STATEMENT
SUBMITTED
BY
THE
UNITED
STATES NUCLEAR REGULATORY COMMISSION
TO
THE
SUBCOMMITTEE
ON TRANSPORTATION, INFRASTRUCTURE AND NUCLEAR SAFETY
COMMITTEE
ON ENVIRONMENT AND PUBLIC WORKS
UNITED
STATES SENATE
CONCERNING
PRICE-ANDERSON
ACT RENEWAL
PRESENTED
BY
WILLIAM
F. KANE
DEPUTY
EXECUTIVE DIRECTOR FOR
REACTOR
PROGRAMS
SUBMITTED:
JANUARY 23, 2002
Mr. Chairman, Members of the
Subcommittee, I am pleased to appear before you today to present the views of
the Nuclear Regulatory Commission (NRC) on extending and amending the
Price-Anderson Act.
As you know, legislation will be
needed to extend the Price-Anderson Act.
The Act, which expires on August 1, 2002, establishes a framework that
provides assurance that adequate funds will be available to compensate the
public in the event of a nuclear accident and sets out a process for
considering nuclear liability claims.
Without the framework provided by the Act, new private-sector
participation in nuclear power would be discouraged because of the risk of
potentially large liability claims if such an accident were to occur.
I am here to deliver the strong and
unanimous recommendation of the Commission that the Price-Anderson Act be
renewed with only minor modifications.
However, I would like to preface my statement of that position with the
reminder that the Commission=s primary concern is public health and safety. We are not a promotional agency. Our mission is to ensure the
safe use of nuclear power and materials.
We can look back on a successful history of safe operation and intend to
exercise vigilance to maintain or improve on this record of safety. Nonetheless, it remains important to assure
that if an improbable accident should occur, the means are provided to care for
the affected members of the public.
As you know, Congress first enacted
the Price-Anderson Act in 1957, nearly a half century ago. Its twin goals were then, as now:
! to
ensure that adequate funds would be available to the public to satisfy
liability claims in a catastrophic nuclear accident; and
!
to
permit private sector participation in nuclear energy by removing the threat of
potentially enormous liability in the event of such an accident.
On original passage the Congress
provided a term during which the Commission could extend Price-Anderson
coverage to new licensees and facilities.
When that term expired, the Congress then, and repeatedly since, decided
that the nation=s energy policy would be served by
extending the Price-Anderson Act so that coverage would be available for newly
licensed reactors. This action
preserved the option of private sector nuclear power and assured protection of
the public. At this point, in order to
avoid confusion, I should note that Price-Anderson coverage for NRC licensees
is granted for the lifetime of the covered facilities and does not Aexpire@ in 2002.
Thus, in any event, Price-Anderson coverage with respect to already
licensed nuclear power reactors will continue and will afford prompt and
reasonable compensation for any liability claims resulting from an accident at
those facilities.
While Congress has amended the
Price-Anderson Act from time to time, it has done so cautiously so as to avoid
upsetting the delicate balance of obligations between operators of nuclear
facilities and the United States government as representative of the people.
Perhaps the most significant
amendments to date were those that effectively removed the United States
government from its obligation to indemnify any reactor up to a half billion
dollars and instead placed that burden on the nuclear power industry. Congress achieved this by mandating in 1975
that each reactor greater than 100 MWe, essentially each reactor providing
power commercially, contribute $5 million to a retrospective premium pool if
and only if there were damages from a nuclear incident that exceeded the
maximum commercial insurance available.
The limit of liability was then $560 million. Government indemnification was phased out in 1982 when the
potential pool and available insurance reached that sum.
In 1988, Congress increased the potential obligation of each
reactor in the event of a single accident at any reactor to $63 million (to be
adjusted for inflation). The maximum
liability insurance available is now $200 million. When that insurance is exhausted each reactor must pay into the
retrospective premium pool up to $83.9 million, as currently adjusted for
inflation, if needed to cover damages in excess of the sum covered by
insurance. The $83.9 million is payable
in annual installments not to exceed $10 million. Today, the commercial
insurance and the reactor pool together would make available over $9 billion to
cover any personal or property harm to the public caused by an accident.
In 1998, as mandated by Congress,
the Nuclear Regulatory Commission submitted to the Congress its report on the
Price-Anderson system. The report
included a concise history and overview of the Price-Anderson Act and its
amendments as well as an update on legal developments and events pertaining to
nuclear insurance and indemnity in the last decade. Congress had also required the NRC to address various topics that
relate to and reflect on the need for continuation or modification of the Act: the condition of the nuclear industry, the
state of knowledge of nuclear safety, and the availability of private
insurance.
After considering pertinent
information, the Commission considered what its recommendations should be. It concluded then that it should recommend
that Congress renew the Price-Anderson Act because it provides a valuable
public benefit by establishing a system for the prompt and equitable settlement
of public liability claims resulting from a nuclear accident. That, as I said at the outset, remains today
the strongly held position of the Commission.
Having noted that substantial
changes in the nuclear power industry had begun and could continue, the
Commission believed it would be prudent to recommend renewal for only 10 years
rather than the 15-year period that had been adopted in the last
reauthorization so that any significant evolution of the industry could be
considered when the effects of ongoing changes would be clearer.
Notwithstanding that view, the Commission recommended that the Congress
consider amending the Act to increase the maximum annual retrospective
premium installment that could be assessed each holder of a commercial
power reactor license in the event of a nuclear accident.
The NRC suggested that consideration
be given to doubling the ceiling on the annual installment from the current sum
of $10 million to $20 million per year per accident. The total allowable retrospective premium per reactor per
accident was to remain unchanged at the statutory A$63 million@ adjusted for inflation. (It is now
$83.9 million as so adjusted). The
Commission recommended consideration of an increase to $20 million because it
then appeared likely that in the coming decade a number of reactors would
permanently shut down. The effect of
these shutdowns would have been to reduce the number of contributors to the
reactor retrospective pool. Fewer
contributors would, in turn, reduce the funds that, in the event of a nuclear
accident, would become available each year to compensate members of the public
for personal or property damage caused by an accident. Increasing the maximum annual contribution
available from each reactor licensee would provide continuing assurance of Aup front@ money to assist the public with prompt compensation until Congress
could consider whether to enact additional legislation providing further
relief, should it be needed.
Further developments in the electric
generation industry since the 1998 report to Congress have led the Commission
to review its 1998 recommendations and to re-evaluate its recommendation that
Congress consider increasing the annual installment to $20 million. There is now a heightened interest in
extending the operating life for most, if not all, of the currently operating
power reactors, and some power companies are now examining whether they wish to
submit applications for new reactors or complete construction of reactors that
had been deferred. As a result,
contrary to our former recommendations, the Commission does not believe that
there is now justification for raising the maximum annual retrospective premium
of $10 million. This level is adequate
and does not need to be changed.
In summing up, I would like to leave
these thoughts with you. To date, the
United States government has not paid a penny for claims against nuclear power
plant licensees. In the event a serious
accident were to occur, over $9 billion will be available to pay compensation
for any personal injury or offsite property damage. The money will come from insurance policies bought by the
industry and from retrospective premiums that will be paid by industry. If those funds are inadequate, Congress will
be called upon to decide what action is needed to provide assistance to those
harmed. We believe the public is
protected by the broad base of prompt funding.
The Price-Anderson Act further aids the public by establishing important
procedural reforms for claims arising from nuclear accidents. It channels liability to the licensee,
establishes a single Federal forum for all claims, eliminates the need to prove
fault, requires waivers of other significant defenses, makes prompt settlements
possible, and, if litigation is needed, establishes legal management processes
to assure fairness and equity in distribution of damage awards.
The Commission reiterates its
support for the Price-Anderson Act Reauthorization.
Thank you Mr. Chairman. I welcome your comments and questions.