Mr. VENTO. So, it was a negative decision, and therefore, it did not entail the utilization of Price-Anderson in that circumstance? It did have an assessment factor, didn't it?

Mr. SALTZMAN. Price-Anderson was utilized. By the Commission's declaration of the accident not being an ENO, the effect was that waivers of defenses were not used. However, in the State of Pennsylvania, it was considered to be a situation of absolute liability anyway, and so it had no real effect on the settlement of the claims in Pennsylvania. But the judge wanted the question of ENO to be settled before she got in to the settlement.

Mr. VENTO. I guess that really kind of raises the whole point, Mr. Palladino. Do you think there is an overemphasis on that particular ENO business?

Do you really think that it fills a useful purpose today, or not? Mr. PALLADINO. I do not think there is overemphasis. I think it does serve a useful purpose. I think it maintains the linkage of waivers to the accidents that had the most significance on public health and safety, and it does distinguish a basis for valid claims and provides that they can be covered in the Price-Anderson system.

Mr. VENTO. Mr. Asselstine.

Mr. ASSELSTINE. Mr. Vento, I feel that the concept should be eliminated from the act. I think there are two principal disadvantages. One, it does undercut any kind of uniform national scheme for recovery, because in essence, what you are left with is differing interpretations of differing State laws, depending upon where the accident occurred and which of these defenses might be available. For example, as we just heard, Pennsylvania is a strict liability State and therefore, the question of contributory negligence was not an issue in terms of the Three Mile Island accident.

My suspicion is that most States will be strict liability States, but you do not know. Liability may, then, depend upon where the accident occurs.

Mr. VENTO. I think that there is an argument here, but isn't it likely that this would be a matter that would have to be litigated? This is something really that you are inviting, in other words, rather than setting up a mechanism to resolve things, I think you are setting up a major basis on which a litigation would have to proceed.

Any utility that has to pay $5 or $10 million, you are talking here about less than $500,000 per utility for instance, in the Three Mile Island case but any utility that you go against to pay $5 or $10 million, and if they do not want to do it themselves, the public service commissions are going to say, we do not think it is a reasonable cost unless we explore all legal avenues, so on top of the rather heavy assessment that you are utilizing to pay for these types of incidents that might occur, you are also piling on a whole legal case that will make most legal work pale by comparison.

How many years do you think it might take to move something like that through the court? I am not an attorney, but I think that would be something which would obviously impede the effectiveness of any type of insurance programming.

I think it is a major problem, Mr. Palladino, and maybe you would not like to respond to that, but I think you really should on the part of the Commission.

Mr. PALLADINO. I do think it does set forth the conditions against which an accident claim can be compared. I think the legal problems are there, whether you have an ENO or do not have the ENO, but I do think that it does make provision for handling valid claims, and it does make a provision for seeing that those claims are paid.

Mr. VENTO. Mr. Palladino, the intent of the ENO is, of course, to expedite that to eliminate these types of court decisions, is that accurate? Do you believe that was the initial intent of it?

Mr. PALLADINO. I cannot say what the initial intent was.

Mr. VENTO. What is the intent today? Do you think this facilitates litigation? In other words, by requiring that these things would be set aside, and not be the result of litigation.

Mr. PALLADINO. I think that would set aside those claims that do not reach the threshold that we believe ought to apply in evaluating an accident.

Mr. VENTO. Have you had testimony to the contrary?

Mr. PALLADINO. Have I?

Mr. VENTO. Has the Commission?

Mr. PALLADINO. I am not aware of any.

Mr. ASSELSTINE. This is an issue that we differed on. Two of us felt that the ENO determination really did not have any further validity. It created in itself enough problems that it should not be retained. The majority of the Commission felt that it should be retained and that it provided a mechanism for differentiating between significant claims and nonsignificant claims.

Mr. PALLADINO. May I add one other point? I am informed by Mr. Saltzman that ENO decision by the Commission is not appealable in the courts, and that the Commission determination would stand.

Mr. ASSELSTINE. But if an ENO is not declared the question of which defenses would apply clearly is a matter that would then be litigated. The ENO determination would not, but the question of what defenses then are available to a utility or their insurance companies to protect them from having to pay claims is something that would have to be decided by the courts.

Mr. VENTO. In other words, one way or the other, it is going to get there. Either validity or constitutionality, which has never been tested with regard to ENO, has it, Mr. Palladino? Has that been tested?

Mr. PALLADINO. Not as far as I know.

The CHAIRMAN. The gentleman's time has expired.
Further questions on my right here? Mr. McCain?

NRC RECOMMENDATION'S-IMPACT ON PLANS FOR FUTURE REACTORS

Mr. MCCAIN. Thank you, Mr. Chairman.

Mr. Palladino, we all know that there has been no request for new construction of a nuclear powerplant since 1978, for all intents and purposes. Do you have any indication that anyone else is contemplating such?

Was there any assessment that you or anyone else on the Commission made on the impact of either Mr. Seiberling's proposal or Mr. Weiss' proposal or your proposal on companies who are in the business of building nuclear powerplants or utilities that may consider using nuclear power as a way to generate some energy?

Mr. PALLADINO. We have considered various aspects of that question. For example, we do believe that Price-Anderson should be extended to apply to new plants as well as old plants, and there are a number of plants in the pipeline.

We did also examine the question of what would happen in the future if the number of plants went down as some were decommissioned and taken off the line. Our point of view was that this is at least a couple of decades off, and each 10 years the Congress should be looking at the situation and considering the conditions of the industry at that time.

There may have been other aspects of the future to consider. I will ask either my fellow Commissioners or Mr. Saltzman to answer that.

Mr. MCCAIN. Before you answer, Mr. Asselstine, did you ask utilities and companies what impact will this have on any plans they may have for construction of new nuclear powerplants?

Go ahead.

Mr. PALLADINO. I am not sure to what extent this was done by the staff.

Mr. SALTZMAN. Yes; we had a short chapter in this report on the condition of the nuclear industry.

Mr. MCCAIN. I can understand why it was a short chapter.

Mr. SALTZMAN. The attitude of the industry people that we talked to was that while they had no immediate plans for building nuclear powerplants that the failure to extend Price-Anderson would have a chilling effect on their plans to do so if things turned around.

The CHAIRMAN. We will hear from the industry in a few minutes. That will be a good question.

Mr. MCCAIN. I understand that, Mr. Chairman, but I would hope that their recommendations would be based at least to some degree as to the viability of nuclear power in this country, which would require them to have some input from the industry, I would hope.

RETROSPECTIVE PREMIUMS

Mr. ASSELSTINE. Mr. McCain, one issue that we did look at was increasing these retrospective premiums. That is if there is an accident once the insurance money is exhausted. You collect a certain amount of money from utilities for each operating reactor owned by that utility.

We looked at the impact of increasing that amount, and we found that if you increase it fairly drastically, say up around $50 million per operating reactor, that could have a very substantial impact on a number of utilities, particularly those that have large numbers of operating plants.

That is an aspect where if you had to go around immediately and collect very large sums of money from all the utilities all at once, we find that there would be a significant impact.

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That impact is aggravated by the fact that a lot of utilities now are very heavily committed to large property insurance programs as well, which also involves deferred premium payments in the event of an accident. So that is one aspect where we did look at the economic impact on the utilities if we had to collect very large amounts of money all at once.

Mr. BERNTHAL. Mr. McCain, I would like to comment on just one aspect of the Commission recommendation for which I voted, and for which I would not vote had I to do it over again.

One of the provisions there is that the retrospective premiums would simply be $10 million per powerplant. It strikes me now that is rather inequitable, and I would suggest that a more appropriate thing to do that is somewhat in line, I think, with the two bills that have been presented in this committee, would be to have that amount prorated on the basis of $10 million per gigawatt, so the smaller prorated reactors would pay less and larger ones would pay

more.

I think that is a more equitable scheme.
Mr. MCCAIN. Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Lujan.

Mr. LUJAN. Thank you, Mr. Chairman.

GOVERNMENT INDEMNITY

One of our concerns all along has been to get the Government out of being at risk in the liability for a private reactor and I guess that is pretty well done with the 5 million, is that correct?

The Government is not liable for any moneys? We have the 165 million private insurance and the 425 or 450 million, 425 coming from the various reactors. Is the Government still at risk?

Mr. PALLADINO. If the utility comes up with their retrospective premiums, I do not believe the Government is at risk. The Government might be at risk as the guarantor of the utility's share.

Mr. ASSELSTINE. Mr. Lujan, there is one other element as well. Given the number of plants that we now have, the Federal Government does not have any obligation other than, as the chairman said, to guarantee a payment by the utility.

Mr. LUJAN. That means if they do not pay their 5 million.

Mr. ASSELSTINE. That is right. But there is an indirect obligation on the part of the Federal Government written into the act the last time it was extended.

Congress said that if there was an accident that used up the amount of money available under the Price-Anderson system, the Congress would then step in and take whatever action was necessary to provide additional compensation to the victims of an accident beyond the amount provided in the Price-Anderson Act.

Mr. LUJAN. And that is the point of my question, because that was going to be my next question. If we raise it to $10 million, could we then remove that provision and the $10 million would be sufficient to take care of any costs incurred, or has the Commission considered that?

Mr. ASSELSTINE. The $10 million would certainly increase the amount of money available. It would bring it up to about $1 billion or so. The question is, is there still a very low probability of a very

high consequence accident that would result in losses to members of the public well in excess of that amount of money, and I think the answer that we gave in our report is that there still is that risk.

We think it is a very low risk, however.

Mr. LUJAN. At what point? You said certainly not $50 million. The industry can not carry that-$15, $20, at what point can we get the Federal Government out of it. That is really one of the big considerations in this whole discussion.

Mr. ASSELSTINE. One of the advantages of the proposal that we made is that I think it absolutely gets the Government out, because, in essence, under our proposal you go back and continue to collect on an annual basis those deferred premiums from the utilities until all public liability claims are paid.

The Government is out. And the utilities, in essence, underwrite on an annual basis whatever payments have to be made until all public liability claims are made.

So if you had a $5 billion accident, you would continue to collect those deferred premiums from the utilities until all $5 billion were paid off. There would not be any direct Federal obligation, or even this indirect commitment that had been made the last time around for further Federal financial involvement.

APPLICABILITY TO WASTE FACILTIES

Mr. LUJAN. Let me ask you another question, because of the time limitations that we have.

The Commission has indicated that for Government repositories, that Price-Anderson applies. Let's take WIPP.

For example, a very good example, as a matter of fact. Does that mean that even right now the $5 million kicks in in case of an accident in WIPP?

Mr. SALTZMAN. WIPP is a DOE facility. It is not licensed by the NRC, so it is not involved in this program at all.

Mr. LUJAN. Then how can you say that Price-Anderson kicks in? Mr. SALTZMAN. What was being discussed was the licensee part of Price-Anderson-talking about nuclear reactors. It does not kick in for WIPP. WIPP is something that is, I believe, indemnified by the Federal Government under its contract with Westinghouse for zero up to $500 million.

Mr. LUJAN. That was my understanding. It is also my understanding that both DOE and NRC have told the State of New Mexico that Price-Anderson is applicable in the case of WIPP; is that correct? Has the State of New Mexico been told that?

Mr. SALTZMAN. The DOE authority to provide indemnity is the same Price-Anderson as we have been discussing here. It is just another section of the act.

So when they say that Price-Anderson covers, that is correct. But our discussion so far this morning has all been on the licensee part and large powerplants, not the WIPP facility.

Mr. LUJAN. I understand what the discussion is. I just do not understand. If you are telling me WIPP is covered by Price-Anderson-but the 5 million per reactor does not kick in, how much good does Price-Anderson do in a case of an accident at WIPP?