policies written by the pools, elimination of the exclusion of the nuclear risk from personal property insurance policies and eliminating the economic channeling effect of the Price-Anderson Act by applying retrospective premium assessments to manufacturers, architect-engineers, and suppliers as well. For various reasons, it was our conclusion that a simple increase in the level of financial protection available under existing law would be preferable for reasons of simplicity to any such indirect method of increasing financial protection. Changes in Substantive Law In addition to proposals to increase the level of financial protection available, a number of suggestions have been made which would facilitate recovery in actions brought under the Act. One of these, which draws on other legislation being considered by Congress, would ease the plaintiff's burden of establishing causation in situations involving latent injury claims by adopting a probability of causation approach. Such proposals would, for example, permit a plaintiff to recover some portion of his damages related to the percentage probability that his injury was the result of the accident even if he could not reach the preponderance of the evidence standard applied under tort law. Because the Price-Anderson Act leaves the question of causation, like other questions of substantive law, to the state where the accident occurred or whose law would otherwise apply, -21 incorporation of any such proposal into the Price-Anderson system would require a significant amendment to the Act which would supplant state tort law and substitute a federal rule of substantive law. Clearly adoption of such an approach, particularly in the absence of any aggregate limitation on liability or any limitation on the amount available to each individual claimant, could substantially broaden the potential exposure of industry to claims arising out of a nuclear accident. If, on the other hand, a limitation on liability were retained, the primary effect would be to require the Court having jurisdiction over claims arising under the Act to consider the potential for latent injury claims in allocating priority to competing claims. It was our conclusion that, given the present level of scientific knowledge as to causation of those diseases which are generally associated with exposure to radiation, and the little experience to date with application of probability of causation, it would appear to be premature to consider any amendment of the Price-Anderson Act which would incorporate such a new rule of substantive law and depart from the original decision to leave the determination of liability to the law of the various states. A more modest proposal to amend substantive law would eliminate the concept of the ENO and apply Price-Anderson to all nuclear incidents regardless of their size. In view of the widespread adoption of strict liability today, we question 38-299 0-84--42 -22 whether such an amendment would have any substantial impact on either industry the public. The insurance industry, however, takes the position that experience under existing law supports their concern that elimination of the ENO concept would result in spurious claims. The great majority of claims, they point out, have not involved the kind of public liability Price-Anderson was designed to cover, but have been brought by employees of contractors of reactor operators and have been based on situations which do not involve off-site releases. They argue that it is appropriate to retain the defenses normally available under state law with regard to these claims. The final proposal for a change in substantive law includes an extension of the waiver of statutes of limitation to encompass statutes foreclosing suits more than twenty years after an incident. Again, these proposals are directed at the latent injury problem and could potentially, in the absence of the limitation on liability, broaden the exposure of industry and affect the allocation of priority of claims. Because the substantive law of the states may change in years to come, for example, by adoption of probability of causation approaches, it is difficult to assess at this time how great any additional exposure might be. Again, in considering proposals to extend the time in which suits may be brought, Congress will have to consider the balance between offering fuller protection to the public and the possible -23 disincentive which any such amendment would provide to the participation of industry in the nuclear energy program as well as whether the priorities for compensation as set forth in present law should be altered. In conclusion, our study does not reach any specific recommendation as to amendment of existing law, rather, it provides a historic overview of existing law, identifies the competing policies and goals which will have to be addressed in considering the specific proposals before Congress, and emphasizes the importance of considering each proposal in the context of the resolution of competing policy considerations reflected in existing law. -24 TESTIMONY OF WILLIAM C. WOOD Before the HOUSE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS June 11, 1984 Good afternoon. My name is William C. Wood and I am currently an assistant professor of economics at the University of Virginia. I have been researching nuclear liability issues since 1977 and I am grateful for the opportunity to tell you about my findings today, as they apply to your consideration of the Price-Anderson Act. Sound public policy in this area requires the insights of many different disciplines engineering, law, economics, and more. My research is based on the methods of economics and the social sciences, and I'll be addressing the issues from that perspective. : nuclear Congress faces a much different situation than it did in 1974 and 1975 when Price-Anderson was last considered. The Nation has learned from Three Mile Island that nuclear power plant accidents can happen, so that we had better be ready for |