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SPRING 1981]

Extraordinary Nuclear Occurrence

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tively. This judicially determined definition of nuclear incident should include loss of use of property, and expenses and income loss arising from objectively reasonable actions taken to avoid exposure to radioactivity. This would guarantee that the waivers would apply to any accident involving reasonable evacuations, a finding within the competence of the courts.

2. Replace the twenty-year statute of limitations with a discovery rule- More adequate protection of the public calls for at least one amendment to the waiver provisions themselves. The twenty-year gross statute of limitations should be repealed, so that the "three years from time of discovery of injury” rule remains applicable indefinitely. Because many radiation injuries can have latency periods longer than twenty years, and genetic defects can take several generations to appear, the present provision is no help to the victims of those injuries.

3. Create additional waivers- If Congress wishes to demonstrate genuine concern for protection of the public from nuclear technology, it should consider the addition of more substantive waivers to the present ones. For example, if licensees were required to waive any issues or defenses as to the compensability of certain damages not always allowed under tort law, the scheme would more equitably allocate the true social costs of nuclear accidents. Examples of these damages include evacuation expenses, lost income, lost business revenue, decline in property values, health monitoring costs, severe psychological distress, loss of peaceful use and enjoyment of property, and other consequential and incidental injuries. State tort laws have widely disparate standards for compensability of such damages. The Act would be greatly improved if it mitigated the disparate effects by ensuring the compensability of those damages as long as the claimants can prove actual harm and causation. The difficulties of proof will be more than adequate to dispose of unmeritorious claims.

CONCLUSION

The concept of waiver of defenses is a step toward improving the public protection component of the Price-Anderson Act, but the extraordinary nuclear occurrence threshold tends to make the promise of protection largely illusory for an important class of accident victims. To the extent that future accidents cause substantial economic dislocation without heavy physical damage, the threshold creates a substantial gap in protection of the pub

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Journal of Law Reform

[VOL. 14:3 lic. The threshold should be abolished because it is superfluous as a screen against frivolous claims, excessively broad in its application, and a source of needless uncertainty and complexity in administration. Additionally, Congress should repeal the twentyyear limit on waiver of statute of limitation defenses, so that victims of nuclear incidents are not unfairly precluded from receiving compensation for their injuries.

-Dean R. Tousley

38-299 0-84-37

ENVIRONMENTAL POLICY INSTITUTE

SUMMARY OF

THE NUCLEAR REGULATORY COMMISSION'S
REPORT TO CONGRESS:

"THE PRICE-ANDERSON ACT: THE THIRD DECADE"

(NUREG-0957)

PREPARED BY

KEIKI KEHOE, DIRECTOR

NUCLEAR ACCOUNTABILITY AND INSURANCE PROJECT

ENVIRONMENTAL POLICY INSTITUTE

JANUARY 1984

218 D Street, S. E., Washington, D.C. 20003 (202) 544-2600

SUMMARY OF NUREG-0957

"THE PRICE-ANDERSON ACT: THE THIRD DECADETM

BACKGROUND ON THE PRICE-ANDERSON ACT

The Price-Anderson Act is the federal law that limits the liability of the nuclear industry in the event of an accident. Enacted by Congress in 1957 for a ten-year period, the Act has been amended and extended for two additional ten-year periods. The current Act expires in 1987.

The original intent of the Act was two-fold: 1) to encourage the development of commercial nuclear power, and 2) to provide for compensation to the public.

In the event of an accident, the nuclear industry's liability is limited to the amount of money in a public compensation fund. The fund comes from two sources: 1) liability insurance purchased by utilities--currently worth $160 million, and 2) post-accident assessments of $5 million per licensed nuclear plant, paid by the utilities that own nuclear reactors. With 82 nuclear plants currently licensed to operate, the fund would total $570 million.

After an accident, the $570 million would be divided among all claimants. The public is strictly prohibited from suing anyone responsible for an accident--regardless of negligence or fault--for any damages that exceed the $570 million fund.

THE NUCLEAR REGULATORY COMMISSION REPORT ON PRICE-ANDERSON

The 1975 renewal of the Price-Anderson Act required the NRC to submit a report to Congress on the need for extension and/or modification of the Act, by August 1, 1983. In early August a draft of the report was circulated widely among the press and public. In late December, the final report, "The Price-Anderson Act: The Third Decade," was sent to Congress.

The NRC report analyzes a wide range of issues and makes seven specitic policy recommendations. The report will be valuable in the Congressional review of Price-Anderson for two reasons. First, it identifies nearly a dozen issues which Congress will need to address; and second, it proposes an alternative to the current system of limited liability.

The fundamental flaw in the report is its lack of attention to nuclear safety issues. Critics of the Price-Anderson Act have consistently argued that limited liability serves as a disincentive tor nuclear safety. Despite recent reports from a variety of experts (including publications from the American Enterprise Institute and the Heritage Foundation) calling for a reinstatement of market incentives for nuclear safety, the report fails to acknowledge any relationship between safety and limited liability. As a result, the NRC proposal for a new system of limited liability does not shift the primary financial

responsibility for an accident to the companies at fault. Instead, the proposal continues to insulate the companies that design, build and operate nuclear plants from full liability, even in the event of negligence or willful misconduct.

Finally, the NRC report is significant as much for what it does not say, as for those issues it addresses. The August draft contained an extensive review of nuclear safety studies, including specific figures related to accident probabilities and consequences. Although all of the calculations had been previously released to the public, this section met with harsh criticism from representatives of the nuclear industry. In the final report, released in December 1983, the entire section was deleted and an amorphous discussion of the "progress" the NRC is making in the area of nuclear safety was added.

THE SUMMARY

The attached summary is a series of excerpts from the NRC report, with brief comments on the issues that are likely to be controverial. Where important changes have been made between the August draft and the final report, some references are made to the earlier draft. The questions raised by the report include the following:

1. DOES THE NUCLEAR INDUSTRY NEED THE PRICE-ANDERSON ACT?

2. SHOULD THERE BE AN ABSOLUTE LIMIT ON LIABILITY?

3. HOW LARGE SHOULD AN ANNUAL UTILITY ASSESSMENT BE?

4. SHOULD THE "EXTRAORDINARY NUCLEAR OCCURENCE" THRESHOLD BE RETAINED?

5. CAN THE PROBLEM OF COMPENSATING LATENT INJURIES BE OVERCOME?

6. ARE UTILITIES BUYING ENOUGH LIABILITY INSURANCE?

7. SHOULD THE COSTS OF INVESTIGATING, DEFENDING AND SETTLING CLAIMS COME OUT OF THE PUBLIC COMPENSATION FUND?

8. IS THE PRICE-ANDERSON ACT A SUBSIDY?

9. SHOULD HOMEOWNER'S INSURANCE POLICIES EXCLUDE NUCLEAR RISKS?

10. WHO SHOULD PAY FOR DAMAGES CAUSED BY SABOTAGE?

11. WHO SHOULD PAY FOR THE COSTS OF A PRECAUTIONARY EVACUATION?

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