PREPARED STATEMENT OF LAURIE R. ROCKETT, In 1983, the Legislative Drafting Research Fund of Columbia University undertook its third study of issues relating to financial protection against nuclear hazards. I served as Project Director of that study, which resulted in publication of the report, Financial Protection Against Nuclear Hazards: Thirty Years Experience Under the Price-Anderson Act. The study was supported by the Atomic Industrial Forum, the Edison Electric Institute, the American Public Power Association, and the National Rural Electric Cooperative Association. The conduct of the study and its content are, consistent with University regulations, wholly independent, and the sponsors had no control over its conclusions or its content except insofar as the scope of the study was defined by the contract. That contract provided that we would identify the range of policy alternatives to extend or amend the Price-Anderson Act prior to 1987 and analyze and describe the relative advantages and disadvantages of each, but that the report would not reach any specific legislative recommendations. The Legislative Drafting Research Fund of Columbia University was established in 1911 and operates on endowed University funds, gifts from alumni and others interested in its work and with funding provided on a cost reimbursement basis from groups that avail themselves of its services. As a non-profit university-connected institute the Fund selects its projects and studies both on the basis of their value and significance for public service and their suitability in providing an opportunity for student training at Columbia Law School in legislative drafting and legislative research. The Fund has close historical connections with the Congressional offices of legislative counsel, which were established in 1918 as a result of a demonstration project run by the Fund for Congress. Indeed, Middleton Beamon and Thomas Parkinson, early directors of the Fund, who participated in this demonstration, later became House and Senate legislative counsel, respectively. The Legislative Drafting Research Fund also has a longstanding interest in Price-Anderson issues. It was Professor Arthur W. Murphy's 1957 study, Financial Protection Against Atomic Hazards, prepared under the auspices of the Fund with the support of the Atomic Industrial Forum, which formed the basis of much of the original Price-Anderson Act. Again, in 1974, we undertook a second study to identify the policy alternatives before Congress in connection with the 1977 expiration of NRC authority to enter into indemnity agreements. The present study is intended to update the 1974 work in the light of the last ten -2 years experience and the proposals presently before Congress to extend or amend the Price-Anderson Act. The report is a lengthy one and in this presentation I will merely stress some of its salient features, referring, for the full discussion, to the report itself. The passage of the Atomic Energy Act of 1954 committed the nation to the development of nuclear energy for peaceful purposes. It soon became apparent that the problem of insuring against the special hazards associated with nuclear energy constituted a roadblock to the achievement of this goal, not because of the likelihood that a major accident would occur, but because of the potential dimensions of such an accident if it should occur. It became apparent too that the amount of insurance which was available on the private market in the 1950's, sixty million dollars, was not sufficient to protect the public or to cover third party liability risks to which the nuclear energy industry would be exposed in the event of a major accident. The Price-Anderson Act of 1957 represented a compromise between Congress' desire to encourage the participation of private industry in the development of nuclear energy and, at the same time, to assure protection to the public in the event of a major accident arising out of the operation of the nuclear energy industry. In requiring that financial protection be obtained from the private market, to the extent it was available, -3 the Act also reflected the interest of the insurance industry to participate in covering the nuclear risk. The original Act provided that certain licensees of the AEC would be required to maintain financial protection in an amount equal to the insurance available from private sources and that, until August 1, 1967, the Atomic Energy Commission would agree to indemnify those licensees for any third party liability incurred in excess of this amount up to five hundred million dollars. A total limitation on liability of any person for a nuclear incident at an indemnified facility or in the course of transportation to it, was set at five hundred million dollars for each incident plus the amount of insurance available from private sources. The determination of the substantive basis of liability, the availability of defenses, the measurement of damages and the period of limitation on bringing suit were initially left entirely to state law. Amendments to the Act, passed in 1958, 1961, 1962, 1965 and 1975 and the administrative regulations promulgated thereunder were designed to close gaps in the public protection afforded by the original Act, to extend protection as new circumstances required, and gradually to transfer the responsibility for providing financial protection which had been assumed by the federal government under the original Act to the nuclear utilities. The 1965 and 1975 amendmensts each extended the authority of the NRC to enter into indemnity agreements for additional ten year periods. The most significant substantive amendments were those enacted in 1966 and 1975. The 1966 amendments authorized the AEC to require operators of facilities entitled to indemnification to waive most of their defenses to tort actions under state law in any action arising under the Price-Anderson Act. Identical waivers were included in the insurance policies designed to fulfill the financial protection requirements of the Act. These waivers permitted individuals injured in a nuclear accident to recover if they could establish the fact of damage and that the damages were a result of the accident regardless of the lack of any finding of fault on the part of the defendant. In addition, the 1966 amendments waived any statute of limitations of less than ten years. The waivers was thought necessary because it had become apparent in the years since passage of the original Act that all states might not apply the doctrine of strict liability to accidents arising out of the nuclear hazard and because, in some jurisdictions, the short statute of limitations applicable to actions in tort could preclude recovery for latent personal injuries which might appear years after a nuclear incident had occurred. The application of the waivers was limited to an accident determined by the AEC to constitute an extraordinary nuclear occurrence (ENO). Such a determination was to be made only if -5 |