CONTENTS Tuesday, April 26, 1960. HEARING DATES ATOMIC ENERGY COMMISSION WITNESSES McCone, John A., Chairman_. Graham, John S., Commissioner_ Pittman, Dr. Frank K., Director, Division of Reactor Development Finan, William F., Assistant General Manager for Regulations and Safety. Page 123 189 190 190 190 124, 190 Kratzer, Myron, Division of International Affairs_. 124 Lowenstein, Robert, Office of General Counsel 124 Price, Harold L., Director, Division of Licensing and Regulation..- Haugh, Charles J., vice president, Travelers Indemnity Insurance Co., on behalf of Nuclear Energy Liability Insurance Association... – 157 Johnston, Senator Lyndon B., read by Harry McPherson.... 258 McVey, Mr. and Mrs. Jackson, Houston, Tex.... 259 Yarborough, Senator Ralph, represented by Richard Yarborough......... 258 Yount, H. W., executive vice president, Liberty Mutual Insurance Co., on behalf of Mutual Atomic Energy Liability Underwriters....... 148 STATEMENTS SUBMITTED FOR THE RECORD Biemiller, Andrew J., AFL-CIO.......... 264 Dorsett, J. Dewey, general manager, Nuclear Energy Liability Insurance 177 173 170 175 156, 167 Haugh, Charles J., vice president, Travelers Indemnity Insurance Co.- Mann, Guy E., senior vice president, Aetna Casualty & Surety Co- ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD "Notice of Proposed Rulemaking," article from the Federal Register of CORRESPONDENCE INSERTED IN THE RECORD Decker, R. J., assistant secretary, Mutual Atomic Energy Liability Underwriters, to the Joint Committee, dated May 3, 1960, furnishing a list of policies issued to nonprofit educational institutions operating reactors or critical facilities _ _ Hollingsworth, R. E., Deputy General Manager, AEC, to Senator Clinton P. Anderson, dated March 31, 1960, concerning financial protection required of reactor licensees__ 220 203 238 155 178 Hollingsworth, R. E., General Manager, Atomic Energy Commission, to James T. Ramey, executive director, Joint Committee on Atomic Energy, dated May 8, 1960, supplying information on (a) premiums charged Battelle Institute and Armour Foundation, (b) time fuel units will be shipped to BONUS site near Rincon, P.R., and (c) nonprofit institutions Hydeman, Lee M., and Berman, William H., atomic energy research project, University of Michigan Law School, to Senator Clinton P. Anderson, dated April 21, 1960, concerning a study just completed and a proposed study of organization of atomic energy functions at the Federal Luedecke, A. R., General Manager, Atomic Energy Commission, to James Mann, Guy E., Aetna Casualty & Surety Co., to John F. Floberg and John S. Graham, Commissioners, AEC, dated January 21, 1960, expand- ing on two points that arose during discussion before the Joint Com- Morehouse, E. W., vice president, General Public Utilities Corp., to Harold Price, Director, Division of Licensing and Regulation, Atomic Energy Commission, dated May 3, 1960, submitting comments on proposed amendments to the Commission's regulations published in the Federal Ramey, James T., executive director, Joint Committee on Atomic Energy, to Lee M. Hydeman and William H. Berman, atomic energy research project, University of Michigan Law School, dated April 28, 1960, on the proposed study to be undertaken by the university....... Sporn, Philip, American Electric Power Service Corp., to Harold L. Price, Director, Division of Licensing and Regulation, Atomic Energy Com- mission, dated April 30, 1960, commenting on notice of proposed rule- making published in the Federal Register February 11, 1960-- Thomsen, C. J., vice president and treasurer, Texas Instrument, Inc., to 214 128 INDEMNITY AND REACTOR SAFETY TUESDAY, APRIL 26, 1960 CONGRESS OF THE UNITED STATES, SPECIAL SUBCOMMITTEE ON RADIATION, The subcommittees met, pursuant to notice, at 10 a.m., in room P-63, the Capitol, Hon. Melvin Price (chairman of the subcommittee) presiding. Present: Representatives Price and Van Zandt. Also present: James T. Ramey, executive director; David R. Toll, staff counsel, Joint Committee on Atomic Energy. Representative PRICE. The committee will be in order. The Subcommittee on Research and Development, and the Subcommittee on Radiation, are holding joint public hearings today on atomic energy indemnity problems, and tomorrow's session will be on reactor and radiation safety problems, including site selection, and the operations of the Advisory Committee on Reactor Safeguards. This morning we have requested AEC witnesses to testify on the Commission's indemnity program under Public Law 85-256, the Price-Anderson amendments of 1957, and also on current indemnity problems in the foreign field. The Price-Anderson amendments were enacted by the Congress in 1957 to solve what had previously been described during hearings in 1956 and 1957 as a major roadblock to development of the peaceful uses of atomic energy. The amendments set up a framework, whereby AEC may require licensees to provide "financial protection," or private insurance, up to determined amounts, taking into consideration certain factors, including cost of private insurance and the type, size, and location of the facility. Above the "financial protection" that AEC may require, a governmental indemnity up to $500 million is provided by the statute, in order to provide protection for the public in the remote event of a reactor accident, and then limitation of liability procedures are included in the statute. Each year since passage of the amendments, the Joint Committee has held hearings on the indemnity program, and on related safety questions, including the activities of the Advisory Committee on Reactor Safeguards, which was made a statutory committee by these amendments. During the past year, AEC has made some progress in closing potential "gaps" between the private insurance available and the Government indemnity. It is hoped that AEC will continue these efforts in order to provide full protection for the public without "gaps" in the indemnity program. After discussing the domestic program and new regulations this morning, we will discuss problems of foreign indemnity. This afternoon we are scheduled to hear testimony from representatives of the insurance syndicates. I understand the witnesses this morning will be Mr. William F. Finan, Assistant General Manager for Regulations and Safety, AEC; Mr. Harold Price, Director of the Division of Licensing and Regulation, AEC; and Mr. Robert Lowenstein, Office of General Counsel, and Myron Kratzer, Division of International Affairs. We are glad to have you with us this morning, gentlemen. Are you going to lead off, Mr. Finan? STATEMENT OF WILLIAM F. FINAN, ASSISTANT GENERAL MANAGER FOR REGULATIONS AND SAFETY; HAROLD L. PRICE, DIRECTOR, DIVISION OF LICENSING AND REGULATION; ROBERT LOWENSTEIN, OFFICE OF GENERAL COUNSEL; AND MYRON KRATZER, DIVISION OF INTERNATIONAL AFFAIRS, ATOMIC ENERGY COMMISSION Mr. FINAN. Mr. Chairman, with your permission we would like to have Mr. Harold Price deliver our statement on the first subject to be covered this morning, the indemnification of licensed activities. Representative PRICE. I might also state on behalf of the committee the fact that there are so few members present this morning is not indicative of the lack of interest in this particular subject, but due to the fact that we have several conflicting meetings this morning. Mr. Price. Mr. PRICE. Mr. Chairman, I will present part of this prepared statement, dealing with indemnification of licensed activities. PART I. INDEMNIFICATION OF LICENSED ACTIVITIES Since the Joint Committee held hearings on the Government's indemnity program approximately a year ago, the Commission has completed and issued two effective amendments and one proposed amendment to the Commission's rules governing the financial protection requirements imposed on reactor licensees and the indemnity agreements to be executed by the Commission with such licensees. COMPREHENSIVE REVISION OF PART 140 The first of the effective amendments supersedes the provisions of the original part 140, which was issued in September 1957, shortly after enactment of the Price-Anderson Indemnity Act. The amendment prescribes revised requirements as to the amounts of financial protection required to be maintained by reactor licensees. It establishes fixed amounts of financial protection-ranging from $1 to $211⁄2 million-for reactors licensed to operate at relatively low power levels. The previous minimum amount of financial protection required to be maintained was $250,000. Representative PRICE. Mr. Price, could you tell us why the minimum amount was raised from $250,000 to $2.5 million? Mr. PRICE. Yes, sir. When we first put out the regulation right after the enactment of the act, we had information on projected costs of insurance, but I am afraid we had not had time to look at the problem of potential damage by the smaller reactors as much as we could have on more study. What we have done here is to recognize that for these small reactors-these are very small research reactors beginning with the training reactors on up to 10 kilowatts first the real small reactors, these training reactors, we don't believe there is much damage likely, but the cost of insurance for $1 million is not too much more than the cost for $250,000. Representative PRICE. What are the figures? Mr. PRICE. I don't have them in my mind, Mr. Chairman. The insurance people will be able to give them. They may differ by reactors. It maybe goes up by a factor of a third or 50 percent jumping from $250,000 to a million. Representative PRICE. I recall when we were working on the original legislation that there was great concern expressed by operators of small research reactors over this matter. What would be their situation? Mr. PRICE. There is another reason for this change. At the time we issued the first regulations, the law required the educational institutions as well as other reactor owners to buy insurance. The educational institutions made a great plea that they could not buy insurance or could not afford any at all, and in some instances they did not have authority. Representative PRICE. When you are speaking of educational, you are talking about the general rather than the special amendment we passed to take care of the State universities. Mr. PRICE. It was primarily the State universities. Representative PRICE. That was taken care of by the bill. Mr. PRICE. That is right, but at the time we passed the original regulation and passed this low minimum, it had not been taken care of. Since then you have eliminated any problem with respect to the educational institutions by exempting them from financial protection requirements. You have fixed the law so that the indemnity takes hold at $250,000. So we don't now for purposes of fixing financial protection requirements have to consider any problems of the educational institutions. Representative PRICE. I remember the time the act was under consideration, it was not so much the plea of the larger educational institutions, the State universities and so forth, that there be some consideration to holding the amount down. It was more from the presentation made by research institutes like Armour Institute in Chicago, Battelle Institute at Columbus, Ohio. How would they be affected? I am not speaking of one particular institution, but these types. Mr. PRICE. The amendment dealing with educational institutions did not exempt them. So they are subject to the financial protection requirements and the amount of insurance that they would have to buy will be raised by this amendment. How much the premium goes up for Battelle and Armour, I don't have here before me, but I would be glad to supply it for the record. |