Report to the Congress from the Presidential Commission on Catastrophic Nuclear Accidents

INTRODUCTION

The Price-Anderson Act of 1957 had two primary objectives. One was to remove the threat of uninsurable liability for catastrophic accidents and thus remove a roadblock to the participation of private industry in the development of peaceful applications of nuclear energy, chiefly nuclear power, which had been a major objective of the Atomic Energy Act of 1954. This objective was largely achieved by limiting the amount of private insurance available. The second objective was to protect the public against the risk of uncompensated loss resulting from the peaceful uses of atomic energy. This objective was to be achieved by requiring the operator of a nuclear reactor to maintain “financial protection” in the amount of available private insurance — $60 million — and, secondly, by providing for government indemnity of $500 million above the level of financial protection. Congress rejected a proposal that the government indemnity by unlimited, and an overall ceiling of $560 million was imposed on liability for a nuclear accident.

It was recognized that the limitation on liability — without provision of any supplemental mode of compensation — was inconsistent with the notion of complete protection of the public. Although Congress chose not to make an unlimited commitment in advance of a nuclear accident, it did make a clear promise to reexamine the amount of the indemnity if it should prove insufficient. This congressional commitment has been an important premise of the Price-Anderson Act.

The Price-Anderson Act did not directly affect the law governing liability. That liability was to be dependent upon the provisions of the state tort law, which were to remain in effect. Although it was widely assumed that, in the event of a nuclear accident, the operator of the reactor would be held “strictly” liable, the Act did not explicitly so provide.

The assurance of protection to the public was significantly reinforced in subsequent extensions of Price-Anderson. In 1966 a provision was added requiring that the licensee of a reactor waive defenses in the event of a significant nuclear accident. The effect of the waivers of defenses provision was to ensure that, in the event of an accident causing significant damage, a rule of strict liability would, as a practical matter, be imposed. The extensions in 1976 and 1988 significantly increased the amount readily available to pay claims — to a current $7.3 billion, all of it to be supplied by the nuclear utility industry through private insurance and “retrospective premiums” in the event of an accident.

In both 1966 and 1976, Congress reiterated and elaborated its commitment to provide additional funds if the limits on liability were exceeded. Finally, in 1988 Congress specifically committed itself to a principle of “full compensation.” Although the commitment is clear, the statute contains no guidelines as to how that commitment is to be effectuated. Instead, Congress created the Presidential Commission on Catastrophic Nuclear Accidents and charged it with the task of making recommendations as to how the goal of full compensation was to be implemented in the event an accident exceeds the amount currently available from the first two tiers of insurance proceeds. Within that general charge, the Commission was directed to address three specific areas of concern.

In the first area, civil procedures, the Commission was charged with considering whether it is necessary to change the laws and rules governing liability or civil procedures to ensure fair, timely, and efficient resolution of valid damage and injury claims. In addition, the statute directed the Commission to examine the possibility of handling public liability claims through an administrative agency rather than the judicial system.

In the area of claim priority, the statute directed the Commission to consider the procedures necessary to establish priorities for claims in order to expedite hearing, resolution, and payment when awards are likely to exceed the amount of funds available.

Finally, the statute directed the Commission to recommend special standards or procedures necessary to identify and pay claims for latent illnesses, those health effects that might not become apparent for years but that could be attributed to the nuclear accident.

The Commission has spent the past year addressing those concerns.

The main elements of Price-Anderson — mandatory insurance, government indemnity, and even the limitation on liability — were all known to the law in 1957. Perhaps the most unusual aspect of the Act was that it represented an attempt to plan against the possibility of a highly unlikely catastrophic accident. The perceived remoteness of the possibility of such an accident, however, importantly conditioned Congress' action. Essentially, Congress did what was necessary to achieve the goals of the legislation — the protection of industry from catastrophic liability and the furnishing of a significant protection to the public. The assumption that an accident was highly unlikely is at least in part the explanation for why Congress, although it revisited the statute at 10-year intervals, did not attempt to flesh out the promise of the 1957 Act that the public would not suffer because of the limitation on liability. It should be stressed that the decision in 1988 to create this Commission does not reflect any change in the perception that the likelihood of a catastrophic accident at a reactor in the United States is exceedingly remote. Rather it reflects growing awareness of the inadequacies of the current legal system in dealing with catastrophic accidents generally. Experience with Bhopal, Agent Orange, asbestos, Dalkon Shield, etc., have made clear the desirability of advance planning. As pointed out by Judge Jack B. Weinstein, the time for planning is “in advance, when you're calm about it.”1

The Commission strongly underscores its view that Congress directed it to postulate a catastrophic nuclear accident so it could structure a system for compensating claimants of such an accident. Congress did not give the Commission any direction to attempt to determine the probability of such an accident or to describe the specific consequences of such an accident if it were to occur.2 Even if the work of the Commission is never utilized in the nuclear area, it is hoped that it will be useful in other contexts.


Footnotes
  • Judge Jack B. Weinstein. U.S. District Court for the Eastern District of New York, Meeting Transcript, Dec. 1. 1989. p. 151. Judge Weinstein added, “I wanted to say that, whatever good you do here, don't expect anybody to be grateful for it. That's clear. If you don't have a nuclear disaster, you will be accused of wasting a lot of time. If you do have one, you will be accused of planning it.”

  • The Commission accepts the view that such a accident is highly unlikely. For background purposes the Commission asked one of its members, Dr. Norman Rasmussen, McFee Professor of Engineering at the Massachusetts Institute of Technology and the director of the Nuclear Regulatory Commission (NRC) Reactor Safety Study in 1975 that evaluated the overall risks from reactor accidents (Nuclear Regulatory Commission, Reactor Safety Study—An Assessment of Accident Risk in U.S. Commercial Nuclear Power Plants. WASH 1400. NUREG 75/014.1975) to provide a short summary on the nature of severe nuclear accidents. This is included in Appendix B.


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