ML19249F127
| ML19249F127 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 11/07/1973 |
| From: | Haskins C Atomic Safety and Licensing Board Panel |
| To: | |
| References | |
| NUDOCS 7910100467 | |
| Download: ML19249F127 (70) | |
Text
4 UNITED STATES ATOMIC ENERGY COMMISSION vfT'
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IN THE MATTER OF:
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METROPOLITAN EDISON COMPANY
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(Three Mile. Island Nuclear Facility, Unit No. 1. )
Docket No. 50-289
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Harrisburg, Penncylvania Pages 7 November 1973 511 - 583 D " " l0 lD 3dh [
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(Code 202) 547-E22 a
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\\CE - FEDERAL REPORTERS. INC.
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NATIONWIDE COVERAGE co<n
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- f UNITED STATES OF AIERICA 10 ATOFCC SU3RGY CO!! MISSION
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In the Matter of:
- l' METROPOLITAN EDISON COMPANY Docket No. 50-289 6
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(Thre?-Mile Island Nuclear Pacility, a
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i oL Hearing Room No. 1 i
'l Public Utilities Cos:niasion 10 Cctrnonwealth a North Streets Harrisburg, Pennsylvania l
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7 November 1973 i
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Hearing in the above-ontitled matter was
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DEFORE:
15 l CHARIES B. EASKINS, Esq., Chairnan, Atomic i n,1 Safety and Licencing Ecard.
i 17 DR. JOHN R. LYI@.N, Hanber.
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DR. M. STANLEY LIVINGSTON, Macher.
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APPEMtANCES:
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(As hereto: fore notad.)
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WITNESSES:
DIRECT CROSS pDIRECT REC 2003 5 ll Ecrbert S. Donenberg 516 520 i
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cross-ereminat'.on.
2 That is the next business before the Board.
3 However, the hour is getting late, and it's getting toward e-lunch time, and I think we probably could not finish with 4
Dr. Carson before lunch; and, therefore, I suggest that we 5
6 now recess, have a luncheon racess, and return here at 1:30.
7 (Whereupon, at 12:03 p.m., the hearing in the
'above-entitled matter was recessed, to reconvene at 1:30 8
g p.m., this same day.)
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O APTERNOON SESSION n1 2
(2:00 p.m.)
3 CHAIRMAN HASKINS:
The hearing will ncre be in order.
-8 Mr. Sager, Counsol for the Intervonor, do you have 5
a witness to present this afternoon?
6 MR. SAGER:
Yes.
We hava Dr. Donenberg on Con-7 tantion No.10 concerning cost-benefit analysis and the 4
3 insurance question.
9 I have discussed with other counsel Dr. Denenberg's 10 qualifications, and I believe that it is well known that 11 Dr. Denanberg has been and is presently the Cemissioner of 12-Insurance for the commonwealth of Pennsylvania.
I believe that all parties are willing to,atipulate 13 that he is an expert, qualified as an expert witness, in the 14 15 matters of insurance.
16 MR. GITNER:
So stipulated, Mr. Chairman.
37 MR. TROWBRIDGE:
Agreed, Mr. Chairman.
18 CHAIRMAN HASKINS:
Mr. Sager, are you prepared to jg have the witness sworn?
20 E. SAGER:
Yes.
21 CHAIRMAN HASKINS:
Dr. Denenberg, would you raise 3
your right hand?
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HERDERT S. DENENBERG e
was called as a witness on behalf of the Intervanors and,
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having been first duly sworn, was examined and testified as 2
gotte,3, 3
DIRECT EXAMINATION m
4 BY HR. SAGER:
5 Q
Dr. Denenberg, at my request, did you prepare 6
certain testimony?
7 A
Yes, I did.
I have a written statement.
8 Q
Would you please read that directtestimony?
9 A
Okay.
10 Mr. Chairman and memberc of the Licensing Board, 11 I am Herbert S. Denenberg, Insurance Commissioner of the 12 Commonwealth of Ponnsylvania.
I hold the degree of doctor of 13 philosophy in applied economici and insurance and I was, 14 prior to assuming my present position, professor of. Insurance 15 at the Wharton School of the University of Pennsylvania.'
I am 16 also an attorney.
17 In my capacity as State Insurance Commissioner I 18 recently conducted public hearings on the risk and the 39 insurability of nuclear pcwer plants in Pennsylvania.
These hearings included testimony from the Atomic Energy Commission, w
20 21 the nuclear insurance pools, utility conpanies, reactor 22 manufacturers and other groups which gonorally favor the construction and operation of nuclear powar plants; they also 23 included testimony by scientiuts, lawyers and other privato g
G 3 :. citizens who are deeply concerned about problerts which theso il 1408 271 1
517 Plants pose for the health and safety of the general public.
in3 2
I wish to direct my brief remarks today to a 3
part of the tenth contontion of the Intervenors in this 4
proceeding; namely, to the assertion that insurance costs 5
have not been fully included in the NEpA review concerning 6
cost-bencfit analysis and alternatives with respect to the 7
Proposed nuclear power plant to be operated at Three Mile d
a Island near Harrisburg.
This contention is one with which 9
I am in complete agreement.
10 To be fully accurate and meaningful for the purposes it is intanded to carvo, the cost-benefit analysis 33
,g contained in the Environmental Statement for the Three M 13 181and Plant should include a fully accurate and meaningful statement of the costs relating to insurance which will be 14 in urred in the oporation of the plant.
15 One such cost, the most raadily apparent insurance 16 cost, is that which the utility companies operating the 18 annua Y pay p & ate ins nars and to the faderal government in order to maintain the $560 million of liability coverage which is mandated by the Price-Anderson Amend:
g Dent to the U. S. Atomic Energy Act.
This direct cost to the utilities will include, for Unit I alona, S270,000 annually in payment for $95 million of coverage which will be pro id d x
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G by private companies as wall as $76,050 annually in paym ent for an additional $465 million of coverage which will be g
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n4 provided by the federal government through tho Atomic Energy 2
Commission.
Thia repreacnts a total minimum cost of $346,050 3
annually, or nearly $14 million over the 40-year anticipated r
4 lifetime of the plant, for insurance coverage.
The actual final cost will of courca be significantly greater, due to 5
6 the relentless tollcf inflation.
7 In itself a substantial expense (and much greater than a utility would expoet to pay for liability coverage on 8
a conventional plant with the same generating capacity), this 9
direct cost incurred by the utilities is not, however, the 10 exclusive or'even the principal cost to bo incurred with.
gg 12 respect to insurance.
Under existing law, other more substantial 13 insurance costa will be incurred by the general public --
14 r by the federal government at the expense of the general 15 Public -- rather than directly incurred by the utility 16 companies as their stated cost of doing business.
g These are the hidden, unstated insurance costs which the public 18 absorbs in order to enable the utility companies to operata gg nu lear rea t rs with the appearance of economy and profit, 20 including the two proposed for Three Mile Ialand, with the g
appearanco of economy and profit.
Although auch public costa may be legal in the g
S context of present federal logialation on atomic energy, they cught not to remain hidden from the public view and cart i l any i
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518 in4 1
provided by the federal government through the Atomic Energy 2
Commission.
This repreacnts a total minimum cost of $346,050 3
annually, or nearly $14 million over the 40-year anticipated b
4 lifetime of the plant, for insurance coverage.
The actual final cost will of courna be significantly greater, due to 5
6 the relentless tolicf inflation.
7 In itself a substantial expense (and much greater than a utility would expoet to pay for liability coverage on 8
a conventional plant with the same generating capacity), this g
direct cost incurred by the utilities is not, however, the to exclusive or'even the principal cost to be incurred with 11 12 respect to insurance.
Under existing law, other more substantial 13 insurance costs will be incurred by the general public --
14 r by the federal government at the expense.of the general 15 Public -- rather than directly incurred by the utility
- 16 companies ao their stated cost of doing busineas.
These are the hidden, unstated insurance costs which the public 18 absorbs in order to enable the utility co=panias to operata 19 nu lear reactors with the appearance of economy and profit, 20 including the two proposed for Three Mile Island, with the 22 appearanco of economy and profit.
Although such public costs may be legal in the 23 e
context of precent federal logialation on atomic energy, they ought not to remain hidden from the public view and cartai l ny 6
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in5 they ought not to be excluded from the comparative costing of 2
nuclear plants which is required by the National Environmental 3
Policy Act.
r e
4 The first of these public costs for the 5
Throo Mile Island plant is the governmental subsidization which 6
is involvad in the U. S. Atomic Energy Commissicn's provision 7
to the utility companies of $465 million in insurance pro-8 taction in return for the utilities' paymant of a flat rate 9
ingemnity fee which does not adequately reflect the true value to of such covert.ga.
11 It is somewhat difficult to assess the market value to the utilities of th's AEC indemnificatica program 12 because the private insurance industry has been unwilling to 13 14 prica, much less to provide, any coverage in excess of its' 15 present maximum of $95 million.
Yet a rough indication of the disparity between the rates charged by private insurers 16 and by the federal government can be seen in the fact that y7 the private insurance pools charge $270,000 for their S95 18 million of coverage while the AEC chargas only $76,050 for its gg 20
$465 million of coverage.
On the average, therefore, the utility owners of Three Mile Island can be expected to pay a 21 i
minimum of $2,340 per million dollars of coverage purchased l
22 23 in the privato insurance market; for coverage provided by the g
AEC, their cost amounts to only $164 por million dollarc of G
coverage.
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Customary insurance principles suggest that tho l
2 ownors of Three Mile Island and of other reactors might
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expect to pay proportionately more for the Icwor than for the f 4
upper levels of their covoraga, since it is likely that thoro !
5 will be moro claims presented against the lower level than l
1 6
the upper levels of coverage.
This principle is illustrated I
7 by the fact that the utilities must pay a promium of $32,500
'.? 8 for the first one million dollars of covorago providad by private insurers compared with only $1,000 per million for 9
10 coverage abova $40 million.
11 But it is highly unlikely that privato insurers 12 would provide any coverage at whatever level for less than *
$1,00'O per million, which is tha amount designated by. them 13 14 as the basic minimum charge for nuclear liability insuranco.
15 Figured at this rate, the true value of-tha
$465 million of coverage which will be provided by the 16 general public through the Atomic Enorgy Commission is no 17 18 less than $465,000 annually.
The differonce between this amoutn and the $76,050 actually chargod by the AEC is 19 20
$388,950 annually, or $15,558,000 over the anticipated 40-year 21 lifetime of the plant.
f 21 This is the first hidden public cost of nuclear 1
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j liability insurance which should be considered, but so far ha 23 not been, in costing the Three Mile Island nuclear plant and f
24 25 comparing'it with alternativea.
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O n7 A second major cost of the Three Mile Island 2
I plant, uhich will be incurred by the ganeral public rather than {
3 by its utility company owners is that associated with (a) 4 compensation defacts in the mandated $560 million~o'f insurancai 5
coverage which supposedly in provided for the express purposa 6
of protecting the public; and (b) the arbitrary cut-off of 7
insurance benefits (as well as common law remadies) for all 8
damages in excess of $560 million.
9 A good deal has been made of the $560 million of insurance " benefit" nandated by the Prico-Anderson Act, but 10 t
it also needs to be pointed out that the actual recovery of 13 these benefita by injured parties is by no maana assured.
12 Despite the enactment in 1966 of amendments designed to 13 liberalize the availability of banefits to the public, it ja remains necessary nonothelesa for injured parties to establish i
15 I
a causal chain between radiation exposure or other harm 16 produced by nucicar products and the fact of their own 17 l
18 injury.
But medical experts have clearly stated that injuries resulting from radiation exposure may take as long gg I
as 20 years or more to manifect themselves, and that uhen 20 I
i they do, they may appear clinically idantical to non-radiation i) 21 22 induced injuries.
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The difficulty of legally establishing a causal g
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link with an incident of radiation exposure in such circum-y e ances Wn u d be o M ous, and it la e p sily c M o u eat c c 25
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522' 1
9in8 failure to overcome such obstacles will result in the denial of compensation from the liability insurance coverago roquired;;
3 e
under the Price-Andsrson legislation.
In addition, legal 4
ccholars have suggested that present law provides no 5
cdaquate means whereby injured parties are able to rocover 6
compensation for life-shortening, for genetic damage, and for 7
othcr special types of injury which can result from accidantal O
radiation exposure.
9 The history of claims experience under nuclear 10 insurance thus far illustrates that the nuclear insurers will 11 not hesitate to attempt to disprove responsibility for 12 injuries attributed to the activities which they insure; after 13 all, it in !u their businssa interost te do so.
Onacurrent 14 cts involves a claim for several million dollars in damages 15 for a laborer who handled faultily packaged radioactive 16 materials which, according to AEC-authenticated reports, leaked 17 a trail of radiation halfway across the eastern United States.
18 Yet responsibility for the severe cancerous condi-tion which the worker manifested four years efter thia 10 20 exposure has been vigorously contested during five years of legal proceedings by the nuclear insurance companica, who 21 22
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assert that the illness might be attributable to other causes.
23 If not componscted or if inadcquately compensated 1
21
! from th.
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.1 ability insurunce providad for this purpoce, the i
l costs of radiation-induced injuries possibly reculting from 25 1A08 278 1
523 r
1 I
in9 the operation of the Three Mile Island plant will not j
thereby cease to be real costs; they will simply join the listi t
of hidden costs of nuclear activity which must be eventually
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1 absorbed by members of the public.
5 Serious as the obstacles to recovaring compensa-6 tion from the existing $560 million of insurance covorage are, 7
however, an even greater public cost is ombodied in the 8
arbitrary cut-off of insuranco coverage for any possible 9
damages in excess of $560 million.
This limitationof 10 insurance protection, coupled with the abrogation of legal 11 liability of the plant otmers and reactor manufacturers for 12 any claims in escase of $560 million will constitute the 13 ultimate subsidization by the general public of the ThreeMiloIslandpl$1t.
14 15 The plant owners will undoubtedly deny that this 16 capping of benefits and liability represents any real material l 17 value to them or, conversely, any real cost to the public.
They will point proudly to the fact that no member of the 18 public (as opposed to workers in or associated with the 19 20 activity of the industry) has been killed, and no catastrophic accidents have cccurred, in 17 years of experience with 21 22 nucicar reactors.
23 And they will assert that on the baain et this G
l safety record and their continuing = cal to make reactors y,
uncommonly safe, the public vould be foolish to worry about 23 HOB 279 i u
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the financial consequencea of an accident coating moro thin 2
$560 million or, for that matter, eny major accident at all.
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All thace arguments by the utilitico aro 5
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irrolovant, of courna, The utilitica do not take their own nasurances about safety seriotoly enough to placa their 5
corporate necks on the lino by rorouncing their exemption c
from liability for a catastrophic accident, and in fact 7
they insist os the continuance of this exemption as a conditior g
9 of their operating nuc1 car plants.
If pressed, they will admit that a catastrophic 10 accident is both conceivable and paasible.
g Ie.d if such an 12 accident occurs, the fact is uhat it vill be the general public -- and not the utilition and the reactor manufacturers 1.,s g
-- who must bear the cost.
15 at a nuclear power plant has been twico studied by the Brookhaven National Laboratory in bahalf of the Atomic Energy Commission.
In 1957, prior to tno Congressional enactment of a $560 million liability cut-off, the laboratory reported that such an accident could conceivably cause 3,400 20 deaths, 43,000 personal injurios, and cost $7 billion for g
g proporty damage alono.
In the early 1960s the Lchoratory did an updata of its earlier study, an updata whouc coaclecions vara kcet secret fron the public until Juno of this year.
This revised study I
a m i
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inli indicated that a catastrophic accident might cause 45,000 2
fatalities, 100,000 personal injuries, and cost $17 billion or ;
3 more for proparty damage alona.
4 But the ' utilities will say that, whatever its I
5 conceivable magnitude, a catastrophic accident is highly G
improbable.
Thoir 17 years of successful experience with 7
reactors provec this, they say.
8 I say, from the point of view of insuranco 9
administration, that our 17 years of previous experience with 10 reactors tell us very little abcut their futura anfsty record or about the future probability of a catastrophic accidant.
I 11 lihat we have sean so far is no more than the tip 12 13 of an iceberg.
Do the utilitics really believe that the performance of 1,000 or more massive reactors as large or 14 15
. larger than the 871 mgawatt Unit I at Three Mile Island IG csn be safely predictad upon the early parformanca of a handful of reactorn, many of them much smaller than those now 37 39 being built?
The private insuranco industry cupposedly has l
ID some expertise in evaluating the probable frequency and the 20 magnitude of accidental occurrences in order to provide for 21 their compensation and to n:ake a profit in the bargain.
22 In the g
matter of nuclear insuranco, it is my judgment thatthe limitations of experience and the proscure of public policy f
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have rendored the privato insurance poola uncharacteristically g
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526 4
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9 n12 servila to the " party line" ori safety of the industry which 2
they are insuring.
'let, some of the actions as opposed to tL,'public rhetoric of these private insurers is a:ctror.ely 3
4 instructive.
5 In contrast with much higher levals of liability 6
coverage which they have been willing to market for some 7
areas of conventional risk, the private insurers have warily limited their coverage of nuclear risk to $95 million, a 8
9 sum which is the meront pittanco in terms of their assets and to overall financial capacity.
I might insert at this point in 11 all major cities a single company,might have more than $2 12 billion on the line.
13 The normal appec1 of a volume business with a:ttensive profit, it appears, will not induce them to provide 14 15 coverage for even the mandated $560 million of nuclear liability, and much less for any covarage beyond that level.
16 g
And how do the privato insurcrs actually assess their risk for nuclear accidents in excess of $40 million, 18 that is for the range of accidents which begin to justify the 19 20 terms " major" or " catastrophic"?
Taking into consid9 ration an allowanco for profit and oporating oxpenses, their $1,000 21 p r million minimum premium charge for this upper level 22 l
g coverage amounts to an implicit judgment of an appro::imate 1/1700 probability of a major accident, a working pricchility g
25 assessment which is much lesc conservative (or assuring) than 14082(2
527 I
in13 the rhetorical estimates of some nuclear proponants.
2 My own view is that this probability assessment i
3' may deserve to be still loso conservative than it is.
But if l 4
we assume for the ake of discussion that it is a 5
reasonable judgment, and if we apply it to the revised
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.Brookhavon Laboratory figures on the possible magnitude of l
' a catastrophic accident, we will begin to get some idea of t-tN hasible cost to the public of the +4 sting ceiling on
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8 9
nuclear accident liability above $560 million.
10 The Brookhaven revieed study :ontains a $17 billion 11 estimate of possible property damages due to a catastrophic 12 accident.
i It also estit.:f tes possible deaths of 45,000 and 13 personal injuries of 100,000.
If wa apply what I would 14 regard as conservacive individual and societal costs of 15
$300,000 per fatality and $100,000 por radiation injury, we can calculate that the cost of deaths and injuries might be 16
$13.5 billion and $10 billion respectively, for total costs 17 of $40.5 billion for a catastrophic nuclear accident, 10 g
19 If, using the principlen of actuarini scienca
- ehich are the basis for insurance decisions, we wera to 20 combina theco figuras on probability and magnitude of a 21 i.
possible nuclear accident in order to design a realistic 22 j
insurance program to meet this nocd, we would calculate an 23 insuranca premium of at least $23.5 million per year por 2.4 25 reactor.
i 140B ?U l
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528 I
9 in14 But clearly the utility companies, which have 2
heretofore expressed strong opposition to even a modest increaso 3
in'the scope of their present liability, will be unwilling p
4 and probably also unable to purchase such coverage.
And 5
clearly, too, an insurance industry which now balks at raising 6
'its nuclear coverage above even the $100 million level, will 7
be unwilling and also unable to extend that coverage to 8
provide realistically for a possible $40.5 billion accident.
9 In the absence of such insurance, and with the!
10 cut-off of liability 'at $r560 million w'ich now prevails, we-h 3,3 must calculate instead a public subsidy to the nuclear 12 inductry, and ahidden cost to the general publid, of $23.5 13 million per year in consequence of the proposed licensing of g4 a nuclear plant at Three Mile Island.
This public cost, I 15 migth add, is in itself more substantial than the $23.3 million 16 figure which the owners have projected as the entire annual 37 operating cost of the proposed plant.
18 Mr. Chairman, I believe that the entire series of 19 undisclosed but quite real insurance-related costs which I have 20 described in this statement must be included in any accurate 21 cost-banefit or risk-benefit analysis of the Three Mile 22 Island plant.
I believe that when these costs are 23 Properly included, it will beccme apparent that the licensing 24 f this phnt would be unwica and unwarranted, g
My own personal and professional 3 Age nt is that t
529 in15 1
O on purely economic and insurance grounds, the lleensing of 1
2 t
the proposed plant under present circumstances would constitute1 3
a blatant and inexcusable act of fiscal irresponsibility and 4
a basic violation of the public trust..
5 However, even if its owners were willing,
6 and able to provida sufficient insuranco coverage to protect 7
the financial interest of the public,,I would judge that the 8
price, in human and moral terms, is still too much to pay.
9 There are some risks which not even the skillfully applied 10 monetary balm of insurance can make acceptable, and I judge 1
that this is plainly one of them.
12 13 14 15 16 17 18 19 20 21 22 23 24 g
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1408 285 il i
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530 LEE 2 jrb 1 1
CHAIRMAN HASKINS:
Thank you, Dr. Denenberg, 2
for a very thought-provoking statement.
3 MR. SAGER:
Doctcr -- if I may, Mr. Chairman?
4 BY MR. SAGER:
5 Q
Is there anything to add?
6 A
Yes.
Today, of financial necessity the 7
Intarvenors hav.e been forced to agree to a compromise, in 8
order to get the util'ities to install a charcoal filter 9
to reduce low-level radiation, the Intervenors had to 10 agree to withdraw immediate objection to the " licensing 11 of this plant.
12 This shows that once again the nuclear establish-13 ment has ransomed the public interest for its own benefit.
14 In order to get a saf6ay device which should be mandatory 15 to protect the health of.the public, the nuclear establish-
\\
16 ment forced the 'Intervenors to drop their objections by 17 using financial coercion.
18 MR. GITNER:
Mr. Chai man, may I ask at this 19 point how long the statement is going to take -- if 20 Mr. Denenberg knows?
21 THE WITNESS:
Forty more secondo.
22 MR. GITNER:
Is it more than one pagd?
23 THE WITNESS:
I have a half a page to go.
24 Seamingly, the Atcmic Enorgy Co:maission has G
25 especially designed procedures to lock out the little guy.
Hai Q3 ')_bb 8
y 531 jrb 2 1
can't afford the high legal cost of fighting the billion 4
2 dollar atomic establishment, no matter how wrong that nuclear l l
3 establishment happens to bo.
i 4
Here, despite the merits of their contentions, tho 5
Intervenors had to give in to a one-sided capremise because 6
they could not afford the legal fees to carry on.
7 This shes the public interest is not being a
protected because all the money and resources nre with s
the utilities.
It is also tragic that the Atomic Energy to Commission has not guaranteed these issues can be considered, i1 and that it has not guaranteed that Intervenors can properly 12 Present vital issues.
13 So I would suggest that the AEC do two things:
1g First, require such filtration devices on all 15 things; and second, the AEC should force consideration of 16 all issues affecting the public.
17 CHAIRMAN HASKINS:
Dr. Donenberg, does that 18 complete your preparad statement?
19 THE WITNESS:
Yes, it does.
l 20 CHAIRMAN HASKINS:
Do you have anything you wish l
21 to add at this timo?
g f
22 MR. DENENBERG No.
23 CHAIRMAN ASKINS:
Mr. Sager, do you have any I
24 questions of the witness?
25 MR. SAGER:
I havo no further direct.
1408 287
532 1
CHAIRMAN HASKINS:
Dr. Denenberg, as you know, it 2
is the custom of the Licensing Board to give the other 3
parties an opportunity for cross-examination.
Whether they 7-4 have questions or not, I don't know.
5 I will first call on Mr. Trowbridge, counsel for 6
the Applicant.
7 MR. TROWBRIDGE:
Mr. Chairman, I have no cross-a examination of this witness for the reason that, as agreed D
among counsel, the next order of business after this will be 10 the presentation of our own testimony on the subject of 11 insurance.
12 I do wish to record for the record my resentment s
over t:he statement, supplemental statenent, made by this 13 14 witness if the substance of that statement was known to 15 counsel for the Intervenors, s
1 16 CHAIRMAN HASKINS:
Well, the Board notes your i
17 statement, Mr. Trow-ridge, and the Board will evasuate the l
1 1s supplemental statement and the nnin ctatement, of course, j
19 for its consideration.
l
' r. Gitner, counsel for the Regulatory Staff,
'3 M
20 21 do you have any questions at this time?
i 22 MR. GITNER:
Mr. Chair:::an, an you know, and the 9
23 other partios know, we have given a notico of deposition 24 for Mr. Danenberg.
Wo would like to rccerve our right to 25 move to strike such portions of the testimony at a lator j
140B 2BB
s 533 jrb 4 1
date that we feel are inadmissible or irrelevant to these 2
proceedings under the Scard's prehearing conference order.
I 3
We would ask that wo also be allowed to recall
/
4 Kr. Densnberg at a later time to cross-mmine him and to 5
clso present rebuttal testimony on the points that he has 6
raised.
7 At this time I would also enter our objection to a
the supplemental statement of Mr. Denenberg.
I feel that 9
it is somewhat out of place to discuss whatever reasons to Mr. Dananberg believes the settlement was reached, and we 1i would also object to his statement: for the record that the 12 public interest is not being protected by the Atomic Energy 13 Ccamission.
14 Other than that, we have nothing mor= at this 15
- tim, Mr. Chairman.
16 CHAIPJiAN HASKIHS:
Thank you, Mr. Gitner.
ty Mr. Adler? Do you hava any questions?
18 MR. ADLER:
Mr. Chairman, we have no questions 19 nor additional oo:m: tents.
20 CHAIRMAN HASKINS:
Thank you.
21 Mr. Sager?
f 22 MR. SAGER:
Counsel for the Intervenors did not.
l 23 hour2.662037e-4 days <br />0.00639 hours <br />3.80291e-5 weeks <br />8.7515e-6 months <br /> the statement that usa made by Dr. Donenberg.
I i
g.4 However, I believe that it should be observed for the O
25 record Cc=missioner Denenberg has held public hearings (408 2b I
u o
534 jrb 5 1
concerning the matters that he set forth in his statement, cnd 2
I believe that in that respect attention and great weight 3
should be paid to proposals and recommendationc made by the
~
4 Cc:mnissioner.
5 Thank you.
6 CHAIRliAN HASKINS:
I will ask the Board me nbers 7
if they have any questions.
Dr.
Livingston?
8 g
DR. LIVINGSTON:
No questions.
10 DR. LYMANs No questions, Mr. Chairman.
11 CHAIRMAN HASKINS:
Thank you, Dr. Denenberg.
12 I think that concludes your presentation this afternoon.
13 THE WITNESS:
If I may just make a brief 14 statement?
15 CHAIRMAN HASKINS:
Yes, indeed.
16 THE WITNESS:
I simply must say that I thought 37 this was an ideal forum in which to cccment on the 18 settlement and I also thought it was an ideal forum on which gg to comment upon the performance of the Atcmic Energy 20 Commission.
21 I thank you for your att ention.
CHAIRMAN HASKINS:
Okay.
Thank you.
22 (iiitness excused. )
3 CHAIRMAN HASKIHS:
Mr. Sager, do you have any otherl 2d l
witnesses at thin tima?
3
,45 34gg 290 i
I jrb6 535 1
MR. SAGER:
No, sir.
O 2
CHAIRMAN HASKINS:
Mr. Trowbridge, do you have i
3 any othar witnceses?
4 HR. TROWBRIDGE:
By agreement of counsel, l
t 5
Mr. Chairman, Mr. McVey, our next tritness, would be next in 6
order.
7 CHAIRMAN HASKINS:
Yes.
Would you call him at 8
this time.
9 MR 'UROWBRIDGE:
Yes.
10 Mr. McVey, would you come forward.
11 MR. TROWBRIDGE:
Mr. McVey, would you state your 12 full name and address and present business affiliation?
13 MR. MC VEY:
My name is James R. McVey.
I live 14 at 41 Willow Avenue, North Plainfield, New Jersey.
I an i
15 currently an Assistant Vice President of the Frank B. Hall I
i 16
& Company, Insurance Broko rs, at 88 Pine Strcot, New York.
i i
17 CHAIRMAN HASKINS:
Ceuld you speak up a little, 18 Mr. McVey?
i 19 MR. TROW 3RIDG3:
It will be necenaary for you 20 to speak quite loudly, particularly since your back is to 3
1 21 the people here.
I i
22 MR. MC VEY:
Thank you.
j i
23 MR. TRCWBRIDGE:
Mr. Ch&irman, would you l
24 avear the witness?
9 95 CHAIRMAN HASKISS:
Yes.
} khb
'-} {
9
~
,)
f-~
536 jrb 7 l
1 Whereupon, l
2 JAMES MC VEY rvv m f
3 was. called as a witness on behalf of Applicant, and, having
'F been first duly sworn, was e:camined and testified us follows:
S DIRECT E M.INATION i
6 BY MR. TROWBRIDGE:
7 Q
Mr. McVey, I show you three pages of paper clipped 8
together.
The second and third page:s are entitled, up in
{
9 the right-hand corner, " Confidential Resume".
10 I regret the word " confidential".
It is 11 obviously the resume of James R. McVey, as it says.
12 The first sheet is entitled " Supplement to 13 Resume".
14 MR. GITNER:
Excuse rie, Mr. Trowbridge.
15 The Staff would stipulate to Mr. McVey's 16 qualifications and his resume may be bound into the record 17 as if read.
18 MR. SAGER:
We will'so stipulate, also.
19 MR. TROW 3 RIDGE:
All right.
20 In that case I will amend that slightly if it 21 may be copied in the record as if read.
22 CHAIRMAN HASKINS:
May we strike the word l
s 22
" confidential" ?
[
Yes, plesso do.
I e
25 CHAIEhN HASKINS:
Very wc11.
1408 ') N.
I k
sb8 r
537 1h (The te::t of the docunent follows:)
9 E
SUPPLEMENT TO RESUME t
3 Janes R. McVey l
4f 41 Willow Ave.
5 North Plainfield, N.J. 07060 6
Telephone 4201-755-2968 7
PERSONAL 8
Pifty ' 2ee years old, born September 25, 1920, New York 9
City.
to Married - Four children,e.ges 19, 18, 13, and 11.
11 Present security clearance - LX.
I2 EXPERIENCE 13 Frank B. Hall & Co. of N.Y.,
Inc. - May 1973 to present i
14 International Insurance Brokers.
15 Position - Assistant Vice President and Manager of Nuclear 1G Depart:nent.
17 Marsh & McLennan - September 1967 to May 1973 - International 18 Insurance Brokers.
IS Position - Nuclear Consultant I
20 Act as advisor and consultant to clients in metters 2;
pertaining to Nuclear Property and Liability Insurance.
l I
22 l{
l RESUZE I
23 '
Jance R. McVoy
(
i 2a 98 East Evenue 25 Westorly, Rhode Island 02891 n
l!
38 jrb 9 I
Telephones 401-496-1019 9
2 PERSONAL l
i 3
Forty-six years old, born 1920, New York City, New York.
4 Married.
Four children, ages 13, 12, 7 and 4.
5 Five feet, four inches tall, 165 pounds, excellent health.
6 Willing to relocate and travel as required.
7 Conversant in French.
8 Honorably dischargsd in 1946 as a Borgeant from the U.S.
9 Air Force.
10 Present security clearance is Secret.
11 EDUCATION 12 Polytechnic Institute of Brooklyn - B.S.M.E., 1954 13 Brooklyn College - One year of Liberal Arts 14 Mohawk College - Two years of Pre-Engineering 15 OBJECTIVES 16 Increased growth potential and responsibility in Me chanical 17 Engineering as an Assistant Chie.f of Senior Project Engineer.
18 EXPERIENCE 19 General Dynamics 31ectric Boat Division, Groton, donn. 1965 20 to 1967.
This division produces nuclear and conventional 21 Powered vessels for the governnent.
Employed as:
1 1
t 22 Senior Project Engineer 23 Responsible for formulating technical specificationc of pumps, 2.5 distilling plants and administrativo opecifications for l
9 9
l 25 the NR-1 Project.
1408 294 t
I I
I jrb 10 l
539 l
1l Reviewing und appproving procedutes and technical Ennuals of 2
equipment for which I am responsible.
jf 3
(-
Performing technicci ovaluation of proposals which requires j
familiarity with military specifications.
l 4
I S
Reviewing designs and performing necessary calculations
~
6 such as shaft critical speeds, stress and hoat balances.
7~
Assisting other departments as Technical Consultant 8
and niintaining liaison with the custcmer and vendors.
9 Reporting to Mr. R. H. Dudda.
10 Dresser Indlatries, Industrial Valva and Instrument Division, 11 Alexandria, Louisiana.
Formerly Manning, Maxwell and Moore.
12 1960 to 1965.
This division manufacturas valves for the 13 patro-chenical industry and employs approximately 700 14 people, started as Project Engineer and promoted to 15 Resident Enginsor.
16 As Resident Engineers I
17 Responsible for and supervised the activitics of several 18 engineers, draftamen and clerks.
19 Requiring the ability to deal with people at all lovels
~
20 both within the ccmpany and within the customer's plants.
i I
Maintained all technical correspondence with foreign 21 22 licensees in Europe, Mexico and Japan including travel to i
i 23 l those countries as required.
2.1 Dasigned and supervised instnllation of a Steam Flcy Fccility,
25[
which received A.S.M.E. certification and was appointed f
)h a
540 jrb 11 1
official Observer.
O Responsible for the modification and or ccmplete redesign f
2 i
3 of safety valves for various convencional and nuclear appli-4 cations.
5 Served on the American Petroleum Institute's Manufactur 6
Sub-Connittee for Safety Relief Devices.
7 Conducted extensive tests for a Pilot Operated Boiler Valve 8
at the Naval Boiler and Turbine Laboratory, Philadelphia, Pa.
9 Reporting to Mr. H. E. Ferrill.
10 As Project Engineer:
11 Responsible for the development of new safety valve designs, 12 frca inception through test, including cost analysis 13 and pilot run.
14 Requiring knowledge of Thermodynamics, Materials, Stress 15 Analysis, Pluif Flow, Spring Design and Basic Elec-rical 16 Engineering.
17 Designed and developed a new line of Low Pressure Safety Valves which have been A.S.M.E. certified and comnercially 16 19 markoted.
i 20 Assisted in the development of a Thermo-Lip Disc for I
21 an electrically operated valve which has been awarded a l
l 22 patent, numbered 3,174,710.
i 23 Responsibla for the analysis and resolution of field
!i 24 problems.
j 25 Westinghouse Electric Company, Bettis Atcmic Laboratory,
[
140B 296
jrbl2 541 1
Pittsburg, Pa., 1955 to 1960.
This division produces the 2'
reactors for the nuclear submarines and employs appror.1-k 3
mately 5,000 people.
Started as a Junior Enginsor and 4
progresses through four grades to Enginocr.
5 As Engineer 6
Responsible for formulating specifications for filters, 7
pressure valves, heat exchangers, pumps, piping and valves.
~
8 Established a Lead Bonding procedure for Shielded Pressure 9
Vessels.
10 contributed to the Development of a High Pressure Ceramic 11 to Metal Seal for Electrical Heatero.
12 Maintained technical liaison between bendors, the Navy, 13 and shipyards.
14 (End of document.)
15 BY MR. TROWBRIDGE:
16 Q
Mr. McVey, did you prepare a statement
'l 17 relating to nuclear insurance the the nucienr insurance 18 program for this proceeding?
i 19 A
Yes, sir, I did.
j i
20 Q
Would you, Mr. McVay, proceed to read that 4
i 21 statement?
22 CHAIRMAN HASKINS:
Mr. Trowbridge, just a 23 ncment.
We are just at the point where I an wondering if f
24 8
Mr. McVey would prefer to stand at the poditun, in which 9
25 event perhaps his voice would project more towards the
542 jrb 13 1
peanle in the back of the room.
2
- EE !71TNESS:
Thnnk you.
I 3
Mr. Chni:: man and Membera of the Licanaing Board; l;
i 4
my name ic James McVey.
I am an officer of Frank D. Hall &
l 5
Company of New York, Insuranco Brokers, nnd Manager of 6
their Nuclear Department.;
7 I hold a bachelor of Science of Mechanical 8~
Engineering degree from the Polytechnic Institute of 9
Brooklyn.
i l
to on August 14-16, 1973 I attended the hearings l
11 before Commissioner Herbert S. Denenberg of the Pennsylvania 12 Insurance Department relating to nuclear insurance.
Among 13 the witnesses testifying befora commissioner Denenberg 14 was Mr. Joseph Marrone, who presented testimony concerning 15 the history, operations and premium rates and refund policies 16 of Nuclear Energy Liability Insurance Association, 17 commonly known as "NELIA".
Mr. Marrono has been General 10 Manager of HELIA since 1967.
19 I have read the testimony presented to this 4
20 Board by Commissioner Danenberg.
In his testimony, i
21 Commissioner Denenborg mado certain statements and draws j
t 22 certain inferences with respect to the cost of nuclear i
23 liability insurance which are not correct,s:td which I j
i 24 believe reflect a micunderstanding of the testimony that was l 9
25 presented to him at the hearings which he held in August.
1408 ?98
$rb 14 543 1
Comiasioner Denenberg states on page 2 of his 2, 5 testincay that the annual premium cost for nuclear liability rc 3
insurance for Tnree Mile Island Unit No. I will be $270,000 t
4 annually in payment for the $95 million for coverage to be 5
provided by NSLIA, and $76,050 annually in payment for an 1
S additional $465 million of coverage which will be provided 7
by the Federal Government through the Atomic Energy 8
Comission.
He goes on to state that this represents a 9
total minimum cost of $346,050 annually, or nearly $14 million to over the 40-year anticipated lifetime of the plan +. for it insurance coverage.
12 In presenting this figure, comicsioner Denopberg has ignored completely the Industry Credit Rating Plan 13 14 about which Mr.
Marrone testified before him on August 15.
Under that plan, about 73 cents of every premium dollar paid 15 16 to NELIA is placed in a reserve fund which is diaburced to 17 NELIA to pay loss and loss expense or to pay refunds to 18 insureds.
Such refunds are made after a ten-year waiting I
19 period.
HELIA effectively began its operations in 1957 l
when the nuclear power industry was also just beginning.
20 A"
21 In the years 1957 through 1963 a total of $5,312,500 22 of the premiums received by ICLIA ucre placed in the reserve 23 fund and, at the conclusion of the ten-year waiting period, i
24
$5,128,044 or 96.5 percont of the cum placed in the reserve G
l 25 was refunded to insureds by NZLIA.
Stated another wcy the gg
544 jrb 15 1
9 refunds were equivalent to approximately 70 percent of the 2
total premium paid.
I shall also point out that similar data, through 1972, are contained in Table B-2 of the 3
4 WASH-1250 report of the AEC, dated July 1973, referred to 5
by Commissioner Denenberg in his testimony.
6 If one applies this experience to his $2 70,000 initial annual pramium for NELIA coverage for the Three 7
8 Mile Island unit, the net annual premium would be approxi-9 mately $81,000, or an average of approximately $852 por 10 million dollars of coverage for the $95 million of coverage 11 provided by NE IA.
12 Stated another way, Commissioner Denenberg has 13 overstated by Icore than three times the net cost of the insurance coverage to be provided by NELIA, even though he 14 15 had the correct information available to him in Mr.
16 Marrone's testimony and in the AEC publication on which he 17 relies for other data.
This overstatenent is perpetuated in other aspects Is 19 of Com missioner Denenberg's testimony.
He recognizes at 20 page 3 of his testimony that custe:2ary insurance principles l
suggest that the owners of reactors might expect to pay I
21 i
22' proportionately more for the lowor, and lesa for the upper, l
levels of their coverage, since it is ulikely that there will i 23 be more claics presented against the lower than the upper 24 25 levels of coverage.
ODB gQ I
545 jrb 16 1
He illustrates this principle by stating that 3
the initial annual premium for the first $1 million of 3
coverage provided by NELIA lu $32,500 cot: pared with only J
$1,000 per $1 million of coverage for coverage abovo 5
$40 million.
But again, ho has ignored the operation 6
of the Industry credit Eating Plan.
Assuming, on the basis 7
of past experience, a refund of 70 pucent of initial 8
premiums, the net cost for NELIA coverage would be $9,750 9
for the first $1 million of coverage and $300.per $1 10 million of coverage for coverage above $40 million.
11 Commissioner Denenberg goes on to state that it 12 is " highly unlikely" th4t private insurers would provide 13 any coverage above $95 million for an annual premium of 14 less than $1,000 per million, and ho then applies his 15 assumed $1,000 pe:: $1 million of coverage figure to the 16
$465 million of coverage provided by the AEC to derive what 17 he characterir.es as "the true value" of such coverage, which ja he states te be no less than $465,000 annually.
He then i
19 takes the difference between this amount and the $76,050 chargod l
20 by the AEC, or $388,950 annually, and derives a figure of 21
$15,588,000 cver the anticipated 40-year lifetime of e,
the Three Mile Island Unit No. 1.
I 33 [
The trouble with Cc=missioner Denenberg's I
(
24{
2'd 1408
- 01 i
n 11
jrb 17 546 1
arithmetic is that it is based on incorrect premises.
As I 9
2 have just demonstrated, Ccumissioner Denonberg 'should know 3
.that the actual net premium coat of the insurance provided 4
by NEIA for the band of coverage between $40 million and 5
$95 million has been $300 por $1 million of coverage 6
and not the $1,000 assumed by him.
7 secondly, I know of no basis for his assumption a
concerning the rate that NEIA would charge for insurance 9
coverage for the band of coverage new provided by the E C.
10 NELIA does not have, at the present time, insuring capability 11 to cover that band and, therefore, there has been no reason 12 for NELIA to consider what the appropriate rate would be.
13 However, applying the same insuring principles 14 that commissioner Denenberg cites, it is " highly unlikely" 15 that, if NELIA were in a position to cover the band between 16 u
$95 million and $560 million, the net annual cost per 17
$1 million of covernge would be less than that for the band 18 between $40 million and $95 million.
1s Another basic error in Commissioner Denenberg's
,I I
~
20 computations is that he uses figures for Three Mile Island i
1 21 Unit No. 1 cicne and does not take into account the fact I
i 22 that that unit is part of a proposed t:ro-unit development, l
23 with the second unit having a slightly larger electrical
+
24 capacity.
1408 ;02 l
NBLIA han quoted initial prenium rates of 25
.1 l
i l
547 jrb 18 1
$304,750 for the first unit and of $132,212.50 for the O
l 2
second unit, or a total for the two units of $436,962.50, O
with the exposure applicahl.e to each unit being $95 million, 4
but with the total site coverage being $95 million.
5 In other words, if an incident should occur in 6
either unit, there would be coverage up to $95 million.
7 But, if there should be simultaneous incidents in both 8
units, the total coverage would be limited to $95 million.
9 However, the NHLIA insurance coverage from the firtt to dollar of coverage up to $95 million for an incident at 1i either unit clearly invites greater insurance riska than 12 the risks involved in the AEC coverage.
For the band of 13 coverage betarean $10 million and $95 million, the initial 14 annual premium rate for the second unit is $250 per $1 millior.
15 of coverage and this is subject to the Industry credit 16 Rating Plan so that if refunds continue atthe 70 percent 17 rate, the net premium for the band between $10 million and 18
$95 million would be $75 per million.
19 By contrast, I should point out that the
~
charge made by the AEC for its indamnity is not subject to I
20 l
21 refund.
Thus, for the Three Mile Island station, the Azc's 22 net annual charge of $164 per million of coverage for the 1
23
$465 m..i. lion band of coverage betwaca $95 million and $560
\\
21 million is actually more than twice the not prenium charge 25 of $75 per $1 million of coverage for the band between 1408 503
548 frb 19 1
$10 million and $95 million that, based on a 70 percent 2
refund, one can reasonably anticipate for Three Mile Island I,
3 Unit No. 2.
4 Another way of approaching this might be to take 5
an average of the net premium cost for the NZLIA coverage 6
between $40 million and $95 million for Three Mile Island 7
Unit No.1 and for Three Mile Island Unit No. 2.
As I 8
have stated, a reasonable estimate is $300 for $1 million 9
of coverage for Unit No. I and $75 per $1 million of coverage 10 for Unit No. 2, or an average for the two units of $187.50 11 per million.
Certainly, in this light, the ABC charge 12 of $164 per $1 million of coverage for coverage between 13
$95 mL. lion and $560 million does not appear to me to 14 have any element of subsidy.
15 The private insurance pools do not yet have the 16 capacity to provide $465 million of coverage on top of the i
17
$95 million of basic coverage they are already providing, 18 although they have increased their coverage by more than 19 50 percent since NHLIA first began its opstion.
20 However, if they had such insuring capacity, based l t
21 on the data that I have just presented, I do not believe
[
22 that the net premium cost for incurance coverage in the 23 rango between $95 million and $5GO nillion would ho likely 9
tobeinexcesoofanaverageof$164parmillionofccvaragef 24 25 for that band, and particularly co if the non-insurance
\\h
jrb.20 549 I
underwriting cost were eliminated.
'2 As I stated, approximately 73 percent of the cremitas
.f 3
dollar received by HELIA is placed in a reserve, t ith 4
the other 27 percent being used for administrative and 3
en $neering costs, premium taxes, acquisition costa, and 6
the like, including profit.
Consequently, in order to 7
measure the true insurance cost on a private pool basis as 8
an equivalent of theinsuranco cost of the government 9
indanity, it would not be appropriate to use 80 percent 10 of the attributed private pool net premium rate.
This does 11 not give any weight to' the fact that the government's I
12 cost of capital is necessarily less than that of any 13 private insuranco pool so the government can be recovering 14 its full cost of providing the indemnity and yet charge a 15 lower rate than any private pool must charge.
16 The balance of Commissioner Densnberg's testimony 17 is not really directed to insurance matters or the cost of 18 insurance.
Thus, Camissioner Denenberg first extrapola tes 19 i
his wholly erroneous $1,000 assumed premium ra b per million 20 dollars of coverage into an implicit judgment that there
{
21 is a 1/1700 probability of a major nuclear incident, and 22 then applies this figura to the Bookhaven studios concerning 23 the possible damage that could occur if there 11ere to be a l
24j major nuclear accidont, and his aconned cost per nuclenr-25 caused fatslity and. injury.
li l
}
jrb 21 1
He then applies his assumed $1,000 per million 9
2 premium rate figure again to arrive at insuranca premium cost.
3 I know nothing in the Brookhaven report or in the insurance 4
industry's premium practices that would support any 5
such assumptions as to the probability of a major nuclear 6
catastrephe.
7 My understanding is that the Brookhaven studies 8
were premised upon the view that the probabilities of major 9
nuclear catastrophe were so slight as to preclude to quantification, and that they merely sought to measure the 11 possible damage that could occur in the ovent of such a major 12 nuclear catastrophe.
13 Certainly, based on my experisnce in the 14 nuclear insurance industry, I believe that there is no basis 15 for Ca=misoloner Donenberg's attribution to NELIJs of any 16 assumption of the prcbability of the occurrence of a m:jor 17 nuclear incident.
Instead, I believe that NELIA's rates 18 and rating plan are based on the assumption that a major 19 nuclear incident is so unlikely as to wholly ba outside
~
20 the range of probability studies.
l 21 i The concluding paragraph of Cc=missioner Denenberg's 22 statement indicates that he was not really presenting his 23 testimony as indienting come deficiency in the insurance i
i 24 aspects of the cost-bentfit cnalysis or risk-benefit l
25 analysis for the Thrac Milo Island Plant, and he van really s
)hY
i jrb 22 551 taking the opportunity of testifying before you to state his views as an individual that nucicar plants should not be 3
built.
F Certainly if he were talking in insurance terma, 5
and wished to be comprehensive about a coat-benefit or 6
risk-benefit analysis, he trould also have found it necessary 7
to address himself to the insurance costs associated with 8
alternative maans of meeting the energy requirements on the 9
area to be served by the Three Mile Island Plant.
10 For example, the insurance cost for coal miners 11 will rise approximately tenfold over the next four years 12 and even acre thereafter, as a result of the shifting 13 to the coal industrf-from the Federal Government of the 14 cost of the black lung program.
15 Specifically, I have reed the testimony of 16 Mr. Carl Bagge, President of the National Coal Association, 17 before Congress on the subject of the projected insurance f8 cost of providing black lung coverage.
He indicated that 19 the insurance cost of such covertge for 100 miners would 20 be increased by about $500,000 annually.
Since it would 21 take about 1,500 miners to produce the coal equivalent i
i l;
22 of the Three Mile Islaid Unit No. 1 cutput, this wtuld mean i
23 [
an insuranco cost for this element along of about $6.5 f
24[
million annually.
25 I do not kncu how Commissioner Danenberg would I
jj 1A08 507 i
552 jrb23 1
compute tha insurance cost equivalent of assuring l
2 continuing and indeed increased oil supply from foreign 3
countries if nucisar plants are not parmitted to operato and i
4 if anticiapted nuclear generation must be replaced by oil-l fired generation, but his approcch would indicate that this, 6
too, should be quantified; one might well ask, for example, 7
whether there would be the counterpart of a National War
~
8 Risk insurance cost.-
0 Likewise, I do not kncu how he would quantify to the insurance costs of the additional hazards to health, and 11 the impact on the economy of the nation, if operating permits 12 are not granted for nuclear generating stations and this 13 were to force a sharp curtailment in thm uno of energy in
!4 the nation.
15 I would respectfully suggest that Cenissioner 16 Denenberg is going well beyond insurance matters when he
- s -
17 addresses Mm?olf to the issue of whether tihe Price 18 Anderson Act should provide a limit of liability and, if
^
i, 19 so, where that limit should be.
l 20 This is a mattar which is to be reviewed by i
21 Congress in the near. future, and which in the subject of 22 ongoing studies being made for the AEC.
i
(
I 23 I bellove that it presents policy issues on i
24 which many will wish to be heard, but I don't f
G 25 believe that it is a subject to which insuranco principic/s i
1408 508
3rb.
553 24 1
and te.,e.iques can be applied in any meaningful way.
i 2
3 4
5 6
7 8
9 10 11 12 13 l
14 15 l
I 16 i
i 17 i
18
!S 20 l
21 22
'l 23 I
2.t I
'l
(
25 1408
~09 i,
il
l i
554 t
1 MR. TRCWBRIDGE:
Thank you.
G..,
2 CHAIRMAN HASKINS:
Dces that conclude Mr. McVey's 3
testimony?
4 MR. TROWBRIDGE:
It does, Mr. Chairman.
5 THE WITNESS:
Yes, sir.
G CHAIRMAN HASKINS:
Mr. Gitner, do you have any 7
questions?
8 MR. GITNER:
No, Mr. Chairman, we do not.
9 CHAIPMAN HASKIN3:
Mr. Sager, do you have any ques-10 tions?
gg MR, SAGER:
Yes, I do.
12 CROSS-EXAMINATION 13 BY MR. SAGER:
g4 O
Sir, do you recognize that the present state of the 15 industry makes it necessary to have a federal program which 16 would be commonly known as the Price-Anderson Act to'4stablish 37 an insurance base for the risk and hazards of nuclear power Plants?
18 MR. TROWBRIDGE:
I'm sorry.
Might I ask the reporter gg 20 to read back that question?
CHAIRMAN HASKINS:
The reporter will road back the 21 22 question.
23 (The reporter read from the record as requested.)
CHAIRMAH HASKINS:
Do you understand the question?
g MR. TROPTBRIDGE:
I have no objection to the questior. '
g 1408 510
555 2
1 if the witness thinks he can respond to it.
O 2
THE WITNESS:
I recognize that the Price-Anderson is the current basis upon which icost of the.' insurance:ia provided 3
4 for the nuclear power plants.
The basic coverage, however, the first level, up to 95 million, is provided by private industry..
5 6
BY MR. SAGER:
7 Q
Do you recognize that the Price-Anderson Act at this ti$de'--considering the number of reactors in operation s
and the data concerning the risk of nuclear power plant opera-9 tion, it would be necessary to have the Price-Anderson Act-type 10 g;
of covsrage?
12 MR. TROWBRIDGEr Mr. Chairman, implicit in that 13 question was the inference that thoro was some material sce.ewher e 14 on the risk, and I don't believe that material exists.
It needs 15 to-be ide6tified for the~ uitness.
16 MR. SAGER:
Let me just withdraw the question and 37 present it in a different manner.
18 BY E. SAGER:
19 0
In Your Opinion, sir, is there available to date and
.sresently a private insurance pool that would insure those risks 20 f r the operation of nuclear power plants as insured under the 21 Price-Anderson Act?
22 I
A No.
I am not aware of any.
I g
Q It is your opinicn, is it not, sir, that there shoul 24 g
be an insurance base for any damages that might arise from t
9 1408 5II l
4
556 3
1 the operation of the nuclear power plants, is it not?
2 MR. TROWBRIDGE:
Mr. Chairman, I don't believe that 3
question is within the scope of the testimony.
This witness 4
has not testified as to whether he thinks as a matter of public '
5 policy there should or should not be either insurance or Price-6 Anderson ser limitation of liability.
Ho has, instead, stated 7
at the and of his testimony that these are matters for 8
Congressional review and policy-making and decision, which policy-making and decision to date is reflected in a law known 9
10 as thePrice-Anderson Law, and, of course, the Atomic Energy 11 Acts l'2 I don't think this witness is open to cross-examina-13
' tion on a matter to which he has not testified'.
14 MR. SAGER:
Mr. Chariman, I disagree.
On page nine 15 and ten of the prepared testimony, ho certainly gets into w.....
policy considerations with regard to his testimony.
16 17 MR. TROWBRIDGE:
Would you road, Mr. Sager, what you 18 are referring to as the basis for your contention?
19 CHAIRMAN HASKINS:
Yes, please do so, Mr. Sager.
I 20 Read the basis.
21 MR. SAGER:
"One might well ask," and I quote, "For 22 example, whether there would be a counterpart of a National War
,(
23 Risk Insurance Clause.
Likewise, I do not know hCW they would 24 quantify the insurance costs of the additional hazards to health and the impact on the economy cf the nation if operating permitsi 25 1408 512
\\
557 4
I are not granted for nuclear generating stations, etc."
2 Certainly this witness presents testimony concerning 3
,e policy considerations as to insurability of nuclear power plante.
4 MR. TROWBRIDGE:
Mr. Chairman, the context of the 5
material quoted by Mr. Sager is that portion of Mr. McVey's 6
testimony which suggests that if Commissioner Donenberg were to 7
do a complete cost-benefit analysis, he would also have to B
take into account the costs of possible insurance associated 3
with other forms cf generation, and he identified meroly the to types of insurance risks or costs which he suggests by that 11 to be considered by Mr. Denenberg, and that is all that this 12 witness has done.
13 CHAIRMAN HASKINS:
I think the objection will be sus-14 tained, Mr. Trowbridge.
15 BY MR. SAGER:
16 Q
Sir, do you believe that at this particular point, 17 that without the lir :ations cet forth in the Price-Anderson 13 Act as to the amow s of coverage in case of a nuclear accident,;
19 that the insurance costs on a premium basis would remain at l
20 the same level as under the Price-Anderson Act?
21 MR. TROWDRIDGE:
Did you understand the question?
22 THE WITNESS:
I wonder if you would repeat that, 23 please.
4g h}3 24 BY MR. SAGERe 25 O
Do you believe that if the insurance cocts were --
I a
558 5
1 excuse me -- the premiums for the insurance with reference to 9
2 the operation of nuclear power reactors were covered by private 3
industry without any limitations on the amount that might be 4
recovered in case of an accident and damages resulting from 5
the operdtion of a nuclear power plant, do you think that the G
premiums would remain at the same level that they now exist 7
undeb the Price-Anderson Act?
8 MR. TRCWBRIDGE:
Mr. Chairman, may I ask for further 9
clarification?
I think the question needs further clarification.
10 He is talking about levels of insurance premiums.
In he talking 11 about level per billion dollars, or the levels of total 12 insurance premiums, say, annually, in which case he would be 13 asking the witness, as I understand the question, whether he 14 thought the total annual premium for an unlimited liability 15 coverage would be different or more than the present annual 16 cost for a policy with a $95 million limit.
17 If that is the question, I have no objection to the la witness answering it, but I think the question needs clarifica-19 tion as to what he means by "the premium level".
2C CHAIRMAN HASKING As I understand the question, what 21 Mr. Sager is saying is absent Price-Anderson and absent the 22 relatively low rates which a utility pays under Price-Anderson, 23 if the entire insurance burden had to be borne by privato 3
24 companico, would the premiums in terms of dollars por million 9
l 25. be the same as they ara now.
Is that correct?
1408 514 i
559 6
I MR. SAGER:
Yes.
2 THE WITNESS:
Without Price-Anderson, assuming 3
the same amount of limit available, 565 million --
4 MR. SAGER: Thct'is not an assumption to the question.
5 THE WITNESS:
You want unlimited liability?
6 BY MR. SAGER:
7 Q
Yes.
8 A
I would say that in my opinion, the current premiums 9
would not in the lower levels materially change.
If you are to talking about unlimited liability above those currently 11 available, in my time, I could not forecast what the premiums 12 might be.
13 I mean, this is a study on which I -~ an area in s
14 which nobody has really studied.
15 Q
Now, isn't it a fact that it is difficult to ectimate 16 what the actual premiums would be with unlimited liability 17 because we do not know statistically the actual cost of 18 damages that arise frca the operation of nuclear power generating 19 plants?
20 A
Under what conditions would you assume?
I think you 21 would have to clarify the conditions under which we would have 22 unlimited liability and extreme ovposure, j
s t
23 Q
Since thoso statistics are not available, that i
24 calculation could not be made, is that not so?
Presumably, yes.
25
^
1408 515
560 7
I 0
Andisn'titafactthatinthehistoryofinsurancef-Q 2
and you have relat ed the Black Lung Dioeaso experience of the 3
coal miners -- as the technology of an industry increases and f
experience is gathered and statistics-gathering is established 5
,with reference to the accidants and' health matters of.that l
i 6
particular industry, that generally the health insurance has j
7 increased in the particular industry,-as for the Black Lung 8
Disease of the coal miners?
9 A
You say the health has increased --
to Q
No, the insurance premiums have increased because 11 we statistically are able to ascertain and discern what actual 12 damages and costs are accompanying a particular industry.
13 A
If you -- if studies reveal that there is a causal 14 relationship between, in effect, the occurrence -- and the 15 studiet show that sickness is a result of, say, a certain cauce 16 if they can tie.these two together, and the exposure is greater 17 than initially anticipated, then it would be expected that there 18 would be an increase in the premiu:ps chargeable for such 19 coverage.
~
20 21 22 i
I as i
9 24 E
1408 516 25
I P00RDm8!NAL s"
3 1
Gini Andincrdertoestablishapoolofinfor:tation--l Q
2 1
in order to establinh the statictical in:'ormatien to gm.
3 these danage and cost figurcs, ica't it noccusary to have 4
i years of c::parience in mcnitoring programs and also studiac t
5 I
relating to tha impact of thei.nduntry and the hoalth and 1
6 proporty costs?
7 A
Yes, thoro would have to be auch studies.
O O
And isn't it a fcct that to date in the nuclear 9
power industry that otatistical pool is not available?
10 A
I'm not aware of that.
11 Q
Well, sir, again, could you, without limiting liability, give us your opinion to data as to what the 12 premium por million dollars would be for tho operation of 13 I
Three idilo Island Unit 1 without -- with an unlimited lichility 14 15 calling?
16 A
I think my ansvar would have to be the sama ac l
17 tried, the same type of question.
You'ra talking about,
(
I would say, bauically for the amount of coverage they new 18 have, I do not believa that the pramium che.rges would change j
39 i
materially if at all.
20 t
When you'ra cpecking about limite cf liability 21 1
above that currently available, ao I cay, I would not to in a l
22 j
f position to anower your question.
g I
1 y
Q And that's bacceso the statistics are r.ot available~2 l g
A This is correct.
1408 317 l
1 I
/
562 I
n2 Q
And, well, sir, would you expect that the premium fcostswouldchangeifmonitoringoflowlevelradiation 3
(
effluents from a plant were correlated with health hazards, 4
' injuries and renulating costc?
5 A
I can't answer your question because I don't knew G
what you mean by Icw level.
7 There is a great deal of controversy in the 8
industry today as to what is low lovel.
9 Q
Wall, sir, if, in fact, it were shcun thAt to radiation effluents that were normally discharged from a 11 nuclear installation created certain detrimantal health 12 effects which are related in costs and damage figuren, isn't it a fact that the premiu=e for insurance that would cover 13 14 those costs would neccesarily hava to go up?
15 MR. TROWIBRIDGE:
Mr. Chairman --
16 THE WITNESS:
That's a hypo.
17 MR. TROWBRIDGE:
-- I suggest that tho questiening has gone far beyond the scope of any reasonable te 19 cross-examination.
Thero is nothing in the -- certainly 20 nothing in the testimony nor nothing even in the record of 21 this proceedintj and recitation to the fact that there is i
22 any such correlation and I don't see how a hypothetical 23 ' question, if it could be established there is a correlation G
between low level radiation and population effects, would t'
24 j
there be an increase in insuranco rata -- I don't think 25 1(
1408 518 o
P00R BRBE 1
e in3 this is relevant to the area of cost-benefit analysis that J.s l 2I in contention nor to the tastimony of this witnces.
3 CHAIRMAN hASKINS:
Objection sustained.
4 l
BY MR. SAGER:
5 0
Sir, did you take inte account any -- lot me.
3 6
striko that.
/
7
~
Pinally, sir, it's a fact that if there wara an 8
ac61 dent of a nuclea:.t pcuor plant f: hat would. require payments
" " 'D out of the fund established under the 'Jational EnerTJ Liability
~
10 Insurance Association, that the refunda would os ao limited?
11 A
Yes, for the period involved.
12 Q
And, indeed, if there woro an accident: that would 1
require the exhaustion of that fund during the period involved 13 and thers wara no refund, thea Dr. Donenberg's figured are 14 completely correct as to the cost of the inarranca for that 15 1G period; is it not so?
17 A
Yes, but Dr. Danenberg is speaking of a 40-year 13 period.
Are you talking of a 40-year period?
Sir, can you.kive no reasonable assurance right 39 Q
J hero and now on a guarantee that there will bo no accident I
20 l
}uithineachten-yearpariedofa40-yearperiod?
1 21 8
i i
22 MR. GITIER:
Objection.
It'sbeyondthecompotencyf of this witnese to testify to that typa of a fact.
I 23 g
CIIAIRMAN HASIC2IS:
Objection sustained.
g
!!R. SAGER:
I havo no further questions.
l9 la08 519; l
I 564 l
I 9
in4 CHAIRMAN HASKINS:
Mr. Adler, do you have any 2
questions?
f 3
14. ADLER:
Yes, just.a couple.
4 BY MR. ADLER:
5 Q
Mr. McVoy, in there any raason for you to ballovs 6
that th'.s 70 percent refund figure -- this monoy that was I
l 7
refunded between '57 and '63 when there wara just a few l
8 u>; lear reactors in operation would bo identical or similar 9
in the future?
10 A
It should continue based upon -- it.should continue.
11 Q
In other words, with the increased number of 12 reactors in operation, the increased possibility of accidents 13 would not have a bearing on the 70 parcant refund figura?
14 A
It would vary sc.aowhat, but I don't think it 15 would vary matorially from the numbors we are talking about 16 right now based upon current experience.
17 Q
On paga 8 of your testimony, you say that I
gg Commissioner Donenberg relics on this erroneous one thousand jg dollars ascumed premium rate per million dollars coverage
~
20 and then extrapolates that to obtain a 1/1,700 probability?
21 A
Yes.
i
?
22 Q
If we took your assume prcniun rate of $300 per 1
23 million, would it be propor to c::trapolato in thic marmor and gi arrive at a probcbility?
G g
A For purposes of comparison, I would say that wc i
1408 (20
y t
565 In5 1
could probably take the $300 per nillion and arrive at a 2
figure, a probability number.
I don't know what method ho f
3 utilized to arrive at those figures.
4 Q
Do you think that probability would be accurate?
5 A
I would have to see the basis on which Mr. Denenberg 6
mads his assumption.
7 MR. TROWBRIDGE:
Could we have a clarification?
8 Are you talking about that this would represent the 9
probability of a majcr nuclear accident dividing -- I'm not --
10 with whatever piece of arithnotic commissioner Denenberg did 11 substituting his $100 for $1,0007 12 MR. ADLER:
Right.
13 MR. TROWBRIDGE:
And you're asking whethor that 14 vould express the probability of a major nuclear accidenc?
15 MR. ADLER:
Right.
16 MR. TROWBRIDGE:
Thank you.
17 I have no objection to the witness recponding ta to that question.
tg THE WITNESS:
I don't know whother or not.
The number which would be derived if he 20 21 used $300 por million would be correct.
22 BY MR. ADLER:
23 Q
Then are you not only critici ing Dr. Danenberg'c 21
$1,000 assumed premium rata but the method of cztrapolcting?
25 A
I havano idea whether the method he used or not L
1408 *2I i
563 I
O In6 was correct.
I don't know what his cethod wac.
2 I
But I don't know.
I can't criticiza it.
3 1
MR. ADLER:
I have no fur @.er quantions.
l
.n 4
s CHAIRMAN HASIIINS:
Thank you, Mr. Adler.
5 Are thoro any other quastions for this witnesa?
I t
~
6 Mr. McVoy, you may be c::cused, and tharJ: you 7
very"much.
8 MR. TROWBRIDGE:
Mr. Chairman, I would like to I
9 auggest --
10 MR. GITNER:
Mr. Chairman --
11 CHAIRMAN HASKINS:
Just a minute, Mr. Trowbridge 12 has the floor.
13 MR. TROffBRIDGE:
Do you want to go first?
14 MR. GITNER:
Yes, the Staff would just like to
{
l reservo its right to present rebuttal testimony and testimony i
15 16 on this subject at a later time if the need so arisca.
s 17 CHAIRMAN HASKINS:
On the tastimony of Mr. McVey?
i 16 ILR. GITNER:
Yos.
to CHAIRMAN HASKIES:
Very well.
20 MR. TROWBRIDGE:
Mr. Chairman, we are at a point uhere counsci are prepared to sub$.it to the Board a joint i
21 i
22 motion and joint stipulatica.
23 Doos the Board wish to ack any questions of the 4
e pA partion prior to that event?
l 1
25 11 CHAIR!D.N IIASKINS:
No, I don't believe 30.
Sut the,
I i
1408
- 22
.i
567 in7 1
Board will take a ten-minut> recesa before we proceed with 2
the next motion.
3 MR. TROWBRIDGE:
Would the Dcard like to have I
4 before it for that recess the material which us will present 5
to the Board?
6 CHAIRMAN HASKINS:
No, I think we can look at 7
it later.
8 Thank you.
9 (Recess.)
10 11 12 13 14 15 16 l
i 17 t
18 l
I 19 i
20 j
i 21.:
i i
i 22 i,
23 u
i 1408 t23 2"
I 568 1rA l
Leel 1
CHAIRMAN IIASKINS:
The hearing will now resume.
2 Mr. Gitner, do you have enough me:abers of your legal 3 i staff here to proceed?
4 MR. GITNER:
Yes, sir.
5 CHAIRMAN HASKINS:
Mr. Troubridge, you were speaking, 6
I believe, at the end.
Did you have something else to say?
7 MR. TROWBRIDGE:
Yes.
Why don't I provide the 3
Board now with copies of the motion and stipulction which counsel for all parties have signed, and then to the Board by 9
to way of'a piece of mechanics.
We have signed at least four 11 Copies of this.
Each of the parties will retain cae signed copy and we will ha happy to give t:he remaining signed copy 12 either to the Chairman or the reporter, whichever the Chairman 13 14 considers appropriate.
I believe Mr. Sager would like the privilege of giving 15 16 a brief description of the stipulation. -
17 CIIAIPJCGI HASKIUS:
Well, Mr. Trowbridge, I suggest 18 that tho Board take two or three ninute3 to read the stipula-39 tion and then we will hear Mr. Sager.
20 MR. TROWBRIDGE:
Very well, Mr. Chairman.
21 (Pause.)
22 CHAIRMAN HASKIHS:
Very well, Mr. Sager, could we 3
proceed?
3 MR. SAGER:
Mr. Chairman and nembers of the Board, g,
the Intervenors, the Applicant, which is Metropolitan Edicon 1408
>24
(
569 9
1 Company, Jersey Central Power and Light Company and Pennsylvania 2
Electric Company, and the Atomic Energy Ccamission Staff have t
3 entered into an agreement which is subject to the approval of thl.s i
a Board in order to become effective.
5 CHAIRMAN HASKINS:
Just a minute.
./
6 Mr. Seiffert, wculd you please refrain from reading
~
7 the Hall Street Journal during the proceeding?
8 MR. SEIFFERT:
Pardon me, sir.
9 MR. SAGER:
The stipulation essentially provides 10 that the Intervenors opposo the issuance of an operating license jy for the Jacility.
However, the Intervonors, in order to 12 accomodate certain interests which they believe are for the betterment of the public, have agreed in consideration of the 13 Applicant's designing, rdering and installing within Unit 1 14 an 10,000 CFM charcoal kidney filter system which, in essence, 15 16 mamhers of the Board, is a filter treatment plant for the e ntainment building and which the"Intervenors believe will 17 10 u glow level radiation by ten timos the point of approximately r
one-tenth of the proposed low level radiation durinh~ii6nial J
yg operation.
l 20 g
As the Board is aware, this was virtually the f
position and contention of the Intervenors as set forth in j
g contantion number 7, that such a filter system should be added 9
to tho facility.
l g
The Applicants have agreed to design or to inctall f
1408 315
r-
?
I 570 I
S that kidney filter and the kidney filter would be installed as 2
soon as is reasonably practicable but not later than the 3
first scheduled refueling outage if,indeed, the Applicants were f-4 to obtain operating permicaion for unit 1.
5 I can't emphasize enough and I want it to be made 6
clear, as stated in the stipulation, the Intervenors oppose 7
the issuance of an operating license for the facility.
- However, 8
in consideration of the agreement, the Intervenors will and 9
hereby withdraw as parties to this proceeding, recognizing, then 10 that the Safety and Licensing Board, if it approves this par-11 ticular stipulation, would be in a position to make rulings 12 and findings of facti in accordance with the regulations of the 13 Co= mission.
14 The Intervenors, however, do reserve certain rights.
15 As the Board knows, there is presently pending litigation i
16 beforetheUnitedStatesCourtofAppealsforthsThirdCircuitf' 17 styled Citizens for a Safe Environment, et al., vs. AEC, in 16 which the.present Intervenors are asking for financial and 10 technical assistance.
i 20 The Intervenors reserve the right, if they were 1
21 to obtain a favorable decicion directly or indirectly whereby l
22 they would obtain financial and technical assistance, that i
23 they would be able to go ahead; they intend to proceed with I
24 the contentions that they had previously filed on August 7, s
25 1972 and September 6, 1972.
1408 M6 l
1 571 3
We recognize that the Applicants and Staff on their 94 2
part reserve the right to oppose institution or prosecution 3
of any proceedings or litigation by Intervenors for the.
revocation, suspension, or modification of the operating licence 4
5
,The Intervenors further reserve the rights, those 6
rights that would be accorded to any in'dividual, group or 7
organization under the Atomic Energy Act, the Administrative g
Procedure Act and the AEC regulations to seek a revocation, 9
suspension or modification of an operating license if the same is issued, after issuance of the same.
10 g
The agreement and the stipulation came after g
considerable soul-searching on the part of all parties; I can state especially for the members of the Environmantal Coalition and the Citizens for a Safe Environment.
15 f it that it would be better for the public to W
~"
16 the plant would be limited by a factor of ten to a point of one-tenth of that which is prcposed by the Applicant to date.
g We felt that under the circumstances, and with the E **
" "8 Y
20,
j technical assistance.thht we did not have, that this was the t
5 21 I
best way in our judgnent that we could protect the public, again, i
I with our limited resources.
2a I
Again, we believe that the stipulation dcas reflect l
G 24 i
that the Intervonors have cecomplished something of great I
as 1408 327 I
572 1
magnitude for the protection of the health, welfare and safety 2
of the conmunity.
Indeed, I am told by the Applicant that the 3
kidney filter in question would coat probably in excess of 4
$300,000 plus the additional e:cpenses -for shutting down the 5
plant, and so forth.
6 I wish to thank all parties for their cooperation 7
and the Board for giving us the time and being patient with 8
us in order to work out this agreement.
9 Again, on behalf of my clients, I must= state and to emphasize for the record that we do oppose the issuance of 11 an operating license for the facility.
12 Thank you.
13 (Stipulation follows:)
14 15 16 17 18 19 20 l
21 i
1 22 s
23 l
-l 1408
'28 9
1; i
~
.3 UNITED STATES OF AMERICA 9
ATOMIC ENERGY COff!ISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of
)
)
METROPOLITAN EDISON COMPANY, et al )
Docket No. 50-289
)
(Three Mile Island Nuclear Station,)
Unit 1)
)
STIPULATION Pursuant to Sections 2.753 and 2.759 of the U.S.
Atomic Energy Commission's Rules of Practice,10 CFR Part 2,.
and subject to the approval of the Atomic Safety and Licensing Board
(" Board"), the parties, Metropolitan Edison Company, Jersey Central Power & Light Company and Pennsylvania Electric Company
(" Applicants"), Citizens for a Safe Environment and Environmental Coalition on Nuclear Power ("Intervenors"), and the PEC Regulatory Staff
(" Staff"), in consideration of the-mutual agreements contained herein, hereby agree as follows:
1.
Intervenors oppose the issuz.sce of an operating license for the facility.
However, in consideration of the agree-ments herein, Intervenors hereby agree to withdraw as parties to this proceeding, with respect to the issuance of an operating license for the Three Mile Island Nuclear Station, Unit 1
("facilit y") to be made upon proper findings by the Staff's Director of Regulation pursuant te 10 CFR 50.57, and subject to the conditions and agreements herein.
}&
e, 2.
Applicants agree to design, order and install within the facility an 18,000 cfm charcoal kidney filter system
(" kidney filter") for treatment of the containment atmosphere.
The Applicants agree to design the kidney filter to meet AEC licensing requirements.
The kidney filter shall be installed not later than the first scheduled refueling outage after commencement of operation.
It is the intention of the Appli-cants to install the kidney filter as soon as is reasonably practicable, but not at the expense of delaying conmencement of operation.
If reasonably practicable, the kidney filter shall be installed prior to commencement of operation, or, if further reasonably practicable, during any long outage which may occur prior to the first scheduled refueling outage.
The Applicants further agree to use the kidney filter prior to purge of the containment in accordance with reasonable procedures in order to reduce radioactive iodine releases fron the contain-ment.
To that end, Applicants agree to make those operating procedures a part of their fornal operating procedures.
3.
Intervenors agree not to oppose, through any hearing process or other litigation, the issuance of an operating license prior to the commencement of operation of the facility.
However, Intervenors do not acknowledge any agreement to support the issuance of such operating license.
Furthermore, Intervenors reserve the right to seek a revocation, suspension, or nodifica-1408 530
tion of the operating license after commencement of opera-tion.
The parties recognize that the Intervenors may, after connencement of operation, raise the issues stated in their
('
Petition For Intervention and Addendum thereto, dated August 7, 1972, and September 6,1972 respectively if they obtain a favorable decision from the litigation now pending before the United States Court of Appeals for the Third Circuit (Citizens for a Safe Environment, et al v.
A.E.C., Case No. 73-1312).
The Intervenors further reserve the rights accorded to any individual, group, or organization under the Atomic Energy Act, the Administrative Procedure Act an'.~. the AEC regulations to seek the revocation, suspension, or modification of the operating license after issuance of same.
Applicants and Staff reserve their right to oppose the institution or prosecution of any proceeding or litigation by Intervenors for the revocation, suspension or modification of the operating license.
4.
Intervenors, Applicants, and the AEC Regulatory Staff agree to file a joint motion to obtain the approval of the+ Board of Intervenors' withdrawal subject to the conditions agreed to herein.
In addition, Applicants and Staff agree to file a joint motion to obtain an order of the Board. terminating
.this proceeding upon filing of this stipulation.
5.
This stipulation shall be filed with the Board and shall not become effective until the entry of the orders sought by the motions referred to in paragraph 4 above.
1408 531
i O
6.
The obligations of the parties hereunder shall survive the entry of such orders.
(
7.
The parties, including the nembers, officers, and the employees thereof, shall not in ar/ way, either directly or indirectly, take any action in contravention of this stipulation and agreement.
This stipulation entered into this day of
!!ovember,1973, subscribed to by the attorneys as authorized by the. parties:
For Intervenors:
O For Applicants:
For the Staff:
e s
0 1408
!32
i 573 1
ESKE I
CHAIPJfAN HASKINS:
Pleaco stay there, Mr. Sagor.
4B 2
The Board has one or two questions.
51 3
MR. TROWBRIDGE:
Mr. Chairman, might I say -- add I
4 some, thing here to the stipulation?
3 CHAIRMAN HASKINS:
Please do.
G MR. TROWBRIDGE:
Only two aspects.
I think Mr. Sagar 7
has corroctly stated the right of the Intervenora to seek tho l
0 revocation, suspension or modification of an operating license 9
if it's issued, as well as our right to oppose any such to offort..
.11 I don't recall that Mr. Sager covered one 12 aspect of the stipulation which is not only the present 13 withdrawal from this proceeding but one element of the 14 stipulation is that through A2C hoarings or otherwise the 15 Intervonors will not sook whatevar'their vious of the plant
!G are by hearing process or litigation to provent in the first 17 instance the lasuanco of an operating licenae; that is, they Ta will not take legal monsures toward that.
19 And the cocond mattor, Mr. Chairman, is ono which 20 the Board itself vill decido; and it was discussed 21 briefly at a conforence but I would like to stato that the 22 view I o:: pressed in the confercnce with the Board, that 23 undor the Commission's regulations further findings -- and 2,3 thoro will havo to be further findings both on safoty and 25 environmental issues -- will be made by the Director of i
1408 533 h
574 i
in2 1
Regulations rather than this Board in the ovent that the 2
Board accepts this stipulation and icaues tho orders 3
requested.
4 Having said that, Mr. Chairmdn,,I havo no further 5
comment.
6 CHAIRMAN HASKINS:
Mr. Gitner?
7 MR. GITNER:
Yes, sir.
O We have a number of points we'd like to make 9
on behalf of the Commission.
The Co.Tnission's position that to this stipulation which we have joined can in no way be 11 construed as AEC policy requiring the installation of this 12 kidney filter.
13 It is our position that as designed prior to the installation of thekidnay filter the plant meets all 10 CFR 14 15 Part 20 radioactivo levols and requiremanto and that the 16 releases as they are now constitute only a very small fraction 17 of the Part 20 permissihlo limits.
10 A further point is that the Staff has attcupted 19 to provide the Intervonors and all members of the public nith whatever material and technical assistance that we have 20 been able to, and we will continue to do so in tho futura.
21 22 One further point is that this stipulation should be in no way construed as our endorsement of Mr. Sager's 23 ctatement that radioactivo roloaces will be reduced tonfold.
24 We are not certain what lovel they will be reducad, and we are 25 1408 5M l
7 575 i
in3 3
taking no position nor are we making any endorsement as to 2
how much theso lovels will be reduced.
l I
3 That is all, Mr. Chairman.
I 4
CHAIRMAN HASKINS:
Thank you.
5 MR. SAGSR:
Mr. Chaiman, if I may, it should bo noted on the record that the Comonoalth of Pennsylvania 6
7 has not participated in this stipulation.
8 As I understand, h wever, and de co mo weale 9
can speak for itself, that there is no objection to the filing f this stipulation.
to g
CHAIRMAN HASKINS:
That was I:rf next question.
12 Mr. Adler, do you acquiosce in this stipulation on behalf of the Comonwealth?
x.
MR. ADLER:
We have no objection to the stipula-tion; that's correct.
CHAIRMAN HASKINS:
Mr. Sager, a couple of points.
This stipulation addresses itself primarily to the operating license, but I assume that it also covers the issues relating to the construction permit no to whether it should be continued, modified, terminated, et cetera?
MR. SAGER:
Yes, tite intention is th t tha utility would be seeking to operato the facility although ws opposo sama.
23 9
CHAIRMAN HASKINS:
Well, I undorstand that.
24 MR. SAGER:
Yes, and it doon encompass that.
1408 DS 1
~
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r.
576 9 in4 I
CHAIRMAN HASKINS:
But by withdrawing from the 2
proceeding, you withdraw from every phase of the proceading, 3
including those environmental issues relating to possible r'
4 modification under the construction pa mit.
5 How, the ne::t point,in the event that the Board G
grants your motion, that would terminate this caso; is that 7
correct?
8 MR. SAGER:
That would terminate the case.
9 However, there are the reservations cet forth in to the stipulation in order to preserve the right of the Intervenors with respect to reopening the case in the even6 that we get a favorable decision from the Court of Appeals.
12 13 HR. TROWBRIDGE:
After the issuance of the 14-operating licenso.
15 CHAIRMAN HASKINS:
I wocid suppose that you uvuld 16 have that right in any event.
37 In other words, if the Eoard were to dismiss this proccoding and the operating license was granted, if you 18 should be accorded funds from whatever source and you woro 39 20 desirous of trying tho 70-odd issucs that we have discussed 21 earlier, you would be a;. perfect liberty to start a new proca ading and move that the operating liconee be cusponded g
or terminated and havs an appropriato prococding to considar g
eat.
2.
25 MR. TRCWBRIDGE:
Yea, sir, Mr. Chairman, that is our, 1408 336 I
t i
577
(
ins I
understanding, and the stipulation was intended to map.a I
2 it perfectly clear that Intervenors were not giving up that 3
right as a result of the stipulation.
(
4 S
6 7
8 9
10 11 12 13 14 15 16 17,I 16 19 20 21 4
1.
1 22 r I
23 i
9.
I v
i 25 HOB
'37
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t
578
- 3 Leel 1
CHAIRMAN HASKINS:
Well, I think they have that 2
right as a matter of law, Mr. Trowbridge.
3 MR. TROWBRIDGE:
I think they might be able to l
4 stipulate it away, but they have not.
5 MR. GITNEP,t See, they hava made it clear that they G
have not waived the right to petition the Commission at any 7
tima, Mr. Chairman, on that matter.
- 2 t
i 8
CHAIRMAN HASKINS:
Yes.
I think Mr. Trowbridge put i<:
9 very well.
They could stipulate the right away but they have no :
10 done so, so they retained it, as any other citisen would retain 11 the right to petition the Commission to shut down a plant or 12 to discontinue an operating licenso.
l 13 MR. SAGER:
We also retain the additional rights, 14 if any, that we have as a result of the pendency of the liti-1 15 gation now and the order of the commission and the seeking of 16 the reversal of the order of the commission.
17 And I don't want to get into legal arguments, and thereisaprovisionforpreservingtherightsoftheApolicant'd 18 gg position in defense of their rights as well as the Staff, but 20 it clearly is the purport and the intent that if the Intervenors' 21 have any rights that would be afforded to tham as a result of a 22 favorable decision coming from the litigation before the Third 23 Circuit Court of Appeals, t: tat the Intervenors would certainly 24 state their position to be that we are in a different situation f 9
i 25 than the ordinary citizen.
1408 538 I
i 579 2
i We have filed these contantions.
We were limited l
2 in proceeding with the contentions because of financial and i
3 technical assistance not forthcoming.
If that were to be 4
forthecming, we believe that ue are in a position now to seek 5
areopeningofthehearinginamannerdifferentthantheordindry i
6 citizen's petition that might be afforded to him under the 5
7 Atomic Energy. Commission rules and regulations, the Atomic 8
Energy Act, and the Administrative Procedure Act.
g We want to distinguish those two particular posi-9 to tions, and that is reflected in the paragraph under number 3.
11 MR. TROWBRIDGE:
Mr. Chairman, that seems to me a 12 very good statement of the intent.
As a lawyer, were I in 13 Mr. Sager's shoes and as the result of the litigation now 14 before the Third Circuit Court of Appeals,ifere the result a 15 requirement for financirl assistance to the Intervenors, I 16 would, as.a 1,awyer, feel that I wa" in a better position than i
17 most others to submit a petition to the Commission.
[
{
la That does not mean we won't oppose the petition or 19 argue the matter, but I think it is perfectly proper to t
20 reserve here not only his citizen's right to petition the I
i Commission to roopen the matter of our operating license but to {
21 I
22 reserve his right to do so on the basis of any success Inter-e I
23 venors may have in their litigation.
I O
24 CHAIRMAN HASKIMS:
Thank yeu.
Now, during the i
25 presentations by Mr. Donenberg and Mr. McVey, certain M0B 09 e
I i
500 1
93 reservations were made with respect to their testimony and 2
the right to depose them or to cross-eramine them.
1 3
Does this stipulation terminate those reservations?
(
4 MR. TROWBRIDGE:
If accepted by the Board, I under-5 stand it would.
6 MR. GITNER:
What Mr. Trowbridge says is correct.
7 CHAIRMAN BASKINS:
I have some concluding remarks to 8
make, but before then I will call on my fellow Board members fori 9
any questions or comments.
10 Dr. Livingston?
11 DR. LIVINGSTON:
I have a comment but I don't know tha.t 12 it is one that will involvo any of the legal and technical 13 problems here.
14 That comment goes something like this, that it was tho' 15 hope that I had as a member of this Board to be able to be I
informed about things that were perhaps not up to quality 16 17 standards in this particular installation, arguments both for i
18 and against these, and it was my hope that the Board would be l
able to hear enough informaticn to be able-to judge what they 19 might be able to do to improve the safety situation with ragard !
20 21 to the plant once it was in operation through some sort of I ?dervations that we might make in our final crder.
22 23 I thought of this as part of the function of the G
24 Board.
I could say that I, thereforo, fac1 a little bit corry f
25 that this cpportunity to ctady further the situation here in thia 1408 1'O
P00RORBINAL l
=
plant has been taken away from the Board.
Thank you.
f G4
?
2 CHAIRMAN HASKINS:
Well, it hasn't been taken away f
3lfromtheBoardyet.
It is under consideration.
l 4
Dr. Lynan?
5 2m. LYMAN:
I have nothing, Mr. Chairman..
Thankyou.l 6
CHAIRMAN HASKIliS:
Mr. Sager, Mr. Trowbridge and 7
M1 Gitner, the Board is always pleased when parties can 8
re.ch a settlement, and I know it has not been easy.
9 As you know, the Commission under Part 10 of Section 10 2.751 has a particular paragraph encouraging settlements, and I1 we cculd sit here for three weeks and try these issues one by f2 one, 6nd I think it is sparing of the time of the witnesses 13 and of counsel and the Board that you have reached this apparent 14 result.
15 The Board is not going to rule on this stipulation fr!om to the bench.
We are not going to rule on it today.
We shall take it home t: night and consider it, and shall rule on it promptly. l 17 18 To you, Mr. Sager, I would like to say on behalf of 19 the Board t.'.at you have fought this cane very hard on behalf f
l 20 of your clierts and that you have represented the Intervenors j
21 aggressively.ind well in the fashion in which you see it.
l 22 Thereforo, I would say that the witnesGen who hava f
23 waited so pationtly throughout this part of the week are now i
24 excused, that this phase of the hearing will be concluded, and 25 the Board will shortly recess.
However, I would like to meet 140B 5d
300R ORIGT1
~
5 g
with counsel briefly across the hall bafore they dispersa.
9 2
Do you have semothing furthur, Mr. Gitner?
t 3
MR. GITHER:
Are we going to keep the court reporter!
available, Mr. Chairman.
Are you going to recess the hearing 4
5 at this point, as to the question of the adjournment?
f i
6 CHAIRMAN HASKINS:
No, I do not plan to recess the j
hearing.
I plan to adjourn the hearing.
But I would like to 7
9 8
talk to counsel after the adjourniaent.
g Is there anything furt'aer that should. be said f
before we adjourn?
to MR. TROWDRIDG3:
No, Mr. Chcirman.
1 had planned to g
12 and would like to, while we aru still on the record, pay my ra3Pects to Mr. Sager.
It has been many months."ow that I 13 g
have had meetings end discussions with Mr. Sager.
I have I
found it both a challenging an'i a rewarding onperience, and j
g i
I think his professional capabilities have in large part made possible the resolution of matter.s bet.ucon us.
I would also like to ex.prens ny appreciation for the role of ASC counsel throughout this licencing proceeding.
19 I...'would single out Mr. Olsen because, atr.ong the councel, he has s.0 been the one who has bcon steadily, almost, with no, and who ha i
participated and been at all timas cooperative, helpft.1 c.nd constructive in ~his neriod of ti2ae.
23 And I, like Mr. Sagcr, would also like to thank the 4
Boardforitspatienceandunderstandingduringtheicngrecessd 25 i
1 1408 ir2 i
a
B 583 6
I we have.had.
2 DR. LYMAN:
Before you close, Mr. Chairman, I would 3
like to return to Mr. Trowbridge the copy of the prepared testid
(
'8 mony related to the industrial security plan which he cent 5
me.
I would feel more comfortable if he had that.
N6
~
MR. TROWDRIDGE:
I would be glad to have that back.
7 DR. LIVDIGSTON:
I will also return that to you.
8 MR. TROWBRIDGE:
Thank you.
9 CHAIRMAN HASKINS:
I will do likewine, Mr. Trowbridge, to but I have so many papora I cannot readily find it at thin 11 moment.
12 Is there anything further that should come before thi's 13 Board this afternoon while we are still on the record?
14 I repeat again, I would like to meet with counsel 15 for all the parties and also the Commonwealth of Pednsylvania I
16 briefly across the hall upon adjournment.
17 Very well, the hearing will now be adjourned.!
18 Ofhcroupon, at 4:05 p.m. the hearing was adjot'.rnod.)
19 1
i 20 I
21 1
22 2a f
23 1408 5" J