extended to ensure that the same amount, type, and terms of public liability protection, will be provided for future nuclear powerplants as well as existing nuclear powerplants.

ANNUAL LIMITATION ON LIABILITY

Second, the Commission recommends that the Congress amend the Price-Anderson Act to subtitute an annual limitation on liability for accidents at large commercial nuclear powerplants for the present absolute limitation or ability in the act.

Instead of the collection of a single retrospective premium per reactor for each accident as under the present system, retrospective premiums would be collected year after year until all of the public liability claims resulting from an accident are paid. This approach should ensure the availability of sufficient insurance funds to pay claims even for high-consequence accidents while avoiding the imposition of potentially catastrophic losses on utilities or suppliers to the industry.

This system would also provide a mechanism for compensating latent injury claims, thereby eliminating the need, as under the present system, to reserve a portion of the initial insurance funds collected to pay such claims should they arise. The annual limitation on liability should apply to existing, as well as future plants.

INCREASING RETROSPECTIVE PREMIUMS

Third, the Commission recommends that the Congress amend the Price-Anderson Act to raise the maximum retrospective premiums that can be charged from the present $5 million per reactor per incident per year to $10 million per reactor per incident per year. An increase in the size of the retrospective premiums to $10 million would substantially increase funds available to pay public liability claims arising out of an accident.

Moreover, this fund would also be roughly comparable to the amount of insurance coverage now provided for most large commercial nuclear powerplants to pay onsite property damage claims. An increase in the retrospective premiums to $10 million will not, in the Commission's view, jeopardize the financial viability of the participating utilities.

EXTRAORDINARY NUCLEAR OCCURRENCE

Fourth, when the Commission determines that a nuclear incident is an "extraordinary nuclear occurrence," which is defined as an offsite dispersal of nuclear materials in amounts causing radiation levels that the NRC determines has resulted, or will probably result, in substantial damage to persons or property offsite, then the waiver of defenses provision of the Price-Anderson system is activated.

Under an essentially no-fault recovery scheme, claimants would need to prove (a) personainjury or property damage, (b) monetary amount of loss, and (c) a verifiable link between the injury or damage and the radioactive material released.

The Commission reccmends that the Congress retain the present statutory language for the finding of an extraordinary nu

clear occurrence to establish a definitive basis for distinguishing valid claims, and to conserve resources to pay for these claims. Additionally, the Commission notes that it intends to redefine, by rulemaking, the criteria for an extraordinary nuclear occurrence.

STATUTE OF LIMITATIONS

Fifth, the Commission recommends that the Congress extend the statute of limitations for filing a public liability claim arising from a nuclear accident from 20 to 30 years. This change should provide greater assurance that latent injuries caused by a nuclear accident are provided protection under the Price-Anderson system. The Commission recognizes that it is possible to legislate the allocation of funds for latent injury claims in advance, either by imposing binding criteria on the courts or by removing the latent claims issue entirely from the judicial process, and establishing a separate administrative system for compensating such injuries.

The Commission recommends the evaluation of these administrative systems for compensating latent injury claims, but does not recommend further changes to the causation and proof of damages provisions of the Price-Anderson Act at this time.

RISK ASSESSMENT

As mentioned in our Price-Anderson report, no new study on nuclear safety has been carried out in connection with this review of the Price-Anderson Act. Instead, existing sources of information have been examined, including experience gained in carrying out probabilistic analyses since the 1975 reactor safety study, information about possible accident sequences developed as the basis for possible new siting regulations, and nuclear powerplant operating experience since 1975.

The interaction between nuclear accident risk and Price-Anderson can still be summarized as follows: although the two layers of insurance should provide sufficient liability protection for most postulated accidents, there remains a very low probability of a very high-consequence accident that could result in public liability claims in excess of present nuclear liability insurance.

Risk analysis is one part of the Commission's continuing longterm effort to improve our understanding of the overall risk of nuclear powerplants and the need to make them safer. There are many uncertainties in the various factors used in assessing public risk. Accident probabilities and estimates of fission product releases are two of these factors. The Commission has focused its efforts on probabilistic risk assessment to better characterize uncertainties for very unlikely events leading to major radioactive releases, and to trace the paths of potential impact on the environment.

In preparing its Price-Anderson report to Congress, the Commission considered a recommendation, favored by two Commissioners, that Congress eliminate the extraordinary nuclear occurrence concept from the Price-Anderson Act and amend the act to require that the waiver of defenses provision be applicable to all nuclear incidents.

The Commission also considered a third option that would have required the waiver of defenses in the case of any accident in which (a) a general emergency is declared or should have been declared, or (b) offsite radiation doses exceed EPA or FDA protective action guides. However, the Commission recommended in the report that Congress retain the present statutory language for the finding of an extraordinary nuclear occurrence, and noted that the Commission was initiating rulemaking to redefine the criteria for an extraordinary nuclear occurrence.

That concludes my prepared testimony. Thank you.

We will be pleased to answer any questions you may have. The CHAIRMAN. Would any of the other three Commissioners desire to make an opening statement or opening remarks?

Mr. ASSELSTINE. Yes, Mr. Chairman.

I just have comments on two points.

EXTRAORDINARY NUCLEAR OCCURRENCE CONCEPT

First, as Chairman Palladino noted in our testimony, there is a difference of opinion within the Commission on whether the Congress should retain the present statutory language for the finding of an extraordinary nuclear occurrence. This finding is a prerequisite for the waiver of certain legal defenses that a defendant might otherwise have available to oppose a public liability claim under the Price-Anderson Act.

Commissioner Gilinsky and I believe that the Congress should eliminate the requirement that the Commission make a determination of "extraordinary nuclear occurrence" and amend the act to require the waiver of defenses for all nuclear occurrences. However, the majority of the Commission favors retaining the present statutory language.

The principal argument offered in support of the present language seems the setting of a threshold for waiver of these defenses deters frivolous claims in the case of nuclear accidents that are not as severe as an extraordinary nuclear occurrence. In my view, the requirement that a victim of a nuclear incident must establish causation that is, that his or her injury was caused by the nuclear incident is already a substantial deterrent to the filing of frivolous claims. Thus, one or more of these defenses could bar recovery by a victim of an incident even if the victim can establish that he or she suffered an injury that was caused by the nuclear incident simply because the incident didn't meet the threshold for waiver of defenses-ENO.

Another difficulty with the present formulation is that it could lead to inconsistent results for the same type of incident depending upon the location of the accident.

Still a third problem with the present approach is the difficulty in establishing practical and workable criteria for making the determination of whether a nuclear accident is an extraordinary nuclear occurrence. In the course of concluding that the Three Mile

Island accident was not an extraordinary nuclear occurrence, the Commission found that its current criteria were not very workable in that they did not provide an objective and easily determinable standard for making a prompt ENO determination. A particular difficulty is in developing criteria that will promptly establish whether there has been substantial offsite damage to life or property; although the Commission is trying to develop better criteria, this has proved difficult.

Eliminating the ENO concept and requiring the waiver of defenses for all nuclear incidents would establish strict liabilty coverage for all nuclear incidents thereby permitting recovery by a victim who could show that his or her injury was caused by an incident. It would assure uniform recovery from nuclear incidents and eliminate the difficulties in establishing practical and workable ENO determinations.

As the chairman noted, the Commission considered a third alternative that would have required the waiver of defenses in the case of any accident in which a general emergency is declared or should have been, or in which offsite radiation doses exceed EPA protective action: guidelines.

Although I favor the waiver of defenses for all nuclear incidents, I believe this third option is an improvement over the present situation. It would at least eliminate many of the difficulties under the present statutory language in establishing practical and workable criteria for making ENO determinations.

SILKWOOD VERSUS KERR-M'GEE

I also believe, Mr. Chairman, the Congress should consider the need for additional guidance in the Price-Anderson Act in light of the Supreme Court's decision in the Silkwood v. Kerr-McGee case. In that decision the Supreme Court held that the Atomic Energy Act does not generally preempt a State from providing tort remedies for persons injured by nuclear incidents.

This decision raises some interesting questions about the operation of the Price-Anderson system. For example, does the act's liability limit apply to private awards? Is Federal indemnification available for punitive damages? Can or should all utilities be forced to pay for punitive damages assessed against one utility; and, if there is a limitation on liability or limited insurance and indemnification, are compensatory damage awards to be satisfied before punitive damage awards are satisfied? The Court's holding in Silkwood gives no indication of how to resolve those issues.

Given these questions and their potential to delay public liability payments under the Price-Anderson system in the event of a nuclear accident, it might be useful for the Congress to clarify how punitive damages are to be paid.

We have come a long way in the last couple of years in thinking on this subject. When we made a pass at modernizing Price-Anderson in the last Congress, I was toying with the idea of pushing the idea of raising the inadequate $560 million limitation or one inci