example, no matter who is responsible for the accident, Price-Anderson channels financial liability to the utility. In the case of a serious nuclear accident involving substantial off-site contamination and damage (which Price-Anderson calls an "extraordinary nuclear occurrence"), the defendants are required to waive certain defenses to which they would otherwise be entitled in the absence of Price-Anderson, thus making it easier for plantiffs to recover; furthermore, a Federal statute of limitations is invoked to supersede the often shorter state statutes. Price-Anderson also takes the uncertainty out of determining in which court to bring suit. It is for these reasons that PriceAnderson coverage is often called "no fault"

insurance.

Doesn't Price-Anderson depend for its continued existence on the assumption that an accident of catastrophic magnitude could occur? What is the likelihood of that happening?

The justification for Price-Anderson does not depend on the prospects of an accident with catastrophic damage to the public ever occurring, and the industry does not believe there is a significant realistic risk of that happening. PriceAnderson is a package that provides a good deal of financial protection to the public that would not be available in its absence. That is the strongest rationale for its existence.

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In order to estimate the probabilities and consequences of nuclear accidents it is necessary to make many assumptions. For example, the WASH-1400 study on reactor-safety calculates probabilities and risks of nuclear plant accident scenarios using probabilistic risk techniques. While such estimates indicate that the chances of a serious accident are exceedingly small as one chance in a billion reactor operating years - the consequences, with releases of radioactivity based on theoretical studies and limited empirical data, have traditionally been thought to be quite high. However, even the NRC admits that these estimates are extremely conservative - the more likely consequences based on an analysis of the plant during the Three Mile Island accident and extensive research and analyses just now being reported are a very small fraction of these earlier estimates. In fact, the NRC has stated that the results of this research could eliminate the likelihood of any early fatalities.

The justification for Price-Anderson does not depend on the likelihood of a catastrophic accident occurring. Scientists will continue to debate accident probabilities and consequences for some time to come. Whatever the final answer, PriceAnderson will continue to make sense for the public benefits and the industry assurances it affords.

How well did Price-Anderson work at Three Mile Island?

While the accident at Three Mile Island taught electric utilities that they did not have enough property insurance to cover their own nuclear plants and other on-site damage, the accident did not strain the Price-Anderson system. PriceAnderson worked as intended. Within 24 hours after Pennsylvania Governor Richard Thornburgh advised the precautionary evacuation of pregnant women and small children, the nuclear liability insurance pools had opened a claims office in nearby Harrisburg to disburse emergency assistance payments. Payments for travel, temporary lodging and the like were made to 3,170 families in the amount of $1.2 million. In addition, a total of $92,400 was paid to 636 persons for lost wages.

What about dealing with non-emergency claims arising from Three Mile Island?

The Price-Anderson procedure for sorting out and dealing with non-emergency claims also worked well. A class action settlement was approved by the court in September 1981 that established an economic injury fund of $20 million as well as a $5 million public health fund. As of the end of June 1983, the total payments by the pools approximated $29 million. While other suits are still pending there is every prospect that valid claims among those not already paid will be more than adequately covered within the limits of PriceAnderson.

In the case of an accident that exceeds the current limit of $570 million, doesn't the limit on liability mean that the public won't be able to recover fully for their damages?

Congress never intended that the limitation on liability act as a bar to further recovery. The explicit language of Price-Anderson requires Congress to consider further compensation. Furthermore, the Congressional report accompanying the last renewal of Price-Anderson in 1975 explicitly states that, "the limitation of liability serves primarily as a device for facilitating further Congressional review of such a situation, rather than an ultimate bar to further relief of the public." Thus, the Congress intended to provide some flexibility in fashioning appropriate relief based on the circumstances that actually exist at the time of an accident, rather than being locked into a system of compensation that might not be in the public's

interest.

But isn't it true that except for Price-Anderson, a member of the public would be able to fully recover for damages?

Not necessarily. Unlimited liability for a utility responsible for a nuclear accident does not guarantee full recovery it simply means recovery up to the level of resources a utility in a post-accident situation might have available to pay such claims. The experience at TMI suggests that only limited funds would have been available without forcing the utility into bankruptcy, in which event claims could go uncompensated altogether. The conclusion is that whether there are adequate funds to pay legitimate claims within the Price-Anderson limits or whether legitimate claims exceed available funds, claimants are much better off with Price-Anderson than without it.

What is the level of resources that a utility would have available to pay public liability claims in the absence of Price-Anderson?

It is difficult to estimate the level of resources that would be available to pay public liability claims in the absence of Price-Anderson, since it would vary substantially from utility to utility. However, a study prepared several years ago in conjunction with the Supreme Court test of the constitutionality of Price-Anderson concluded that even the largest utilities would have difficulty raising more than a few hundreds of millions of dollars to pay public liability claims. This study is currently being updated, but there is no reason to believe that significantly larger amounts would be available today.

There are several ways to answer this question, depending on how "subsidy" is defined. If "subsidy" is defined as a payout of taxpayer funds by the Federal Government then the answer on Price-Anderson is "no." The Federal Government has never paid out a penny in claims to the public. In 25 years of Price-Anderson protection, $30 million has been paid out in claims. All of these claims were paid by the nuclear insurance pools. Moreover, the Federal Government has collected indemnity fees from utilities of about $21 million, all of which has gone into the Federal Treasury. Accordingly, the Federal Government has been a net beneficiary under Price-Anderson.

However, if "subsidy" is defined as the establishment of a set of rules that confer special benefits on persons or groups that are not available in the absence of such rules, then Price-Anderson is a subsidy both to the general public and the industry, since, in the absence of Price-Anderson, claimants would need to overcome the substantial obstacles to recovery posed by ordinary tort law, and the industry would not have predictable levels of liability. These two concepts of "subsidy" do not exhaust the possibilities, but, hopefully, illustrate that the issue diverts attention from consideration of Price-Anderson on its own merits.

Doesn't Price-Anderson provide an unprecedented break to one particular section of the economy, i.e. the nuclear utilities?

No. In a nation the size of ours and in an economy so complex and rapidly changing it's not surprising that government is involved in many areas of public life. The Federal Government, for example, operates insurance-type mechanisms for crops, floods, banks, savings and loans, home mortgages. Social Security, medicare, crime and maritime losses. Moreover, a number of laws provide for a limitation of liability, including oil-spill liability limits, the Federal bankruptcy laws, worker's compensation maximum payments, as well as medical malpractice laws, and even the liability parents have for acts by their children. In that context, the benefits of Price-Anderson are hardly "unprecedented."

Price-Anderson expires on August 1, 1987. Should it be extended?

Yes, because the public is better protected with Price-Anderson than it would be without it. The approach to providing financial protection to the public embodied in Price-Anderson makes a good deal of sense in that it provides a rapid, efficient "no-fault" process of recovering damages in the event of a nuclear power plant accident. There are numerous examples of non-nuclear situations where the public has suffered economic or physical damages from a variety of occurrences and has been forced into court for years in an effort to recover damages. Price-Anderson eliminates this endless - and often fruitless litigation. Not only does it assure the existence of a large sum of money to pay claims, but, in the case of serious accidents, it facilitates payment of claims by removing many of the obstacles to recovery found in ordinary tort law. These features are balanced against a cap on liability and a commitment by Congress to review the need for further compensation.

Price-Anderson is a closely integrated package that provides substantial benefits to the public and predictable liability for the industry. At a time when Congress is groping for ways to overcome the perceived inadequacy of ordinary tort law to provide public compensation in other toxic and mass tort areas, such as hazardous waste dumps and asbestos hazards, it would be foolish, indeed, to throw public compensation for nuclear injuries back to the vagaries of ordinary tort law.

Should Congress even consider extending PriceAnderson if no future orders for new plants are expected in the next few years?

As the United States moves out of the current economic slump and industrial activity picks up. additional power plants will be needed in the

1990's. They will be needed to meet increased demand and to replace power plants that are becoming obsolete. Planning for those power plants should begin in the second half of this decade if not sooner. All of the responsible studies that have been done as to what energy sources are available to the nation for electric generation indicate that, for the large part, we are talking about coal and nuclear power plants. PriceAnderson will make the same good sense for these new plants as it does for existing ones.

The Congress' decision, when it last extended Price-Anderson, to have the NRC submit its recommendation for further extension by August 1, 1983 three years in advance of its expiration

indicates a sensitivity to the need for a timely decision and we are confident that the Congress will act accordingly. The issue is not really whether new plants might be ordered in the absence of Price-Anderson, rather the issue is that the industries (utilities, manufacturers, architect-engineers, constructors, component suppliers, etc.) need to know what the liability rules will be as part of the decision on future plants. Failure of Congress to deal with this issue in a timely fashion would in itself create an additional obstacle to rational decision-making on the need for additional electrical capacity.

If Congress does decide to extend Price-Anderson past its August 1, 1987 expiration, why not just leave the public protection provisions in place and eliminate the limitation on liability?

First, it is doubtful that repeal of the limitation on liability for any plant that receives an operating license or construction permit prior to August 1, 1987 would be constitutional. The only part of Price-Anderson that expires on August 1, 1987, is the authority of the NRC to enter into indemnity agreements after that date. Existing indemnity agreements, which incorporate the limitation on liability, would continue in full force and effect.

Second, deletion of the limitation on liability would destroy the trade-off embodied in PriceAnderson, whereby the public benefits by reason of prompt compensation and the utility gives up substantial rights available under ordinary tort law, and, in return, the utility is provided with a predictable level of liability. Thus, Price-Anderson is a delicately balanced "package" -the cap on liability could not be eliminated without destroying the entire concept. For example, one of the public benefits of Price-Anderson is that it channels financial liability to the utility - no matter who is legally responsible for the accident claimants can look to the utility for recovery. It would not be reasonable to require a utility to continue to bear this exclusive financial burden if the limit on its liability were removed. On the other hand, removal of this economic channeling would require other potential

defendants to attempt to protect themselves through the purchase of insurance. Since the total worldwide nuclear insurance capacity is now devoted to the nuclear utilities, this could only be accomplished at the expense of reducing the utili ties' coverage. Thus, it would not increase the total amount of insurance available, but rather spread it among all potential defendants. In the case of a judgment against only one of them, a reduced amount of insurance would be available for payment of claims. Moreover, in the absence of a limitation on liability, it would be unreasonable to continue to require all utilities to pay assessments in the case of an accident at a facility other than its own. These assessments are now the principal source of funds for payment of public liability claims. It is clear, therefore, that eliminating the cap on liability would destroy the finely tuned fabric of the nuclear compensation system. since it would eliminate the equitable balance upon which that system is based.

Third, it would not make any sense to abolish the limitation since electric ratepayers across the country would be paying for kinds of damages that in some states can be pretty exotic PriceAnderson covers any legal liability under state tort law. This would mean, for example, that claims for easily-feigned emotional distress (in some states, even absent physical injury), claims for increased probability of incurring disease (in some states) or anxiety about incurring disease (in some states), and loss of consortium would become vested rights. All participants in the system would be obliged to pay these to the same extent as more compelling or appealing claims for such things as medical treatment, or damage to or loss of use of property. One unheralded virtue of limitation on liability is that it allows for priorities to be established if resources to pay claims are limited and allows Congress to provide additional relief if it chooses, only where compensatory damages for actual losses or expenses are involved.

Finally, there are valid grounds to question whether attempting to devise a system that involves unlimited liability would not be depriving society of the very flexibility that it might require in order to make the most appropriate response to the actual circumstances that might exist following a nuclear accident.

What about the suggestion that Congress consider replacing the existing limitation on liability for a single nuclear incident with an unlimited (per incident) retrospective premium obligation on all power plant licenses subject, however, to annual limitation?

The idea is novel, but it is not constructive since it undermines a fundamental element in the balancing of the equities which are the bases of the Price-Anderson law. It would in effect repeal the