[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:
                              ----------                              

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:
                              ----------                              


ATOMIC ENERGY ACT OF 1954

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             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.

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