seeable plethora of local regulations on the subject makes the transportation of radioactive materials a near impossibility on toll facilities throughout the country.

Very truly yours,

THEODORE H. KLINE, Acting Counsel.

Mr. AXELRAD. That these problems were not of only local importance is, of course, reflected by the recent action of the Massachusetts Turnpike Authority in prohibiting radioactive shipments. The transportation committee decided to pursue with the insurance industry the question of the extent to which "first person" property damage and "loss of revenue" insurance coverage might be made available to the authorities within the State. Such insurance coverage would be issued to the authorities as named insureds, and would be available independently of protection afforded either by the PriceAnderson amendments to the Atomic Energy Act of 1954, as amended, or under insurance coverage issued to amend insureds other than the authorities.

When a meeting with representatives of the insurance industry was prevented by inclement weather, letters of inquiry on the above subjects were sent to the Inland Marine Underwriters Association, Mutual Atomic Energy Reinsurance Pool, and Nuclear Energy Property Insurance Association on January 30, 1961.

Preliminary replies from these associations indicated that property loss or damage insurance which could be made available to the authorities would not include coverage for loss or damage resulting from the presence on the premises of (1) a nuclear reactor or (2) any new or used nuclear fuel element (s) or (3) any radioactive material of any kind exceeding 500 millicuries.

However, subsequent correspondence with the insurance industry indicated that consideration was being given to the possibility of providing the coverage desired, and, on June 16, 1961, the Inland Marine Insurance Bureau informed this Office that the Executive Committee of the Bureau had approved an endorsement for use in providing limited nuclear damage coverage on toll bridge and tunnel facilities and in conjunction with use and occupancy and debris removal insurance. I would appreciate having that letter and the proposed endorsement included in the record of this hearing.

Representative PRICE. Without objection they will be included. (The letter and endorsement referred to follow :)

Mr. OLIVER TOWNSEND,

Director, Office of Atomic Development,
Albany, N.Y.

INLAND MARINE INSURANCE BUREAU,
New York, N.Y., June 16, 1961.

DEAR MR. TOWNSEND: Referring to our several telephone conversations and your correspondence with the Inland Marine Underwriters Association, I am pleased to advise you that at a meeting of the executive committee of this bureau held on Wednesday of this week, there was approved an endorsement as attached for use in providing limited nuclear damage coverage on toll bridge and tunnel facilities. Similar endorsements will be prepared for use in conjunction with use and occupancy and debris removal insurance.

Producers representing the Port of New York Authority and the Triborough Bridge Authority have been made aware of the availability of this coverage and others will be advised in due course.

This bureau will collaborate with the Nuclear Insurance Rating Bureau in the rating of risks as and when requests are received from our companies.

Yours sincerely,

H. L. WAYNE, General Manager.

LIMITED NUCLEAR DAMAGE ASSUMPTION ENDORSEMENT (PROPERTY DAMAGE FORM)

The limit of liability under this endorsement is $which is part of, and not in addition to, the amount of the policy to which this endorsement is attached.

and effective

In consideration of an additional premium of $ -at noon, standard time at location of the property, the insurance afforded by this policy is modified in the following, and in no other respect : The exclusion of loss by nuclear reaction or nuclear radiation or radioactive contamination contained in clause 1(e) of the policy shall not be applicable to direct physical loss or damage caused by sudden and accidental nuclear reaction, sudden and accidental nuclear radiation, nor sudden and accidental radioactive contamination including resultant radiation damage to the property covered, if the nuclear reaction, nuclear radiation, or radioactive contamination causing such loss or damage originates in, or emanates from, nuclear or radioactive materials whils such materials are in the course of actual transportation upon the bridge properties or through the tunnel properties covered by this policy.

Within the "limit of liability" set forth above, the liability of the company for loss or damage under this endorsement is for the same percentage interest as is assumed by the company under the policy to which this endorsement is attached. All other terms and conditions of the policy shall remain unchanged.

(NOTE. Where more than one structure is insured under the same policy, a separate limit of liability shall be shown for each and the following wording added: "The foregoing conditions shall apply separately to each item covered by this policy.")

Mr. AXELRAD. As indicated in the previously mentioned letters to this office from the Port of New York Authority, the State Thruway Authority, and the Triborough Bridge and Tunnel Authority, the extent to which the proposed endorsement will resolve the problems of the authorities has not yet been determined.

The prospective insureds were not consulted in connection with the drafting of the endorsement, and it is their belief that some. changes in the newly proposed coverage will be necessary in order to adequately meet the problem. In addition, it is not known to what extent the proposed coverage will be offered for such vital facilities, other than bridges and tunnels, as the roadways of the thruway authority and the piers and other terminal facilities of the Port of New York Authority.

Moreover, the all-important questions of amount of coverage to be afforded, and the cost thereof, remain to be resolved. In any event, the transportation committee is pleased that the insurance industry has taken the step of offering to reinstate certain insurance coverage for shipments of radioactive materials.

It may be pointed out, however, that the problem is not simply whether the insurance industry will offer, and the authorities will purchase, adequate insurance coverage. Our basic premise has been that the transportation of radioactive materials through the facilities of the authorities is probably the safest and most efficient route for many shipments, and that enabling such route to be utilized is therefore in the best interests of the public. Still, it is not clear at this time which segment of the public should pay for the increased coverage necessary, since it may well be that the revenues from radioactive shipments will not be commensurate with the cost of any insurance. For example, the total revenue for radioactive shipments over the George Washington Bridge for the period January 21 to June 30, 1961 (151 shipments), was approximately $375. Some consideration has been given to requiring that insurance be obtained directly by

the shippers, and such an alternative may have to be further discussed in the future.

Simultaneously, with the correspondence with the insurance industry, the State transportation committee has discussed with the U.S. Atomic Energy Commission the possibility that the Commission might enter into indemnity and hold-harmless agreements with the authorities under either the Price-Anderson amendments or any other appropriate authority the Commission may possess, which would furnish financial protection to the authorities against property damage, loss of revenue, and public liability due to nuclear incidents.

At a meeting on May 2, 1961, representatives of the Commission informally advised us that there appeared to be no existing statutory authority under which the Commission might be able to enter into such agreements.

To some extent the problem of public liability may be alleviated by the coverage of the most hazardous shipments under a PriceAnderson agreement executed by the shipping or recipient nuclear facility and by existing insurance protection. However, shipments of many types of radioactive materials may not provide PriceAnderson coverage, and thus may not adequately protect the authorities against potential liability. We plan to explore the possibility that available commercial insurance protection may be an adequate solution to this problem as well as to the problems engendered by possible damage to properties of these agencies.

We are sincerely hopeful that these problems may be resolved without the need for any remedial legislation, and we will be pleased to keep the Joint Committee informed of any further developments. Representative PRICE. Mr. Axelrad, on page 3 of your statement,

you say:

The Inland Marine Insurance Bureau informed this office that the executive committee of the bureau had approved an endorsement for use in providing limited nuclear damage coverage.

This is apparently not satisfactory to the port authority. In what way is this coverage limited? Does it cover the loss of use of property?

Mr. AXELRAD. Well, we have obtained this proposed endorsement from the Inland Marine Insurance Bureau only several weeks ago, and the various authorities have not completed their review of the adequacy or inadequacy of the particular coverage offered.

I may point out, however, that basically this additional endorsement is an addition partly removing an exclusion which had been previously inserted in the policies. The particular language of the exclusion which had been previously put in the policies is contained in the attached letter from the Port of New York Authority.

If you look at page 2 of the letter from the Port of New York Authority to the Director of this Office, the specific exclusion is set forth there. The language of the endorsement that is now being offered does not strictly follow the language of the exclusion which had been previously inserted.

For example, in the coverage which is now offered, the phrase "sudden and accidental nuclear reaction" is used. It is not clear what the term "sudden and accidental" is meant to cover.

The exclusion in the policy talks about losses which are direct or indirect, proximate or remote, et cetera. The language now proposed to be inserted talks only of direct physical loss or damage.

To what extent problems of this kind will turn out to be serious problems, we are not yet aware. We had discussed with the insurance companies about a year ago possible language to be inserted in the policies. At that time they did not indicate approval of such language.

The form of the policy that they are now offering to the authorities had not previously been discussed with them, and it is possible that we can resolve these problems in such discussions.

One additional problem, of course, is the limitation in the endorsement they are now offering, which would cover materials only in the course of actual transportation upon or through the bridge or tunnel facilities. Now, whether or not this would cover any losses resulting from an incident which might take place while the shipment is on the approaches to the facility is subject to possible debate.

We realize that the intent of this particular provision is presumably to assure that if an incident takes place in a nuclear facility which is remote from the bridge or tunnel, there would not be coverage under this policy. But the effect of wording the exclusion in this particular way might lead to a great number of problems when the incident occurs close to the facility and as a result of a shipment which would not be in proximity to the facility except for the fact that it is headed for transportation in the facility. That generally is a type of problem that we intend to discuss with the insurance industry in the next several months.

Senator PASTORE. You say, on page 5:

At a meeting on May 2, 1961, representatives of the Commission informally advised us that there appeared to be no existing statutory authority under which the Commission might be able to enter into such agreements.

Could you elaborate on that? Do you have anything in writing on that?

Mr. AXELRAD. No; we have nothing in writing. The people who were present at this meeting are listed on page 4 of the attached letter from the Port of New York Authority. Those included are Mr. Derry, Director, Division of Construction and Supply; Mr. Satterfield, Chief of the Insurance Section, Division of Finance, in the AEC; Mr. Minsch and Mr. Eason from the Office of the General Cousel, and some people from the Regulatory Branch.

Senator PASTORE. What kind of radioactive material would go through a tunnel?

Mr. AXELRAD. You mean what kind of shipments have been proposed?

Senator PASTORE. Yes. What are we actually talking about, here? Mr. AXELRAD. This would be almost any type of shipment. I would presume there would be certain large shipments. Anything which could be transported in a motor vehicle could conceivably go through the facilities of these agencies.

Mr. RAMEY. Radioisotopes?

Mr. AXELRAD. Radioisotopes would be the most common type.
Mr. RAMEY. Fuel elements?

Mr. AXELRAD. Fuel elements.

If you would note the attachments to the Port of New York Authority letter, one of the shipments being discussed now is a shipment of fuel elements which have been used in a reactor in the Netherlands, which are being returned to the United States for reprocessing, and which the AEC wishes to have transported through the Idlewild Airport. Then I presume it will have to get from Idlewild to New Jersey in some manner, and it will undoubtedly have to go through one of the toll facilities.

Representative PRICE. What type of an accident are you thinking about that involves these types of materials? What kind of damage are you thinking of?

Mr. AXELRAD. Well, again, with respect to fuel elements, for example, there could be almost any type of incident. The Price-Anderson coverage now extends to fuel elements and various other materials in the course of transportation.

I assume that "in the course of transportation" has been included. under Price-Anderson coverage, because substantial incidents could take place in the course of such shipments.

Mr. RAMEY. I suppose you could have a wreck or a trailer could pile up in rush-hour traffic, and that would result in a fair amount of contamination.

Mr. AXELRAD. Almost any normal traffic accident which might take place in any facility could have quite serious repercussions if it took place either in a tunnel or on a bridge facility. Even if there were no substantial amount of damage done to the facility itself, just tying up two or three lanes for 6 hours in the middle of rush traffic would be very awkward for the public and might be very expensive for the facilities involved. This is aside from the possibility that you might get substantial damage to the facility, substantial damage to other patrons of the facility or substantial damage to the neighboring property.

Senator PASTORE. Do you know if high explosives are transported over the George Washington Bridge?

Mr. AXELRAD. I think the answer to your question is "Yes."

Senator PASTORE. Do you know what agreements they have with reference to that?

Mr. AXELRAD. I believe that there is adequate insurance coverage and that the only items which are transported over the George Washington Bridge for which no insurance is presently in effect are radioactive materials.

Senator PASTORE. Well, this seems to be rather important.

Mr. AXELRAD. I think this is the type of problem which is becoming more important as it is coming to the attention of more facilities. I guess that in the past people were not unduly concerned. But of course, prior to 1959 the facilities had adequate coverage, because they had all-risk policies, and there were no exclusions. The addition of the exclusion to the policies, and the increase of radioactive shipments in recent years, have both combined to make this a problem of very serious concern to all facilities of this kind.

Senator PASTORE. What you are up against on an open bridge is no different from what you are up against on an open road, I suppose. If you have an incident, you have an incident. If you had an incident close to where people live on an open road