ML19332E231

Responds to 891013 Request for Clarification of Function of Price-Anderson Act.Act Establishes Sys to Satisfy Liability Claims by Members of Public for Personal Injury & Property Damage Resulting from Nuclear Incident

ML19332E231
Person / Time
Issue date:	11/13/1989
From:	Taylor J NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO)
To:	Dyson R HOUSE OF REP.
Shared Package
ML19332E232	List: ML19332E231 ML19332E233
References
CCS, NUDOCS 8912060398
Download: ML19332E231 (3)

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UNITED STATES 4

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November:13,1989

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, The Honorable Roy Dyson s

y United States House.of Representatives Washington', DC ---20515 -

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Dear. Congressman Dyson:

b ILam responding to your letter of October 13, 1989, requesting-a clarifi-

! cation of the function of-the Price-Anderson Act.-

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g tThe Price-Anderson Act establishes a system to satisfy liability claims by imenbers of the public for-personal injury and property damage resulting from-a; nuclear incident associated with the operation of a nuclear reactor. The Price-Anderson Act, however, is not designed nor intended to-operate as

' Federal nuclear insurance.

It is different, therefore, from the Federal flood

. insurance program in several ways, s-

' The~ Price-Anderson scheme' entails a two-layered insurance system for satisfy-

'ing public liability claims.. The first (or primary) layer consists of a fixed amount of. nuclear liability insurance provided to utilities operating power reactors by the ' nuclear liability insurance pools. The' utilities pay an annual

premium for ~the liability coverage, currently $200 million, provided by(the pools.1This-primary layer of insurance is supplemented by a secondary or l deferred premium)-layer of insurance that is required only of operators of 4

large licensed power reactors.

In the event of a nuclear incident resulting L

-in damages to the~public-in excess of'$200 million, each licensed nuclear 3

power plant operator would be' assessed a prorated share of the damages that l

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exceedtheprimaryinsurancecoverage($200million)uptoJ63millionper L

reactor per. incident. The maximum amount of secondary insurance that any L

licensed nuclear power plant operator wou d be-obligated to pay in a single l

p calendar year,is' limited to $10 million per reactor per incident. With 115 L

commercial-reactors currently participating in this system, the secondary

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. layer of: insurance totals $7.245 billion.

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-The Price-Anderson Amendments Act of 1988 (Pub.L. 100-408), enacted August 20,

'1988, contains several new provisions that address some of your specific con-H cerns regarding the availability of funds to pay claims in excess of the J

$7 billion aggregate' liability. First, under Section 2(d) " BORROWING AUTHORITY,"

i if:the funds available in any year are insufficient to pay valid claims aris-(

ing out of a nuclear incident because of the limitation on the amount of sec-ondary insurance that may be required.of a licensee in any single year, the o

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~ Commission can request the Congress to appropriate sufficient funds to satisfy such payments. The Commission is also given the authority to issue marketable

. obligations which would be treated as public debt transactions of the Unitea FULL TEXT ASCl! SnAN Y

8912060398 891113 PDR ORG NE ED

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- The Honorable Roy Dyson y i

States. Second,'under Section 7 " COMPENSATION PLANS," if damages from any nu-clear incident are likely to exceed the. aggregate public liability available, the Connission and the Congress are required to follow detailed procedures set i

forth in.the Act to develop a compensation plan (s) to eneble the public to receive additional funds. Third, Section 9 of the Act established a Presiden-t

'tial Commission on Catastrophic Nuclear Accidents to study means of-fully'com.

pensating victims.of a. catastrophic nuclear accident for liability claims that

. exceed the amount of-aggregate public liability.

The Study Commission has held public meetings in Washington,'D.C., on July 26, September 27, and

' October 25 and 26, 1989. The Study Commission 1s scheduled to submit its final report to the Congress containing its recommendations for the appropriate p

me:sas of-providing such full compensation not later than August 20, 1990.

You have also expressed concern regarding the availability of Price-Anderson funds to respond.to specific reeds such as mortgage forgiveness and property devaluations. The Pr. ice-Anderson Act does not provide for remedies in these or any other specific areas. One of the purposes of the-Act is to establish i

bodily injury and property damage)public liability claims (e.g., claims for a sure source of. funds to satisfy arising out of or resulting from a nuclear incident. Although the Act assures a source of funds to pay public liability elaics, the types of damages that are compensable under the Act depend on the

' tort laws of the State where the nuclear incident occurs. Given the structure of the'Act, whether real estate devaluation and mortgage forgiveness would or would not be compensable is an-issue that, in all liLelihood, would ultimately

be decided by the court having jur.isdiction over such claims.

-I trust that this' reply responds to your concerns.

Sincerely,

-7 mes M. M Tay r cting Executive Director for Operations

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f6 The Honorable Roy Dyson 1 States. Second, under Section 7 " COMPENSATION PLANS," if damages from any nu-i clear incident are likely to exceed the aggregate public liebility available.

l the Commission and the Congress are required to follow detailed procedures set i

forth in the Act to develop a compensation plan (s) to enable the public to receive additional funds. Third Section 9 of the Act established a Presiden-tial Commission on Catastrophic Nuclear Accidents to study means of fully com-pensating victims of a catastrophic nuclear accident for liability claims that i

exceed the amount of aggregate public liability. The Study Comission has held public meetings in Washington, D.C., on July 26, September 27, and October 25 and 26, 1989. The Study Connission is scheduled to submit its final report to the Congress containing its recommendations for the appropriate means of providing such full compensation not later than August 20, 1990.

You have also exyessed concern regarding the availability of Price-Anderson funds to respond to specific needs such as mortgage forgiveness and property devaluations.

The Price-Anderson Act does not provide for remedies in these or any other specific areas. One of the pur)oses of the Act is to establish a sure source of funds to satisfy)public lia)ility claims (e.g., claims for bodily injury and aroperty damage arising out of or resulting from a nuclear incident. Althoug1 the Act assures a source of funds to pay public liability claims, the types of damages that are compensable under the Act depend on the tort laws of the State where the nuclear incident occurs. Given the structure of the Act, whether real estate devaluation and nortgage forgiveness would or would not be compensable is an issue that, in all likelihood, would ultimetely be decided by the court having jurisdiction over such claims.

I trust that this reply responds to your concerns.

Sincerely,

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