up, or are you providing or thinking about regulation that will provide for a refund to the utility at any stage of the way if there are no accidents in the interim?

Representative LUJAN. Mr. Chairman, if I might comment on that. That is not an unusual procedure in any kind of insurance, where you take group insurance. Most of them are worked on that basis where you pay the premium and if the losses have been low, then either the premium is reduced or the amount is returned or, for any risk which is difficult to evaluate, you do it on what they call a retrospective rating basis which takes into account what the losses were and returns money or reduces the premium in the future.

Senator MONTOYA. Let us put it in this context, that, assuming all 50 which you have now licensed pay an average of $6 million during the 10-year period, then you have $300 million that the insurance companies are using.

Mr. ANDERS. Mr. Chairman, this again flows from the fact that the committee pointed out last year that there really is no actuarial basis for determining this kind of coverage.

You must remember this is an arrangement between the utilities and the private insurance companies. The Government is not involved in this arrangement.

I would expect that, with time and experience, the insurance companies might well adjust their rate to what may appear to be a more reasonable percentage, but that is up to them.

Senator PASTORE. Isn't it fair to say that if within this period of 10 years there has been no outlay by the insurance company because of an accident that, in that particular case, 67 percent will be paid back to the insured and the profit to the insurance company will be the onethird that it retains?

Now, my next question is this:

On the 11th year, does the utility continue to pay a premium?
Mr. ANDERS. Yes, sir.

Senator PASTORE. In other words, the premium payment never stops? The only thing that happens here after 10 years is a rebate of twothirds if there is no layout; is that right?

Mr. ANDERS. That is the way it is currently.

Senator PASTORE. The way I look at this maybe the day will come when we will shut off every nuclear reactor. Maybe we will do away with the nuclear reactor program. If that is the case, so be it. But, as long as you have a nuclear reactor program, you have to have some kind of insurance program and this is what this is all about.

Now, the only thing that disturbs me is that there are a lot of people in our community, sincerely so, who do not believe in the development of nuclear power. They think it is too risky and they have a perfect right to their opinion.

But this idea that you may make the public vulnerable-and the public is being made vulnerable. As long as we have nuclear reactors we have to have protection to the public, and I think the more lenient we are in that regard the better off we are going to be.

In other words, we ought to put the horse in front of the cart and not the cart in front of the horse because I am afraid if we are going to use this guarantee to the public and this protection to the public as a medium of shutting off nuclear development, I think that is the wrong way to go about it.

If we don't need nuclear development, if we are all against it, then let us be against it. But this idea that we make the public vulnerable I think is the wrong way to go about it.

Senator MONTOYA. Are there any more questions?

Representative PRICE. I don't have any questions of Mr. Anders but when Senator Gravel was testifying it came to my mind that there was a public opinion poll this past year. When he talks about opposition to nuclear power, he possibly left the impression that the majority of the people of the country were opposed to nuclear power.

Some figures came to my mind and I waited until I got those figures before I made this statement. Unfortunately, Senator Gravel is not here now.

Actually, the latest poll, a Harris poll, taken this year-just a few months ago-shows that in a public poll taken throughout the country, 67 percent of the public favor nuclear power development and only 18 percent oppose it.

I think those figures ought to be in the record.

Senator MONTOYA. Without objection, they will be made a part of the record at this point.

Representative ANDERSON. Could I ask one question at this point, Mr. Chairman.

I don't know that we are going to have any representatives of the industry present to testify but does the Commission feel, does the chairman feel, that private insurance coverage has really tracked, as it properly should the increase in coverage that they could be expected to provide, given the fact that we do have this safety record and operating experience now in the reactor industry since the act was first passed in 1957?

The cost of living has about doubled in that period of time at least, I think, and the cost of reactors probably has doubled along with it. Shouldn't the insurance industry be extending itself more than it presently is to provide coverage through that industry?

Mr. ROWDEN. That is a judgment, Representative Anderson, that rests on a variety of factors.

I have had some experience in this area over the years. I know that the former Atomic Energy Commission exerted every effort that it could to have the insurance companies extend themselves as far as they felt they could with regard to this primary layer of coverage.

I think it is also fair to observe that the joint committee has also used its good offices in that regard.

I think that you really ought to hear from the insurance companies with regard to the specific considerations which are limiting factors in their view on going any further at this point in time.

One of the things that we are hopeful of doing with the proposed legislation is introducing a new type of insurance coverage, so to speak. this tier 2 coverage. which at first will be relatively modest. Again, this somewhat novel arrangement would provide an experience basis which would enable the Government to remove itself from this insurance. indemnity guarantor regime even more as time develops than would be the case at the outset.

Senator CASE. Would you, for a new member, describe how this limit of liability works?

Mr. ROWDEN. Are we talking about how it works under the present statute?

Senator CASE. This has no relation to what you have said.

I am just trying to figure out what in this whole program the limit. of liability means.

Suppose I get hurt, what is the limit on my claim?

Mr. ROWDEN. Perhaps it might be useful to describe the limitation of liability in terms of the workings of the recovery system as a whole if there were a nuclear accident and the claims were to exceed or were expected to exceed the $560 million. I am talking about the present

system.

It would not be too different except for the dollar figures in how the system would operate in terms of financial responsibility under our proposal. The Commission or some affected party could move the appropriate Federal district court for consolidation of proceedings, in other words, consolidation of the judicial proceedings which would determine the allocation of claims. That court would be empowered to consider a proposal for a comprehensive plan for allocation of resources, private insurance resources, Government indemnity resources, up to the $560 million again proposed by the Commission or some interested party.

The court is given special authority to make provision for immediate advance payments up until, I believe the figure is something like 15 percent of the $560 million. It is also given the authority to set aside. a certain portion of that $560 million to cover potential latent injuries, injuries that might not evidence themselves until a later point in time. Then the funds would be distributed by the court based upon the proof of injury caused by the accident on some allocated basis.

Now, one of the advantageous features of the new legislation-and this is a provision which was added by the Joint Committee last year, and which we have included in this year's provisions-is that the court in allocating funds could establish certain priorities in terms of, let us say, setting aside a fund to pay personal damages and setting aside another fund to pay property injuries and perhaps putting the claim of the utility for damage to offside property to a lower priority status. That, in general, is how the limitation of liability would work.

Senator CASE. In other words, it relates to a particular occurrence? Mr. ROWDEN. A particular occurrence and injury caused by that

occurrence.

Senator CASE. Suppose you had 3 or 4 occurrences in 1 year: What happens?

Mr. ROWDEN. The mechanism exists for replenishing the fund. Now, it may not be replenished immediately-and perhaps Mr. Saltzman can talk to that at the insurance level.

But the Government's indemnity obligation up to $560 million would remain. It is a per-incident obligation.

Now, one of the things I did not mention but which is very important to mention is that a claimant, someone who alleges that he has been injured, need only show that he was injured and that the injury was caused by the nuclear incident. All of the other potential legal defenses are swept aside under the so-called waiver of defenses

provisions. He does not have to prove negligence or a lack of contributory negligence or assumption of risk. It is, in effect, absolute liability. Senator PASTORE. As a matter of fact, if you had three such incidents that would go over the $560 million damage, you could kiss the whole nuclear program goodbye. You would shut down every reactor in this country. If that is what we are talking about here, then this nuclear program is not going to work.

The whole genesis here, as I understand it, is that this is a protection for something that is very unlikely to happen. Is that correct?

Mr. ROWDEN. It is, indeed.

Mr. ANDERS. Truly an event is very unlikely.

One estimate shows there may be the potential of one such event every 15,000 years per 100 reactors. So, it boggles the mind to consider the very low probability of having three in 1 year.

Senator PASTORE. Let us assume your ceiling was $560 million and this was a damage that ran up to $2 billion. The Congress of the United States would have to make a disaster grant and at the same time you would have to shut down every reactor in this country. That is about the size of it.

Representative HINSHAW. I think about 10 to 15 minutes ago, Chairman Anders started to make a comment about the Texas City case. I think the comment he was going to make was referring to the potential for liability over and above the statutory liability.

I think we ought, in light of this extended discussion over limitation of liability, to allow him to make an amplification of what he was going to state before.

Mr. ANDERS. Sir, I really have nothing more to add than what Senator Pastore already commented on, that above the $560 million limit any relief to be provided would have to come through the Congress if they so chose to act.

Representative HINSHAW. Was that the ruling in the Texas City

case?

Mr. ANDERS. That is my understanding.

Representative PRICE. The Texas City case came in for a great deal of discussion during the formative days of Price-Anderson.

Representative YOUNG. I want to apologize for being late. I had to be at another committee where we required a quorum and I had to be there to make that.

Chairman Anders, this occurs to me to be sort of an insurance overkill to placate those who are against the nuclear program anyway. It disturbs me that those who are against the program won't recognize the disastrous effects that will hit this country, particularly the North and East and cold places when we end up without any energy. Now, that day has got to come.

Anybody who says we are going to cut back on energy or take care of it by conservation is simply not being realistic.

I must cite as a further disturbing example when we were handling the ERDA bill on the floor what did those who were opposed to the nuclear reactor program go after? The program, itself? No; they went after the Clinch River project which is a test project to do everything we can to make sure that the breeder reactor is a safe program.

Without the Clinch River project, the antinuclear people would have been climbing the walls, and rightfully so, if we had not been doing it. I just hope that some day in some way we can sit down with the people who are so opposed to nuclear energy and at the same time blind to the need for energy in this country and work something out that the American people can live with.

That is all I have to say.

Senator MONTOYA. Thank you very much, Mr. Anders. Are there any other statements?

Representative LUJAN. Could I just make one point and comment on what John Anderson was asking about, with everything doubling? The contribution for protection by the insurance companies in fact has doubled since the program started. It started out at $60 million and is now $125 million. So it has moved along with the rest of it. [The prepared statement of Mr. Anders follows.]

STATEMENT OF WILLIAM A. ANDERS, CHAIRMAN. U.S. NUCLEAR REGULATORY

COMMISSION

I am pleased to have this opportunity to appear before the Committee in support of H.R. 8631, the bill you are now considering to modify and extend the Price-Anderson insurance indemnity system. The Nuclear Regulatory Commission has been given the responsibility for administering the licensing and related public protection features of the Price-Anderson legislation as a result of the Energy Reorganization Act of 1974. I will present today the Commission's view of the positive effects H.R. 8631 would have within the area of its responsibility. From the vantage point of its responsibility to protect the public, the Nuclear Regulatory Commission believes that the bill represents a balanced and sound accommodation of a number of important public policy considerations, and strongly recommends its enactment.

In view of the extensive legislative record developed last year on an essentially identical proposal, my prepared remarks will be brief. This nation's decision, in the mid-1950's, to develop the peaceful atom through private enterprise presented two broad policy issues relating to compensation for the public in the event of a nuclear accident: How to encourage private industry to enter a field in which potential liability from low probability accidents with possibly high consequences might act as a substantial deterrent; and how to compensate the public adequately for damages which might result in the unlikely event of a serious nuclear accident. The Price-Anderson Act was the legislation developed to meet these problems. Initially enacted in 1957 for a ten-year period, and extended for a subsequent decade, the Act will expire on July 31, 1977. Application to facilities licensed for construction thereafter will be precluded unless the Congress acts. We believe the public will lose important protection unless it does.

As now constituted, Price-Anderson establishes a two-tier system to assure that funds will be available if they are ever needed to compensate the public for offsite damage caused by a nuclear accident. First, subject to some Commission discretion, the Act requires each covered licensee to maintain financial protection equal to the maximum amount of liability insurance available on the private market. Second, the Act directs the Commission to enter into indemnity contracts with each licensee required to provide financial protection. For an annual fee, the Commission promises to indemnify the licensee for all liability incurred as a result of a covered accident and not covered by the first tier, to a maximum of five hundred million dollars. An "omnibus coverage" feature extends insurance coverage and the Government's promise to indemnify not only to the licensee, but also to "any other person who may be liable." For example, should offsite damage be caused by failure of a component, the public would have the benefit of the financial protection and related prompt compensation provisions of Price-Anderson, even though the vendor of the faulty part might otherwise be without substantial coverage. The present Act also puts a ceiling of five hundred sixty million dollars on total liability to the public per accident.