Section 170(d) of the Atomic Energy Act of 1954, as amended, authorizes ERDA "to enter into agreements of indemnification with its contractors for the construction or operation of production or utilization facilities or other activities under contracts for the benefit of the United States involving activities under the risk of public liability for a substantial nuclear incident." Contractors identified in §9-10.5001(a) are eligible for such statutory indemnity. $9-10.5004 Authority of heads of procuring activities to negotiate statutory indemnity agreements. (a) Heads of procuring activities are authorized to negotiate statutory indemnity agreements with contractors identified in $9-10.5001(a) (1). (b) Pursuant to §9-10.5005, heads of procuring activities are authorized to enter into a statutory indemnity agreement whenever it has been determined that a contractor in sub-paragraph (2) of $9-10.5001 (a) is engaged in activities involving the risk of public liability for a substantial nuclear incident. Such a determination may be based upon either the risk of liability for the occurrence of a substantial nuclear incident in the course of performance of the contract work or the risk of liability for a substantial nuclear incident caused by a product delivered to or for ERDA under the contract where such product is expected to be used in connection with a facility or device not covered by a statutory indemnity agreement. If, pursuant to $9-10.5005, a head of a procuring activity determines that the maximum conceivable damage which could result from a nuclear incident arising in the course of a contractor's activities falls between $1 million and $60 million, he shall submit the proposed indemnification with a recommendation, and all supporting data, to the head of the agency or designee for appropriate action. With respect to subparagraph (2) of §9-10.5001(a), and pursuant to the provisions of §9-10.5004, a head of a procuring activity may be required to determine whether a contractor's activities involve the risk of public liability for a substantial nuclear incident and thus make the contractor eligible to obtain a statutory indemnity agreement from ERDA. The determination by a head of a procuring activity shall be based on the following criteria: If, after a study of the maximum conceivable damage which can result from an incident arising out of or in connection with the contractor's activities, the head of a procuring activity concludes that the maximum conceivable damage per incident to property and persons is $60 million or more, then the contractor may be found to be under a risk of public liability for a substantial nuclear incident and the head of the procuring activity is authorized to execute a statutory indemnity agreement under such a contract. If such a study of the maximum conceivable damage indicates a figure of $1 million or less, the contractor should not be considered to have a risk of public liability for a substantial nuclear incident and, therefore, should not be made a party to a statutory indemnity agreement. If the study indicates that the maximum conceivable damage falls between $1 million and $60 million, the head of a procuring activity will submit the proposed indemnification of such contractor to the head of the agency or designee with a recommendation and all supporting data. The head of the agency or designee on such a recommendation, may take one of the following actions: (a) Determine that the contractor is under risk of public liability for a substantial nuclear incident and that the contractor should be extended a statutory indemnity agreement. (b) Determine that the contractor should not be extended a statutory indemnity. In this case the head of the agency or designee may authorize the head of a procuring activity to authorize the contractor to purchase nuclear liability insurance or to offer the contractor a general authority indemnity agreement. $9-10.5006 Statutory indemnity contract article. The contract article contained in §9-50.704-6 shall be incorporated in all contracts in which a statutory indemnity agreemment is to be included upon a determination that the contractor is under risk of public liability for the occurrence of a substantial nuclear incident in the course of performance of the contract work. The contract article contained in 9-50.704-7 shall be incorporated in all contracts in which a statutory indemnity agreement is to be included upon a determination that the contractor is under risk of public liability only for a substantial nuclear incident caused by a product delivered to or for ERDA under the contract where such product is expected to be used in connection with a facility or device not covered by a statutory indemnity agreement. Heads of procuring activities are authorized to include in all contracts for: services in connection with the con architect-engineer (a) struction of a production or utilization facility; (b) the supply of component parts (including construction contracts where the work does not entail the risk of occurrence of a substantial nuclear incident) for a production or utilization facility; and (c) the supply of equipment or services which would be a part of, or contribute to, or be used in connection with the construction or operation of a production or utilization facility, assurances that ERDA will enter into a statutory indemnity agreement with the contractor who will operate a facility on its completion. Assurances will be given, however, only to those contractors and suppliers who might be held liable in connection with a substantial nuclear incident occurring after completion of the facility. The form of contractual assurance which shall be utilized is contained in §9-50.704-8. $9-10.5008 "Representation" for use in subcontracts An ERDA contractor with whom a statutory indemnity agreement has been executed in the form contained in §9-50.704-6 may include in any of its subcontracts and purchase orders a representation that the work under the prime contract is covered by a statutory indemnity agreement with ERDA and that this indemnity covers all persons who may be liable for public liability for any nuclear incident arising out of or in connection with the activity under the prime contract. A suggested form of "representation" follows: The contractor represents that there is included in its prime contract with ERDA an indemnity agreement, entered into by ERDA under the authority of Section 170 of the Atomic Energy Act of 1954, as amended by Public Law 85-256 (the "Price-Anderson Act"), a copy of which may be obtained from the contractor [is attached hereto]; that, under said agreement, ERDA has agreed to indemnify the contractor and other persons indemnified, including the subcontractor, against claims for public liability (as defined in said Act) arising out of or in connection with the the contractual activity; that the indemnity applies to covered nuclear incidents which (i) take place at a "contract location" (which term, as defined in the indemnity agreement, does not include the location of the subcontractor's plant and facilities); or (ii) arise out of or in the course of transportation of source, special nuclear or by-product material to or from a "contract location"; or (iii) involve items produced or delivered under the prime contract. The obligation of ERDA to indemnify is subject to the conditions stated in the indemnity agreement. ERDA will not approve the inclusion, in the subcontracts and purchase orders of an indemnified prime contractor, of any provision whereby the prime contractor indemnifies the subcontractor or supplier against public liability for a nuclear incident because any such liability will be covered by the statutory indemnity agreement of the prime contractor. $9-10.5009 Fees. No fee will be charged an ERDA contractor for a statutory indemnity agreement. $9-10.5010 Financial protection requirements. (a) ERDA contractors with whom statutory indemnity agreements under the authority of section of 170d of the Act are executed will not normally be required or permitted to furnish financial protection by purchase of insurance to cover public liability for nuclear incidents, except (1) that ERDA contractors now covered by insurance against such liability, with the approval of the ERDA may continue to carry such insurance, and (2) with the approval of the Controller, contractors engaged in the operation of ERDA facilities may be required or permitted to furnish financial protection in an amount not to exceed $1 million. (b) If nuclear liability insurance is carried by a contractor who is an ERDA licensee, ERDA will pay an equitable portion of the insurance premium under its contract (or would include such an item in the calculation of a fixed price), but normally a statutory indemnity agreement would not be granted under the contract. $9-10.5011 General contract authority indemnity. (a) ERDA has general contract authority to enter into indemnity agreements with its contractors. Under such authority a certain measure of protection is extended to the ERDA contractor against risk of liability, but the assumption of liability by ERDA will be expressly subject to the availability of appropriated funds. Prior to enactment of section 170 of the Atomic Energy Act of 1954, as amended, this authority was exercised in a number of AEC contracts and this type of indemnification remains in some ERDA contracts. (b) It is the policy of ERDA, subsequent to the enactment of section 170, to restrict indemnity agreements with ERDA contractors, with respect to protection against public liability for a nuclear incident, to the statutory indemnity provided under section 170. However, it is recognized that circumstances may exist under which an ERDA contractor may be exposed to a risk of public liability for a nuclear occurrence which would not be covered by the statutory indemnity. (c) While it is normally ERDA policy to require its contractors to obtain insurance coverage against public liability for nonnuclear risks, there may be circumstances in which a contractual indemnity may be warranted to protect an ERDA contractor against liability for uninsured nonnuclear risks. (d) If circumstances as mentioned in paragraph (b) or (c) of this section do arise, it shall be the responsibility of the heads of the procuring activities to submit to the head of the agency or designee for his review and decision all pertinent information concerning the need for or desirability of providing a general authority indemnity to an ERDA contractor. (e) Where the indemnified risk is nonnuclear, the amount of general authority indemnity extended to a fixed-price contractor should normally have a maximum obligation equivalent to the amount of insurance that the contractor usually carries to cover such risks in to those normally encountered by the contractor, the amount that it otherwise would have reasonably procured to insure this contract risk. (f) In the event that an ERDA contractor has been extended both a statutory indemnity and a general authority indemnity, the general authority indemnity will not apply to the extent that the statutory indemnity applies. (g) The provisions of this subsection do not restrict or affect the policy of ERDA to pay its cost-reimbursement type contractors for the allowable cost of losses and expenses incurred in the performance of the contract work, within the maximum amount of the contract obligation. |