[Senate Report 109-99]
[From the U.S. Government Publishing Office]
Calendar No. 153
109th Congress Report
SENATE
1st Session 109-99
======================================================================
PRICE-ANDERSON AMENDMENTS ACT OF 2005
_______
July 1, 2005.--Ordered to be printed
_______
Mr. Inhofe, from the Committee on Environment and Public Works,
submitted the following
REPORT
[to accompany S. 865]
[Including cost estimate of the Congressional Budget Office]
The Committee on Environment and Public Works, to which was
referred a bill (S. 865) to amend the Atomic Energy Act of 1954
to reauthorize the Price-Anderson provisions, having considered
the same, reports favorably thereon with amendment and
recommends that the bill, as amended, do pass.
General Statement and Background
This bill amends various sections of the Atomic Energy Act
of 1954 (42 U.S.C. 2011 et seq.) to authorize continuation of
the Price-Anderson provisions.
The Atomic Energy Act of 1954 assigned to the Atomic Energy
Commission responsibility for protecting public health and
safety from the hazards of radiation produced through nuclear
technology. The Energy Reorganization Act of 1974 abolished the
Atomic Energy Commission and created a new agency, the Nuclear
Regulatory Commission (NRC or Commission), to take over its
regulatory functions.
The Senate Committee on Environment and Public Works has
jurisdiction over the nonmilitary environment regulation and
control of atomic energy. This includes both legislative and
oversight authority pertaining to the operations of the NRC.
Among the responsibilities entrusted to the Nuclear
Regulatory Commission is the regulation of the nation's
commercial nuclear power plants, along with other civilian uses
of radioactive materials. The mission of the NRC is to conduct
an effective regulatory program that promotes the safe use of
nuclear energy and materials, in a manner that protects the
public health and safety and the human environment, and
promotes the common defense and security.
Congress passed the Price-Anderson Act in 1957 to ensure
that adequate funds would be available to compensate victims of
a nuclear accident. It also recognized that the risk of
extraordinary liability that companies would incur if a nuclear
accident were to happen would render insurance costs
prohibitively high, and thwart the development of nuclear
energy.
The original Price-Anderson Act authorized government
indemnification for only 10 years, until August 1, 1967.
Congress extended the Act, in 1965 and 1975 for additional 10
year periods, and a third time in 1988, for an additional 15
years.
Under the 1988 extension, the Department of Energy and the
Nuclear Regulatory Commission have authority to issue
indemnification agreements only until August 1, 2002. However,
it was extended for commercial nuclear reactors through
December 31, 2003 by the fiscal year 2003 omnibus continuing
resolution (P.L. 108-7). Existing reactors will continue to
operate under the current Price-Anderson liability system even
without further extension, but any new reactors would not be
covered.
The original Price-Anderson legislation that was enacted in
1957 provided up to $500 million indemnification for both
Federal weapons contractors and commercial nuclear power plant
operators. In addition to the $500 million government
indemnification, commercial nuclear power plant operators were
required to obtain as much additional insurance as they could.
By pooling their resources, these civilian licensees were able
to obtain an additional $60 million in private insurance. Thus,
liability for military weapons contractors was capped at $500
million, and at $560 million for civilian commercial licensees
Over the years, Congress has made substantial changes in
the way Price-Anderson operates. As currently constituted,
Price-Anderson places a cap on liability for commercial nuclear
facilities and activities licensed by the U.S. Nuclear
Regulatory Commission, and allows for deferral of a portion of
the payments such licensees must make.
The Price-Anderson Act requires owners of commercial
reactors to assume all liability for damages to the public
resulting from an `extraordinary nuclear occurrence' and to
waive most legal defenses they would otherwise have. However,
in exchange, their liability will be limited to capped amounts
established in the Act.
First, each licensed reactor must carry the maximum amount
of insurance commercially available to pay any damages from a
severe nuclear accident. That amount is currently $300 million.
Any damages exceeding that amount are to be assessed
equally against all covered commercial reactors, up to $95.8
million per reactor (most recently adjusted for inflation by
NRC in August 2004). Those assessments would be paid at an
annual rate of no more than $10 million per reactor. According
to the NRC, all of the nation's 103 commercial reactors are
currently covered by the Price-Anderson retrospective premium
requirement.
Funding for public compensation following a major nuclear
incident would therefore include the $300 million in insurance
coverage carried by the reactor that suffered the incident,
plus the $95.8 million in retrospective premiums from each of
the 103 currently covered reactors, totaling $10.2 billion. On
top of those payments, a 5 percent surcharge may also be
imposed, raising the total per-reactor retrospective premium to
$100.6 million and the total potential compensation for each
incident to about $10.7 billion. Under Price-Anderson, the
nuclear industry's liability for an incident is capped at that
amount, which varies depending on the number of covered
reactors, amount of available insurance, and an inflation
adjustment that is made every 5 years.
The Act provides that in the event that actual damages from
an accident are in excess of this amount, Congress will
``thoroughly review'' the incident and take such action as is
necessary to provide ``full and prompt compensation to the
public.''
S. 865 extends coverage for commercial reactors until
August 1, 2025, increases the annual premium payments from
$10,000,000 to $15,000,000 per reactor and addresses modular
reactors with a total generating capacity of 1,300 megawatts as
a single reactor.
Section-by-Section Analysis
Section 1. Short title.
This Act may be cited as the ``Price-Anderson Amendments
Act of 2005.''
Sec. 2. Treatment of modular reactors.
Section 170(b) of the Atomic Energy Act of 1954 (42 U.S.C.
2210(b)) is amended for the purposes of providing Price-
Anderson liability coverage to a nuclear plant consisting of
multiple small reactors. Under this section, multiple small
reactors at a plant (100-300 megawatts each, up to a total of
1,300 megawatts) would be considered a single reactor.
Sec. 3. Extension of indemnification authority.
Section 170(c) of the Atomic Energy Act of 1954 (42 U.S.C.
2210(c)) is amended to authorize the Price-Anderson liability
coverage for new commercial reactors through December 31, 2025.
Sec. 4. Reports.
Section 170(p) of the Atomic Energy Act of 1954 (42 U.S.C.
2210(p)) is amended to require NRC and DOE report to Congress
by August 1, 2023, on the need for further Price-Anderson
extensions and modifications.
Sec. 5. Maximum assessment.
Section 170 of the Atomic Energy Act of 1954 (42 U.S.C.
2210) is amended so that the total retrospective premium for
each reactor would be set at the current level of $95.8 million
and the limit on per-reactor annual payments raised to $15
million, with both to be adjusted for inflation every 5 years
after August 1, 2004.
Sec. 6. Effective date.
The amendments would take effect upon enactment.
Legislative History
The Price-Anderson Act is the primary Federal statute
governing the public liability, compensation, indemnity, and
insurance coverage for nuclear accidents. The Act (Sec. 170 of
the Atomic Energy Act of 1954 as amended (42 U.S.C. 2210)) was
first passed in 1957. The `Price-Anderson' Act derives its name
from its two primary sponsors Rep. Melvin Price (D-IL) and Sen.
Clinton P. Anderson (D-NM). It has been renewed three times by
Congress, in 1965 and in 1975, for successive 10-year periods,
in 1988 for a fifteen-year period and was extended for
commercial nuclear reactors through December 31, 2003 by the
fiscal year 2003 omnibus continuing resolution (P.L. 108-7).
Senator Voinovich (R-OH) and Senator Inhofe (R-OK) introduced
the current Act known as S. 865, ``Price-Anderson Amendments
Act of 2005'', on April 20, 2005. It was then referred to the
Senate Committee on Environment and Public Works. A full
committee business meeting was held on June 8, 2005, and the
committee ordered S. 865, the Price-Anderson Amendments Act of
2005 as amended, to be reported to the full Senate.
Hearings
Since the committee approved legislation on December 9th
2003, it has held annual oversight hearings. There was one
general hearing held on S. 865 during the 109th Congress.
Witnesses included: Nils J. Diaz, Chairman, U.S. Nuclear
Regulatory Commission; Edward McGaffigan, Jr., Commissioner,
U.S. Nuclear Regulatory Commission; Gregory B. Jaczko,
Commissioner, U.S. Nuclear Regulatory Commission; Jim Wells,
Director, Natural Resources and the Environment, Government
Accountability Office; Marilyn C. Kray, President, NuStart
Energy Development; Dr. Edwin Lyman, Senior Staff Scientist,
Global Security Program, Union of Concerned Scientists.
Rollcall Votes
The Committee on Environment and Public Works met to
consider S. 865 on June 8, 2005. The committee voted favorably
to report S. 865 by voice vote with Senator Barbara Boxer
asking to reported as a nay vote.
Regulatory Impact Statement
In compliance of section 11(b) of rule XXVI of the Standing
Rules of the Senate, the committee finds that S. 865 does not
create any additional regulatory burdens, nor will it cause any
adverse impact on the personal privacy of individuals.
Mandates Assessment
In compliance with the Unfunded Mandates Reform Act of 1995
(Public Law 104-4), the committee finds that S. 865 would
increase the maximum retrospective and annual premiums
collected from NRC to cover damages resulting from a nuclear
accident.
Cost of Legislation
Section 403 of the Congressional Budget and Impoundment
Control Act requires that a statement of the cost of the
reported bill, prepared by the Congressional Budget Office, be
included in the report. That statement follows:
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S. 865, Price-Anderson Amendments Act of 2005, As ordered reported by
the Senate Committee on Environment and Public Works on June 8,
2005
S. 865 would amend and extend certain provisions of the
Price-Anderson Act, which governs insurance and liability
coverage of nuclear facilities. That act provides financial
protection in the event of a nuclear accident for facilities
with Nuclear Regulatory Commission (NRC) licenses issued by
December 31, 2003. The bill would extend liability coverage to
any facilities issued licenses by December 31, 2025. It also
would define nuclear sites with more than one nuclear facility
as a single facility for the purposes of determining the amount
of financial protection offered and premiums required under the
act.
CBO estimates that enacting S. 865 would have no direct
effect on the Federal budget primarily because any payments by
the Federal Government in connection with a nuclear accident
would require additional legislation. The Price-Anderson Act
provides a framework for liability coverage in the event of a
nuclear accident but does not automatically trigger any Federal
payments if a nuclear accident occurs. If damages resulting
from a nuclear accident exceed the liability coverage
established by the Price-Anderson Act (about $10.7 billion),
the act requires that the Congress determine how remaining
damages would be paid. Options could include additional
assessments on the nuclear industry or Federal appropriations.
These Price-Anderson Act provisions apply to both NRC licensees
and Department of Energy (DOE) contractors working at nuclear
facilities.
S. 865 contains an intergovernmental and private-sector
mandate as defined in the Unfunded Mandates Reform Act (UMRA),
but CBO estimates the costs of that mandate would not exceed
the thresholds for intergovernmental or private-sector entities
established in that act ($62 million and $123 million,
respectively, in 2005, adjusted annually for inflation).
Under current law, in the event that losses from a nuclear
incident exceed the required amount of private insurance, NRC
licensees (both public and private) are assessed a charge to
cover the shortfall in damage coverage. The bill would increase
the maximum annual premium from $10 million to $15 million.
Raising the maximum annual premium would increase the costs of
an existing mandate and would thereby impose an
intergovernmental and private-sector mandate under UMRA.
Because the probability of a nuclear accident resulting in
losses exceeding the amount of private insurance coverage is
low, CBO estimates that the annual costs for public and private
entities of complying with the mandate would probably not be
substantial over the next 5 years.
Estimate Prepared By: Federal Costs: Lisa Cash Driskill and
Jimin Chung; State and Local Impact: Lisa Ramirez-Branum;
Private-Sector Impact: Selena Caldera.
Estimate Approved By: Robert A. Sunshine, Assistant
Director for Budget Analysis.
Changes in Existing Law
In compliance with section 12 of rule XXVI of the Standing
Rules of the Senate, changes in existing law made by the bill
as reported are shown as follows: Existing law proposed to be
omitted is enclosed in [black brackets], new matter is printed
in italic, existing law in which no change is proposed is shown
in roman:
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ATOMIC ENERGY ACT OF 1954
* * * * * * *
CHAPTER 1. DECLARATION, FINDINGS, AND PURPOSE
Section 1. Declaration.--Atomic energy is capable of
application for peaceful as well as military purposes. It is
therefore declared to be the policy of the United States that--
a. * * *
* * * * * * *
Sec. 170. Indemnification and Limitation of Liability.--
a. * * *
* * * * * * *
b. Amount and Type of Financial Protection for Licensees.--
(1) The amount of primary financial protection required shall
be the amount of liability insurance available from private
sources, except that the Commission may establish a lesser
amount on the basis of criteria set forth in writing, which it
may revise from time to time, taking into consideration such
factors as the following: (A) the cost and terms of private
insurance, (B) the type, size, and location of the licensed
activity and other factors pertaining to the hazard, and (C)
the nature and purpose of the licensed activity: Provided, That
for facilities designed for producing substantial amounts of
electricity and having a rated capacity of 100,000 electrical
kilowatts or more, the amount of primary financial protection
required shall be the maximum amount available at reasonable
cost and on reasonable terms from private sources (excluding
the amount of private liability insurance available under the
industry retrospective rating plan required in this
subsection). Such primary financial protection may include
private insurance, private contractual indemnities, self-
insurance, other proof of financial responsibility, or a
combination of such measures and shall be subject to such terms
and conditions as the Commission may, by rule, regulation, or
order, prescribe. The Commission shall require licensees that
are required to have and maintain primary financial protection
equal to the maximum amount of liability insurance available
from private sources to maintain, in addition to such primary
financial protection, private liability insurance available
under an industry retrospective rating plan providing for
premium charges deferred in whole or major part until public
liability from a nuclear incident exceeds or appears likely to
exceed the level of the primary financial protection required
of the licensee involved in the nuclear incident: Provided,
That such insurance is available to, and required of, all of
the licensees of such facilities without regard to the manner
in which they obtain other types or amounts of such primary
financial protection: And provided further: That the maximum
amount of the standard deferred premium that may be charged a
licensee following any nuclear incident under such a plan shall
not be more than [$63,000,000] $95,800,000 (subject to
adjustment for inflation under subsection t.), but not more
than [$10,000,000 in any 1 year] $15,000,000 in any 1 year
(subject to adjustment for inflation under subsection t.), for
each facility for which such licensee is required to maintain
the maximum amount of primary financial protection: And
provided further, That the amount which may be charged a
licensee following any nuclear incident shall not exceed the
licensee's pro rata share of the aggregate public liability
claims and costs (excluding legal costs subject to subsection
o. (1)(D), payment of which has not been authorized under such
subsection) arising out of the nuclear incident. Payment of any
State premium taxes which may be applicable to any deferred
premium provided for in this Act shall be the responsibility of
the licensee and shall not be included in the retrospective
premium established by the Commission.
(2)(A) The Commission may, on a case by case basis,
assess annual deferred premium amounts less than the
standard annual deferred premium amount assessed under
paragraph (1)--
(i) for any facility, if more than
one nuclear incident occurs in any one
calendar year; or
(ii) for any licensee licensed to
operate more than one facility, if the
Commission determines that the
financial impact of assessing the
standard annual deferred premium amount
under paragraph (1) would result in
undue financial hardship to such
licensee or the ratepayers of such
licensee.
(B) In the event that the Commission
assesses a lesser annual deferred premium
amount under subparagraph (A), the Commission
shall require payment of the difference between
the standard annual deferred premium assessment
under paragraph (1) and any such lesser annual
deferred premium assessment within a reasonable
period of time, with interest at a rate
determined by the Secretary of the Treasury on
the basis of the current average market yield
on outstanding marketable obligations of the
United States of comparable maturities during
the month preceding the date that the standard
annual deferred premium assessment under
paragraph (1) would become due.
(3) The Commission shall establish such
requirements as are necessary to assure availability of
funds to meet any assessment of deferred premiums
within a reasonable time when due, and may provide
reinsurance or shall otherwise guarantee the payment of
such premiums in the event it appears that the amount
of such premiums will not be available on a timely
basis through the resources of private industry and
insurance. Any agreement by the Commission with a
licensee or indemnitor to guarantee the payment of
deferred premiums may contain such terms as the
Commission deems appropriate to carry out the purposes
of this section and to assure reimbursement to the
Commission for its payments made due to the failure of
such licensee or indemnitor to meet any of its
obligations arising under or in connection with
financial protection required under this subsection
including without limitation terms creating liens upon
the licensed facility and the revenues derived
therefrom or any other property or revenues of such
licensee to secure such reimbursement and consent to
the automatic revocation of any license.
(4)(A) In the event that the funds available to pay
valid claims in any year are insufficient as a result
of the limitation on the amount of deferred premiums
that may be required of a licensee in any year under
paragraph (1) or (2), or the Commission is required to
make reinsurance or guaranteed payments under paragraph
(3), the Commission shall, in order to advance the
necessary funds--
(i) request the Congress to
appropriate sufficient funds to satisfy
such payments; or
(ii) to the extent approved in
appropriation Acts, issue to the
Secretary of the Treasury obligations
in such forms and denominations,
bearing such maturities, and subject to
such terms and conditions as may be
agreed to by the Commission and the
Secretary of the Treasury.
(B) Except for funds appropriated for
purposes of making reinsurance or guaranteed
payments under paragraph (3), any funds
appropriated under subparagraph (a)(i) shall be
repaid to the general fund of the United States
Treasury from amounts made available by
standard deferred premium assessments, with
interest at a rate determined by the Secretary
of the Treasury on the basis of the current
average market yield on outstanding marketable
obligations of the United States of comparable
maturities during the month preceding the date
that the funds appropriated under such
subparagraph are made available.
(C) Except for funds appropriated for
purposes of making reinsurance or guaranteed
payments under paragraph (3), redemption of
obligations issued under subparagraph (A)(ii)
shall be made by the Commission from amounts
made available by standard deferred premium
assessments. Such obligations shall bear
interest at a rate determined by the Secretary
of the Treasury by taking into consideration
the average market yield on outstanding
marketable obligations to the United States of
comparable maturities during the months
preceding the issuance of the obligations under
this paragraph. The Secretary of the Treasury
shall purchase any issued obligations, and for
such purpose the Secretary of the Treasury may
use as a public debt transaction the proceeds
from the sale of any securities issued under
chapter 31 of title 31, United States Code, and
the purposes for which securities may be issued
under such chapter are extended to include any
purchase of such obligations. The Secretary of
the Treasury may at any time sell any of the
obligations acquired by the Secretary of the
Treasury under this paragraph. All redemptions,
purchases, and sales by the Secretary of the
Treasury of obligations under this paragraph
shall be treated as public debt transactions of
the United States.
(5)(A) For purposes of this section only, the
Commission shall consider a combination of facilities
described in subparagraph (B) to be a single facility
having a rated capacity of 100,000 electrical kilowatts
or more.
(B) A combination of facilities referred to in
subparagraph (A) is 2 or more facilities located at a
single site, each of which has a rated capacity of
100,000 electrical kilowatts or more but not more than
300,000 electrical kilowatts, with a combined rated
capacity of not more than 1,300,000 electrical
kilowatts.
c. Indemnification of [Licenses] Licensees by Nuclear
Regulatory Commission.--The Commission shall, with respect to
licenses issued between August 30, 1954, and [December 31,
2003] December 31, 2025, for which it requires financial
protection of less than $560,000,000, agree to indemnify and
hold harmless the licensee and other persons indemnified, as
their interest may appear, from public liability arising from
nuclear incidents which is in excess of the level of financial
protection required of the licensee. The aggregate indemnity
for all persons indemnified in connection with each nuclear
incident shall not exceed $500,000,000, excluding costs of
investigating and settling claims and defending suits for
damage: Provided, however, That this amount of indemnity shall
be reduced by the amount that the financial protection required
shall exceed $60,000,000. Such a contract of indemnification
shall cover public liability arising out of or in connection
with the licensed activity. With respect to any production or
utilization facility for which a construction permit is issued
between August 30, 1954, and [December 31, 2003] December 31,
2025, the requirements of this subsection shall apply to any
license issued for such facility subsequent to [December 31,
2003] December 31, 2025.
* * * * * * *
p. Reports to Congress.--The Commission and the Secretary
shall submit to the Congress by [August 1, 1998] August 1,
2023, detailed reports concerning the need for continuation or
modification of the provisions of this section, taking into
account the condition of the nuclear industry, availability of
private insurance, and the state of knowledge concerning
nuclear safety at that time, among other relevant factors, and
shall include recommendations as to the repeal or modification
of any of the provisions of this section.
* * * * * * *
t. Inflation Adjustment.--(1) The Commission shall adjust
the amount of the maximum total and annual standard deferred
premium under subsection b. (1) not less than once during each
5-year period following [the date of the enactment of the
Price-Anderson Amendments Act of 1988] August 1, 2004, in
accordance with the aggregate percentage change in the Consumer
Price Index since--
(A) [such date of enactment] August 1,
2004, in the case of the first adjustment under
this subsection; or
(B) the previous adjustment under this
subsection.
* * * * * * *