Operations Under the Indemnity Provisions of the Atomic Energy Act of 1954

OPERATIONS UNDER THE INDEMNITY PROVISIONS OF THE ATOMIC ENERGY ACT OF 1954

TUESDAY, JULY 18, 1961

CONGRESS OF THE UNITED STATES,

SUBCOMMITTEE ON RESEARCH,

DEVELOPMENT, AND RADIATION,

JOINT COMMITTEE ON ATOMIC ENERGY,

Washington, D.C.

The subcommittee met at 10 a.m., pursuant to notice, in room P-63, the Capitol, Hon. Melvin Price (chairman of the subcommittee) presiding.

Present: Representatives Price, Morris, and Westland; and Senator Anderson.

Also present: James T. Ramey, executive director; and Jack R. Newman, professional staff member, Joint Committee on Atomic Energy.

Representative PRICE. The subcommittee will be in order.

The Subcommittee on Research, Development, and Radiation of the Joint Committee on Atomic Energy opens hearings today on operations under the indemnity provisions of the Atomic Energy Act of 1954.

In the course of these hearings, we shall receive testimony on the AEC's annual report to the Joint Committee on Atomic Energy on operations under section 170 of the Atomic Energy Act.

We also plan to give further consideration to proposed legislation affecting the Commission's liability for underground nuclear detonations. We also expect to discuss recent proposals to amend the PriceAnderson Act so as to extend coverage to incidents occurring outside the United States.1

This morning we well hear from witnesses from the Atomic Energy Commission.

Before our first Commission witness takes the stand, I would like to place in the record at this point the press release announcing our schedule of witnesses.

(The material referred to follows:)

[No. 326. From the Offices of the Joint Committee on Atomic Energy. For release Monday a.m., July 17, 1961]

JOINT COMMITTEE ON ATOMIC ENERGY ANNOUNCES WITNESSES FOR HEARINGS ON INDEMNITY ON JULY 18, 19, and 20, 1961

A tentative schedule of witnesses to testify at the hearings on indemnity before the Subcommittee on Research, Development, and Radiation of the Joint Committee on Atomic Energy was announced today by Congressman Melvin Price, chairman of the subcommittee.

1 On Sept. 15, 1961, Congressman Price introduced a bill (H.R. 9244) to expand the coverage of the Atomic Energy Act of 1954 so as to cover nuclear incidents occurring outside the United States. Mr. Price's statement on the floor, the bill, and an analysis thereof appear as appendix 6, p. 177.

The hearings will begin on Tuesday, July 18, at 10 a.m., in room P-63, the Old Supreme Court Chamber in the Capitol. They will continue through Thursday, July 20.

In accordance with the requirements of section 170 of the Atomic Energy Act, the Commission forwarded to the Joint Committee a report on operations under the indemnity provisions of the act for 1960. This report was released to the press by the Atomic Energy Commission on April 13, 1961. The Commission will testify on this report on Tuesday, July 18.

In the course of the hearings, the subcommittee plans to give further consideration to two bills, S. 1144 (introduced by Senator Anderson) and H.R. 5215 (introduced by Congressman Morris) concerning the Commission's liability for underground nuclear detonations. This legislation establishes rules of liability for damages resulting from such activities as the plowshare program of peaceful nuclear explosions.

In addition, the subcommittee will discuss recent proposals to amend the Price-Anderson Act so as to extend its coverage to incidents occurring outside the United States. This proposal was set out in detail on pages 137-139 of the published 1961 hearings on the "Development, Growth, and State of Atomic Energy Industry." The subcommittee also expects to receive testimony on the regulatory and insurance problems associated with the transportation of radioactive materials.

A complete list of witnesses, subject to change, is attached.

LIST OF WITNESSES ON INDEMNITY HEARINGS JULY 18, 19, and 20, 1961

July 18, Tuesday, 10 a.m.: Atomic Energy Commission witnesses.
July 19, Wednesday, 10 a.m. :

Mr. DeRoy C. Thomas, Nuclear Energy Liability Insurance Association.
Mr. Roy Shoults, General Electric Co.

Mr. Hubert W. Yount, Liberty Mutual Insurance Co.

Mr. Ambrose B. Kelly, Associated Factory Mutual Fire Insurance Companies.

July 20, Thursday, 10 a.m.:

Mr. Arthur W. Murphy, law firm of Baer, Marks, Friedman & Berliner.
Mr. Clark C. Vogel, the Glenn L. Martin Co.

Mr. Oliver Townsend, New York State Office of Atomic Development.

Mr. Milton Stewart, American Bridge, Tunnel & Turnpike Association, New York Thruway Authority.

Representative PRICE. Mr. Olson, are you going to represent the Commission today?

Mr. OLSON. Yes, sir.

STATEMENT OF LOREN K. OLSON, COMMISSIONER, ACCOMPANIED BY FRANK N. PARKS AND JOSEPH HENNESSEY, OFFICE OF THE GENERAL COUNSEL; ROBERT LOWENSTEIN, ACTING DIRECTOR, DIVISION OF LICENSING AND REGULATION; NEIL D. NAIDEN, GENERAL COUNSEL; MYRON KRATZER, DEPUTY DIRECTOR, DIVISION OF INTERNATIONAL AFFAIRS; AND ROLAND F. BEERS, CONSULTANT, ATOMIC ENERGY COMMISSION

Mr. OLSON. I have a prepared statement. What is your pleasure? Would you like me to read it, or merely submit it for the record and submit to questioning? It is pretty lengthy.

Representative PRICE. I would suggest that you summarize it and submit the full statement for printing in the record.

Mr. OLSON. Because of the complexity of the subject matter, Mr. Price, it would be awfully difficult to summarize.

Representative PRICE. Well, if that is the case, you might select ain parts of it and touch on what you consider to be the most im

portant parts. You will have to be the judge of what to submit and we will insert the full statement at the end of your oral testimony (p. 35).

Mr. OLSON. All right.

This statement summarizes the principal developments in the administration of the indemnity program since the committee's hearings held in April 1960. They are discussed in somewhat greater detail in the Commission's report of March 31, 1961, to the Joint Committee on operations under section 170 of the 1954 act. (See app. 4, p. 133.)

REEVALUATION OF FINANCIAL PROTECTION REQUIREMENTS

As the Joint Committee was informed at the indemnity hearings in April 1960, the Commission, in announcing a comprehensive revision of the financial protection requirements in part 140 in March 1960, also stated its intention to reevaluate those requirements by the end of 1960. The reevaluation study included consideration of the recommendations of the two nuclear liability insurance pools, comments received in connection with those recommendations, and suggestions and views expressed at an AEC industry advisory conference held on October 11, 1960, with representatives of the reactor and insurance industries.

As a result of its study, the Commission issued an amendment to part 140, which increased to 200 percent (from the former 150 percent) the maximum adjustment in the amount of financial protection because of population density in the area surrounding the reactor site. The insurance pools had recommended an increase to 400 percent. No other change was made concerning amounts of financial protection.

The Commission revised the location factor range because its study had indicated the desirability of giving greater effect in the formula to variations in population density.

ADOPTION OF FORMS OF INDEMNITY AGREEMENTS

With respect to indemnity agreements, the Commission, in March of this year, adopted amendments to part 140 which establish the forms of agreements which the Commission will execute with licensees furnishing financial protection. Before adopting these forms of indemnity agreements, the Commission considered numerous comments and suggestions received from interested members of the public and from participants in industry advisory conferences held to consider the agreements.

By letter dated June 5, 1961, the ad hoc committee on nuclear liability and insurance of the Atomic Industrial Forum made a number of suggestions concerning these definitive forms of indemnity agreement.

With the permission of the committee, I would like to offer a copy of the Forum's letter for incorporation in the record of this hearing. Is that acceptable?

Representative PRICE. Yes.