million, which exceeds the limits prescribed in the OEEC convention. We hope that both the OEEC and Euratom conventions will come into effect in 1962. The International Atomic Energy Agency is attempting to prepare an international convention concerning civil liability for land-based reactors which would be both adequate and acceptable on a wider than regional basis. Difficult problems are inherent in such an attempt, in view of the wide divergences that exist in the economic positions in the status of nuclear development and in the legal systems of the various nations of the world. The United States has supported the preliminary work that has been done by the IAEA on this convention. A revised draft, prepared in May 1961 by an intergovernmental committee which included the United States, is to be circulated to all member governments for consideration.

An international convention applicable to maritime reactors was drafted at a diplomatic conference in April 1961 in Brussels at which some 50 countries were represented by official delegations and a number of countries and international organizations were represented by observers. This draft convention is being sent to governments for consideration. The tentative plans are for a signing conference be called for January 1962. The convention generally conforms to the views of the United States on such a convention expect that a significant problem is raised by inclusion of nuclear warships in the coverage of the draft convention.

With regard to national measures in this field, legislation has been enacted in the United Kingdom, the Federal Republic of Germany, Switzerland, Sweden, and Japan. Furthermore, such legislation is before the Philippine Congress and is in various stages of preparation in Italy, France, Austria, Spain, Norway, Denmark, the Netherlands, Israel, and Venezuela. A number of other

governments have reported that the problem is under active consideration.

The Government of Belgium is considering legislation which would provide the supplier of the Belgian power reactor (BR-3) with indemnity against nuclear liability, thus clearing the way for startup of the reactor. We are hopeful that this legislation will be passed in the near future.

MARITIME INDEMNITY PROBLEMS

NS "Savannah" foreign acceptance agreements

Designated foreign nuclear, maritime, and public health officials of Belgium, Denmark, France, Germany, Greece, Italy, Norway, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom have met with Maritime Administration and AEC staff to work out acceptance agreements for the NS Savannah. In general, negotiations are progressing satisfactorily on matters related to general operating conditions, safety evaluation, and inspection. Liability provisions for an agreement with Germany have been tentatively agreed upon at the staff levels. Negotiation of liability provisions for agreements with the Netherlands, Greece, and Norway are at an advanced stage. The United Kingdom liability position remains unchanged from that described in the Commission's fourth annual report on its indemnity operations, dated March 31, 1961. The conclusion of acceptable indemnity arrangements continues to present problems, which we hope can be resolved through mutual effort during the months ahead.

STATEMENT ON H.R. 5215 AND S. 1144

The Commission was requested to comment on H.R. 5215 and S. 1144. On June 29, 1961, the committee received testimony on these bills from witnesses representing the owners of potash industry properties located in New Mexico near the site selected for Plowshare Project Gnome. This statement reflects the comments of the Commission on these bills which were furnished the committee by letter dated July 14, 1961.

S. 1144 and H.R. 5215 are identical bills, the primary purpose of which is to make the United States liable without proof of negligence or a wrongful act for damage from a nuclear incident "which occurs in the course of the conduct of any activity of the Commission involving the deliberate underground detonation of a nuclear explosive device."

Possible activities of the Commission that would fall within the scope of the bill are underground nuclear detonations in the Plowshare program, the seismic improvement program, and in nuclear weapons testing programs if they should be resumed.

We understand that the bills were introduced to provide a basis for assuring residents and property owners in the vicinity of a proposed underground nuclear detonation that they would be compensated in the event of injury or damage from the detonation. The Commission cannot give such an assurance under existing laws since none of the courses of action available to a person damaged by an underground nuclear detonation provides a guaranteed remedy. For example:

1. Under the Federal Tort Claims Act an agency of the United States is not liable for damage arising from its activities in the absence of proof of a negligent or wrongful act or omission by a Government employee acting within the scope of his employment.

2. Under the Price-Anderson Act the Commission may enter into indemnity agreements with its contractors under contracts for the benefit of the United States involving activities under the risk of public liability for a substantial nuclear incident. Public liability is defined by the act as legal liability. In connection with any program involving the deliberate underground detonation of a nuclear explosive device the Commission would expect to enter into Price-Anderson indemnity agreements with the principal contractors engaged in the program. However, since the indemnification runs only to the legal liability of an indemnified person it may be possible for the indemnified contractor to prove a defense in an action for damages-a defense such as sovereign immunity to suit; the absence of negligence, if the applicable State law does not recognize strict liability; the fact that the contractor was merely performing a Government contract in accordance with its specifications; or that the Commission and not the contractor was liable for acts of the contractor's employees while they were under the control of the Commission's test manager.

3. Any administrative settlement by the Commission under the Federal Tort Claims Act of claims for damages in amounts not exceeding $2,500 is limited to damage caused by a negligent or wrongful act of a Government employee.

4. The Commission's authority under section 167 of the Atomic Energy Act to settle claims not in excess of $5,000 is limited to claims for damage produced in the conduct of the Commission's programs for testing atomic weapons. This procedure is therefore not available in connection with Plowshare or seismic improvement program detonations. However, it should be noted that the omnibus bill recommended by the Commission (S. 2117 and H.R. 7798) which is now before the committee, contains a proposed amendment to section 167 which would extend the Commission's authority under section 167 to settle claims not in excess of $5,000 for damage resulting from detonations of explosive devices in any Commission program. It would also authorize the Commission to recommend to the Congress meritorious claims in excess of $5,000.

A person damaged by an underground nuclear detonation must therefore in order to recover either prove negligence or a wrongful act or omission or overcome any defenses that may be available to indemnified persons.

However, we believe the probability of serious damage from any underground nuclear detonation is remote. The Commission follows the practice of approving the detonation of nuclear devices only after it is satisfied that the detonation can be conducted safely. With respect to Plowshare Project Gnome in which it is planned to detonate a 5 kiloton nuclear device at a depth of 1,200 feet, independent expert consultants recommended by the National Academy of Sciences and retained by the Commission have reported that there is no serious danger of damage to any of the potash mines from a 10 kiloton detonation at the proposed location selected. That report of the panel stated:

"In general, it is concluded that there is no serious danger of major damage to any of the mines that would result from a 10 kiloton detonation at the proposed location for Project Gnome. The added stresses that will be produced by such a shot are negligible in comparison with those which already occur in the mined areas as the pillars are robbed and the mining operation is completed. The effects that might be reasonably expected from the nuclear shock are probably less than those several hundred feet away from the normal blasting operations daily conducted in the mines. Since these only rarely produce any damage at distances more than a few feet away, it is not expected that the nuclear shock will produce any serious effects. The possibility of a crack or breakthrough from the mine to the surface, causing possible flooding of some of the mined areas, might be of more serious concern. However, it is not con

sidered that this would be a major source of difficulty because of the small motions and accelerations that are involved, and the general large scale of the wavelength of the motions, which is considerably larger than the width of the mined areas, in general. It is therefore believed that the possibility of damage to be expected is slight enough that the project should be carried out as planned." Since that report the yield of the device has been reduced from 10 kilotons to 5 kilotons. With your permission we would like to submit for the record a statement proposed by Dr. Roland F. Beer as member of the panel of consultants, commenting on the technical testimony furnished the committee at the hearing June 29, 1961, together with an outline of Dr. Beer's professional background.

Even though in our opinion the probability of serious damage from any underground detonation is slight and enactment of the Commission's omnibus bill will provide authority to settle claims in amounts up to $5,000 enactment of S. 1144 or H.R. 5215 should allay the concern of residents and property owners in the vicinity of a proposed underground nuclear detonation over their possible inability to obtain compensation for serious damage from a detonation. Enactment of either bill should therefore make programs of the Commission involving deliberate underground nuclear detonations more acceptable to the public.

At the same time the proposed bills would have the undesirable effect (identified in the letter of the Department of Justice which was furnished the committee with the Commission's letter of July 14) of creating an avenue other than the Federal Tort Claims Act for suits against the Government, by making the United States absolutely liable in a suit in a Federal court for damage arising out of the activities covered by the bills. Generally speaking statutes authorizing redress, outside the Federal Tort Claims Act, to persons injured or damaged by Government activities provide an administrative remedy, often limited in amount, to be exercised in the discretion of the interested agency, rather than a legal right to be asserted in the Federal courts. (Sec. 167 of the Atomic Energy Act is such a provision.) In addition, relief by private bills is available in such

cases.

In the above-mentioned letter the Department of Justice stated:

"Inasmuch as the United States is currently liable for the results of negligent or wrongful acts or omissions of its employees pursuant to the Federal Tort Claims Act, 28 U.S.C. 1346(b), it would appear that the principal thrust of the present legislation is to subject the United States to liability in the courts whether the plaintiffs can show negligence or fault on our part or not. The bills establish no criteria or standards for determining the liability provided by this legislative proposal. In addition, there is the incongruity of tacking a Federal consent statute on to a provision of the law which is primarily concerned with the indemnification of independent contractors with the Commission. "The Department of Justice is opposed to the enactment of legislation which would provide for 'absolute liability' without the necessity of showing negligence or fault in the Federal courts. In other words, if compensation is to be a matter of grace as distinguished from a provable right an administrative rather than a judicial remedy should be provided. If it is desired to compensate third parties on such a basis, it would appear that the machinery provided by 42 U.S.C. 2207 which currently authorizes the Commission to settle and adjust claims for any damage can be made available for that purpose."

The Department's letter also indicated several areas in which the bills in its opinion should be amended.

We have been advised by the Bureau of the Budget that it strongly recommends against enactment of either bill for the reasons set forth by the Department of Justice.

Representative PRICE. The committee will adjourn until 10 a.m. tomorrow morning, at which time we will resume these hearings with public witnesses.

(Whereupon, at 11:15 a.m., Tuesday, July 18, 1961, the subcommittee was adjourned, to reconvene at 10 a.m., Wednesday, July 19, 1961.)

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

WEDNESDAY, JULY 19, 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, Thomas, and Morris; Senator Pastore.

Also present: James T. Ramey, executive director; 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 continues hearings this morning on indemnity.

We shall receive the testimony of representatives of the reactor and insurance industries as to operations under the indemnity provisions of the Atomic Energy Act of 1954. We also look forward to receiving comments of these witnesses on proposed legislation to amend the Price-Anderson Act so as to cover incidents occurring outside the United States. We understand that witnesses testifying this morning may also wish to comment on recent legislative proposals concerning the Commission's liability for underground nuclear

detonations.

Our first witness this morning is Mr. D. R. Shoults, of the General Electric Co.

Mr. Shoults, will you come around?

We are glad to have you with us again, Mr. Shoults.

STATEMENT OF D. R. SHOULTS, REPRESENTATIVE, ATOMIC DEVELOPMENT, GENERAL ELECTRIC CO.; ACCOMPANIED BY E. T. MAHER, COUNSEL, ATOMIC DEVELOPMENT, GENERAL ELECTRIC CO.

Mr. SHOULTS. Thank you, Mr. Price.

Representative PRICE. You and I have been fighting a losing battle on the nuclear-powered airplane. Maybe some day our judgment in that cause may be vindicated.

Mr. SHOULTS. I hope so, sir.

I am D. R. Shoults, representative, atomic development for General Electric Co. I am accompanied here this morning by Mr. E. T. Maher, counsel, atomic development, General Electric Co.

I am here to speak in support of the proposal for an amendment to the Atomic Energy Act to enable the Atomic Energy Commission to indemnify contractors against liability for nuclear incidents involving U.S. Government activities which occur outside of the United States.

Two proposals are before the committee. One would extend the Price-Anderson definition of "nuclear incident" to embrace incidents outside the United States for the purpose of contractor indemnification.

The second would additionally enlarge the authority of the Atomic Energy Commission to enable it to enter into indemnification agreements with contractors of all Government agencies.

Generally, our position is this:

(1) The first proposal for coverage of contractors for offshore incidents involving Government instrumentalities would provide an urgently needed solution to a pressing current problem. We urge the committee to take action to provide this coverage.

(2) To be fully purposeful for contractor protection, the covered offshore incidents should include those involving licensed agencies of the Government.

(3) The Atomic Energy Commission should also be authorized to provide indemnification for those Department of Defense joint projects which are not now being covered.

A number of comments on the drafting of the proposals before the committee are in an appendix which has been filed with this state

ment.

DOMESTIC GOVERNMENT ACTIVITY

The provisions of the Price-Anderson Act as they relate to private licensees are well adapted to providing the unbrella-type indemnity coverage which was contemplated by the Congress when it enacted this statute. In the main, in this area the hazard remains resident at a site, or in transit between sites.

The contract activities, on the other hand, are in major portion devoted to work which entails the creation not only of a hazard at a site, but also of highly mobile, uninsurable hazards, worldwide in range, which continue to exist long after work on the contract under which they were created is completed.

We believe that the provisions of section 170d were intended to afford ample authority in the Commission to assure that any hazard of a substantial domestic nuclear incident which comes into being in the course of work under any Commission contract or joint project could be adequately covered by an agreement of indemnification. This coverage would be without regard to the time or the place within the United States of the occurrence of the incident.

As in the case of licensees, we believe it was contemplated that the contractor indemnification authority of the Commission would be adequate to extend the statute's umbrella-type coverage to any person who might become liable for any domestic nuclear incident which is made possible by work under a Commission contract or joint project.