dent to something in the neighborhood of $2 billion. I think at one point we were talking about $5 billion. Now, the Commission, Mr. Chairman, as I understand it in your December study of this, recommends that we take off all limitations on liability except for an annual limitation, the amount of money that could be assessed against any operator for a year. Is this correct? Mr. PALLADINO. Yes, sir. The CHAIRMAN. All right. Mr. SEIBERLING. Well, thank you, Mr. Chairman. CHANGES IN THE NUCLEAR FIELD Mr. Palladino and anybody else on the Commission that cares to respond, what has changed in the nuclear field since the last debate on Price-Anderson that caused the Commission to change its views? Mr. PALLADINO. I think the basis for the change in our thinking is twofold. One, we wanted to make sure that latent claims were covered for a sufficient period of time so that people who had latent claims could bring them forth. Second, because of inflationary characteristics of our economy, we needed to develop a broader base to cover the situation that might occur in the very improbable, but high consequence accident, and I think between the two, we have accomplished that point. Mr. ROBERTS. It is low probability and high consequence? Mr. PALLADINO. I am sorry, did I say it the other way? I am sorry if I did. Mr. ROBERTS. I would agree with the things that the Chairman just said. I point out that there have been a few other things that occurred as well since the last time the Congress considered the Price-Anderson Act. The TMI action was one, and our experience in trying to apply the extraordinary nuclear occurrence determination is one element of that. Second, there has been a fairly dramatic change in the balance between property insurance and liability insurance the amount that is available in a primary layer from insurance companies. The amount of property insurance has gone up fairly dramatically since the Price-Anderson Act. Although there has been some increase in the liability insurance, there has not been nearly as marked an increase in the liability insurance side as there has been on the property insurance side. Those are a couple of the other differences, I think, that have occurred since then. Also I think we just took a little more careful look, as the Chairman indicated, as trying to provide some additional public liability protection. Mr. SEIBERLING. Is it safe to say the most important change has been a change in your thinking? Is that correct? Mr. PALLADINO. I think it is in part a change in our thinking, and I think, as Commissioner Asselstine pointed out, the TMI accident did indicate that there could be circumstances for which we ought to provide protection. Mr. ASSELSTINE. Mr. Seiberling, I would agree with you. That has been a major part of it, a change in thinking. There have been a couple of other things as well. One is that with the decline in the number of plants, we are now far short of the amount of funds available to pay public liability claims that was projected and predicted the last time that the Congress considered the Price-Anderson Act. At that time, people thought that with the growing number of plants, by now we would be at about $1 billion in terms of financial protection for public liability claims. We are not, given the decline in the number of plants. Also, I think it is fair to say that there has been a gradual evolution over time in thinking on Price-Anderson. That is evident in the last extension where Government indemnification was phased out and more of the financial burden was spread to all utilities under the retrospective premium program. Mr. BERNTHAL. Mr. Seiberling, if I could make a comment, I did want to say a word on the point of extraordinary nuclear occurrences because that was one matter that we developed some experience with in the wake of the Three Mile Island event. I have not favored the kind of no-fault waiver of all defenses for all accidents that some members of the Commission have. I think the public and the courts expect the Commission to serve as a kind of technical court in such matters and in this case, of course, Congress will have to serve as a technical judge in trying to establish some sort of floor for the waiver of defenses. But I do not think that we should place that burden on the civil courts. Even though I voted with the Commission majority to retain the present definition for waiving defenses and the extraordinary nuclear occurrence, I must say that the present ENO criteria that we have are extremely cumbersome, and I suspect they are essentially unworkable in the case of a real accident. In fact, for that reason, I have proposed a much simpler and more direct set of criteria now which will go out with the Commission's rulemaking package that largely relies on the instrumentation and sophistication available for detecting radiation, and thereby defines the threshold for an extraordinary nuclear occurrence. I think the extraordinary nuclear occurrence threshold is a good concept. I think it provides for the prompt and effective waiver of defenses and compensation in case of an accident, but I think there is a better way to do it than we are right now. The concept is sound. INCREASED SAFETY INCENTIVES Mr. SEIBERLING. If we had no ceiling at all on liability and we had strict liability, wouldn't that cause the insurance industry to do a better job of policing the nuclear industry on its own? In other words, if the insurance companies had the liability, they would be monitoring each company more, and it seems to me that oversight activity would result in greater uniformity of competence on the part of the managers of nuclear plants. I do not know whether it was Mr. Palladino or one of you who said that one of the problems with the nuclear industry was the great variation in management competence between different utility companies. Somehow or other it seems to me some way has to be found to provide the highest level of competence in all nuclear plants. Obviously while the Commission does a conscientious job, it has not succeeded in that objective. Does anyone care to comment on that? Mr. PALLADINO. Mr. Seiberling, I think in a number of plants, there has been good management. Mr. SEIBERLING. I think there has, but in some there has not. One of the problems with lifting the provisions of the Price-Anderson would be that the public might not be protected adequately even despite the best management that might take place at a particular plant. It is for that reason that we felt that the Price-Anderson Act should be kept in force. Mr. SEIBERLING. Mr. Asselstine. Mr. ASSELSTINE. I am not sure that lifting the limit on liability, removing it altogether, is going to increase the incentive on the part of the insurance industry to assure that things are done properly. The way the insurance layer is set up is that all the insurance companies that participate in the pool are asked to contribute a certain amount or asked to contribute whatever they want to contribute to the total amount of public liability coverage that is available. Generally, the amount that is presently available represents all that the insurance companies are willing to commit in terms of funds for public liability coverage. That money is already at risk. That is the money that is looked to first in the event of a nuclear accident. I think the insurance companies ought to have and do have now a strong incentive for policing the industry and ensuring that things are done properly. I suspect that there is more that they could do than they presently do to protect the commitment that they have already made. But lifting the limitation on liability will not necessarily result in the availability of more insurance. So, I do not think it would put insurance companies at any greater risk than they are already with the way the system is now set up. If there is no increase in risk, there is unlikely to be an increase for policing the industry. Mr. SEIBERLING. And lifting Price-Anderson wouldn't change that? Mr. ASSELSTINE. I do not think removing the limitation on liability would. Let me add one other comment on the Commission's recommendation. One of the strongest arguments that the industry raised during the last extension of the act against removing the limitation on liability altogether was that this would impose, in the event of a very large accident, a large and probably catastrophic financial burden on the utility that had the accident. Presumably you would have the amount of money that is available from the insurance companies. Then you would exhaust the retrospective premiums collected from all other utilities, and any further financial burden would fall on the utility that had the accident. In all likelihood that would put that utility out of business, and it is question able whether you would obtain a large amount of additional funding to pay for public liability claims. What we tried to do in our recommendation to balance two competing concerns. On the one hand, we sought to make sure that whatever money is necessary to pay all public liability valid claims is available, but at the same time not to impose a very crushing and immediate financial burden on either the utility that has the accident or on all utilities. That is why we favored this annual limitation on liability. You just continue to collect year after year these retrospective premiums from the utilities until you have paid off all public liability claims. We thought that was at least an attempt to avoid imposing the catastrophic financial loss on the utilities, and at the same time make sure you had a system that would provide all the money necessary to pay all public liability claims. Mr. SEIBERLING. The airline industry has been able to get insurance coverage of $1 billion per accident. Why can't the utilities do the same thing? Mr. PALLADINO. I think if we went in the direction that the Commission is proposing, we would far exceed that $1 billion. One can do arithmetic a lot of different ways, and some of them are applicable and some are not, but if we are talking about $10 million a year for some period of time, like 30 years, that is $300 million per reactor. If we are talking about 100 reactors, that gets to be quite a sizable fund, greater than $1 billion. Mr. BERNTHAL. Mr. Seiberling, if I could just comment. As you know, the insurance industry is largely based on statistics and probabilities of events and actuarial tables. There are, in fact, no such statistics available in the case of nuclear powerplant operation. There has never been a payment made under the Price-Anderson provision. So we are largely relying on calculations at this point and estimates instead of the kind of statistical base as would normally apply to any other segment of the insurance industry. The CHAIRMAN. The gentleman's time has expired. Mrs. Vucanovich. Mrs. VUCANOVICH. Thank you, Mr. Chairman. RULEMAKING FOR EXTRAORDINARY NUCLEAR OCCURRENCE DEFINITION I would like to address my question to Mr. Palladino. I would like to ask you what the status of the NRC's rulemaking for redefining an extraordinary nuclear occurrence is or what changes in the criteria are being considered? Mr. PALLADINO. At the present time, the rulemaking is being rewritten to reflect current thinking that was achieved among several of the commissioners. The primary changes are to try to make use of the protective action guidelines in setting the conditions that would define an extraordinary nuclear occurrence. There is also another proposal by Commissioner Bernthal and I will characterize it briefly, and let him describe it further, if he would like, and that is to try to, in one determination, determine that there was a release of nuclear materials or radioactivity and that there was danger caused by it. Its intent is to try to simplify the determination of an ENO. It is a bit more complicated than I have described, but those are a couple of the principal features that would be in the proposal for proposed rulemaking that we would issue. I am told that the staff will have a proposal to us some time later in July. Mrs. VUCANOVICH. Mr. Bernthal, would you like to comment? Mr. BERNTHAL. Let me just sketch very briefly what the essential differences would be between the current ENO definition and one that I have proposed. More accurately, I will just set forth the simple definition that I proposed here, because I think the current definition has already proved itself to be pretty difficult to carry out in practice. For example, under the current definition, a sufficient criterion for an extraordinary nuclear occurrence, a criterion that is retained, in fact, in the proposed rule the Commission will soon send out, is that five or more people must receive a dose equivalent to 100 rem. But if four people, for example, receive 100 rem, and I remind you that is a very, very large dosage of radiation, the criterion would not be met. Or one might have 500 people at the level of 80 rem. Again, surely an extraordinary occurrence by anyone's definition but one that would slip under the wire of the definition for the threshold of extraordinary nuclear occurrence with the present rules. What I have proposed is a very simple and direct set of criteria that relies on the instrumentation that is now available. Very briefly, I would simply say that if an off-site surface contamination dose rate was measured at one meter to be greater than 10 mR per hour at any time during an incident, or alternatively if an off-site dose integrated over 24 hours after initiation of a release was greater than 10 rem, then the criterion for extraordinary nuclear occurrence would be met. This would rely on instrumented measurements. There would not be the confusion and attempts to make a case as to whether a given organ had or had not received a threshold level. It is a very, very simple and I think good definition. Mrs. VUCANOVICH. I yield back the balance of my time. Thank you. The CHAIRMAN. Mr. Vento. Mr. VENTO. Thank you, Mr. Chairman. Of course, the problem I guess with the retention of ENO is that really kind of leaves a question as to the effectiveness of any type of insurance plan. It really resorts back to either, I guess, further regulations in which you are going to establish what an ENO is or something that has to be debated at the time an accident occurs. As an example, at Three Mile Island, how long did it take Mr. Palladino, for the NRC to declare that an extraordinary nuclear occurrence? Mr. PALLADINO. Let me ask Mr. Saltzman if he could answer that? Mr. SALTZMAN. By the time the Commission made its final declaration that it was not an ENO, it was about a year, about 11 months. |