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the urgent need for adequate safeguards. But approaches should not be confused. The question of nuclear violence is: How do you guard against it? And even that is only a short-run question. What we really need to know is what the causes of such violence are and how we can attack the causes rather than the end results.

The Commission's report discusses a number of alternatives for dealing with the diversion problem though without making an explicit recommendation. These cover a broad range: (1) extending Price-Anderson to cover damages arising out of nuclear theft, though with the reservations previously discussed as to the wisdom of so doing; (2) the development of a separate insurance system for the theft and sabotage area, but also with a reservation as to the fairness of imposing these costs on the nuclear industry; (3) a variant of this, on a deferred cost basis, through the adoption of the scheme embodied in the proposed legislation; (4) a continued government indemnity program limited to the nuclear theft area; (5) a general government indemnity applicable to all terrorist activities, though with a caveat as to costliness if expanded-as perhaps it should be to cover street crime; and (6) leaving the question of coverage to ad hoc congressional action in the event of an act of successful nuclear sabotage or theft.

Although we cannot, at this time, endorse any of the approaches examined in the Commission report, we recommend that the issue of the protection of the public from the consequences of nuclear terrorism not be considered in a vacuum. The fact that a bill to amend and extend the Price-Anderson program is presently before you should not in itself provide the occasion to extend to the victims of terrorists employing nuclear materials any greater protection than is accorded to terrorists or, indeed, other criminals employing handguns or chemical explosives or poisons or biological agents. If the Federal Government is to be responsible for these victims-and we take no position here on that issue-it should be handled on a comprehensive basis after a full and open consideration of its rationale and implications.

Consequently it is the position of our association that the PriceAnderson system should not be extended to cover the consequences of sabotage or theft of nuclear materials.

This concludes my prepared remarks. I would like to thank you again for having afforded us the opportunity to express our views. Representative YOUNG. Mr. Kalmanson, I am being summoned for a vote that is being taken on a very important measure in the Rules Committee of which I am a member.

Thank you for your testimony.

This committee will stand in recess until I return.

[A brief recess was taken.]

Representative YoUNG. Mr. William F. Allen, Jr., president of the Stone and Webster Engineering Corporation.

STATEMENT OF WILLIAM F. ALLEN, JR., PRESIDENT, STONE AND WEBSTER ENGINEERING CORPORATION

Mr. ALLEN. Mr. Chairman, I would like to have permission for Mr. John Landis who helped with my statement to sit with me.

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Representative YOUNG. Mr. Allen, I have a question I want to as before you start.

I presume you have been present for some of the preceding testi mony?

Mr. ALLEN. Yes, sir.

Representative YOUNG. You have heard the previous witnesses thi afternoon and this morning. You have heard the fear stated by a least two of the witnesses of the dangers, the inherent dangers, of catastrophic accident by these nuclear reactors.

As a person who has dealt with this for years from the scientific standpoint and engineering standpoint, and charged with the re sponsibility of developing and producing these reactors, what is your view of that position?

Mr. ALLEN. I think there is nothing, Mr. Chairman, that is a absolute certainty and therefore no one of us can say that it is no possible.

But, I have four teenage children. I feel just as sincerely about the safety of those children and everyone else's children and the genera tions to come as any of the other people who have sat here today.

I am firmly in favor of advancing with the nuclear option. Representative YOUNG. I will ask you to be a little more specifi than you have been and I can understand an engineer and scientist no wanting to delve into the impossible or superlatives, but do you con sider that the inherent peril in a nuclear reactor is a real threat?

Mr. ALLEN. I do not think that nuclear reactors, as such, present as great threats as other possibilities that we have with us all the time.

On the other hand, I am, as expressed by the chairman earlier, very much in favor of doing all those things that we can to assure a higher degree of safety.

When I say threats that are with us, we experience a major flood somewhere in our country, it seems to me, every few years or so.

Representative YOUNG. It is so difficult to draw a parallel with everything else.

You say we have a major flood somewhere every few years.

I do not think that the witness intends to state that we may have a major atomic catastrophe every few years somewhere.

Mr. ALLEN. Absolutely not.

Representative YOUNG. Go ahead with your statement, Mr. Allen. Mr. ALLEN. Mr. Chairman and members of the Joint Committee. I want to thank you for the privilege of presenting a statement on H.R. 8631, the Administration's legislative proposal to modify and extend the Price-Anderson Act. Stone and Webster Engineering Corp. strongly supports this bill.

The National Constructors Association, of which Stone and Webster is a member, along with 47 other engineering-construction firms, has reviewed this statement, and fully supports our position on this matter.

Stone and Webster Engineering Corp. is an engineering and construction firm active in the energy industry since 1869, with a broad background in all aspects of power generation-fossil, hydro and nuclear and electric transmission, the production and transmission of natural gas, coal gasification, and petroleum refining facilities.

Stone and Webster's participation in atomic development goes all the way back to major projects at Oak Ridge in the early 1940's, and to the Shippingport prototype in the 1950's. The nuclear plants we Lave been involved with have generated approximately 25 percent of the nuclear electric power produced in the United States to date. Comercial nuclear plants for which Stone and Webster has provided engineering or construction services include Yankee-Rowe (MassachuSetts). Connecticut Yankee, Maine Yankee, Surry (Virginia), Fitzpatrick and Nine Mile Point in New York, and currently projects in Louisiana, Pennsylvania, Virginia, Wisconsin and California.

We believe that these activities, together with our experience in environmental sciences, nuclear plant safety, power system planning, and advanced energy development qualify us in some measure to address the practical aspects of the continuation of the Price-Anderson Act. As you know, the construction of nuclear powerplants in the United states is being curtailed by high interest rates and the limited availability of funds to finance such projects. This is occurring at a time when the U.S. Geological Survey is announcing a reduction in its official estimate of the country's oil and natural gas reserves to approxiLately one-third to one-half what was reported a year ago.

In view of this double-barreled threat to the economic livelihood of the Nation, all reasonable steps to revitalize the nuclear power industry should be taken.

It would appear that prompt extension of the Price-Anderson Act would help to clarify the financial status of both privately and pubEely operated nuclear powerplants and thus assure financial markets for the nuclear industry's capital requirements, including the continued participation of the broad range of companies required to fully utilize this basic source of energy.

This assurance, along with other measures of financial stability, would help release the necessary funds for full-scale resumption of construction of nuclear powerplants, with an attendant material decrease in the unemployment rate and a marked increase in energy supply.

The savings of equivalent amounts of oil and gas, which would have to come from foreign sources, to provide the necessary electric power requirements, should be obvious.

Furthermore, if the Price-Anderson Act is not extended and the statutory limit on liability established in it is thus permitted to expire, a chaotic situation could arise due to the probable difficulties in obtaining necessary financial protection, including third-party liability in

surance coverage.

It is, of course, difficult to predict specifically what would happen to the nuclear industry and what would happen with our company and similar companies. So much would depend on the particular circumstances of the time.

With Stone & Webster, in the event the Act were not extended, we would, of course, join with others in attempting to find alternate means of coverage which were economically feasible. Whether we would be able to work something out, I do not know.

I do believe that we would have great difficulty, from just the standpoint of time, to come up with an adequate alternative system, even if

such a system were ultimately feasible. That is why, in itself, a further extension makes sense.

In regard to what would happen to the nuclear industry, I personally, believe a few utilities might try to go it without Price-Anderson coverage. Perhaps one or two of the bigger suppliers might, also. However, the ones that public policy should be concerned about are the medium-sized and smaller organizations in all segments of the nuclear industry.

The potential liability-even though very remote-might be just enough of a factor to cause many of these organizations to withdraw from the nuclear field. This is particularly true of component manufacturers-valves, pumps, instruments, and controls-who produce only a small proportion of their output for the nuclear industry.

The problems which architect-engineering firms would face in connection with obtaining professional liability insurance on nuclear plants may be very similar to those which physicians and other professionals in the health field are having in relation to obtaining malpractice insurance. As you know, government at various levels has had to intervene in order to provide adequate and economic coverage in this area.

Most important, in my opinion, would be the effect on the public at large if Price-Anderson were not extended.

The Columbia University study graphically points out the chaotic situation which would exist with differing State requirements, and with no means of accelerating payments in the event of an accident.

The opportunities for delay would be enormous from the standpoint of the affected members of the public. The legal and financial uncertainties affecting the industrial participants in the event of an accident could also have public implications in terms of the ability of the participants to stay in business.

In over 18 years of commercial nuclear plant operation there has been no accident that has injured a member of the public.

Furthermore, no Federal Government funds have been paid out under the present Act in connection with this operation.

Extension of the Act would continue to insure prompt and equitable payment of claims if a nuclear incident should occur.

Other important factors supporting extension of the Price-Anderson Act are:

1. The Act's principal purpose is to provide financial protection to the public against losses caused by malfunction of nuclear power facilities. The Act will not, unless extended, cover facilities licensed by the Nuclear Regulatory Commission for construction after August 1, 1977, which would be an abrupt change in ground rules for the nuclear industry by the Federal Government.

2. In addition to protecting the public by assuring adequate financial protection, the Act provides other important protections, such as its "no-fault" clause, which eliminates various technical legal claims that might otherwise be asserted against the parties involved and which assures prompt settlement of the public's claims.

3. H.R. 8631 includes provision for phasing out the present Government indemnity system by substituting a new two-layer private insurance system under which nuclear licensees would be expected to pay the full cost.

4. H.R. 8631 would still put a ceiling on liability. This would rise substantially above the present $560 million limit as more nuclear powerplants are licensed, thus assuring the public of an even larger source of funds than is now available.

5. If the Act is not extended, it would appear that the present indemnity system will, nevertheless, continue to be in effect for the many existing nuclear powerplants licensed prior to August 1, 1977. This could involve public protection against nuclear incidents at some nuclear powerplants and not at others, depending upon the time of their construction, which obviously is inequitable and contrary to the public interest.

6. As is generally known, the nuclear power industry has compiled an impressive safety record. In over 18 years of commercial nuclear plant operation there has been no accident that has injured a member of the public. Furthermore, no Federal Government funds have been paid out under the present Act in connection with these operations. Extension of the Act would continue to insure prompt and equitable payment of claims if a nuclear incident should occur.

7. The Federal Energy Administration has concluded that no environmental impact will result from either phasing out Federal Government indemnification or providing for a floating liability limitation.

In conclusion: The adverse effects of the uncertainty over the future status of privately operated nuclear powerplants and, more importantly, the welfare and financial protection of the public urgently call for Price-Anderson resolution as soon as possible.

Stone & Webster accordingly urges the Joint Committee to recommend the adoption of H.R. 8631.

Representative YOUNG. Thank you very much for your statement, Mr. Allen. I appreciate very much your being here.

I am not going to pursue any questions although I have several of them, because we are simply out of time, and I am being called by the committee, but I am going to try one more witness.

Again, thank you, Mr. Allen.

Mr. ALLEN. Thank you, Mr. Chairman.

Representative YOUNG. Mr. Morgan Dubrow, staff engineer of the National Rural Electric Cooperative Association.

Mr. Dubrow, I will ask you to do as I have the others, to please summarize your statement.

I do want to ask you, though, as I did Mr. Allen, as an engineer dealing and serving a great area of this country through the National Electric Cooperatives you have heard the previous witnesses, Friends of the Earth, Mr. Nader-are you impressed or alarmed at the fears they have with regard to the safety of these nuclear reactors?

STATEMENT OF MORGAN D. DUBROW, STAFF ENGINEER, NATIONAL RURAL ELECTRIC COOPERATIVE ASSOCIATION

Mr. DUBROW. Contrarywise, I don't believe there ever has evolved and been made available to the American people any form of energy, any kind of machine that is as safe as a nuclear powerplant.

Representative YOUNG. Thank you very much, sir. Will you proceed with your statement?

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