ML20196D371
| ML20196D371 | |
| Person / Time | |
|---|---|
| Issue date: | 11/14/1988 |
| From: | NRC |
| To: | |
| References | |
| FRN-53FR40233, RULE-PR-140 NUDOCS 8812090065 | |
| Download: ML20196D371 (71) | |
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UNITED STA w l NUCLEAR REGULATORY SSION l l r. : i t. r v l l ' ,.-
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I In the Matter of: )
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PRICE-A!1DERSOld RULEMAKI!1G )
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Pages: 1 through 69 l
Place: Rockville, Maryland I Date tiovember 14, 1988 l
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l HERITAGE REPORTING CORPORATION l @RW .
1230 L Serest. N.W Satu 888
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1 UNITED STATES NUCLEAR REGULATORY COMMISSIO~. .
2 In the Matter oft )
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3 PRICE-ANDERSON RULEKAKING )
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4 . i 5 Room 2F21 >
O'ne White Flint North 6 Rockville Pike l Rockville, Maryland [
Monday, i 8 November 14, 1988 I
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The above-entitled matter came on for hearing, t 10 t I
pursuant to notice, at 9:10 a.m. [
11 3 BEFORE: HONORABLE HOWARD S. BELLMAN !
12 Mediator [
I 13 APPEARANCES:
1
, 14 On behalf of the Nuclear Regulatory Commissions f I i 15 - STUART TREBY, ESQ. i FRANCIS CAMERON, ESQ. !
l 16 Office of General Counsel !
l One White Flint North ;
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Rockville Pike f l Rockville, Maryland '
j 18 Also Presents !
19 l I IRA DINITE, Office of Nuclear Reactor Regulation !
20 JOHN TELFORD, Office of Research t NORMAN MCELROY, Office of HMSS ;
21 ERIC JAKEL, Office of General Counsel L 22 On behalf of Hoffman-LaRoche ,
1 23 ROBERT J. ROSS, ESQ.
1800 K Street, N.W. - Suite 600 24 Washington, D.C. 20006 25 l.
t Heritage Reporting Corporation (202) 628-4888 I
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4 2
1 APPEARANCES: -(Continued) 2 Also Present -
3 ROY BROWN, Mallinckrodt LIllDA MCLEAll, Hoffman-LaRoche 4 BOB HARNEY, Hoffman-LaRoche GASTON DE BARON, Hoffman-LaRoche 5
On behalf of flational Association Nuclear Pharmacy:
6 ALVIll J. LORMAN, ESO.
7 Baker & Hostetler 1050 Connecticut Avenue, N.W.
8 Washington, D.C. 20036 9 On behalf of Syncor International Corporation:
10 WILLIAM KEKMEL, ESO.
General Counsel 11 Syncor International Corporation 12 13 14 15 16 17 18 19 20 21 !
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1 PROCEEDINGS i 2 MR. BEILMAN Let's bring the session to order. I i
3 am Howard Bellman, the convenor appointed by the Nuclear !
s 4 Regulatory Commission, pursuant to the requirements of f 5 Section 19 of the P?ticenAnderson Amendments Act of 1988.
6 And this is the first session of the negotiated rulemaking 7 procedures specified in the rederal Register of October 14, i
8 1988.
9 I want to make some preliminary re.aarks about my l [
j 10 intentions respecting procedure, although a great deal is '
l l 11 already indicated in that rederal Register announcement, but l l
12 before doing so, I would like to ask everyone here who j l I l
13 intends to participate to state an appearance for the (
1 14 record. And we have also passed around, I believe, a 15 sign-in document that will reflect everyone who is present !
L f 16 here, whether they intend to participate or not. So, j 17 perhaps if we can just go around the table, f 18 MR. TREBYt My name is Stuart A. Treby. I have f 19 been designated by the Commission to be the negotiator for i 20 the NRC Staff in this proceeding. My title doing my usual 21 work at the Commission is Assistant General Counsel for
, f 22 Rulemaking and ruel Cycle. In that capacity, I am the head f i
23 of the division that is responsible fot< all of the 24 rulemaking for the Commission.
25 With me, for the Nuclear Regulatory Commission is
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4 1 ' Chip Cameron, who is also from the Office of General 2 Counsel, Ira Dinitz who is from the Office of Nuclear 3 Reacto'*
. Regulation, John Telford, who is from the Offi:e of 4 Research, Norman McElroy who is from our Office of HMSS and 5 Eric Jakel who is also with the Office of General Counsel.
6 The people I have just indicated constitute an internal team 7 that is going to be invelved in this negotiation.
8 MR. BELLMAN: Thank you.
9 MR. KEMMEL: My name is Williar. Kommel. I am 10 Genera). Counsel for Syncor International Corporation. We 11 operate a system of nuclear phe.rmacies and we are a member 12 of the National Association of Nuclear Pharmacies.
13 MR. LORMAN: My name is Alvin J. Lorman. I'm with 14 the law firm of Baker and Hostetler and we represent the 15 National Association of Nuclear Pharmacies.
16 MR. LELLMAN: Do I understand, Mr. Lorman, that 17 you will be the chief spokesperson for the Pharma is ?
18 MR. LORMAN: That is correct. Well, fos une 19 pharmacies which are members of the national association, 1
20 yes.
21 MR. BELLMAN: Thank you.
22 MR. TREBY Could you clarify who those are?
23 MR. LORMAN: The National Association of Nuclear 24 Pharmacies represents approximately 80 of the 125 nuclear 25 pharmacies in the United States which are operated for Beritage Reporting Corporation-(202) 67.8-4888
5 1 profit.
2 MR. ROSS: I am Robert J. Ross of the law firm of 3 Ross & Smith and I represent Hoffman-LaRoche, duPont and 4 Mallinckrodt. With me is Roy Brown, with Mallinekrodt, 5 Linda McLean with Hoffman-LaRoche, Bob Harney with 6 Hoffman-LaRoche and Gaston deBaron with Hoffman-LaRoche.
7 MR. BELLMAN: Thank you. Apparently there are no 8 other appearances.
9 After the following, I will taka any questions 10 that my remarks may generate. As I am sure at least some of
. 11 you know, the procedures specified and required by the 12 Price-Anderson Amendments is not a typical negotiated 13 rulemaking as contemplated by the Administrative Conference 14 of the United States guidance documents that are actually 15 cited in the amendments.
16 The Commission's Federal Register notice makes 17 some reference to most of those discrepancies. And if you 18 would like, we can discuss further how the remainder of this i 19 procedure will attempt to resolve those discrepancies l 20 further. It has seemed to me that a discourse on that point 21 now might be gratuitous, but I want to make it clear that in 22 the future, including this morning, if any of you want to 23 discuss what I would refer to as reconciling the amendme'its .
24 to the Administrative Conference of the United States 25 Guidelines, I'm happy to do that with you.
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6 1 Perhaps the most difficult aspect of applying f 2 those guideline.? to this matter has been the absence of any [
r 3 determination in advance of the number of participants. :
I 4 Under normal circumstances, the convener would survey the j
$ field of possible participants, make some judgments 6 respecting which ones were required for our proper ,
l 7 nogotiations and recommend that they be invited or maybe 8 even recommend that there are too many to conduct feasible l
9 negotiations or at least recommend how long the negotiations 10 ought to take in order to allow for proper participation by 11 the proper number of participants.
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, 12 In this case, the amendments required the i 13 procedure eclipsing any question of feasibility and ,
1 t 14 specified a time table making such a survey impracticable.
l l 15 On that basis, the Commission, af ter consulting with me and 16 receiving my recommendations, simply invited all persons and !
l 17 entities belonging to a list of some 15 categories of 18 interests potentially affected by this proceeding through j 19 its rederal Register notice and I believe reinforced that 20 procedure by issuing some more specific invitations. And 21 perhaps Mr. Treby will speek to that later.
l 22 In settling on that process, we contemplated the l
23 possibility of a very large number of requests to 24 participate and on that worst case >cenario basis selected 25 msny of the remaining specifications in the Federal Peoister Heritage Reporting Co poration (202) 628-4888 l
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1 notice. For example, in order to insure that participation !
2 would be granted only to parties who were willing and able i
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3 to participate substantially, the notice required that those !
4 who wished to participate file a notice of intent t
5 accompanied by a position statement specifying and l i I j 6 addressing a number of material issues. In effect, a l i
7 prelilainary briet was required. l I
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- 8 Also, the notice indicates that persons with j j 9 similar interests are encouraged to consolidate and granted
< 10 the convener the authority to require consolidation of 1
l 11 participants. ;
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12 And, finally, .3 this respect, the notice !
13 indicated that where a person did not wish to participate
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14 fully as a negotiating party, so to speak, or where the 15 convener found that a request to so participate was !
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l 16 insufficient, such persons would participate as members of l 17 the public. And I should say that it is my present 18 intention to provide a formal opportunity at every session f
) 19 of these negotiations for the public to orally address the
- l 20 negotiators and that any member of the public may submit l 4 !
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21 written statements for consideration by the negotiators ;
22 throughout the proceeding.
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23 This morning, although it certainly would appear f
} 24 that our fear of too great a number of participants has not j l
materialized. I will rule upon the requests that have been
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1 submitted, some of which are obvious from who is here and [
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2 some of which are not, frankly. l
, 3 Before doing that, however, I want to say that I l
- 4 am quite open-minded respecting modifying the procedures in j 2
5 view of the smaller number of participants and will be glad j 6 to hear everybody's suggestions about that. However, for f i
7 the time being, I would not consider revising the calendar
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i 8 in the rederal Register notice. It may take us fewer days l i I
- ' m not sure, however, I want to cancel 4
, 9 at each seasion.
10 whole sessions. At this point, I would be reluctant to do I 11 that. ;
l 12 On other matters, my current intentions are as i !
], 13 follows. We will devote the first session, the session that 14 starts today, to complete sxposition of the parties' 15 positions. In the current session, we will hear from each
)j l t 16 party, make sure everyone had received everyone else's j {
17 preliminary documents and, if there is time, which seems !
l 18 very likely, ask one another some clarifying questions.
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- 19 I had contemplated that the second multi-day 20 session would allow for questioning of initial presentations ;
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!, 21 and the presentation of rebuttal. 1 think that that should !
22 stand, but in view of the smaller numbers, I would also
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23 consider providing some time during that session for 5 1 24 experts. Clearly, there may bc some critical fact issues in 25 this case. For example, respecting the availability of l
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1 insurance which may benefit from such presentations if we 1
2 have time. And there may be some other stich issues as well.
3 I do not want this to develop into a l 4 courtroom-like format, however. I would minimize question l
5 and answer processes, except perhaps in the examination of l 6 other party's witnesses. And oven in that case, I would l 7 like to keep it as untrici like as I can appropriately.
8 I want to disnuss this with you off the record, l
9 particularly after we have formally specified who the 10 negotiators are. Perhaps as in a pure example of regulatory 1
11 negotiations, we can even agree on some ground rules at the 12 outsee now that we see how few of us there are.
13 Speaking of off the record, I should say that I 14 only intend to have a transcript made during the first two 15 multi-day sessions so that we have that advantage in 16 studying one another's statements. The subsequent sessions, 17 which I've thought of as negotiation sessions, will be 18 untranscribed. I understand that we all should be able to 19 obtain transcripts within approximately two days of the 20 session. I believe you are able to purchase copies of the 21 transcript from the reporter. And let me say that if any of 22 you want to make off-the-record statements, I would l
23 appreciate it if you would address that request to me and 24 not to the reporter.
25 I also want to address the matter of ex parte Heritage Reporting Corporation l (202) 628-4888 L .
10 1 communication. Given my hybrid role as mediator and sort of 2 arbitrator, up to a point, and the policymaking or 3 legislativa-like role of this proceeding, I believe that 4 ex parte communications are appropriate, just as they always 5 are between negotiators and a mediator or between s 6 policymaker and an interested party. I would emphasize very p i
7 strongly, however, that to the extent that I have to decide 8 issues upon which the negotiators can't agree, I will do my 9 very best to base my decisions on the record that you make 10 together and not on ex parte communication. So, testimony 11 and documents will be highly valued and assertions that can 12 be documented, including assertions regarding congressional 13 intent, should be documented.
14 As you know very well, the amendment requires an i
15 answer to the preliminary question: Should the Commission i 16 enter indemnity agreements with radiopharmaceutical i 17 licensees?
18 It is my present judgment that in order to make a 19 more informed decision and in order to be as consistent with ,
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20 the normal regulatory negotiation format as is practicable, f 21 I should defer my answer to t. Sat threshold question until 22 after our sessions.
23 I may likewise defer on some, if not all, of the j 24 scope issues raised, particularly in the preliminary (
l 25 document of the Commission.
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11 1 It should be clearly understood that this deferral 2 does not reflect a decision in favor of indemnification or 3 any particular breadth of inclusion. I would think of it as 4 tantamount to the conventional arbitration procedure of 5 deferring decisions on arbitrability evet, where they are
! 6 jurisdictional until the entire case has been heard. There 7 are very similar court methods for accepting jurisdictional 8 contentions without bifurcating proceedings.
9 So, following our first multi-day sessions, we 10 will move to negotiation sessions where we will attempt to 11 negotiate a rule even if one or more participants contends l 12 that there should be no rule.
- 13 I should tell you that I hope that we will be i
14 negotiating from a single text. That is from a proposed '
15 rule that one or more of you submits.
16 Let me ask on the record now if there are any 17 questions so far about what I have said that you would like ,
18 to put on the record?
19 (No response.)
20 MR. BELLMAN: I am going to go off the record for
, 21 some informal discussion about participant status and other 22 matters. I want you to understand that if you feel as 23 though something that is being said off the record ought to 24 be on the record, that we'll go back on at your request. It 25 isn't my intention by going on and uff the record to obscure l
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12 I certain things. It is just to reinforce informality which I 2 think ought to be bound in this matter.
3 So, unless there is something further that someone 4 else wants to say on the record, let's go off the recerd.
5 (Discussion was held off the record.)
E 6 MR. DELLMAN: Shall we go back on the record?
7 I have a number of things to say for the record 8 before we go ahead to the oral presentations. First of all, 9 I would put on the record that the negotiating parties will 10 be the Commission, the manufacturers as represented by 11 Mr. Ross, and the pharmacies as represented by Mr. Lorman.
12 So, we have three negotiating parties.
13 Another matter that we discussed were the 14 particular efforts that the Commission made to insure that 15 all appropriate parties were advised of this proceeding and 16 maybe, Mr. Treby, you want to make a statement about your 17 efforts to invite everyone?
16 MR. TREBY: Thank you.
19 Yes, the Staff besides publishing a notice in the 20 rederal Register also took the rederal Register notice and l
21 mailed it to all of its licensees within the NRC so that 22 they would receive a copy of it as opposed to having to read 23 it in the rederal Register.
24 He also expanded the list of people that we would 25 normally send such a notice to by including all -- including Heritage Reporting Corporation (202) 628-4888 wi . _ _ _ _ _ _ _ _ _ . _ _ _ . _ _
13 I representatives of the insurance industry to the extent that t
2 we scold identify different ones, although I don't want to ;
3 represent that we sent copies to every insurance company in !
4 the country. j i
5 Also, sir.co msny radiopharmaceuticals in other !
6 categories on the list in the rederal Rooister are licensed 7 by states under the Agreement State Program between the NRC 8 and the states, we insured that the representative of each I 9 of the agreement states received a copy of the notice so 10 that they would be aware of it.
11 We also attempted to identify potential interested ;
12 other federal agencies and sent them copies of it. And I l 13 guess we were somewhat successful since we do have an !
14 observer from another federal agency here today.
15 We also issued a press release. So, this is a l i
16 summary of the various efforts that the Commission Staff 17 undert.cok to insure the widest possible dissemination of its ,
18 Federal Register notice.
19 MR. BELLMAN: Thanks. I understand that 20 Mr. Cameron just had a discussion or a telephone I l
21 conversation with American Osteopathic College of Radiology i l'
22 which had filed a letter. Can you report on that? l i
l 23 MR. CAMERON: Yes. I just talked to Pamela Smith j l
24 who is the executive director of the American Osteopathic l \
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! 25 College of Radiography or Rad; ology, rather. And they were 1
1 Heritage Reporting Corporation t (202) 628-48G8
14 1 mainly concerned with participating because they thought one 2 of the issues was going to be the indemnification of 3 physicians for malpractice or mis-administrations. I 4 informed her that that was not one of the issues that would 5 be on the table unless they wanted to put it on the table.
6 They are against such indemnification. And she informed me 7 that they would withdraw their request to participate. And 8 I committed to informing her if there was any change at all l 9 on that issue that we would get back in totch with them and 10 ask them to ecme in and participate. I don't anticipate 11 that there will be any change, but they are satisfied with 12 withdrawing their request for participating, although they 13 may come as an observer.
14 MR. BELLMAN: Okay, thanks.
l 15 I would indicate for the record that while we were 1
16 off the record, the parties ag,eed that there will be an l 17 opportunity for expert t istimony at the December 5th meeting 18 and that the advanced text of that t9stimony will be 19 circulated here in Washington among them on November 30th. '
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20 It is also under' stood that there may be some unanticipatible i
21 rebuttal offered during those sessions, depending on what i
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22 the testimony provides, of course.
23 I would like to say for the record that I will ask l 24 for public input, if anyone wishes, at the end of this 25 session whenever that turns cut to'be today. And, finally, l l
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15 I thac we have agreed that we are now going te go ahead with ;
2 oral presentation and that the presentation will be in the 3 order of manufacturers, pharmacies, and the Commission, and 4 between the presentationJ, there may be some questions based 5 on the presentations. So, that is where we are as of the l
6 moment. i 7 So, Mr. Ross, if you will? I f
8 MR. ROSS: Yes. I am Robert Ross and I represent !
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9 the manuf acturers of radioisotopes and radiopharmaceuticals, 3 e
10 specifically, Hoffman-LaRoche and its subsidiaries, ;
11 Mallinckrodt and E.I. duPont et de Nemours And Co., Inc. i 12 We have filed our document in this case and I 13 think it sets forth our positions on these matter, but let L i
14 me run through them briefly. ,
15 First off, our interest is as manufacturers, of [
l 16 course, we would be if a rule were developed directing NRC 17 to anter into indemnity contracts with radiopharmaceutical ;
1 f l 18 licensees, we would be the prime people who supply those i 19 radiopharmaceuticals and who stand at risk in the case of a j 20 potential law suit for teleases from my clients' plants I i
21 which manufacture radiopharmaceuticals, t L
22 I think in order to make a more complete record, l l
23 at thib time, I am going to ask Roy Brown from Mallinckrodt ;
24 to describe a little bit what it is the manufacturing i i
25 process for radioisotopes'and radiopharmaceuticals is all f i
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2 MR. BROWN: My name is Roy Brown. I am i t
3 manager of Regulatory Compliance at Mallinckrodt. Tho 4 radiopharmaceutical manufacturers produce a couple of !
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, 5 different types of products. First of all, they produce i*
i 6 products that are used for diagnostic imaging. And, second I l
- 7 of all, the manufacturers produce therar-"tic products for 1
8 treatment of various disorders.
r 9 The manufacturers ship these p .s both 10 directly to hospitals and to nuclear pharmacies. The 11 medical community uses these radiopharmaceuticals and
. 12 medical radioisotopes both on a national basis and on a 13 worldwide basis. It has been estimated that in the U.S.,
14 alone, there are 100 million nuclear medicine procedures 15 each year.
16 The three manufacturers represented in this group 17 comprise more than 90 percent of the radiopharmaceutical 10 manufacturing market. Two more manufactures, a total of 19 five manufactures, represent more than 99 percent of the 20 market. So, this group of manufacturers is well 21 represented. It reprocents the bulk of the marufacturing.
22 The manufacturers use both by-product materials 23 and NARM materials. Several of the facilities have one or 24 more cyclotrons on site to produce some of these machine 25 produced or HARM products. HARM products meaning, N-A-R-M, Heritage Reporting Corporation (202) 628-4888
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1 naturally occurring to the accelerated produced radioactive l 2 materials. }
3 Due to the nature of the radiopharmaceuticals, 4 many of the radiopharmaceuticals have a very short half- !
5 life, half-lives on the order of several hours. As a result 6 of this, several of the manufacturing facilities are located !
7 in large urban areas. One need here is with the short t 0 half-life materials, you manufacture and ship t'a material f F
9 one day and it has to bt 'elivered to the hospital for use ;
t 10 the following morning. This necessitates the manufacturing 11 plants to be located in large urban areas close to meior 12 airports. Consequently, many of these paants are located in i 13 high population density areas, i
14 Our manufacturing plants are highly regulated by 15 NRC, EPA, FPA, DOT, del. in some cases. We all have i 16 extensive environa-r. cal protection pe**ctes. W. all have l 17 large professional staffa to do environmental sampling, i 18 environmental protection. The radiopharmaceutical industry f
19 does have a flawless safety record, operating for many, many [
20 year.
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21 In summary, we just feel that the products we I 22 manufacture, the medical radioisotopes and the f
23 radiopharmaceuticals do represent an important nitch in I 1
l 24 diagnostic medicine and are used in the medical community, ;
25 many literaving procedures worldwide, j k
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18 1 MR. ROSS: As Mr. Brown has indicated, the risk to 2 the public health and safety from the operations of these 3 plants is extremely low. And, in fact, there has been an 4 exemplary safety record established by the 5 radiopharmaceutical manufacturing industry. However, that 6 does not preclude such cases as Bennett v. Mallinckrodt 7 arising when the public believes that it has been injured.
8 This, we feel, is an indication of some of the future 9 problems that we could face and, therefore, we would favor 10 development of a rule directing NRC to enter into indemnity i
11 contracts with the radiopharmaceutical licensees and this is 12 occasioned primarily because we are unable to obtain 13 insurance in some cases or adequate insurance in others as 14 reflected by insurance brokers that we have contacted and 15 gone to.
16 I would hope by December 5th to have the testimony 17 detailing that issue particularly in the hands of all the 18 parties here.
19 I think there is another issue that we have a 20 position on, also, and that is that if these indemnification 21 agreements are entered into, we think they should include 22 'acilities in agreement states.
. We believe that 23 congressional intent to that effect is fairly clear. And I 24 would say that that finishes a briof synopsis of our l
25 position in this case.
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19 1 MR. BELLMAN: Are there questione?
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MR. TREBY: I have a few, if I mayr just for the 3 purposes of the record.
4 MR. BELLMAN: Sure.
5 MR. TREBY: I wonder if you could explain to us 6 what the difference is between a radiopharmaceutical and a 7 radioisotope or whether there is a difference. I mean you 8 indicated that you manufactured both of them. And I'm not 9 quite sure I understand the difference.
10 hE. BROWN: Radioisotopes are various chemical 11 agents tagnvu vith the radio nuclide. For example, 12 some c c- unds using C14 for labeling or tritium.
13 Those are mostly used in medical research, both in hospital 14 research and university research. Where 15 radiopharmaceuticals are products that are licensed-by FDA 16 for use in humans either for diagnostic purposes or-for 17 therapy purposes.
18 MR. KEMMEL: Don't they cross over from time to 19 time? In other words, something that was researched once 20 winds up being --
21 MR. BROWN: Oh, absolutely, In some cases, the 22 medical research that is being done using medical 23 radioisotopes eventually will become a radiopharmaceutical 24 or a radiopharmaceutical product.
25 MR. TREDY: Dut is the distinction the fact that a Heritage Reporting Corporation (202) 628-4088
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20 1 radiopharmaceutical is licensed by the FDA for use in 2 humans? .
3 MR. BROWN: That's right. That's right. That's a 4 distinction.
5 MR. TREBY: Also, you had indicated that there 6 were five major manufacturers who made up approximately 99 7 percen?. I guoss of the industry. Could you give us the 8 rough percentages of what each one of them have? What 9 percentage of the market just so we know, you know, whether 10 there is one that is 80 percent or --
11 MR. BROWN I can give you some numbers that we 12 use. It's a difficult market to analyze because some of 13 these products go directly to hospitals. Some of the 14 products go to hospitals via nuclear pharmacies, but this is 15 the breakdown that we use and this represents products going 16 straight from the manufacturers to the hospital. These are 17 all estimates. Mallinckrodt represents 40 percent of the RP 18 market share. duPont 27 percent. Metaphysics or 19 Hoffman-LaRoche 21 percont. Squibb 9 percent. Amersham 2 20 percent. And all others 1 percent.
21 Once again, these are radiopharmaceutical products 22 going from the manufacturer directly to the hospital or what 23 the market considers direct sales.
24 MR. TREDY: I know that duPont, for instance, is a 25 very large corporation and all. I guess I don't know a Heritage Reporting Corporation (202) 628-4888
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. i 21 1 whole lot about hallinckrodt'. Could you tell us what ut>
2 businesses Mallinckrodt has?
3 MR. BROWN: Mail.inckrodt is a subsidiary of 4 International Minerals & Chomicals out of Chicago.
5 Mallinckrodt manufactures other chemical products, other 6 pharmaceutical grade products e.nd there is a division, a 7 medical products group that manufactures those 8 radiopharmaceuticals. The total, to give you a feel for 9 dollar sales, we're looking at a direct market of somewhere 10 around 225 million per year total market and a direct and 11 non-direct market of around $400 million a year.
12 MR. TREBY: For radiopharmaceuticals?
13 MR. BROWN: For radiopharmacauticals.
14 MR. TREBY: And radioisotopes.
15 MR. BROWN: Right.
16 MR. TREBY: In rough figures, what percentage of 17 Mallinckrodt's business is radiopharmaceutical?
18 MR. BROWN: Roughly, it's 25 to 30 percent.
19 MR. TREBY: You indicated that the 20 radiopharmaceuticals are manufactured I guess by two 21 d'ifferent means. One is to use by-product materials.
t 22 MR. BROWN: That's right. j 23 MR. TREBY: And the second means is this -- the 24 use of naturally occurring and accelerated produced 25 radioactive materials, the so-called NARM materials'.
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22 1 MR. BROWN: Yes.
2 MR. TREBY: Do you have some sort of feel for the 3 breakdown there, too? What percentage are from by-products 4 and what percentage might be from NARM7 5 MR. BROWN: In terms of sales figures or curie 6 throughput --
7 MR. ROSS: Use and manufacturing facility or sales 8 or what?
9 MR. BROWN: We can certainly put some numbers 10 together. There are several. In our written testimony 11 there is an example of some by-product material products and
. 12 some naturally occurring or accelerated produced materials.
13 If you would like, we could go back and get a greater detail 14 on either dollar figure breakdown or curie breakdown.
15 MR. TREBY: I think that might be helpful.
16 MR. CAMERON: I guess a critical question there 17 that we wanted to clarify is whether you were asserting that 18 the NARM material should be within the scope of the 19 rulemaking.
20 MR. BELLMAN: Let me just put that directly. But 2' before we do that, though, let me go off the record for just 22 a moment.
23 (Discussion was held off the record.)
24 MR. BELLMAN: Back on the record.
25 I think there is a potential issue here or there Heritage Reporting Corporation (202) 628-4888
23 1 is an issue here about the coverage and whether it reaches 2 these NARM materials and the by-product materials. The 3 Commission's position seems to -- addresses that pretty 4 directly in terms of your position on that. But let me just 5 ask you about yours.
6 MR. ROSS: I would like to just have a small 7 conference here, first.
8 MR. BELLMAN: Sure.
9 MR. TREBY: Well, let me just say something i
, 10 because I don't want to be indirect or to be viewed as 11 trying to not put all my cards on the taole.
12 One of the issues I think is the question of NARM, 13 The Commission's jurisdiction is from the Atomic Energy Act 14 and we do have jurisdiction to license by-product materials 15 and the use of by-product materials. We are not -- we do 16 not have any jurisdiction over NARM materials. Also, the 17 Price-Anderson Act provides that we are to indemnify those 18 things that are under our jurisdiction. And, so, the 19 question comes up whether or not we would be able to even 20 indemnify flARM manufactured materials. And that was why I 21 was trying to get some sort of feel for the difference or 1
22 the percentages of by-product materials and NARM materials.
23 MR. BELLMAN: All right. We'll go off the record 24 so you can confer.
25 (Discussion was held off the record.)
Heritage Reporting Corporation f (202) 628-4888 t
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24 1 MR. BELLMAN: We'll go back on ths recofd.
2 MR. ROSS: We believe that even though there may 3 be a gap in the Atomic Energy Act as f ar as NAR'( is 4 concerned that we are going to try and make a ase for its 5 inclusion. We believe that the congressional intent was 6 this way and, moreover, we feel that we're daaling here 7 largely with matters of public perception. The public 8 probably doesn't distinguish between NArA products and other 9 radiopharmacies. $
And we feel that t.e overall public 10 perception and public interest, as well as our own status in 11 our facilities dictates that we will argue that NARM should 12 be included.
13 MR. BELLMAN: Do you have any questions?
14 MR. LORMAN: No, but I'd like to answer --
15 MR. TREBY: I have some more questions.
16 MR. BELLMAN: I'm sorry. I asked you out of turn.
17 Mr. Treby still has some more questions.
18 MR. TREBY: Right.
19 MR. BELLMAN: Go ahead.
20 MR. TREBY: The five major manufacturers that you 21 listed, do they all hold licenses from the NRC or do they 22 have licenses from the agreement states? Do you know?
23 MR. BROWN: Mallinckrodt has NRC license. duPont.
24 MR. ROSS: M?taphysics.
25 MS. MCLCAN: We have both NRC and state --
i .
Heritage Reporting Corporation (202) 628-4888 l
1 l
25 ,
1 MR. TREBY: Just a second. We're getting too many 2 people on the record here.
3 MR. ROSS: Yes. Metaphysics does hold an NRC and 4 agreement state licenses. Squibb, NRC licenso. Amersham, I 5 know holds an agreement state license. I don't know whether 6 they hold an NRC license or not.
7 MR. TREBY: But it woulu be a fair statement to f 8 say that there is a mixture between NRC and agreement ;
a l
9 states, t 10 MR. ROSS: Absolutely.
11 MR. TREBY: And even if Mallinckrodt has an NRC 12 license, it also has an agreement license from one of our 13 so-called agreement states as well.
14 MR. BROWN: Not in the manufacturing area, but in ;
15 the radiopharmacy area, yes, we do.
16 MR. TREBY: And I assume that each of these or 17 that some of these companies have facilities in more than
, 18 one location and so that there would be a combination of NRC 19 or agreement states depending on the location.
20 MR. Bh0HN: Possibly, yes. I l ,
21 MR. TREBY: I just have a couple of questions I i
- 22 guess dealing with insurance. One of the points that has 23 been made is that Lnsurance Is not available. And just to 4
1 24 clarity what your position is on that, I guess my first l 25 question is, Bob, do you know whether any of your clients )
lieritage Reporting Corporation (202) 628-4888 i
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26 1 maintain insurance for this type of risk?
2 MR. ROSS: It has been my impression and my 3 understanding after quite a bit of research into this area 4 that they all have nuclear exclusions and that chronic 5 releases are not covered by any of the three of my clients 6 in their insurance policies.
7 MR. TREBY: All right. Well, just to clarify, 8 when you say they have nuc19ar exclusions, they may have 9 something called commercial general liability insurance, but 10 that type of insurance has certain exclusions in it.
11 Something called broad-form nuclear exclusions.
12 MR. ROSS: That is my understanding. And 13 pollution.
14 MR. TREBY: And those -- is it your understanding 15 that those exclusions cover by-product material?
16 MR. ROSS: Stuart, I'm going to have to -- I want 17 to get back to you in more detail on that question.
18 MR. TREBY: Right. No, I understand that.
19 MR. ROSS: It is not an easy one just to say yes 20 or no to. So, I'd like to be able to answer it, but it 21 isn't that simple and I am going to have to go back to make 22 sure that we have accurate statements on the record.
23 MR. TREBY: Well, let me just sort of indicote the 24 kinds of questions or concerns I guess that the Staff has.
25 And if you can answer them now, fine; and, if not, you know, Heritage Reporting Corporation (202) 628-4888
27 I we are oing to have another opportunity when you have your 2 experts here.
3 MR. ROSS: We'll have several other opportunities, 4 I think.
5 MR. TREBY: Right. You know, it is not my intent 6 to cros;-examine you.
7 MR. ROSS: Certainly.
8 MR. TREBY: But I guess one of the questions I j 9 would have is what type of insurance do your clients 10 maintain fer the risk from non-radioisotope pharmaceuticals?
11 That is, you know, a company such as Squibb or Mallinckrodt 12 must produce other types of pharmaceuticals and they must 13 have some sort of insurance I would think for that kind of 4 14 risk and what it is.
1 15 And whether these companies are self-insurers or 16 not. With regard to that, I might say it is our belief that 17 a lot of these very large companies, these multi-national 18 large companies are self-insurers to some extent. And we 19 wonder, you know, if we could have some more information or t 20 facts in that area. l l 21 On page 10 of your written statements, you had 22 indicated that there was a concern about insurance coverage.
23 And I guess we are wondering: Is your concern the coverage
, 24 of risk from the chronic low level type of releases or is it 25 to seek coverage from accidental releases or perhaps both?
Heritage Reporting Corporation (202) 628-4888 :
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28 1 You know, it is not clear to us what type of risk you're 1
2 seeking indemnification from.
3 MR. PSLLMAN: Let me -- I want to ask a question 4 about that question. And that is are you making the 5 distinction between behavior or emissions that occur that 6 are in compliance and those that are not in compliance with 7 regulation? You are asking him if he is seeking coverage 8 for both of those categories in and out of compliance? Is 9 that another way of putting it?
10 MR. TREBY: Well, I guess -- it appears to us 11 there are perhaps three different types of situations.
12 MR. ROSS: Okay. I think this is very important 13 to spell all of this out.
14 MR. TREBY: Right. One situation I guess is 15 whether there is some sort of accident. And I'm not even 16 sure whether that's a possibility or not, but we will assume 17 for the purposes of our discussion here that there is the 18 possibility of some sort of accident which results in 19 releases which are far in excess of what PAR 20 says and 20 you're seeking to get some sort of indemnification or 21 protection against whatever claims might result from that.
22 Another situation for which you might be seeking 23 protection is a release that is in excess of the Pitt 20 24 requirements, but it is not an accident in the sense of --
25 none of our accidents are the mushroom cloud type things, Heritage Reporting Corporation (202) 628-4888
^
29 1 but, you know, an accident that is unforese-n or something.
2 This is just some sort of release that exceeds Part 20 or 3 our regulatory regime and you want some sort of protection 4 from that.
5 And then the third category, which I guess is the 6 situation that came up in the so-called Mallinckrodt case is c 7 where there are some low level releases, and by "low level",
8 they are below what levels -- they are within the range that 9 we say you can have such releases and it is impossible to 10 have zero releases. And is that the type of --
11 MR. ROSS: We are seeking insurance for any r
j 12 release that is a potential liability to the plant where we 1
13 cannot obtain commercial insurance or adequate insurance i 14 coverage. And I understand where you're coming from and we 15 will enswer for the industry in as much detail as we can in i
16 the next written testimony, 17 MR. BFLLMAN: All right. Let me just say -- and r
18 maybe we'll actually see this, but the same questions 19 probably can be answered by the -- will have to be put to 20 the pharmacies. From my perspective, in terms of meeting my 21 responsibilities, I think it will be extremely valuable to !
22 me to be able to sort of crystallize the issues here and !
23 make sure that what is an issue is specified and what is not 24 an issue is also specified as not an issue.
25 MR. ROSS: Right.
Heritage Reporting Corporation (202) 628-4888
.e.
30 i
1 MR. TREBY: And no ships passing in the night 2 here. I would think that that l be one of the ways of 3 avoiding a terribic blundui ,,y part, which I presume we 4 all want to do here.
5 MR. ROSS: I think this is a crucial issue for all 6 of us. I mean this one probably is the most important one.
7 The insurance coverage issue is the one that is going to 8 drive the entire rulemaking, if there is one, or lead to the 9 decision that there won't be one.
10 MR. BELLMAN: Okay. Other questions?
11 MR. TREBY: Yes. In your statement, you make 12 reference to the fact that such cases as the Mallinckrodt 13 case, are you aware of other cases besides Mallinckrodt? I 14 ask that because we're not aware of other cases other than 15 the one that the Pharmacies mention in their document 16 dealing with --
17 MR. ROSS: I am aware of the cases that we 18 mentioned and tFa cases that the Pharmacies mentioned and 19 those are the only ones I'm aware of as well.
20 MR. TREBY: Well, one last question. I notice 21 that Squibb and Amersham are not one of your clients.
22 MR. ROSS: Right.
23 MR. TREBY: Is that because they h' ave insurance or 24 they just didn't want to join in? Is there anything we 25 should read into that fact?
Heritage Reporting Corporation (202) 628-4888
4 31 1 MR. ROSS: No. For whatever reason, they didn't 2 want to join in this particular effort. I can't second 3 guess their motives. We certainly talked with them. And we 4 have their supprr*; but I have no idea why-they didn't join.
5 MR. TREBY: Okay.
6 MR. BELLMAN: Do you have any questions?
7 MR. LORMAN: Several of your clients, Mr. Ross, 8 also operate pharmacies as well as manufacturing facilities.
9 I wonder if you would just identify the number of 10 manufacturers that own pharmacies?
11 MR. ROSS: We don't have today the exact number of
. 12 pharmacies connected with these people, but we can certainly 13 tell you the names of the corporations that own them. We 14 believe that it is Mallinckrodt, duPont and Medi-Physics 15 which is a subsidiary of Hoffman-LaRoche that have the 1 16 radio --
17 MR. BROWN: duPont does not operate pharmacies.
18 MR. ROSS: No pharmacies 7 19 MR. BELLMAN: Let's go off the record.
20 (Discussion was held off the record.) 4 21 MR. BELLMAN: Bach on the record.
22 MR. ROSS: Mallinckrodt and Medi-Physics, a i 23 subsidiary of Hoffian-LaRoche, do operate radiopDarmacies.
24 duPont does not. To our knowledge, Squibb does not and 25 Amersham does not.
Heritage Reporting Corporation (202) 628-4888
32 1 MR. LORMAN: Are you representing the pharmacies 2 in this proceeding as well as the manufacturers?
3 MR. ROSS: I am representing the manufacturers 4 primarily, and not the radiopharmacies except as the 5 interest appears that benefits my client. And we certainly 6 agree with the Pharmacies' position statement and in almost 7 all regards. And we are certainly supportive of it.
8 MR. LORMAN: Will you supply us for the record 9 either an estimate today or an actual number tomorrow or the 10 next time we me9t the number of pharmacies that are involved -
11 for Mallinckrodt?
12 MR. ROSS: Sure.
13 MR. LORMAN: Thank you. I have no further 14 questions.
15 MR. BELLMAN: Why don't we go ahead with your 16 presentation, then.
17 MR. LORMAN: For the record, my name is Alvin J.
18 Lorman. I represent the National Association of Nuclear 19 Pharmacies. I will not take a great deal of time to 20 summarize my' presentation, which I guess perhaps was the !
l 21 weightiest by weight, if nothing else, of the statements of j j
22 positions that ware submitted. !
23 I find in reviewing the position papers of all the l 24 parties that in fact I think most of us agree on most of the 25 issues, which I find encouraging. We agree with everyone I Heritage Reporting Corporation (202) 628-4888
l 33 1 else in this room that the manufacturer and the compounding 2 and pharmacies of radiopharmaceuticals is an extraordinarily 3 safe procedure presenting virtud11y no risk to the public.
4 We agree that the levels of radiation involved are extremely 5 low.
6 Our concern, however, is that cases such as 7 Bennett v. Mallinckrodt are a part of a public trend in the 8 law toward environmental liability cases inventing types of 9 liability which did not exist before, in many cases for 10 which no insurance had existed because the liability was 11 thought not to exist. And, frankly, it was a type of 12 liability for which the nuclear pharmacies, themselves, did 13 not have insurance. When that case became known to the 14 nuclear pharmacy industry, inquiries were made of insurance 15 carriers as to whether the CGL policies did indeed cover 16 that kind of exposure and we are told that, in fact, the CGL 17 policies that the nuclear pharmacies did hold did not cover 18 it on two grounds. One was the general nuclear exclusion 19 and the other was the new exclusions for environmental 20 impairment. So, they get you one way or the other.
21 Nuclear pharmacies attempted to obtain or to 22 ascertain the availability of insurance that would cover 23 this kind of J iability and as will appear later I guess in 24 talking to some of the same people that the NRC Staff did, 25 we were unable to determine that any such coverage was Heritage Reporting Corporation (202) 628-4888
34 2 available or available at a rate with coverage limits that 2 would make it worthwhile having.
3 That remains the key issue to us. We believe it 4 is a very important issue for two reasons. One, of course, 5 business people feel very nervous about investing large sums 6 of money in an operation which for at least one potentially 7 very large area of exposure is uninsured.
8 The other thing is that we believe there is a 9 public interest involved here. While we do not believe that 10 this industry causes injury to the public, if at some point 11 down the road we all turn out to be wrong, it would be 12 comforting to know that there was some sort of fund to 13 compensate the public. So, we believe it is more than just 14 the commercial interests of the people at this table at 15 stake here, but there is a public interest.
16 We believe that in passing the amendment in 17 Section 19, that Congress determined that in fact if we 18 demonstrate that insurance is not available, that the NRC 19 should exercise its discretionary authority to, in fact, 20 establish an indemnification program. Accordingly, we j 21 believe that the focus of this issue as it apparently is 22 going to be is on the availability of insurance.
23 We also believe that Congress did -- and to answer 24 the question that Mr. Treby will be asking later -- we also 25 believe that Congress did determine that nuclear pharmacies 1
IIeritage Reporting Corporation (202) 628-4888
35 1 and other facilities as may be determined in the rule in 2 agreement states would be covered as well. And that 3 concludes my statement of position.
4 MR. BELLMAN: Let me ask you all whether there is 5 disagreement among you as to the effect of the exclusions.
6 I mean I realize there are differences among you as to the 7 facts of the insuranco market. And we're going to get some 8 expertise here, I guess, on that point. But then you also 9 recognize all of you that there are these exclusions in what 10 is available, but are there differences among you as to what 11 that means, how those -- what sort of those exposure those 12 exclusions provide? t 13 Maybe you could just describe why those exclusions l 14 from your perspective frustrate your need for coverage?
15 MR. LORMAN: We have a very simple answer. Our 16 insurance carriers told us that the exclusions worked to 17 prohibit any coverage for the kinds of incidents that we're 18 talking about. So, whether -- we don't have any -- I don't 19 have any independent expertise in the area of insurance, but 20 our insurance carriers told our pharmacies that the nuclear i
21 exclusion works as a bar as well as the environmental i 22 impairment exclusion. So, we are knocked out of the ball 1
23 park, at least according to our insurance companies, on both I
24 grounds.
25 MR. TREBY: I think,there may be a difference. 1 Heritage Reporting Corporation (202) 628-4888 ,
36 1 don't profess to be an expert in insurance, but in talking 2 with members of the Staff who are more knowledgeable than I, 3 they seem to think that there may be a distinction in these 4 exclusions with regard to those people who operate nuclear 5 facilities, such as a power plant that produces electricity 6 'and those who are using by-product materials or source 7 materials to do something. And that the exclusions go to 8 those who are operating nuclear facilities. Since a 9 by-product -- use of a by-product material is not within 10 this term of art, "nuclear facilities", then it appears that 11 perhaps the exclusions don't apply.'
12 Hewaver, I want to make sure I add my caveat that 13 I'm not an expert on insurance. And it is an issue that I 14 think needs to be resolved before this group.
15 MF. BELLMAN: It seems to me it almost as 16 important as the whole notion of market, itself, because, 17 clearly, insurance is available with the exclusion. So, we 18 need to determine, it seems to me the importance of those 19 exclusions.
20 Mr. Lorman, I take it your position is the same as 21 the manufacturers, not only with regard to the coverage of 22 agreement states, but also with regard to this NARM 23 by-product dichotomy.
24 MR. LORMAN: I hate to do thi., but I don't agree.
25 My client agrees with the NRC with that. HARM material is Heritage Reporting Corporation (202) 628-4888
g 37 1 not covered, with the understanding that as long as the NRC 2 is not at this point seeking to expand its jurisdiction to 3 cover such material, we agree it is not covered under the 4 present statute and, therefore, should not be covered under ,
5 Price-Anderson as well.
6 MR. BELLMAN: And with regard to the issues that 7 Mr. Treby indicated about accidents and compliance and 8 noncompliance, could you address that, please?
9 MR. LORMAN: Yes. I can answer those questions 10 quite simply. You gave us three scenarios: an accident, a s
! 11 release of excessive of Part 20 limits that was not an ;
1 l
12 accident, and chronic complying releases. We believe that i
13 insurance on all three of those events should be provided.
14 MR. TREBY: Can you think of other scenarios to go 15 with those three? !
16 MR. LORMAN: No.
17 MR. BELLMAN: Do you have any other questions?
18 MR. TREBY: Yes. I have just a few, I guess.
19 You indicated that you were representing 20 radiopharmaceuticals, about 80 of them, I guess. {
21 MR. LORMAN: Yes. {
22 MR. TREBY: As in the case of the manufacturers, 23 do they hold both NRC licenses and agreement state licenses f 24 and some combinations 7 l
25 MR. LORMA!!: Yes.
i Heritage Reporting Corporation (202) 628-4888 .
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38
, 1 MR. TREBT: Are these 80 different outlets, are 1
2 some of them associated with each other in the sense that 3 they may be outlets of one company?
4 MR. LORMAN: Yes. The largest number are part of 5 an organization called Syncor, Inc., International which is 6 the successor firm to a merger of two prior chains of 7 nuclear pharmacies, Syncor and Nuclear Pharmacy, Inc., which 8 merged some years ago. Syncor is the largest member and 9 represents the bulk of those membership in the NANP.
10 MR. TREBY: Does Syncor, itesif, have a license?
11 Do each of the subsidiaries --
12 MR. LORMAN: The pharmacies are licensed in one of 13 two ways. Some of them hold individual licenses, either the 14 NRC or an agreement state. There are a group of Syncor 15 pharmacies which in fact are covered by a master license 16 from the NRC. So, there is one license that covers more 17 than one pharmacy. -
18 MR. TREBY: Do you know whether these companies 19 have insurance of any sort at this time? I assume they must 20 have some insurance for their non-radioactive program.
21 MR. LORMAN: My understanding is they have the CGL 22 policies to cover their businesses, but that does not 23 include the kind of coverage we are concerned about here.
24 MR. TREBY: Also, do you know whether any of these 25 companies are self-insurers?
Heritage Reporting Corporation (202) 628-4888
39 1 MR. LORMAN: My' understanding is that none of them 2 are.
3 MR. TREBY: We1.1, again, it is my view and I think 4 it is probably the consensus around the table that the 5 availability of insurance is the central issue. So, to the 6 extent that you can give us any more information about 7 things like self-insurance and whatever kinds of other 8 insurance they have, I think that would be helpful.
9 MR. LORMAN: I guess you could call them 10 self-insured if you call the absence of insurance, 11 self-insurance. But by definition, no.
. 12 MR. ROSS: Perhaps I could get a Staff definition 13 of what he means by self-insured because that's not -- well, 14 may I have one?
15 MR. TREBY: Sure. My undarstanding of a 16 self-insurer are companies who set aside some reserves to 17 take care of contingencies such as selt-insurers or else
'8 have some surety bond or letters of credit or some other 19 financial means whereby in the event they're hit with a 20 claim and then they have to pa'y some monies, there is a 21 source to meet that obligation.
22 MR. DELLMANt It is something much more 23 affirmative than crossing your fingers.
24 MR. TREBY: Oh, yes. And it is much more than 25 just saying, -well, we have x-amount of money in'our Heritage Reporting Corporation (202) 628-4888
0 40
~
l treasury and, you know, if we have to pay, we have to pay."
2 It is some sort of separate fund that is set up 3 for the purpose of meeting these kinds of obligations.
4 MR. LORMAN: We have no problem with your 5 definition. The answer is still, no.
6 (Laughter.)
7 MR. ROSS: Stu, in your definition, would you say 8 that self-insuring would mean that whatever this plan is 9 you're describing has to be funded before there's a 1,4s?
10 Is that within the ambient of your definition?
11 MR. TREBY: I don't think that's critical to the 12 definition. It could be either, either funded or not 13 funded.
14 Well, I guess one other question that we would 15 have although you may not be able to answer it now and that 16 is to what extent your clients have looked into some sort of 17 captive insurance type things. Some pools made up by the 18 individual members who would provide some insurance or some 19 of these companies that provide specialty type insurance.
20 MR. LORMAN: Reserving the right to have an expert 21 speak to that in two wooks, our preliminary looks have 22 determined that we're not a big enough industry to do that.
23 Thero aren't enough people involved to spread the risk that 24 it ultimately is not really called insurance. But we will 25 bring in someone to address that issue.
Heritago Reporting Corporation (202) 628-4888.
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~+g a 41 1 MR. BELLMAN: Mr. Ross, do you have any questions 2 of Mr. Lorman?
3 MR. LORMAN: No, I do not.
4 MR. BELLMAN: I guess we are ready for the 5 Commission's presentation.
N 6 MR. TREBY: In the Commission's Federal Register 7 it sets forth six issues and I intend to briefly address 8 each of them. I have, on behalf of the Staff, submitted a 9 written statement as have the other two speakers before me.
10 And I assume tha'c they will be made part of the record.
11 Maybe as a part of the housekeeping process when we're 12 finished, we can consider hov we want to get that into the 13 record, whether we have it attached to the transcript or 14 just provided to you. Somethin, like that. I don't intend 15 to read my statement.
16 I have been designated by the Commission to serve 17 as the Staff's negotiator in this proceeding and authorized 18 to represent the Staff in this proceeding. The nature of 19 the Commission's interest that may be affected by this 20 rulemaking is that under Section 8)'of the Atomic Energy Act 21 of 1954 as amended, the Commission is authorized to issue 22 licenses for the medical use of by-product material. And, 23 as indicated in the Staff's written statement, the 24 Commissiei has under license approximately 2000 licenseea 25 doing various things. Not all of those are Heritage Reporting Corporation (202) 628-4."S8
42 1 radiopharmaceuticals. There is a variety of things that we 2 set forth in our statements. ,
1 3 Under Section 170(a) of the Atomic Energy Act, the 4 Commission has the discretion to require finnneial 5 protection of and to extend an indemnity coverage for these 6 activities licensed by the Commission. And I wauld note !
7 that the Commission has been requested to exercise this -
8 discretiorary authority in the past for the licensees who I
9 are before us today and has not chosen to do so. And, in 10 fact, has only exercised its discretionary authority to !
11 require financial protection of and extend indemnity
- 12 coverage to certain persons licensed to possess or use '
13 plutonium in plutonium processing and fuel fabrication ,
l 14 activities. !
i 15 Of course, the 170(a) makes it mandatory that we ;
16 extend indemn.fication to the construction and operation of j 17 power reactors and research reactors.
t 19 With regard to the nature and the extent to the i 1
19 risk to the public health and safety posed by the activity '
'O of concern, I t.11nk I agree -- or I know I agree with Al 21 when he stated that aJ1 of the participants here are in 22 agreement that the activities of concern pose low risk to l
23 the public health and safety. For the Staff's part, based l
24 on considerations of potential risks and consequences due to l 1
\
, 25 the amount of by-product motorial in the inveritories which
. i i
J lieritage Reporting Corporation (202) 628-4888 l i
i I
43 ,
I are listed on Table 1 of the Staff's written position. The t 2 half-lives of the radioisotopes, the frequency and methods j 3 and use of these radioisotopes and une low likelihood of an 4 accident based on historical experience at ,
t 5 radiopharmaceutical licensee facilities, the Staff believes ;
6 that there is adequate safety with respect to these ;
r 7 activities. I t
8 I might say if we didn't think so, we weuldn't f
t i 9 have issued the licenses. But I think that is one thing t
[
10 that we probably have agreement on that tnere is very low j 11 risk to the public health and safety.
12 Whether financial protection for such risk is 13 available to licensees from commercial sources, this is the i
14 central question and the one where there appears to be the 15 greatest disagreoment amongst the participants, 16 As the staff indicated in its written statement, f
j 17 it believes financial protection is available from the
! 18 commercial sources. I provided a little earlier this J
j 19 morning a list of telephone conversations that Mr. Dinitz
)
i 20 had had with various insurance representatives to verify the
]
21 staff's belief which it has held for some time that the 22 possibility of commercial insurance exists. And the list 23 indicates a number of telephone conversations that he had 24 with dl!forent representatives. These representatives 25 included the largest excess and surplus insurer in the Heritage Reporting Corporation (202) 628-4880
44
+
1 United States or one of the larger casualty property 2 insurers in the U.S. writing medical professional liability 3 policies, the large casualty -- one of the largert casualty 4 companies, et cetera. And I intend to provide a copy of 5 this listing with the written statement and I don't need to 6 read through it all here. But in summary, it seems to 7 indicate that a lot of these companies indicated that they 8 had never previously been asked to provide this coverage, 9 but if asked, they would consider writing the coverage.
10 Now, that's not an ironclad agreement that they would 11 provide it, but, apparently, they would certainly consider
. 12 it and they appear willing to evaluate the possibility of 13 providing that coverage.
14 With regard to what our position is, I guess our 15 position can be summarized as stating that, first of all, wo 16 believe that there is a low risk to public health and safety 17 from the pharmaceutical licensee's activities and, 18 furthermore, in the unlikely event that an event does occut, 19 the potential liability for offsite damages resulting from 20 such an event would be within the insurance coverage that 21 the Staff believes is avalAable.
22 The Staff also would note that one of the primary 23 objectives of the Price-Anderson Act was to remove the 24 deterrents of the private sector participation in atomic 25 energy activities presented by the threat of potentially Heritago Reporting Corporation (202) 628-488E
45
- 1 enormous high liability claims in the event ef a 1 R 2 catastrophic nuclear accident. And that was one of the l 3 principal incentives for the initial Price-Anderson Act back J 4 in 1954. I 5 We believe that this objective retains ite 6 validity for application to the issue of whether 7 radiopharmaceutical licensees should be indemnified. And, j 8 therefore, we believe that in addition to demonstrating that f 9 commercial insurance is unavailable, the Staff believes that l
10 those supporting indemnification must also demonstrate that 11 indemnification is necessary to maintain participation in !
i
- p. 12 the radiopharmaceutieel industry in order to j3sure that the
[
13 public will not be deprived of radiopharmaceuticals. f 14 We would note that we're not aware of any instance (
l 15 where a radiopharmaceutical licensee har ceased operation l i
16 because of the threat of uninsured liability. And this is l t
17 an industry that has existed for 30 to 40 years so far. i 18 The last area that I would like to address is l 19 other facts pertinent to the indemnification issue. And f 20 under this catugory, I'd like to raise thic issue of the 21 coverage of agreemeat states. As I stated earlier in my 22 [+,osentation, the ilRC in the various categories that we 23 enumerated in our written statement cover about 2,800 24 licenseos. We understand that the 29 agrooment states cover 25 approximately 5,000. Jo, there are many mote licensees
' Heritage Reporting Corporation (202) 628-4988
46 ,
1 covered by agreement states than covered by the NRC. The 1
2 question is whether or not the NRC has the authority under 3 Section 170 of tne Act to require financial protection and 4 indemnification of radiopharmaceuticals from an agreement 5 state.
6 We believe that the record on this isaue is 7 ambiguous. The amendments act does not provide any explicit 8 authorization for the Commission to indemnify agreement 9 state licensees. And, as I said, a reading of the current 10 language of the Atomic Energy Act would indicate that we can 11 only -- that is the Commission can only cover its own 12 licensees. We do r3 cognize, however, that there was some 13 language in Section 19 of the 1988 Act amendments that 14 extended Price-Anderson and contained Section 19 which 15 indicated that this negotiated rulemaking should cover both 16 persons licensed by the Commission and by the agreement 17 state. Frankly, we're not quite sure what that means, l
18 whether Congress was implying that we should have the i 19 jurisdiction to extend it to agreement states or whether 20 after we conducted this rulemaking activity we would then go i
21 back through Congress with the results of our activity and (
l 22 say, "Yes, there ought to be indemnification. And in order l 23 for us to extend to agreement states, you need to give us -
24 some additional jurisdiction."
25 We believe that this ambiguity needs to be l
Heritage Reporting Corporation (202) 628-4888 e
47 1 resolved in some way in the course of this proceeding. It 2 should be one of the issues on the table here and one that 3 the negotiating committee should address.
4 We suggest in our written statement that perhaps ,
5 we could defer addressing that until after we had reached 6 some sort of position as to whether or not indemnification 7 should be provided because if the answer is indemnification 8 should not be provided, then it's somewhat of a moot point.
9 And I guess I don't need to say anything further on that 10 issue. I have already discustsed the NRC's Staff position 11 with regard to NARM and I don't think I need to elaborate 12 any further on the position covered in our written I 13 statement.
14 With regard to the scope of the licensees to be i
15 covered, as we said in our written statement, we thought ,
16 that it should be somewhat limited from the very broad
. 17 coverage that we initially stated in the rederal Register 10 notice. The purpose of the rederal Register notice was to 19 give the widest possible dissemination of notice to i 20 potential participants in this proceeding. And because we ,
21 listed various categories, that did not necessarily mean 22 that the Staff agreed that all of those would fall within j l
23 Section 19. !
I 24' As I believe I stated earlier, we thought that 25 there should be two tests, initially, as to the scope of Heritage Reporting Corporation
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48 1 licensees covered, first, to look to Section 19 and, 2 secondly, who sought to participate here. Certainly, the 3 Staff does not disagree that the -- who are the parties to 4 this proceeding at the moments the manufacturers and the 5 radiopharmaceuticals would fall within the scope of Section G 19. And they certainly have sought to participate here.
7 And we would think that they are within the scope of whoever 8 should be included in any rulemaking that would take place.
9 So, I guess our position would be or our position would be 10 that at this time, they are the only categories that we 11 would see being covered by any rulemaking that might result 12 from this proceeding.
13 In the event that we get to the point that we 14 think there should be some rulemaking and some 15 indemnification, we would like to identify a couple of other 16 matters that we believe need to be covered in such 17 negotiations. First amongst these would be the amount of 18 coverage and financial protection to be provided. Section 19 170(c) of the Act requires that the Commission must provide 20 indemnity coverage in the amount of $500 million. Given the 21 very slight risk that we have identified from these 22 categories of licensees and the very small half-lifes, 23 et cetera, we raise the question whether even if 24 indemnification is found to be appropriate, whether it 25 should be in that amount or some other amount. That seems lleritage Raporting Corporation (202) 628-4888
l i
49 I to be a very large amount of money and perhaps some lesser 2 amount might be appropriate. In any regard, that is an 3 1. sue tha' we think needs to be discussed amongst us.
4 Seccadly, pursuant to Section 170(b) of the Act, 5 the Commission may require that those licensees who are 6 indemnified have and maintain some amount of financial 7 protection of .he type specified in Section 170(b) of the 8 Act as a first s*,ep. That is with regard to power reactors, 9- fo'r instance. I believe there is a requirement that they 10 have to provide a certain amount of insurance first before 11 they indemnification thereto. ;
12 The issue is, again, if we were to provide in this 13 rulemaking for some indemnification, should there be a 14 similar type prevision with regard to these licensees. :
15 Finally, a subject that appears to be very close 16 to the heart of Congress and I guess therefore must be close i 17 to the Commission's heart is the question of fees with !
18 regard to all people to whom an indemnification agreement !
19 would be executed. And we would like to put that subject on l
20 the table, also.
21 These were the items that we identif4,ed in our 22 initial consideration of the problem of some ttungs that 23 should be considered when we meet in the negotiation phases 24 of this proceeding. And we wanted to alert the other 25 participants of our thinking. And that concludes our oral 1 Heritage Reporting Corporation I (202) 628-4888
~. . _ . . _ _ . , _ . .. . .__- _
50 I statement.
2 MR. BELLMAN: Let me say with respect to the last <
3 three items Mr. Treby just specified, how much insurance 4 should the insured maintain on its own, the amount of 5 coverage that the law might provide and the fees that -- I 6 would hope that each of you would have a specific position 7 on those three issues.
[
8 With regard to the matter of the lack of evidence '
9 that companies are withdrawing from the market because of 10 their exposure, the point you made of people being in this ,
11 business for decades and nobody seems to have left, what 12 sort of demonstration are you talking abr,ut? What sort of 13 evidence are you talking about? I know what an absence of 14 evidence is, but I don't know what you might see as 15 affirmative evidence.
16 MR. TREBY: I guess the type of affirmative 17 evidence that we would be looking for is some -- I don't 18 want to create a self-fulfilling prophecy, but, you know,
- 19 some statement by either the manufacturers or the 20 radiopharma'couticals that due to the lack of some sort of
- 21. protection this is going to be the factor that determines l 22 that they're going to go out of business, that this is such I l
23 an important matter that this determines whether they remain l 24 in business or not. f 25 When one reads the 'ongressional c record and reads i h Heritage Reporting Corporation !
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51 I some of the statements, at least on the Senate side, it 2 appeared that some of the Senators seemed to be concerned 3 with the concept that the radiopharmaceuticals industry and 4 the manufacture of those radiopharmaceuticals was a very 5 important public service. And that is something that the 6 Staff agrees with. We think that radiopharmaceuticals are 7 very important and very worthwhile,to the public health and 8 safety. And they seemed to be concerned that this industry 9 was going to disappear unless it qcc acme sort of 10 protection.
11 Our concern is that this is an industry that has 12 existed for a long time without that protection. And we 13 frankly don't know where this concern comes from that the 14 people involved in the industry are going to go out of 15 business. I guess the type of evidence would be some sort 16 of indication of that.
17 MR. BELLHAN: Well, I just want to say that 18 although it seems to me that what you're raising is relevant 19 and material and all that, it calls forth a sort of rhetoric 20 that can only be grounded sort of in the hearts of the 21 stockholders or something. And I don't know exactly. I 22 mean it's a perfectly plausible issue, but it is a difficult 23 matter of proof here.
24 MR. LORMAN: Would Mr. Treby be persuaded by sort 25 of evidence by analogy, such as what's happened in the Heritage Reporting Corporation (202) 628-4888
r 52 ,
1 vaccine industry in the United States where DPT 2 manufacturers one by one fell off the boards because of 3 product' liability concerns until there literally was a risk 4 of no one in this country being willing to make a DPT 5 vaccine or the evidence that until Congress passed the Swine 6 Flu vaccination scheme, no one would manufacture Swine Flu 7 vaccine in this country. Is that probative 'vidence to you?
8 Or do we have to get up and say, "We're going to go out of 9 business." -
10 MR. TREBY: Well, that's why I said I am concerned ;
11 about the statement saying, "I'm going to go out of-12 business." It is easy to say that and I'm not sure how 13 probative that is, but maybe some information by analogy ;
14 would be helpful to show the extent of the concern. I think 15 as a representative of the Commission, I sort of have two 16 hats. One hat is as an advocate of the Staff's position, 17 but the other hat I wear is a person who is responsible and '
18 concerned with how we go about rulemaking and how we can 19 protect our rulemaking if we are ever challenged in court. .
20 I am concerned about developing records, too. And I would ;
21 like there to be some sort of record developed that, you 22 know, there was a need for the particular rulemaking and it 23 fell within the ambient of what of Congress said f
24 Price-Anderson was all about.
l 25 MR. LORMAtl e I guess our response would be we will !
?
Heritage Reporting Corporation (202) 628-4888 i
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33 1 certainly attempt to satisfy your curiosity in that regard, 2 but our legal position is that Congress satisfied your 3 curiosity for you by directing this proceeding. We agree 4 with you Let Congress determine that this is an important 5 industry whose future is important to the American public 6 and t*.at in directing this proceeding, Congress made the 7 judgment that the issue is insurance, not whether we are 8 going to go bankrupt without it.
9 , MR. TREBY: Well, perhaps that's another issue 10 that needs to be considered at our table, too. I have read 11 the various congressional statements and all, and, 12 certainly, there are many statements on the Senate side that 13 indicate just what you have indicated. However, there are a 14 number of statements, particularly on the House side, that 15 indicate that Congress may not have reached a final 16 conclusion on this matter but may view this rulemsking 17 activity as a direction to tne Commission that it engage in 18 rulemaking and that it dad not preordain what the result 19 would be and that it waa nothing more than an urging that we 20 undertake this stuff since Congress, itself, was unable to 21 resolve the matter when it was before them.
22 MR. BELLMAN: Let me just say on my own behalf 23 that I think it is uncontroversial that fundamental 24 questions were not disposed of by the Congress because if 25 they were, we wouldn't be here. I mean they disposed in Heritage Reporting Corporation i
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1 ma.ty ways of this issue by shunting it to this process, not ;
2 the normal course of events. I mean it is unprecedented to i
3 my knowledge, this what we are going through here. That l 1
4 doesn't mean that they didn't express some very strong 5 opinions about other things or that some of them didn't 1 i 6 express strong opinions. . I I ;
7 Now, I think that in addition to recognizing what i
8 they didn't dispose of, I agree with anyone who wants to be j l
9 sensitive to whatever broad opinions did seem to be evident 10 in their debates, in their discussions and consistent with l L
l 11 something that I think Mr. Treby just said. I presume that [
12 we want the outcomo of this process to float. That is to f l 13 say we don't -- not only do we want to do the right thing i
i 4
14 here, not only do we want to do what we are requested to do,
- 15 but we also want to do something that will be sustained.
i ,
i 16 Whether it is a matter, as he suggested, of making an (P 17 appropriate record to withstand challenge subsequently, or (
1 18 whether it is a matter of doing that which political
, f 19 leadership in the best sense of those words will accept. I '
20 think we want to do all of that, and I certainly do. L 21 MR. LORMAN: We don't disagree with you at all.
22 Solely on this issue of whether or not the industry goes !
i a 23 under w'ithout insurance, I think that is our disagreement. !
L 24 I don't think that's an issue. Did Congress consider it? I ;
j 25 don't think it's an issue, frankly, that is really [
d :
i 1' L l Heritage Reporting Corporation (202) 628-4888
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- l l.
1 appropriately before this group for negotiation. Prudent ;
2 business practice dictate that businessmen either have 3 insurance or an alternative to insurance. That people don't 4 sit around saying, "Shall we go out of business if we 5 don't," most of the time. You do in extraordinary :
6 circumstances, such as in the vaccine areas. Granted, we 7 don't sit here with as much horsepower behind us without a !
8 $20 million judgment against someone sitting in this room as !
9 we would in the vaccine area. But once we have had that i
10 judgment, it is sort of closing the barn door after the ;
r 11 horse has escaped. Our position is prudent people have j t
12 insurance, otherwise, they don't do business. Just as no one ;.
13 here, I suspect, has no insurance on their automobile. And I 14 we don't sit and engage in lengthy discussions about the l 15 wisdom of not having insurance on your automobile.
l 16 MR. SCHWARTZ: Let me just get back to some other
! 17 points. You were asking the other parties about these three l l l
18 scenarios of yours. And I want that you address them
{
- 19 yourself regarding your own position on that, on those. [
20 MR. TREDY: I guess the first point is that our 21 current position, subject to overwhelming -- well, not 22 overwhelming, but evidence to the contrary is that they can f 23 get insurance that cover all three possible scenarios. !
[
24 However, as to whether indemnification should cover all l 25 three scenarios, I guess I'd like to think about that. l i
l Heritage Reporting Corporation [
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l 56 1 Certainly, it should cover the accident one and the releases 2 above Part 20. I think I would like to defer until the next 3 time as to whether or not it should cover the releases that 4 are within regulatory guidelines, t
5 MR. BELLMAN: With regard to your position on 6 scope which it seemed to me there were three elements, the !
7 by-product, NARM, dichotomy, the federal versus state !
8 licensees dichotomy and also the matter of only the ;
9 participants here. With regard to the -- I understand, ,
10 although I'm not sure what sure to do next with regard to 11 this notion of ambiguity. I know what you mean by ambiguity '
l 12 there with regard to the federal-state licensees. With 13 regard to the by-product NARM element, is your position a !
l 14 position of policy or a position of legal strictures.
15 In other words, are you saying it would somehow 16 bias the law to go beyond your position? i 17 MR. TREBY: Yes, it's a legal stricture. We just (
18 don't have tho authority under the Atomic Act to cover --
l 19 MR. BELLMAN: So that if my recommendation, for 20 example, or our consensus did that, it would be an illegal, j 21 it wouldn't be a proper rule. t i
22 MR. TREBY: At least with regard '.o NARM. To be !
l 23 very candid, the subject of whether or not the Commission l
i 24 should take jurisdiction over NAP.M comes up from time to l i
25 time and the Commission was briefed a month or two ago on {
l l
Heritage Reporting Corporation '
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57 I that very subject. And, you know, I can't predict if the 2 condition at some point is going to take jurisdiction over 3 NARM materials. The issue comes up from time to time, 4 particularly with regard to disposal because some of these 5 materials are in our low level burial sites. But at the 6 present time, we don't have jurisdiction over it and it 7 would be illegal to extend Price-Anderson to it.
8 MR. ROSS: When I indicated you were going to make 9 arguments with regard to NARM, I believe I started by 10 agreeing that in fact there is that hole in the law and that 11 NARM is not presently covered.
12 On the other hand, we want to certainly be 13 inclusive and if, in fact, we get to a point where some 14 indemnification results from this, we want to have raised it 15 on the record and in our documentation in case the 16 Commission does take it up in the future.
17 MR. BELLMAN: I just think that for purposes of 18 consensus building and the kind of objectives that I would 19 like to have here, it is important for all of us to know 20 when positions are known on ' discretion and policy judgment 21 as opposed to readings of'the law because presumably none of 22 us is interested in reach /ng an agreement that is not legal.
23 MR. LORMAN: I would like to ack, Stuart, when you 24 say the Commission has been briefed on whether to take 25 jurisdiction over NARM. do you believe that th'e Commission Heritage Reporting Corporation (202) 628-4888
g e
58 I has the statutory authority to do so or would the statute 2 need to be amended --
3 MR. TREBY: The statute would need to be amended.
4 But I think the Commission pursues legislative agendas, too, 5 and this is something that the Commissioners appear to be 6 interestod in. We have had subject as to whether or not 7 that is something they ought to go back to Congress and ask 8 about. In particular, the agreement states, some of which 9 do regulate NARM are always pressing the Commission to do 10 something in this area.
11 MR. BELLMAN: But that needs to be sorted out. I 12 mean we're not here to develop a legislative agenda.
13 MR. TREBY: That's right.
14 MR. BELLMAN: I mean we can give some gratuitous 15 advice here.
16 MR. TREBY: I didn't mean to muddy the waters. I 17 just wanted to provide full disclosure that while it is my 18 view that it is clearly not something that the Commission 19 can do now.
20 MR. LORMAN: I would just like to clarify our 21 position, then, in response. We agree with you that the 22 Commission does not have legal authority to regulate NARM at 23 this point, but we also agree with Mr. Ross that should the 24
- Commission assart authority over it one way or another, then 25 we would like it covered as well.
Heritage Reporting Corporation (202) 628-4880
59 1 MR. ROSS: We certainly wouldn't want to go back 2 through this just for 11 ARM in case it came up. So, there 3 must be some way we can allow for that contingency in the 4 future.
5 MR. BELLMAN: Well, give that some thought because 6 it's not im; 'iately apparent to me anyway. Do you have any 7 other questions or any questions?
8 MR. LORMAN: I don't. Well, I guess I do.
9 Perhaps this is an improper question, but since, without 10 divulging it today, the name of one of the insurance il companies on here is the name of the very insurance company 12 that we have been unable to extract the policy, quote, fron 13 for some time. I am wondering whether in connection with 14 our next session, you are planning to bring in people that 15 we cats ask about these things or is this basically the kind 16 of evid mce we're going to see, because, quite frankly, I 17 don't know how to cross-examine this when it's the same 18 company that won't give us a quote.
19 MR. TREBY: Well, I guess I have two answers. I 20 think, first of all, with regard -ta) the apparent different 21 views, I think it may be a matter of talking, one of uh 22 talking to some sort of headquarters group in a different 23 location and another one talking to a regional office or 24 womething like that. I think we just epoke to different 25 offices. I am not prepared to resolve the difference here Heritage Reporting Corporation (202) 628-4888
60 '
1 now.
2 With regard to whether we're going to bring in 3 people, well, we're working towards the best we can do.
4 We've been seeking to interest the insurance industry to
(
5 tell us what their views are one way or the other. And we 6 may look at getting an expert. It depends on what we can 7 do.
8 MR. BELLMAN: Witbout being too lawyer-like, as I 9 say, I suffer a lapse once in a while and I think that we 10 all appreciate the value of being able to cross-examine and 11 we all appreciate the lack of value in hearsay. So, I mean 12 if we're going to have competing evidence, some of it may be 13 more persuasive than other evidence because it is direct and 14 subject to cross-examination. I don't know what else to say 15 about that. We're going to get together for as many days, 16 really, as I'm sure it's going to take. And you all have 17 your own ways of putting these preser.tations on. I think in 18 many ways, the value of this document that shows the efforts 19 so far by the Commission or some of their efforts is to 20 forewarn the rest of you about the basis for their position.
21 Do you have any questions?
l l 22 MR. ROSS: Yes, I do.
I 23 Stuart, on this list of telephone converpations 24 with insurance representatives, I know that most of it says, 25 ... would consider wrAting such coverage.- Frankly, that Heritage Reporting Corporation (202) 628-4888
61 !
I doesn't help me a great deal. Almost any insurance company J 2 that you call probably would consider writing some coverage. !
i 3 Did your people oi you, if you made the calls, get any more l r
4 specifics out of these people, such as: Are these claims 5 made policies, occurrence policies? Were there limits that j 6 you considered? Were any of the premiums brough*. up? Was 7 deductibility part of what you asked them? Is there a need (
8 for engineering studies prior to these companies considering l 9 issuing a policy? Questions of that nature. Were any of I
10 those asked? Do we have the answers to any? t 11 M.".. TREBY: Thuce telephone conversations were !
12 conducted by Ira Dinitz.who, as I earlier indicated, ir our I l
13 expert in NRE itho deals with Price-Anderson issues all the '
14 time. Perhaps the most efficient way to answer your 15 question would be to have Ira provide the answer to you. j 16 So, I would ask Ira to respond. !
17 MR. BELLMAN: Okay. He can do that. Does anybody 18 have any objection? j 19 MR. ROSS: No.
20 MR. BELLMAU: That's fine. Okay. !
21 MR. DINITZ: I think our initial thought was that 1
22 we wanted to see from the industry as to whether or not they 23 had ever been approached by the radiopharmaceutical 24 manufacturers or radiopharmacies directly.
25 It's funny, because I normally read Business Heritage Reporting Corporation (202) 628-4888
G2 1 Insurance and I see ads f rom various insurance companies end 2 one ad that caught me a little by surprise was an ad by the 3 Home Insurance Co.mpany that said, "We are willing to write 4 radiopharmaceutical -- I'm sorry -- pharmaceutical companies 5 and other high risk," I can't recall the other high-risk 6 type, "or all other product liability companies. Give us a 7 call." Which is what I did.
8 And one of my first contacts was with the Home 9 Insurance Company and they are a very large writer of 10 casualty and property insurance policies within the country.
11 And I asked them have they ever been approached by the 12 radiopharmaceutical manufacturers or radiopharmacies to 13 write or to consider writing insurance. And he said, "No "
14 And I said, "Well, I will take you at your word in 15 your advertisement that you would be interested in at least 16 considering it." And, of course, I should preface this by 17 saying, no one told me or could tell me over the phone that 18 they are willing to write any type of insurance. They have 19 to make a determination or underwriters have to make a 20 determination as to the nature of the risk, the coverage in l
21 the policy, the deductibles in the policy. These are l
22 underwriting decisions that no one could give to you over l
23 the phone.
24 ar basic need. however, was to find out just what l l 3 hind of canvasing of the market -- we wanted to determine l
fleritage Reporting Corporation (202) 628-4888 l
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63 1 what kind of canvasing of the market that the 1
2 radiopharmaceutical manuf acturers or radiopharmacies 3 acconsiished.
4 I also called one of my initial contacts, as you 5 see on there, was with the Lexington Insurance Company. In 6 a number of my conversations and, of course, I converse 7 very, very regularly with American Nuclear Insurera, the 8 larger of the two pools writing nuclear liability insurance.
9 From early on, they had indicated to us that they do not 10 write this type of insurance for radiopharmacies or 11 radiopharmaceuticals because of the ability, they have 12 indicated to us and as well have indicated to the Congress 13 numercus times, that this insurance they believed and 14 certainly indicated to me was available in the conventional 15 market. Therefore, we thcaght it was incumbent upon us to 16 just do an initial canvasing of the market to see if that, 17 in fact, was correct.
18 One of the companies I did contact early on was 19 the Lexington Insurance Co.mpany, the largest of the excess 20 and specialty insuranco markets. The indications from 21 Lexington were that this is an area that they would be 22 interested in looking at. They had never been approached by 23 any of the participants to consider writing this type of 24 coverage, but they were in the business to write this cype 25 of coverage and they certainly would welcome inquiries from Heritage Reporting Corporation (202) 628-4888
l l
l 64 1 the radiopharmaceutical industry on this issue.
1
! 2 As I got into more of the telephone conversations, i 3 that seemed to be a pattern that developed and a number of l 4 the companies that I contacted indicated that they had not r 1 e 1
5 been approached to write this type of coverage, but the ,
6 conventional insurance market was the area that the coverage !
7 should be written in. And there was agreement that. it 1 8 should not be written with American Nuclear Insurers, but ;
\
9 the CGL policy, the Commercial General Liability policy that <
i 10 was being written for across the board for thousands and l 11 thousands of companies would be the policy that should be 12 written for radiopharmaceuticals and all of the companies l
13 that I contacted indicated that they would be willing, at f
- 14 least, to consider whether or not to write this type of l
15 coverage, given the fact that they couldn't make any other ;
i 16 commitment to me over the phone until they actually had t 17 specifics on what we were talking about.
18 MR. ROSS: And you didn't give them a hypothetical 19 client or anything like that and say, "Could you just kind j 20 of run this through your system?" Or would they even do (
21 that for you?
22 MR. DINIT:s They wouldn't even do that. I think 23 we all know insurance companies --
24 MR. LORMAN: They don't do it when you submit it. {
25 MR. BELLMAN: one at a time because the reporter i Heritage Reporting Corporation (202) 628-4888 1
. _ , . _ - ~ _ _______
65 I 1 is going to have difficulty. ;
2 MR. DINIT:s You're right. They don't like to (
3 deal in hypothetical situations, especially, you know, 4 insurance underwriters don't deal with hypotheticals. They 5 said that, "If we were approached, we certainly would l
6 consider writing it."
7 To give just & follow-up on what Stu said, I had [
f 8 spoker. to Gary Lewis in Mallinckrodt about the insurance.
i 9 of course, I guess early on, it had been alleged that 10 Mallinckrodt had not maintained and was not able to maintain j 11 a CGL policy. And we were a little surprised to find out ,
l 12 that they were maintaining the policy. The gentleman I l l
13 happened to speak to at Liberty Mutual, just to give you an l 14 idea as to what we were running up against, the one official {
15 in the company saying insurance was available, and the other [
l 16 saying it's not, the Liberty Mutual gentleman I spoke to
(
17 wasn't even aware that they were writing Mallinckrodt.
18 So, there are -- these are very large insurance f
19 companies. Headquarters operations, regional operations.
20 And it is certainly very well possible that one official in i I
21 the company does not know what other officials of the :
I 22 companies are doing.
23 I tried in my contacts to speak to the people in !
'24 this area that'were directly responsible for the i
25 pharmaceutical and these type of high-risk operations, Heritage Reporting Corporation j (202) 628-4888 -
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66 !
- t I rather than speaking to the people writing the casualty and !
2 property policies for fire and theft and the usual risks.
3 MR. ROSS: Other than that, I don't think I have i
4 any other questions, j 5 MR. BELLMAN: Let me pursue one other matter that 6 the Commission's position raises. And that is the coverage i 7 by this proceeding -- our proceeding here, cf categories of 8 actors who are not among us, the position of the Commission !
9 being, I understand, that they should not be covered by this i 10 proceeding. I mean I presume that allows us to say neither !
~
11 yea nor nay with regard to whether they ought to be.
12 They're just not here end not germane.
13 Is there any dissent from that view of the 14 Commission? Is there any other category that you want 15 discussed here besides your own?
t 16 No? Okay.
17 MR. LORMAN: Not on behalf of the pharmacies. f i
18 MR. ROSS: Other than, of course, Squibb and 19 Amersham aren't directly represented here -- I l
20 MR. BELLMAN: I'm not talking about companies.
21 MR. ROSS: Other than that, no. I agree with
- 22 that.
23 MR. BELLMAN: Are there any other further i
24 questions that any of you have of one another here? (
I 25 (No response.) ;
t Heritage Reporting Corporation [
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67 1 MR. BELLMAN: Is there anyone here from the -- ;
2 anyone else here, not at the table, who wishes to say 1 i i 3 something? I think I recognize everybody here, having been {
t 4 here all along.
l 5 (No response.) !
i 6 MR. BELLMAN: All right. Let's go off the record, l 7 please. [
8 (Whereupon, a brief recess was taken.) [
9 MR. BELLMAN: Back on the record.
10 This is my attempt, subject to everyone's 11 correction, to recite for the record a list of issues anj 12 agreements with respect to certain factors and some pointe 13 with respect to evidence that is regarded as important to 14 provide.
15 The first issue is the need for insurance, which 16 is divided into three subsets: the need to address 17 liability, the need to address litigation costs and the need 18 to address potential disincentives to investment.
19 Next, there are issues with respect to 20 availability of insurance which includes kinds et insurance, 21 raounts of coverage, and the cost of insurance. All of 22 which factors go to a question of whether acceptable 23 insurance is really available. Or, as it was put: What 24 kind of insurance can a participant in these industries hope 25 to purchase and is it reasonable to expect them to accept Heritage Reporting Corporation (202) 628-4888
r 68 1 that kind of insurance?
2 Then there was some discussion with respect to the 3 need for insurance and the period of time that has passed in 4 the present state of affairs where it is asserted there is a !
t 5 lack or absence of insurance.
i 6 How does one account for decades of operation in !
7 that situation, given that it is not conventional to expect 8 cn enterprise to operate without coverage? In fact, were i
j 9 tnere decades without coverage is another question. Or have 10 some kinds of insurance which were available become 11 unavailable? :
12 Also, the question was asked what types of 13 insurance and other insurance-like devices are now held or [
14 engaged in by these companies in these industries, i l 15 There is the question of the importance of the 16 nuclear or pollution exclusions and what effect or 17 importance should be attached to insurers' advice to these l
l 18 companies with respect to the importance in effect of those 19 exclusions.
20
- And the question of if these exclusions are 21 applied more broadly than simply these populations of
- 22 companFis, why should these companies receive special 23 treatment from the government?
24 I think that we agreed that whether that the 25 public would suffer were these companies to leave their i
Heritage Reporting Corporation (202) 628-4888
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1 business, but -- and we also agreed that we cannot --
i 2 ultimately, we cannot determine whether not being 3 indemnified wi.11 cause them to lea,ve. What we know is that 4 the parties have varying opinions 'and it is dif ficult to 5 bolster any of those opinions with specific evidence.
6 Finally, with respect to insurance, there is the 7 issue of how much insurance for indem:.ification should be 8 provided if any is going to be provided.
9 Secondly, there is the issue of whether agreement 10 states are or should be covered and it was indicated that it 11 would be helpful to know how these companies are distributed 12 between federal licensing and agreement state licensing.
13 Thirdly, there is the issue of NARM coverage.
14 And, finally, it was agreed that the discussion here l 15 encompasses releases within Part 20, releases that exceed 16 Part 20, and what we have referred to as "accidents."
l 17 That is my representation of what I think we have 18 agreed are the issues here. I mean I really do encourage 19 you to refine that if I have -- I take no pride in 20 authorship here.
1 21 (No response. )
22 Hearing none, thank you all very much. And I will 23 see you in a couplo of weeks. l l i 24 (Whereupon, at 2:15 p.m.. the hearing was
(
25 adjourned.) L i
r f
l Heritage Reporting Corporation
( (202) 628-4888 l
t . - --
1 CERTIFICATE 2
3 This is to certify that the attached proceedings before the 4 United States Nuclear Regulatory Commission in the matter 5 oft 6 Names PRICE-ANDERSON RULEMAKING 7
8 Docket Number 9 Place ROCKVILLE, MARYLAND 10 Date: November 14, 1988 11 were held as herein appears, s'd that this is the original 12 transcript thereof for the file of the United States Nuclear 13 Regulatory Commission taken stenographically by me and, 14 thereafter reduced to typewriting by me or under the 15 direction of the court reporting company, and that the 16 transcript is a true and accurate record of the foregoing 17 proceedings.
18 /s/ 50% N 19 (Signature typed) : JOAN ROSE 20 official Reporter 21 Heritage Reporting Corporation 22 23 24 25 Heritage Reporting Corporation (202) 6!!8-4888
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