Mr. CRAIG. In other words, if an actuarial study were done based on history, you folks would look pretty clean.

Mr. BREWER. The entire industry would look pretty clean.

Mr. CRAIG. I am referring to you.

Mr. BREWER. Yes, sir.

Mr. CRAIG. Therefore――

Mr. BREWER. But it is very difficult to set premiums and set coverage for events which are extraordinarily low in probability. You just never get enough of a statistical base to do so. And that is characteristic of this business.

Mr. VENTO. Mr. Chairman.

I was interested in the same thing in terms of risk assessment NRC has done. It seems like a taboo in terms of talking about these events, because of the nature of the industry, it is always in such a tenuous situation we cannot really address the magnitude of some of these particular incidents that we are trying to cover.

One of the problems, of course, is that if and when and hopefully insurance would be available in the absence of these sorts of artificial limits that have been placed on the law in terms of Price-Anderson which I disagree with-but the problem is the system we have here all depends on the Government. I think that has been one of the big complaints.

When an accident occurs, if you do not spread that risk adequately, obviously the entire industry will go down, because if you have a serious incident like this, certainly there are not going to be too many advocates in Congress.

I think in pursuing the type of limitations and the limited protection any of this really offers, any serious type of incidents are really going to rely on the Government payout. And we are notoriously bad in terms of running private sector type of energy development and so forth. So I think in looking for this mantle, they are really buying some false protection.

I do not think there is any doubt that many of these would fail in the event, if you are going to start assessing $20 million a year and so forth. So I think there are the seeds of their own destruction, the ineffectiveness of this industry, lie in that particular problem. No one seems to be considering building up that type of experience, because this industry is old enough to do that.

I am sort of surprised that NRC and DOE have not come up with a better analysis of risk assessment, and more than just some sort of fear of the unknown with regard to the availability of insurance. That is really what we have, if we put the best face on it, a real reluctance to talk about what the consequences are. That, of course, underlies anything. This industry is so tenuous, we really cannot say things in public that should be said. We have the same problems with the banks and FDIC. I think it really is a serious problem.

Mr. MCCAIN. Mr. Chairman.

The CHAIRMAN. Mr. McCain.

Mr. MCCAIN. I would like to ask Mr. Brewer, do you know of any taboo or reluctance to discuss consequences of nuclear incidents or accidents, or any possible coverup or anything else that has taken place?

Mr. BREWER. No, Mr. McCain. In fact, in 1957 or there abouts, the WASH 740 report, which was one of the elements that was considered during the original Price-Anderson days, painted a very horrendous picture of the potential for a nuclear accident, however small its probability.

More recently, in the early seventies, at some point, WASH 1400 did a more thorough probabilistic assessment. That report, too, was published. There have been repeated attempts to quantify the probabilities and consequences of nuclear accidents. We have not tried to sweep it under a rug.

Mr. McCAIN. Thank you, Mr. Brewer. That has been my distinct impression. I think the risk of nuclear accidents has been one of the most well ventilated issues in the history of this country. I would submit the American people have had the opportunity and have been educated tremendously, particularly as a result of the Three Mile Island incident. I certainly hope that the job of this committee would be to make people aware and continue to urge you to be open in all of the risks involved to the American people. Thank you.

The CHAIRMAN. Thank you very much, Mr. Secretary.

Mr. BREWER. Thank you, Mr. Chairman.

The CHAIRMAN. We will now hear two witnesses from State government. Mr. Bigelow, deputy attorney general of New Mexico, and State Representative Dick Nelson of the State of Washington. Mr. Bigelow, would you like to go first?

[Prepared statements of Paul Bardacke and Dick Nelson may be found in the appendix.]

PANEL CONSISTING OF JOHN BIGELOW, DEPUTY ATTORNEY GENERAL, STATE OF NEW MEXICO; AND DICK NELSON, WASHINGTON STATE LEGISLATURE

Mr. BIGELOW. Thank you, Mr. Chairman.

Mr. Chairman, members of the committee, New Mexico is unique with regard to Price-Anderson coverage because of the Waste Isolation Pilot Plant [WIPP] and the WIPP supplemental stipulated agreement [SSA] provisions related to Price-Anderson. A copy of the SSA and a lengthier presentation of the State's views in the form of an analysis have been provided to staff for inclusion in the record.

[EDITOR'S NOTE.-The above mentioned report entitled "An Analysis of the Waste Isolation Pilot Plant and The Price-Anderson Act" may be found in the appendix. See table of contents for page number.]

WIPP PROJECT

The WIPP is a Department of Energy project under construction, located in southeastern New Mexico near Carlsbad. Its purposes are to permanently store transuranic waste [TRU waste] and to conduct experiments on the storage of high-level radioactive waste. In December 1982, as a result of protracted negotiations following the filing of a lawsuit challenging many aspects of DOE's proposal to build the WIPP, the State and DOE entered into the SSA in an attempt to resolve many of the State's concerns on WIPP construc

tion and operation. A significant area addressed in the SSA is that of Price-Anderson coverage.

We are aware that this hearing is in part to receive testimony on two bills pending now, H.R. 3277, introduced by Representative Seiberling and H.R. 421, sponsored by Representative Weiss. We feel that it would be premature to take a position on these bills at this time, except to note that many issues raised by New Mexico in this testimony are not covered in the proposed legislation.

Additionally, because the NRC does not license the WIPP facility, we shall not comment on the December 1983 NRC on Price-Anderson. Our principal purpose in presenting this testimony is to make information available to the committee and to present specific concerns and issues which at this time are unique with respect to Price-Anderson.

WIPP is an unlicensed DOE facility for the storage of defense nuclear waste. As such, Price-Anderson coverage, if any at this time, falls under the 170(d) provisions of the act, the contractor indemnity clause. In order to attempt to reassure the State, DOE agreed in the SSA that:

First, it has the authority to and would extend Price-Anderson indemnity coverage to the operation of the WIPP both for emplacement of the waste and for transportation of the waste through New Mexico to the WIPP site;

Second, the term "persons indemnified" as used in Price-Anderson would include the State of New Mexico and its political subdivisions and municipalities.

Third, Price-Anderson indemnity coverage does extend to New Mexico, notwithstanding the 1975 amendment to the term "persons indemnified" and the current and probable lack of NRC licensing. Fourth, the section 170(n) waiver of defenses provision of the act would apply in the event of an extraordinary nuclear occurrence [ENO] in the course of transporting waste to the WIPP site because the waste would be special nuclear material or byproduct material. Fifth, the act or the implementing indemnity article does not require the State to use its own resources before Price-Anderson indemnity coverage will be available.

Sixth, Price-Anderson indemnity protection would not be subject to costs of investigation or settlement of claims before claimants would be paid.

Seventh, DOE would bear the costs of cleanup and contamination regardless of provable release of radioactive contaminants into the biosphere, and regardless of the potential liability or fault of others.

Eighth, DOE would make all possible efforts to provide $60 million additional insurance on a daily basis when high-level waste is being shipped in the State.

Ninth, DOE would assist the State in presenting its concerns to Congress with regard to increasing public protection under PriceAnderson.

The foregoing guarantees resulted from an opinion of DOE's Office of General Counsel asserting that its interpretation of the Price-Anderson Act was consistent with congressional intent and also the implementation of those guarantees. In the event of nucle

ar accident giving rise to liability, the State would rely on the SSA and DOE's position as expressed in the opinion.

RECOMMENDATIONS FOR CONGRESSIONAL ACTION

Nevertheless, with regard to those provisions and the suggestions which follow, the State believes that to remove any doubt as to Price-Anderson applicability to WIPP and to increase public protection, Congress should strongly consider extending and amending the act consistent with the issues raised in this testimony.

Specifically, the State urges the Congress to consider amending the act to clearly provide the following:

First, substantially increasing the $50 million limit of indemnity coverage to realistically reflect current estimates of potential liability and damage in the event of nuclear accident.

Second, equalizing coverage for WIPP and NRC licensed activi

ties.

Third, extending the 20-year statute of limitations and making the "waiver of defenses" provisions applicable to nuclear accidents not categorized as extraordinary nuclear occurrences and to the Federal Government's own liability pursuant to claims brought under the Tort Claims Act for nuclear accidents.

Fourth, making the "waiver of defenses" provision applicable in the event of a nuclear accident at the WIPP site, even though WIPP is unlicensed and is not a "production or utilization facility." Fifth, providing coverage for evacuation costs even though the threat and release of radiation does not occur and the event in question may not, as now defined, qualify as a "nuclear incident." Sixth, extending Price-Anderson coverage to cover nuclear incidents caused by all criminal acts of theft or sabotage, whether the incident occurs at the site, in normal transport or after successful diversion of material from normal transport.

Seventh, explicit provisions which spell out the applicability of Price-Anderson indemnity coverage to the WIPP, thus obviating any potential challenge to the DOE's interpretation of the act or any claim of ambiguity in the SSA.

Both the SSA and its companion agreement, the stipulated agreement, have as their underpinnings the requirement that the parties proceed in "good faith" to effectuate their provisions. The State would prefer to work with DOE and the Congress to insure that its concerns as expressed here are fully considered and passed into law. Many of you are aware that the WIPP has not enjoyed unanimous support from the citizens of New Mexico or its leaders in the past. Controversy has been abundant over the real or suspected mission of the project, the manner in which DOE has proceeded, the benefits or detriments to the State and the potential danger which construction and operation of the project may mean. Extending and amending Price-Anderson to reflect and cover New Mexico's concerns would be welcome and sound.

Thank you for allowing me to speak before this committee. I shall be glad to answer any questions.

Mr. SEIBERLING. Before we get into questions, we have a panel consisting of you and Representative Nelson.

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Mr. NELSON. Thank you, Mr. Chairman. I am Dick Nelson. I serve in the Washington State Legislature where I chair the house energy and utilities committee and its subcommittee on radioactive waste. I am also a member of the nuclear waste board which was recently created as one response to the State's participation in selection of a high-level nuclear waste repository under the Nuclear Waste Policy Act. I will give you a short version of my prepared remarks. I want to thank you for allowing me this opportunity to make known the views of our State as your committee begins to consider extension and modification of the Price-Anderson Act.

DOE RECOMMENDATIONS

I am particularly concerned about the request of the U.S. Department of Energy that the Price-Anderson Act limitations on liability be extended to expressly cover a nuclear waste repository. It is my view and the view of other legislators and many citizens in our State that such an extension would not be responsive to the concerns of the people of the State of Washington and would jeopardize the establishment of a nuclear waste repository wherever it might be sited.

The State of Washington through our nuclear waste board has been intensely involved in negotiations with the U.S. Department of Energy over the past year. These negotiations have taken place as part of the cooperation and consultation process authorized by section 117 of the Nuclear Waste Policy Act. The State of Washington is the first and, to date, only State to become involved in a C&C process as a candidate State for the first repository.

The C&C process so far has been beneficial for the State and has been pursued in good faith by both sides. The process has assisted the State in more clearly identifying issues of particular concern which need to be resolved before the State can even begin to feel comfortable with its role as a candidate State. These issues include whether the State, if selected, would be required to accept nuclear wastes generated in foreign countries and possibly defense wastes, whether spent nuclear fuel and radioactive waste will be barged up the Columbia River, and, if so, what controls will be placed on those shipments. And to what extent the State may exercise its right to independent review of the activities of USDOE in the repository selection process.

LIMITATION ON LIABILITY

One issue, however, has emerged above all others as the primary concern of the State of Washington. That issue involves liability and indemnification for any incident which may occur as a consequence of disposal of radioactive waste within the State. The concern about who will pay for any damage, and whether we will be fully compensated has come up time and time again in legislative hearings on this matter, in discussions of our nuclear waste board, in our negotiations with USDOE.

I believe this concern is so strong, because the people of the State of Washington are very familiar with the problems of nuclear waste dispsosal and are attuned to possible catastrophic consequences of any nuclear incident which may contaminate the Co