The tentative schedule of witnesses is as follows: Tuesday, September 23, 1975 10 a.m. John Hill, Deputy Administrator, Federal Energy Administration Robert Fri, Deputy Administrator, Energy Research and Development Burt C. Proom, General Manager, Nuclear Energy Liability-Property Insurance Association, representing that Association and the Mutual Atomic Energy Liability Underwriters Hubert H. Nexon, Senior Vice President, Commonwealth Edison Gerald G. Fain, representing the Atomic Industrial Forum Wednesday, September 24, 1975 - 10 a.m. Jeffrey W. Knight, Legislative Director, Friends of the Earth Dr. Chauncev Kepford. Wednesday, September 24, 1975 2 p.m. Mr. Morgan Dubrow, Staff Engineer, National Rural Electric The Association of the Bar of the City of New York, witness to be designated American Public Power Association, witness to be designated Mr. William F. Allen, Jr., President, Stone and Webster Engineering Corporation Senator MONTOYA. Representatives of the nuclear industry have argued that the prompt extension of the Price-Anderson system with its limitation of liability provision is essential if the nuclear power industry is to continue its present rate of development without disruption. Others have argued that the limitation of liability provision in the present act and the provision in H.R. 8631 allowing for a gradual increase in that limit, deny the public adequate financial protection in the event of a serious nuclear accident. They contend that any risk of loss beyond the maximum amount of compensation provided for in the act should fall on the industry rather than the public. The opposition of the Price-Anderson Act last year appeared to focus more on the wisdom of the continued use of nuclear energy to generate electricity than upon the provision of that act. The nuclear energy policy of the United States is embodied in the Atomic Energy Act of 1954, as amended, in which, among other things, it is declared to be the policy of the United States that "the development, use, and control of atomic energy shall be directed so as to make the maximum contribution to the general welfare...." A question which was the subject of considerable debate in the Congress last year is whether the Price-Anderson system should be extended to cover sabotage or the theft of nuclear materials. The conference committee on H.R. 15323 deleted an amendment providing additional coverage for accidents involving illegally diverted materials, but called for a report on the consequences and feasibility of extending Price-Anderson protection to cover these events. That report was prepared by the Nuclear Regulatory Commission and was submitted to this committee on June 9, 1975. [See appendix D. p. 453.] Again, there are differing views as to whether, in light of the NRC report, changes should be made in the Price-Anderson system to deal with the diversion problem. These questions, as well as other matters regarding H.R. 8631, are the subject of our inquiry today and tomorrow. We have a request here from one of our distinguished colleagues, Senator Gravel of Alaska, that he be allowed to participate in the hearings and offer testimony. He is here with us this morning. I certainly want to welcome you here. Senator Gravel, do you have a statement? STATEMENT OF HON. MIKE GRAVEL, A U.S. SENATOR FROM THE STATE OF ALASKA Senator GRAVEL. Yes; I do, Mr. Chairman. Senator MONTOYA. Would you prefer to read it? Senator GRAVEL. I would like to read it; it is not a very long statement. I would like to read it in the record, if I might. Senator MONTOYA. Do you have an opening statement, Mr. Price? Representative PRICE. NO. Senator MONTOYA. You may proceed, sir. Senator GRAVEL. Thank you, Mr. Chairman, for giving me the opportunity to testify on H.R. 8631, the proposed extension of PriceAnderson nuclear power insurance legislation. This committee and the nuclear power industry face a basic and irresoluble paradox in trying to insure nuclear power, because the kinds of risks we take in generating nuclear electricity are simply not insurable. WHY UNINSURABLE? There are several reasons why nuclear power is uninsurable. The most obvious is the scale of the possible accident. The committee is, of course, familiar with the Government's own various estimates of possible damages in a nuclear catastrophe: $6 billion, $7 billion, $17 billion, conceivably even $280 billion; with outright deaths of 3,400 to 43,000; and contamination of an area the size of California or Pennsylvania.1 However unlikely such a nuclear catastrophe might be, with such enormous potential damages, it is not insurable. The testimony which this committee has heard in previous years from the insurance industry bears out this conclusion.2 Other factors making nuclear power uninsurable are the far-reaching and long-term natures of the damage that could be done. If great quantities of radioactive elements escaped into our environment, there would be no way to judge the extent of the cancer cases or birth deformities which might be caused. The health consequences would be incalculable-and recompense would thus be impossible. Cancer, as in the case in Hiroshima, might appear as late as 20 years or more after the event-in spite of Price-Anderson's 10-year statute of limitations.3 And the range over which damage would be inflicted could not be judged. Radioactive carcinogens would be distributed throughout the biosphere and concentrated by some plants and animals in a way completely outside the control of man.' WHO'S HOLDING THE BAG? So, what this committee is deciding is not, "How shall we insure nuclear power?" If it were insurable, we would not be here. Nuclear power would be subject to normal liability laws and there would be no need for Price-Anderson. What this committee is deciding today, and what it has decided each time it has considered the Price-Anderson Act, is, to put it very bluntly: "Who's going to be left holding the bag?" If the Indian Point reactor, 24 miles from New York City, suffers a melt-down and a breach of containment, who's going to be left holding the bag? If the San Joaquin project contaminates this Nation's largest foodproducing area, who's going to be left holding the bag? Back in the mid-1950s, when the insurance problem was first tackled 1 Figures from the Rasmussen, Brookhaven and updated Brookhaven studies. Environmental Action, Oct. 12, 1974, p. 3. Hearings before the Joint Committee on Atomic Energy. "Possible Modification or Extension of the Price-Anderson Insurance and Indemnity Act, 1974. p. 260. "Theoretical Possibilities and Consequences of Major Accidents in Large Power Plants, Wash-740," U.S. Atomic Energy Commission. 1957, pp. 1-6. 2 Hearings, p. 94. "Selected Materials on Atomic Energy Indemnity and Insurance Legislation." Joint Committee on Atomic Energy, 1974, pp. 75 and 79. Hearings, p. 219, John Gofman and Arthur Tamplin, "Poisoned Power," Rodale Press, Sheldon Novick, "The Careless Atom," Houghton Mifflin, 1969, pp. 90 to 110. by this committee, the nuclear industry made it very clear who was not going to be left holding the bag. They let the committee know that if normal liability were allowed to apply, they would not take the nuclear gamble." The public, on the other hand, was not wary. And, today, it is the public which really carries the burden of nuclear power risks, even though few citizens are aware of it. PRICE-ANDERSON PROVISIONS The committee decided that, in the worst nuclear catastrophes, the citizen's constitutional right to just compensation would be suspended. A challenge to the constitutionality of Price-Anderson is, incidentally currently under way in North Carolina.1 An arbitrary sum-$560 million, a fraction of the possible damages would be shared on a prorated basis. And, even if the victim were to get only pennies to the dollar under this scheme, Price-Anderson would prohibit him from recovering further from the nuclear industry. What is more, even the $560 million is to be paid mostly by the taxpayer, not by the industry or its insurers. At the present time, $125 million is guaranteed by insurers and $435 million by the Federal Government. This Federal indemnity is provided to industry at a cost far below what would be charged for private insurance. In the meantime, insurance companies have added to their homeowners and other insurance policies a clause excluding coverage of nuclear catastrophes. So, in a word, the public is holding the bag. Or, as a Columbia University study of Price-Anderson declared last year: "... the decision to limit liability represents a determination that a major share of the costs of an accident should be borne by its victims." I believe the committee failed its obligation to the public in permitting the limitation of corporate liability. The committee has indeed indicated that should damages exceed $560 million, the Congress may provide disaster relief. But another Columbia study has shown that congressional action in such instances can be expected to be too little, too late.8 What's more, if congressional action is what is needed to cover a nuclear catastrophe, then what purpose is Price-Anderson serving? Nothing in the act guarantees extra relief. The only conclusion is that Price-Anderson exists to protect the utilities and nuclear manufacturers. Period. The kind of protection Price-Anderson gives the public could be compared to a policeman saying something like this: There's an arsonist in the neighborhood. Maybe he'll burn down your $17,000 house. Probably not. The chances are very small, maybe. But don't worry. If he gets your house, we guarantee you $560. Carolina Environmental Study Group, et al. v. U.S. Atomic Energy Commission, et al. (C-C-73-139), now pending in the Western District of North Carolina. "Selected Materials, etc.,' Hearings, p. 122. 7 Hearings, p. 256. D. 75. *Columbia University Drafting Research Fund, "Catastrophic Accidents in Government Programs." Maybe the damage will be less. Anyway, if it's more, you can ask the U.S. Congress to make up the difference. In any event, we want you to understand that this arsonist is a very important person. Whatever happens, you're not allowed to touch him. By the way, your fire insurance is canceled. $560 MILLION MINUS Even within those provisions which supposedly assure $560 million for victims, there are loopholes which protect industry at the expense of the public. For one thing, industry's costs for investigating and settling claims are to be subtracted from the $560 million. In other words, the funds to pay utility lawyers to challenge victims' claims will come from money supposedly designated for paying those claims." In addition, the utility's property, outside the reactor, is covered by the $560 million. That is, the utility will recover from its own "public liability" insurance.10 It's also interesting to see how much private insurance the utilities have managed to get for damage to their reactors in an accident. While they claim that only $125 million in coverage can be found for public liability, their reactor, in the same accident, is covered to $175 million.11 H.R. 8631 proposes that so-called "deferred premiums" be used to gradually phase out the Government's responsibility as an indemnitor. Yet there are loopholes, too, protecting industry and not the public. As proposed in this bill, the premiums are likely to be deferred in whole or virtually in whole until the accident takes place. Even then, the Government may forward the money for utilities caught short of cash. It seems to me that deferral of the premiums virtually guarantees that the Government will have to pay for the utilities in the event of a nuclear catastrophe. Furthermore, H.R. 8631 authorizes a ceiling on the number of payments that may be made within a given year. Apparently, then, after the victims of one accident get, perhaps, pennies to the dollar, victims of other accidents that year might get nothing at all. Admirers of the Price-Anderson Act point to its assurances that money will be available to victims on a no-fault basis. In fact, however, the guarantees made by Price-Anderson are rather illusory. To begin with, in many States, utilities would be held strictly liable even without Price-Anderson. In addition, victims must accept the settlement offered to them or else go to court much as though Price-Anderson's no-fault provisions did not exist.12 How many people are likely to accept their prorated share if the damages exceed $560 million? It should also be noted that the $560 million provided by PriceAnderson is now worth much less than it was when it was settled 20 years ago. And in that same period, the possible consequences of an accident have grown, because reactors are larger and the population density near them is greater. The Congressional Research Service calculated that $3 billion would Atomic Energy Act, section 170, paragraph h. Hearings, p. 212. 10 "Selected Materials, etc.,' p. S7. 11 Atomic Industrial Forum, "Price-Anderson Questions and Answers." 12 Hearings, p. 130. |