ML19275A075

Responds to 790601 Suggestion Re Need for Legislation Providing Coverage for Costs in Event of Nuclear Accident. Submits Info Re Existing Legislation Designed to Pay Public Liability Claims.Doe & to Carter Encl

ML19275A075
Person / Time
Issue date:	08/06/1979
From:	Saltzman J Office of Nuclear Reactor Regulation
To:	Herman F AFFILIATION NOT ASSIGNED
References
FRN-44FR43128, RULE-PR-140 NUDOCS 7908300742
Download: ML19275A075 (8)

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AUG 6 1979 Mr..F. A. Herman 591 Pine Tree Drive Indialantic, Florida 32903

Dear Mr. Herman:

Your letter of June 1,1979 has been referred to our office for reply.

We found your ideas concerning the need for legislation to provide for the costs of a nuclear accident to be very interesting.

He thought that you might like some background information on legislati;n that presently exists to pay public liability claims arising out of a nuclear accident.

The Price-Anderson Act (P.L.65-256) requires licensees of commercial nuclear power plants having a rated capacity of 100,000 electrical kilowatts or more to provide proof to the NRC that they have financial protection in the form of private nuclear liability insurance, or in some other form approved by the Commission, in an amount equal to the maximum amount of liability insurance available at reasonable cost and on reasonable terms from private sources.

That financial protection, which at present totals $495 million, consists of a primary layer of nuclear liability insurance of $160 million from commercial insurance pools (which was increased from $140 million on May 1, 1979) and a secondary retrospective premium insurance layer.

The secondary layer results from the 1975 amendments to the Act as follows.

In the event of a nuc' ear incident causing damages exceeding $160 million, each commercial nuclear power plant licensee would be assessed a prorated share of damages in excess of the primary insurance layer up to $5 million per reactor per incident but not in excess of $10 million for each reactor in any calendar year.

With 67 commercial reactors operating under this system, the secondary insurance layer now totals $335 million.

This secondary layer of $335 million, plus the $160 million from the commercial pools gives the total of $495 million available today from privata sources.

The Price-Anderson Act also directs the Commission to enter into indemnity agreements ' th each licensee who is required to provide financial protection, to indemnify the licensee from public liability arising out of a nuclear incident in excess of the licensee's primary and secondary insurance amounts.

This third component of the total indemnification for a nuclear incident is provided by the government and is limited to

$500 million, which is reduced by the amount that the private source financial protection required exceeds $60 million.

The Act limits the 2033 102 79083,007/4

Mr. F. A. Herman '

aggregate liability for a single nuclear incident to $560 million or the amount of primary and secondary insurance required of the licensee, whichever is greater.

The difference of $65 million between the present private-source financial protection layer of $495 million and the $560 million aggregate liability limit is the present government indemnity level.

Government indemnity will gradually be phased out as more commercial reactors are licensed and licensees participate in the retrospective premium system.

When the primary and secondary financial protection layers by themselves provide liability coverage of $560 million, government indemnity will be eliminated.

The present liability limit of $560 million would thereafter increase in increments of $5 million for each new commercial reactor licensed to operate.

Both the primary and secondary insurance and the government's indemnity agreements cover not only licensees but also any other person who may be lia bl e.

For example, should offsite damage be caused by failure of a component, the public would have the benefit of the financial protection and related prompt compensation provisions of Price-Anderson even though the vendor of the faulty part might otherwise be without substantial coverage.

Public protection comes from nore than simple assurance that fundr will be available. The Act provides for specific and ef fective procevare to assure prompt and equitable payment of claims, under court sur vision if necessary. A 1966 amendment to the Act provided that, in the event of an " extraordinary nuclear occurrence," all damage claims may be transferred to a single federal distr'ct court.

That court is empowered to consider comprehensive plans for a fait distribution of the available funds submitted by the Commission or any interested person.

If it appears that damages may exceed the limit of liability, tocal payments may not exceed 15 percent of that amount unless made pursuant to a distribution plan approved by the court. Moreover, emergency assistance payments may be made immediately following a nuclear incident.

The 1966 amendments also pre.ided for the waiver of certain defenses in the event of a declaration of an " extraordinary nuclear occurrence."

At the present time the following Congressional subcommittees have been considering some of the questions raised in your letter in connection with the possible modification of the Price-Anderson Act, and in attempting to determine the most equitable way that other, non-liability costs, such as the costs of replacement power for disabled reactors, may be 2035 103

Mr. F. A. lierman.

allocated. They would be interested in any new ideas in these areas that members of the public might have.

The Honorable Gary Hart, Chairman Subcommittee on Nuclear Regulation Committee on Environment and Public Works United States Senate Washington, D.C.

20510 The Honorable Morris K. Udall, Chairman Subcormittee on Energy and the Environment Committee on Interior and Insular Affairs United States House of Representatives Washington, D.C.

20515 The Honorable John D. Dingell, Chairman Subcommittee on Energy and Power Comnittee on Interstate and Foreign Commerce United States House of Representatives Washington, D.C.

20515 The Honorable Toby Moffett, Chairman Subconnittee on Environment, Energy and Natural Resources Committee on Government Operations United States House of Representatives Washington, D.C.

20515 We would suggest that you may want to send copies of your letter and any other thoughts on these matters to these subcommittees.

We appreciate your ideas on these most important questions.

Sincerely, h

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Jerome Saltzman, Chi Antitrust & Indemni Group Office of Nuclear actor Regulation 2033 104

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C tY. F. A. !!er, :n LT Pum ire' Drive 1;..i.alo ti c, FL 32933 D.u r I:r. I!e ran:

Yoto recent letter to the President expressing concerns about t' saf ty of nuclear pa.;3r as a result of the incident at Three I;ile Island has been referred to this office for reply.

Innauch as these tatters are under the cognizance of the T:uclear m for

1. :gula tory... ;i,s ion, ite are re ferring your letter to the.

aj'propriate act. ion by copy of this letter.

Sincerely, YB r c A '.[

}lOl~sj & u ns Jo"n P. Thereault, Deputy Director Plcr and Analy ~ is Divisoa Office of t'aclear Encr Prograz CC:

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This suggestion was generated as ri result of the Th ree I.fi l e Island nuclear accident.

a Since it is conceivable that nuclear power will be a principle source o f energy in the future and that there wi 11 be "Th ree ?.Ill e I s l an d" accidents in t.h e fu t u re, is it not essential that NOW is the time to enact legislation wh ich woul d speci fy 1 i nb il.i t y, responsibility and the f u n d i n g-to cover all types of claims and clean-up costs including nii Federal, State and Utility Corporation expenses?

?!y suggestion is as follov.m In the event of a nuclear accident being declared a

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D i s a s t e r" by the President of the United Stat es, a Nuclear

}" Disaster Commission would be established.

The Presiden t would l-appoint three members to the Con.m i s s i on and the Governor of the State i n which the accident occurred would do likewise.

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Thi s Cotamission o f si x woul d be headed-up by a "Di recto r" who j

would be selected by the Senate of the United States from three persons recemrended by the President.

Such appointments to be made within thirty days of the date the accident v'a s declared a "Di sa n t e r'.

The Di rect or and t he six Cor::ni ss i oners w

v.ould serve for a period o f t en years,

-h The function of the "om:nisci on woul d be to accept, f.

review, evaluate and to authorize paymen t o f all claims (as de fined below) which ocenrred as a result of the Disaster.

Such claims would comprehend:

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(a) tiedical claims of individuals; g

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Claims of individuals and business for p ro-perty damages and losses; p

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Evacuat ion cos t.s,

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Holocation claims; (e)

City, County, State and Federal emergency expenditures; (f)

Long-term individual medical claims caused by radiation; (g)

I,osses i ncurred by busi rmss establishments because of cem,ation o f ope ra t i ons ;

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Any additional power costs incurred by the utility co rpo ra t ion until such time as the damaged nuclea r povee r un i t or unit.s can be returned to service; (i)

Clean-up costs of the public utility at the nuclear disaster site; (j)

If feasible, reimburse the public uti1ity the repair costs necessary to re t u rn the d: unaged nuclear unit to service.

If not f eas ibl e, to determine the type of power unit to be built to replace the des t royed n ucl ear unit and to f i n an ce construction.

All cla ims would :uve to be filed wi th the Commission within five years of the date of the disaster except fo r per-sonal health claims which would have to be filed wi thin ten years.

Claims not settled within the ten yea r period would be t rans fe r red to the Departmen t o f Health and Welf are tor processing-This.l egi s l a t ion would preclude any individual, business or corporation from suing anyone other than the Nucl ea r Dis-aster Con m ssi on.

As every pe rson in the United States bene fi ts through the use of nuclear power, it is only " f a i r" that. all contri-but.e to the fundi.ng to cover the costs of a nuclear disaster.

When such an accident is declared a " Disaster" by the presi-dent, the foll ovc i n g man t.t t o ry centributions would be collected during the next twelve consecutive months following such a declaration:

(a)

E ve ry elect ric utility in the United States would collect for the twelve c on se cu t. i ve months from each of its aceounts as f o l ] o'.. s :

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Every electric utility in the United Stat.es total of 19 for each share o f would deduct a stock over the twelve roon t h period from the dividends paid to its stockholders, (c)

E ve ry elec t ri c utility in the United States would deduct a total of S2 i ro:n the interest paid to i ts Innd hol ders during the trie l ve month period for each S1,000 bond; (d)

The electric utility having the accident. v;ould contribute its total " net p ro fi t" for the twel ve consecu t ive ir.on ths peri od.

Thus,t. heir s t ockhol ders woul d receive no dividends f(> r the twelve mon th period; (c)

The Un i t.ed S t a t es Gove rnirn t. woul d con tri bute 205 of t.h e corporate t a n's p a i d by the electric utilities in t.he Un i ted S t at es during the twelve rnon th period; (f)

All States would contribute 10% of the utilities corporate taxes paid to the St ato during

1. h e tselve month period; (g)

All insu rance paymen ts received by the utility having the accident. would be paid into this fund The " numbers" cited in the above a re es t i ma t.ed to create a fund of several bil l ion doll a rs.

I f not, they can he revised to dc. so.

Such funds contributed would be paid rnanthly into a special account est.ablished by the United St at es Treasu ry and disbursed upon receipt o f au thori v.a t ion from the Conmission.

It is f u rther suggested that the present Nuclear Energy Commi ss i on es t ablish NG',

the type o f organi vat ion, adminis-tration procedu res and regulations un de r v.h i ch the p roposed Nuclear Disaster Commission would operate in order t h at this phase would be cornpl e t e d an d ready should a disas t er be declare in the future.

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Senator Lawton Ch i l d.',,.ashington, DC 20000

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Sen a t or Ili ch a rd S tone,

, 1 j S. Ilop resen t a t i ve Willieu :elson, Washington, DC 20000 J

50e re t a ry Jam"s Schlesinger, '; a sh i n g t on, DC 20000 s

William G.

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".l i s copy o f my letter o f Jane 1 to the Nat ional 5"qges t ion 130x is sent. to you a<,

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