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The Price-Anderson Indemnity Act provides financial protection to both the public and the nuclear power industry in the event of a serious nuclear accident and also sets a limit to the amount of liability for such an accident. The Act was twice extended and is currently scheduled to expire on Aug. 1, 1987. Although further legislative action is not expected during the 95th Congress, the indemnity act remains one of the points at issue in the continuing controversy over nuclear power. The controversy was accentuated when a Federal district judge declared the liability limitation to be unconstitutional. The primary issues are: To what extent should the public underwrite the risks of public liability from major accidents caused by nuclear power? To what extent should manufacturers and operators of nuclear facilities be granted limited liability in the event of a nuclear accident? EAQEGROUND AND P0LlQZ-A§ALZ§l§ The Price-Anderson Indemnity Act was enacted as P.L. 85-256 in September 1957. It appears as Section 170 of the Atomic Energy Act of 1954 as amended. The two major objectives of the Act were (1) to assure the availability of funds to satisfy liability claims in the event of a nuclear incident, and (2) to remove the growth deterrent for the nuclear power industry presented by +‘e threat of unlimited liability claims in the event of a nuclear incident. -, meet these objectives, the Act stipulated that: ? —- Each nuclear licensee furnish $60 million of private insurance (the maximum amount available in 1957) to cover public liability claims against the licensee and its subcontractors; -- The ABC provide indemnity protection up to $500 million for each nuclear incident in addition to the $60 million of private insurance supplied by the respective licensees; A —-The maximum liability for any nuclear incident shall be the sum of the private insurance and the ABC's indemnity, but shall not exceed a total of $560 million. The amount of private nuclear liability insurance available increased several times from the 1957 level of $60 million to $140 million in 1977. The level of private insurance will probably continue its gradual increase in the future. Although the amount of available private insurance increased over the years, the upper limit of total financial liability remained constant at $560 million, thereby decreasing the ABC's maximum indemnification from the original $500 million to $fl20 million. The private insurance industry« has organized the juuclear. Energy Liability-Property Insurance Association (BEL-PIA) to provide property and 1 bility insurance for owners of nuclear reactors and other nuclear facilities. At present, it provides liability insurance to all operating nuclear facilities and property insurance to 24. The association also maintains a liability pool, which, since it began operation in 1957, has paid out $600,000 in losses and loss expenses through 1976. As a result of 27 CBS‘ 2 IB75013 UPDATE-On/08/77 reported nuclear incidents during more than 19 years, 20 claims have been filed. Two were not within the liability pool coverage and four remain unsettled. Of these, three are for bodily injury and one for property damage. About $uoo,ooo has been paid out for claims filed by workers in 196? and 1960. No claims have been received as a result of the operation of a nuclear power plant. A similar mutually owned organization is the Mutual Atomic Energy Liability Underwriters. Each nuclear licensee is required to pay an annual “administrative” fee to the Nuclear Regulatory Commission for the Government's share of the idemnity. Typically, a 1000-megawatt power plant would pay about $90,000 per year. A§2lQ!-§1-2§§.2fll§-§Q!§E§§§ The Federal Energy Administration on July 11, 1975, submitted draft legislation extending the Price-Anderson Act for 10 years from August 1977 to the Joint Committee on Atomic Energy. The draft legislation contained the following features: (1) The Government's portion of the liability insurance would be phased :out by establishing an insurance pool of retrospective premiums to be paid by each nuclear reactor operator. Such premiums would be deferred until public liability from a nuclear incident would exceed the private insurance vprotection (currently $140 million). with an increase in nuclear power facilities, the Government's portion of insurance liability would decrease, until it was entirely replaced by premiums and private uinsurance. The maximum amount of liability coverage would float upward accordingly. The retrospective assessment was to be between $2 million and $5 million pe reactor -- the exact amount to be determined by the NRC. (2) The Government would be the ultimate assurance to the public that the designated funds would be available in the event of a nuclear incident. However, the private insurance pools NEL-PIA, subsequently set up a separate $30 million contingent liability capacity in case one or more reactor operators could not immediately pay the retrospective premium. The operator would be required to repay any funds advanced. A (3) There would be no immediate increase in the current $560 million limit on liability. However, depending upon the number of new reactors and the assessed premium rate, the upper liability limit could float upwards. Representatives Price and Anderson introduced this legislation into the House on July 1h, 1975, and it became H.R. 8631. An identical hill, 5. 2568, was introduced in the Senate on Oct. 28, 1975, by ur. Pastore. and met on Oct. 31 and Nov. 6 to mark up the bill. iiThe bill was reported out in the House (Report no. 94-648) on Nov. 10, 1975, and in the Senate (Report no. 9n-usu) on Nov. 13, 1975. In marking up the bill, the Joint Committee reemphasized then concept of congressional responsibility in case of an accident causing more damage than the $560 million liability limit would cover. New language in the bill itself provided that ‘...in the event of a nuclear incident involving damages ' excess of that amount of aggregate liability, the Congress will thoroughly review the particular incident and will take whatever action is deemed necessary and appropriate to protect the public from the consequences of a disaster of such magnitude.“ In its report on the bill, the Joint Committee clas-- 3 IB75013 UPDATE-Oil/08/77‘ noted 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." The bill passed the House on iDec. 8, 1975, and the Senate, with amendments, on Dec. 16, 1975. The House accepted the Senate amendments on Dec. 17, clearing the bill for White House action. ‘ In the House action, several floor amendments were rejected in passing the bill. An amendment by hr. Bingham, which would have removed the $560 million limitation on liability, was defeated (217-176). Another amendment, proposed by Mr. Eckhardt, would have allowed any person to bring action in Federal court testing the constitutionality of the liability limitation; it was rejected (225-161). Hr. Scheuer's amendment, to extend Price-Anderson coverage to include accidents resulting from illegally diverted nuclear material, was also defeated, as was Hr. Jeffords's amendment to reduce the effective life of the bill, from 10 years to 5 years. Final passage of the bill was 329 to 61. In the senate, an amendment similar to the Bingham amendment removing the $560 million liability limitation was offered by Hr. Gravel and defeated (62-34). Two amendments by Mr. Hathaway, however, were accepted. One extended the time during which a claim of damage could be made from 10 years following an accident to 20 years. The second eliminated the provision that the costs of investigation, settlement, and defense of claims be deducted from the $560 million total available. The final vote on the bill in the Senate was 76 to 18. The House concurred in the Senate amendments and the bill was sent to the White House on Dec. 19, 1975 and was signedm into law '“.L. 94-197) on Dec. 31. During the Senate floor debate, Hr. Percy made several suggestions of ways in which the amount available for compensation could be increased. Joint Committee Chairman Pastore promised to take up the question in a separate hearing, which was held Mar. 3. By that time, hr. Percy had concluded that the most practical way to increase the amount available was to make the retroactive premium obligations of nuclear utilities larger. He testified that a number of utilities informed him they could accept a premium of between $10 million and $15 million per reactor. No further action was taken on the proposal. The law as passed in 1975 (P.L. 94-197) specified a range of between $2 million and $5 million; NRC later determined that the premium should be $5 million. On mar. 31, 1977, Federal Judge James B. ncnillan of the western District of North Carolina struck down the liability limitation as an unconstitutional deprivation of property without due process of law. The wdecision applies only to nuclear plants in Western North Carolina, and is being appealed to the Supreme Court. L§§£§LA2lQ! H.B. 8631, providing for the extension and amendment of the Price-Anderson Act, which concerns insurance and indemnification of privately 0 ed nuclear reactors, was passed by the 94th Congress and became law, P.L. 9u—197, when it was signed by President Ford Dec. 31, 1975. The Price-Anderson Act was originally passed in 1957. It set a limit of $560 million on the total amount to be paid out as compensation for damage or cns-— 4 11375013 UPDATE-04/O8/77 injury to the public arising from any single~ nuclear incident. A private insurance pool was set up, originally with $60 million. The Government, for a fee, provided indemnity for the remaining $500 million. Claims «in the event of an accident were to be paid on the basis of proof of damage or injury; proof of negligence would not be necessary. The original act was given a 10-year life, and in 1965 was extended to 1977. During the 93d Congress, a modification of the system was voted, and the program was extended to 1983. However, an amendment giving Congress the option of reversing its approval following the release of a Government study on nuclear reactor safety led President Ford to veto the bill, on the ground that such a provision would be an unconstitutional infringement on Presidential authority. The bill was reintroduced in the 94th Congress in essentially the same form, except that it lacked the veto—stimulating amendment, and extended the bill's effectiveness to 1987. The main feature of the bill was the gradual substitution of Government indemnity with "retroactive premiums“ to be assessed on each reactor. The bill also provided that the $560-million limitation on liability would increase as the retroactive premium total went up. For example, 58 reactors licensed and the preimum set at $5 million, as proposed by the Nuclear Regulatory Commission, the total available would be $290 million, plus $125 million in the private insurance pool, for a total of $415 million. Government indemnity would thus be reduced to $145 million. with 100 reactors licensed, the retroactive premiums added to the private insurance would total $625 million, Government indemnity would be eliminated and the liability limit would be raised to the higher figure. ’ The bill was reported out by the Joint Committee on Atomic Energy on Nov. 10, 1975. During floor debate, amendments were offered in both Houses eliminating the $560 million limitation on liability, but were defeated. The bill passed the House on Dec. 8, and the Senate on Dec. 16, and became P.L. 94-197 when President Ford signed it on Dec. 31. 1 During the 93d and 94th Congresses, the following hearings were held. U.S. Congress. House. Committee on Interior and Insular Affairs. Subcommittee on Energy and the Environment. Oversight Hearings, 94th Congress, 1st session, on atomic energy insurance legislation. Washington, U.S. Govt. Print. 0ff., Dec. 1, 1975. U.S. Congress. Joint Committee on Atomic Energy. H.R. 8631: To Amend and extend the Price-Anderson Act. Hearings, 94th Congress, 1st session. Washington, U.s. Govt. Print. 0ff., Sept. 23-24, 1975. ----e Possible Modification or Extension of the Price-Anderson Insurance ‘ A and Indemnity Act. Phase II, Legislative Proposals: H.R. 14408, . S. 3452, and S. 3254. Hearings, 93d Congress, 2d session. Washington, U.S. Govt. Print. Off., 1974. Part 2. Hearings held may 9-10, 14-16, 1974. Q OSO Congress. CRS- 5 IB75013 UPDATE—04/08/77 ;29RTs AAD co§§aEs§;9§AL.Dos2n§nz§ Joint Committee on Atomic Energy. Selected materials on atomic energy indemnity and insurance legislation. 94th Congress, 1974. March 03/31/77 01/00/77 03/03/76 12/31/75 12/17/75 12/16/75 12/Q8/75 11/10/75 10/30/75 09/23/75 07/14/75 07/11/75 06/09/75 02/21/75 1st session. Washington, U.S. Govt. Print. Off. QEROEQLOGY OF §E§§$§ Federal Judge James ucuillan of the Western District of North Carolina struck down liability limitation as unconstitutional. Nuclear insurance pool, BEL-PIA, announced increase of $15 million in private indemnity pool for liability, for a total of $1uo million. Joint Committee on Atomic Energy held a hearing on possible ways to increase compensation available in the event of a nuclear accident. President Ford signed H.R. 8631 into law (P.L. 94-197). House accepted Senate amendments, clearing H.R. 8631 for White House action. Senate passed Price—Anderson extension with minor amendments. House passed H.R. 8631, Price-Anderson extension. Joint Committee on Atomic Energy reported out H.R. 8631. Final version of Rasmussen Reactor Safety Study was issued. “ 09/2a/75 ——-The Joint Committee on Atomic Energy held hearings on H.R. 8631. Representatives Price and Anderson introduced H.B. 8631 to extend the Price-Anderson Act for 10 years. The Federal Energy Administration submitted draft legislation to the Joint Committee on Atomic Energy that would extend the Price-Anderson Act. The Nuclear Regulatory Commission sent the study of compensation available to the public under the Price- Anderson Act, which covers damages resulting from the theft or sabotage of nuclear materials to Senator John Pastore, Chairman of the Joint Committee on Atomic Energy. The Nuclear Regulatory Commission amended its regulations to reflect the increased commercial insurance coverage CRS— 6 IB75013 UPDATE-OH/0‘ lavailableand to reduce the amount of Government indemnity to $fl35 million. 10/12/7a - President Ford vetoed H.R. 15323. H.R. 15323 as amended passed Senate. 03/oo/7n - Draft report submitted, Reactor Safety Study. An Assessment of Accident Risks in U.S. Commercial nuclear Power Plants, WASH~1400 (The “Rasmussen Report-). 07/10/7n —- H.R. 15323, as amended, passed House. O6/18/7% -— H.R. 15323 reported out of Joint Committee on Atomic Energy. 00/00/66 —— The Price-Anderson Indemnity Act was amended, P.L. 89~6u5. 0Q/00/65 - The Price-Anderson Indemnity Act was extended to August 19 P.L. 89-210. 00/00/57 - The Price-Anderson Indemnity Act was implemented through August 1967, P.L. 85-256. 22£2lQEAL-§EF§RE!§§-§9Q§§§§ Melicher, Ronald. Huclear liability insurance for electric utilities Public utilities fortnightly, v. 95, May 22, 1975: 15-20. Nuclear insurance, questions and answers. Hot man apart, June 1975: 1-2. Nuclear torts: the Price-Anderson Act and the potential for uncompensated injury. New England law review, v. 11, fall 1975: 111-115. Price-Anderson amendment. Nuclear industry, v. 22, June 1975: 10-11. Shapara, Howard K. Nuclear indemnity legislation in the United State Nuclear law bulletin, no. 15, Apr. 1975: 50-62.