B-197742 L/M, MAR 7, 1980

B-197742 L/M, MAR 7, 1980

SUBJECT: INTERPRETATION OF PRICE-ANDERSON ACT (CODE 301548; FILE B-197742)

MANAGEMENT ANALYST, PHILADELPHIA R.O. - DAVE PASQUERELLO:

IN RESPONSE TO YOUR REQUEST, WE HAVE EXAMINED THE PRICE-ANDERSON ACT, WHICH AMENDED THE ATOMIC ENERGY ACT, AND ITS LEGISLATIVE HISTORY. THE PURPOSE OF THIS ACT IS TO PROTECT THE PUBLIC AND THE NUCLEAR INDUSTRY BY ASSURING THE AVAILABILITY OF FUNDS FOR THE PAYMENT OF CLAIMS AND BY LIMITING THE LIABILITY OF THE NUCLEAR INDUSTRY IN THE EVENT OF AN ACCIDENT. H. R. REP. NO. 94-648, 1 (1975).

SHORT ANSWERS TO YOUR QUESTIONS FOLLOW. A MORE DETAILED ANALYSIS IS ATTACHED.

QUESTION 1: WHAT ARE THE CONGRESSIONAL COMMITMENTS WHEN THE LIABILITY DUE TO A NUCLEAR INCIDENT EXCEEDS $560 MILLION?

ANSWER: CONGRESS IS COMMITTED TO REVIEW THE INCIDENT AND TAKE WHATEVER ACTION IT DEEMS NECESSARY TO PROTECT THE PUBLIC. 42 U.S.C. SEC. 2210(E) (1976).

QUESTION 2: HOW ARE ATTORNEY'S FEES HANDLED UNDER THE ACT?

(A) WILL A UTILITY'S ATTORNEY'S FEES AND OTHER LEGAL EXPENSES BE CONSIDERED IN DETERMINING IF THE LIABILITY LIMITATION HAS BEEN REACHED?

(B) WILL CLAIMANTS' ATTORNEYS RECEIVE THE BULK OF DAMAGE AWARDS UNDER PRICE-ANDERSON?

ANSWERS:

(A) ATTORNEY'S FEES AND OTHER LEGAL EXPENSES SHOULD BE CONSIDERED IN DETERMINING THE AGGREGATE LIABILITY. 42 U.S.C. SEC. 2210(E) (1976).

(B) GENERALLY, AN ATTORNEY'S COMPENSATION IS SUBJECT TO AGREEMENT BETWEEN THE ATTORNEY AND HIS CLIENT. IT IS DOUBTFUL THAT ATTORNEYS WILL RECEIVE THE "BULK" OF THE MONEY AVAILABLE UNDER THE ACT.

QUESTION 3: WHAT DAMAGES ARE COVERED BY THE ACT? WHAT DAMAGES ARE EXCLUDED?

ANSWER: THE ACT COVERS "PUBLIC LIABILITY CLAIMS." 42 U.S.C. SEC. 2210(A) (1976). THIS INCLUDES ANY LEGAL LIABILITY ARISING OUT OF OR RESULTING FROM A NUCLEAR INCIDENT EXCEPT CLAIMS UNDER STATE OR FEDERAL WORKMEN'S COMPENSATION ACTS OF EMPLOYEES OF PERSONS INDEMNIFIED WHO ARE EMPLOYED AT THE SITE OF AND IN CONNECTION WITH THE ACTIVITY WHERE THE INCIDENT OCCURRED; CLAIMS ARISING OUT OF AN ACT OF WAR; AND CLAIMS FOR LOSS OF, OR DAMAGE TO, OR LOSS OF USE OF PROPERTY WHICH IS LOCATED AT THE SITE OF AND USED IN CONNECTION WITH THE LICENSED ACTIVITY WHERE THE INCIDENT OCCURRED. 42 U.S.C. SEC. 2014(W) (1976).

QUESTION 4: HOW ARE FUNDS DISTRIBUTED UNDER THE ACT?

ANSWER: THE ACT DOES NOT SPECIFY ANY PARTICULAR PROCEDURE FOR THE DISTRIBUTION OF FUNDS. UNLESS IT IS DETERMINED THAT PUBLIC LIABILITY FROM THE INCIDENT WILL EXCEED THE STATUTORY LIMITATION, NUCLEAR REGULATORY COMMISSION WILL DEVELOP A DISTRIBUTION MECHANISM. 42 U.S.C. SEC. 2210(M) (1976). OTHERWISE, FUNDS WILL BE DISTRIBUTED IN ACCORDANCE WITH A COURT- APPROVED PLAN. 42 U.S.C. SEC. 2210(O) (1976).

QUESTION 5: DOES THE ACT'S COVERAGE INCLUDE LIABILITY FOR PUNITIVE DAMAGES?

ANSWER: YES. THE ACT COVERS ANY LIABILITY ARISING OUT OF OR RESULTING FROM A NUCLEAR INCIDENT.

QUESTION 6: ARE THERE OTHER DISASTER RELIEF PROGRAMS WHICH WOULD PROVIDE ASSISTANCE TO THE VICTIMS OF A NUCLEAR ACCIDENT?

ANSWER: YES. ALL OTHER FEDERAL RESOURCES, EXCEPT MONETARY COMPENSATION, ARE AVAILABLE. THE DISASTER RELIEF ACT OF 1974 WOULD BE THE PRIMARY SOURCE OF ADDITIONAL ASSISTANCE.

QUESTION 7: HOW DOES THE ACT DEFINE "EXTRAORDINARY NUCLEAR OCCURRENCE"?

ANSWER: AN "EXTRAORDINARY NUCLEAR OCCURRENCE" IS

"ANY EVENT CAUSING A DISCHARGE OR DISPERSAL OF SOURCE, SPECIAL NUCLEAR, OR BYPRODUCT MATERIAL FROM ITS INTENDED PLACE OF CONFINEMENT IN AMOUNTS OFFSITE, OR CAUSING RADIATION LEVELS OFFSITE, WHICH THE NUCLEAR REGULATORY COMMISSION DETERMINES TO BE SUBSTANTIAL, AND WHICH THE COMMISSION DETERMINES HAS RESULTED OR WILL PROBABLY RESULT IN SUBSTANTIAL DAMAGES TO PERSONS OFFSITE OR PROPERTY OFFSITE." 42 U.S.C. SEC. 2014(J) (1976).

ATTACHMENT

INTERPRETATION OF PRICE - ANDERSON ACT

DIGESTS:

1. PURPOSE OF PRICE-ANDERSON ACT IS TO PROTECT PUBLIC AND NUCLEAR INDUSTRY BY ASSURING AVAILABILITY OF FUNDS FOR PAYMENT OF CLAIMS AND BY LIMITING LIABILITY OF NUCLEAR INDUSTRY IN EVENT OF ACCIDENT. WITH THREE EXCEPTIONS, ACT WILL COVER ANY LEGAL LIABILITY, INCLUDING LIABILITY FOR PUNITIVE DAMAGES, ARISING OUT OF OR RESULTING FROM NUCLEAR ACCIDENT. WHEN LIABILITY DUE TO NUCLEAR INCIDENT EXCEEDS $560 MILLION, CONGRESS HAS AGREED TO REVIEW INCIDENT AND TAKE WHATEVER ACTION IT DEEMS NECESSARY TO PROTECT PUBLIC. UNLESS IT IS DETERMINED THAT PUBLIC LIABILITY FROM NUCLEAR ACCIDENT WILL EXCEED STATUTORY LIMITATION, NRC WILL DEVELOP MECHANISM FOR DISTRIBUTING FUNDS TO VICTIMS; IF LIABILITY WILL EXCEED LIMITATION, FUNDS WILL BE DISTRIBUTED IN ACCORDANCE WITH COURT-APPROVED PLAN.

2. UTILITY'S ATTORNEY'S FEES AND OTHER LEGAL EXPENSES SHOULD BE CONSIDERED IN CALCULATING AGGREGATE LIABILITY FOR NUCLEAR ACCIDENT UNDER PRICE-ANDERSON ACT; HOWEVER, FEDERAL GOVERNMENT WILL NOT INDEMNIFY UTILITY FOR THESE EXPENSES.

BACKGROUND

IN THE EARLY 1950'S, THE FEDERAL GOVERNMENT BEGAN PROMOTING PEACEFUL USES OF ATOMIC ENERGY; PRIVATE, COMMERCIAL DEVELOPMENT OF NUCLEAR POWER WAS ENCOURAGED. HOWEVER, PRIVATE INDUSTRY WAS RELUCTANT TO BECOME INVOLVED. WHILE ALL OF THE STUDIES OF THAT TIME INDICATED THAT THE CHANCES OF A MAJOR NUCLEAR ACCIDENT WERE SMALL, THE LIABILITY THAT COULD ARISE IF A MAJOR ACCIDENT DID OCCUR ACTED AS A DETERRENT TO THE CONSTRUCTION AND OPERATION OF NUCLEAR POWER REACTORS. H. R. REP. NO. 435, 85TH CONG., 1ST SESS. 1 (1957). FURTHERMORE, A LACK OF ACTUARIAL EXPERIENCE LIMITED THE AMOUNT OF INSURANCE AVAILABLE. GREEN, ENERGY LAW SERVICE, MONOGRAPH 6C, SEC. 6C.01 (SEPTEMBER, 1979). THE MAGNITUDE OF POTENTIAL LIABILITY AND THE LACK OF INSURANCE COMBINED TO DISCOURAGE THE PRIVATE DEVELOPMENT AND USE OF NUCLEAR POWER.

THE PRICE-ANDERSON ACT WAS PASSED IN 1957 TO STIMULATE THIS DEVELOPMENT. THE ACT WAS DESIGNED TO PROTECT BOTH THE NUCLEAR INDUSTRY, BY LIMITING ITS POTENTIAL LIABILITY, AND THE PUBLIC, BY ASSURING THE AVAILABILITY OF FUNDS FOR THE PAYMENT OF CLAIMS. THE ACT LIMITS THE AGGREGATE LIABILITY IN A NUCLEAR INCIDENT TO A MAXIMUM OF $560 MILLION AND PROVIDES FOR GOVERNMENT INDEMNITY OF THE DIFFERENCE BETWEEN $560 MILLION AND THE AMOUNT OF PRIVATE INSURANCE AVAILABLE. 42 U.S.C. SECS. 2210(C), (E) (1976). IN THE EVENT THAT AN INCIDENT RESULTS IN DAMAGES IN EXCESS OF $560 MILLION, CONGRESS AGREED TO REVIEW THE INCIDENT AND TAKE WHATEVER ACTION IT DEEMS NECESSARY TO PROTECT THE PUBLIC. 42 U.S.C. SEC. 2210(E) (1976).

THE CONSTITUTIONALITY OF THE ACT'S LIMIT ON LIABILITY WAS UPHELD BY THE SUPREME COURT IN 1978. DUKE POWER CO. V. CAROLINA ENVIRONMENTAL STUDY GROUP, INC., 438 U.S. 59 (1978). THE COURT CONCLUDED THAT "LIMITING LIABILITY IS AN ACCEPTABLE METHOD FOR CONGRESS TO UTILIZE IN ENCOURAGING THE PRIVATE DEVELOPMENT OF ELECTRIC ENERGY BY ATOMIC POWER ***" ID. AT 86. WHILE IT RECOGNIZED THAT THE $560 MILLION FIGURE WAS ARBITRARY IN A SENSE, THE COURT STATED THAT "THIS IS NOT *** THE KIND OF ARBITRARINESS WHICH FLAWS OTHERWISE CONSTITITIONAL ACTION." ID. THE COURT VIEWED THE EXPRESS STATUTORY COMMITMENT TO TAKE FURTHER ACTION IF DAMAGES EXCEEDED $560 MILLION TO BE FAIR AND REASONABLE. ID. AT 90-91.

QUESTION 1: WHAT ARE THE CONGRESSIONAL COMMITMENTS WHEN THE LIABILITY DUE TO A NUCLEAR INCIDENT EXCEEDS $560 MILLION?

ANSWER: CONGRESS OBLIGATED ITSELF ONLY TO REVIEW THE INCIDENT:

"IN THE EVENT OF A NUCLEAR INCIDENT INVOLVING DAMAGES IN EXCESS OF THAT AMOUNT OF AGGREGATE LIABILITY (A MAXIMUM OF $560 MILLION), THE CONGRESS WILL THOROUGHLY REVIEW THE PARTICULAR INCIDENT AND WILL TAKE WHATEVER ACTION IS DEEMED NECESSARY AND APPROPRIATE TO PROTECT THE PUBLIC FROM THE CONSEQUENCES OF A DISASTER OF SUCH MAGNITUDE ***" 42 U.S.C. SEC. 2210(E) (1976).

THERE IS NO COMMITMENT TO APPROPRIATE FUNDS TO COMPENSATE VICTIMS OR TO PROVIDE OTHER FORMS OF ASSISTANCE. THUS, IT IS DIFFICULT TO SPECULATE WHAT ACTION, IF ANY, WOULD BE TAKEN IN SUCH AN EVENT. HOWEVER, IT SEEMS LIKELY THAT CONGRESS WOULD GIVE SERIOUS CONSIDERATION TO THE SITUATION AND THE NEED FOR ADDITIONAL ASSISTANCE (FN1).

THE $560 MILLION FIGURE WAS NOT INTENDED TO GUARANTEE FULL COMPENSATION IN THE EVENT OF A NUCLEAR INCIDENT. AS THE SUPREME COURT POINTED OUT, THE FIGURE WAS TO BE A "STARTING POINT" FOR CONSIDERATION OF FURTHER RELIEF. DUKE POWER CO. AT 85. THE COURT FORESAW CONGRESS ENACTING EXTRAORDINARY RELIEF PROVISIONS TO PROVIDE ADDITIONAL RELIEF IN THE EVENT OF A NUCLEAR INCIDENT INVOLVING CLAIMS IN EXCESS OF $560 MILLION. ID. (FN2)

CONGRESSIONAL REVIEW OF A NUCLEAR INCIDENT WOULD BEGIN WHEN IT SEEMS LIKELY THAT CLAIMS RESULTING FROM THE INCIDENT WILL EXCEED $560 MILLION. THE ACT DOES NOT INDICATE WHO WOULD INITIATE THE REVIEW. IT SPEAKS ONLY OF A NUCLEAR INCIDENT "WHICH WILL PROBABLY RESULT IN PUBLIC LIABILITY CLAIMS IN EXCESS OF $560,000,000." 42 U.S.C. SEC. 2210(I) (1976). SINCE THE NUCLEAR REGULATORY COMMISSION (NRC) IS DIRECTED TO SURVEY THE CAUSES OF THE INCIDENT AND THE EXTENT OF DAMAGE, NRC MUST MONITOR THE SITUATION. THUS, WHEN NRC DETERMINES THAT DAMAGES WILL PROBABLY EXCEED $560 MILLION, IT WILL INITIATE CONGRESSIONAL REVIEW BY REPORTING THE CAUSES AND EXTENT OF DAMAGES TO THE APPROPRIATE CONGRESSIONAL COMMITTEES, (FN3) TO THE CONGRESSMEN OF THE AFFECTED DISTRICTS, AND TO THE SENATORS OF THE AFFECTED STATES. THE REPORT WOULD PROBABLY BECOME THE BASIS FOR HEARINGS AND DEBATES AS TO WHETHER OR NOT FURTHER ASSISTANCE SHOULD BE PROVIDED. SEE 121 CONG. REC. 39079 (1975) (REMARKS OF CONG. PRICE).

QUESTION 2: HOW ARE ATTORNEY'S FEES HANDLED UNDER THE ACT?

(A) WILL A UTILITY'S ATTORNEY'S FEES AND OTHER LEGAL EXPENSES BE CONSIDERED IN DETERMINING IF THE LIABILITY LIMITATION HAS BEEN REACHED?

(B) WILL CLAIMANTS' ATTORNEYS RECEIVE THE BULK OF DAMAGE AWARDS UNDER PRICE-ANDERSON?

ANSWERS:

(A) AS THE STATUTE IS PRESENTLY WRITTEN, LEGAL EXPENSES WILL PROBABLY BE TAKEN INTO ACCOUNT IN COMPUTING WHETHER THE AGGREGATE LIABILITY HAS EXCEEDED THE STATUTORY LIMITATION.

THE ACT SPECIFICALLY EXCLUDES THE COSTS OF INVESTIGATING AND SETTLING CLAIMS AND DEFENDING DAMAGE SUITS FROM THE AGGREGATE INDEMNITY FOR ALL PERSONS INDEMNIFIED IN CONNECTION WITH EACH NUCLEAR INCIDENT. 42 U.S.C. SECS. 2210(C),(D),(H), (K)(1), (1) (1976). HOWEVER, AT THE SAME TIME THE ACT SPECIFICALLY INCLUDES "THE REASONABLE COSTS OF INVESTIGATING AND SETTLING CLAIMS AND DEFENDING SUITS FOR DAMAGE" IN THE AGGREGATE LIABILITY FOR A SINGLE NUCLEAR INCIDENT. 42 U.S.C. SEC. 2210(E) (1976).

CLEARLY, LEGAL FEES ARE TREATED DIFFERENTLY IN DETERMINING THE AMOUNT OF INDEMNITY THAN IN DETERMINING THE AMOUNT OF LIABILITY. IT IS DIFFICULT TO ASCERTAIN WHETHER THIS DIFFERENT TREATMENT WAS INTENDED. IN 1975, SENATOR HATHAWAY INTRODUCED AN AMENDMENT TO "STRIKE FROM THE BILL (THE ACT) THE SECTIONS WHICH INCLUDE THE COSTS OF INVESTIGATION, SETTLEMENT, AND DEFENSE OF CLAIMS FROM THE OVERALL LIABILITY LIMIT." 121 CONG. REC. 40966 (1975). HIS INTENT WAS TO MAKE CLEAR THAT THESE COSTS SHOULD NOT REDUCE THE AMOUNT OF MONEY MADE AVAILABLE FOR COMPENSATING VICTIMS:

"QUITE SIMPLY, WHAT THIS AMENDMENT DOES IS TO REQUIRE THAT THE ENTIRE RESOURCES OF THE $560 MILLION FUND - OR WHATEVER LIMIT IS ESTABLISHED THROUGH THE RETROSPECTIVE PREMIUM SYSTEM - BE USED ONLY FOR THE PURPOSE OF COMPENSATING PEOPLE WHO ARE INJURED OR SUSTAIN DAMAGES AS A RESULT OF A NUCLEAR ACCIDENT." ID.

SENATOR HATHAWAY FURTHER EXPLAINED, "MY AMENDMENT SPECIFICALLY EXCLUDES THESE COSTS FROM ANY DETERMINATION AS TO WHEN THE OVERALL LIABILITY LIMITATION HAS BEEN REACHED." ID. SENATOR BAKER, IN AN ATTEMPT TO CLARIFY THE MEANING OF THE AMENDMENT, STATED THAT "THE COST OF THE INVESTIGATION ORDINARILY IS CHARGED AGAINST THAT INSURANCE BEFORE IT EVER GETS TO THE INDEMNITY SIDE. IS THERE ANYTHING IN THIS AMENDMENT THAT CHANGES THAT RELATIONSHIP?" SENATOR HATHAWAY RESPONDED, "NO." ID. AT 40967. THE AMENDMENT PASSED. ID. THOSE SECTIONS OF THE ACT DEFINING THE AMOUNT OF INDEMNITY AVAILABLE WERE CHANGED; THE SECTION FIXING A MAXIMUM AMOUNT OF LIABILITY WAS NOT.

THEREFORE, THE ACT MUST BE INTERPRETED AS FOLLOWS: THE GOVERNMENT WILL NOT INDEMNIFY A PERSON FOR HIS LEGAL EXPENSES; THE USE OF PRIVATE INSURANCE MONEY TO PAY LEGAL EXPENSES IS SUBJECT TO THE AGREEMENT BETWEEN THE INSURED AND THE INSURER; (FN4) THE COSTS OF INVESTIGATING AND SETTLING CLAIMS AND DEFENDING DAMAGE SUITS WILL BE INCLUDED IN CALCULATIONS TO DETERMINE IF THE STATUTORY $560 MILLION LIMITATION ON LIABILITY HAS BEEN REACHED, PRESUMABLY BECAUSE, AS SENATOR BAKER POINTED OUT, THESE COSTS ARE CHARGED AGAINST THE INSURANCE AND THE AMOUNT OF INSURANCE MONEY AVAILABLE IS A FACTOR IN DETERMINING THE AGGREGATE LIABILITY.

(B) GENERALLY, UNLESS A STATUTE LIMITS THE FEE AN ATTORNEY CAN RECEIVE FOR PROSECUTING A CLAIM UNDER THE STATUTE, AN ATTORNEY'S COMPENSATION IS SUBJECT TO AGREEMENT BETWEEN THE ATTORNEY AND HIS CLIENT. IN THE ABSENCE OF AN EXPRESS AGREEMENT AS TO THE AMOUNT OF COMPENSATION, AN ATTORNEY IS ENTITLED TO A "REASONABLE" AMOUNT. THE PRICE-ANDERSON ACT DOES NOT IMPOSE ANY LIMITATION ON ATTORNEY'S FEES. THUS, WE CANNOT PREDICT WHAT PERCENTAGE OF DAMAGE AWARDS MADE UNDER THE ACT WILL BE USED BY CLAIMANTS TO PAY FOR LEGAL SERVICES. HOWEVER, WE HAVE NO REASON TO ANTICIPATE THAT THE "BULK" OF AWARDS WOULD BE CONSUMED BY ATTORNEY FEES. QUESTION 3: WHAT DAMAGES ARE COVERED BY THE ACT? WHAT DAMAGES ARE EXCLUDED? WHAT IS THE RATIONALE FOR THE EXCLUSION?

ANSWER: THE ACT REQUIRES LICENSEES TO MAINTAIN FINANCIAL PROTECTION TO COVER PUBLIC LIABILITY CLAIMS. 42 U.S.C. SEC. 2210(A) (1976). "PUBLIC LIABILITY" IS DEFINED AS ANY LEGAL LIABILITY, WITH THREE EXCEPTIONS, ARISING OUT OF OR RESULTING FROM A NUCLEAR INCIDENT. 42 U.S.C. SEC. 2014(W) (1976). THE FOLLOWING CLAIMS WOULD NOT BE COVERED BY THE FINANCIAL PROTECTION REQUIRED BY THE ACT: (1) CLAIMS UNDER STATE OR FEDERAL WORKMEN'S COMPENSATION ACTS BY EMPLOYEES OF PERSONS INDEMNIFIED WHO ARE EMPLOYED AT THE SITE OF AND IN CONNECTION WITH THE ACTIVITY WHERE THE NUCLEAR INCIDENT OCCURS;

(2) CLAIMS ARISING OUT OF AN ACT OF WAR; AND

(3) CLAIMS FOR LOSS OF, OR DAMAGE TO, OR LOSS OF USE OF PROPERTY WHICH IS LOCATED AT THE SITE OF AND USED IN CONNECTION WITH THE LICENSED ACTIVITY WHERE THE NUCLEAR INCIDENT OCCURS.

DAMAGE TO OTHER PROPERTY OWNED BY PERSONS INDEMNIFIED IS COVERED IF THAT PROPERTY IS COVERED BY THE TERMS OF THE PRIVATE INSURANCE WHICH THE PERSON INDEMNIFIED IS REQUIRED TO MAINTAIN.

WORKMEN'S COMPENSATION CLAIMS OF EMPLOYEES WORKING AT THE SITE OF THE INCIDENT AND IN CONNECTION WITH THE ACTIVITY WHERE THE INCIDENT OCCURS ARE EXCLUDED BECAUSE THE INSURANCE CARRIERS WHO PAY THE WORKMEN'S COMPENSATION FOR THESE PEOPLE ARE PRESUMED TO KNOW AND UNDERSTAND THE RISKS THEY ARE TAKING IN PROVIDING THIS INSURANCE AND TO FIX INSURANCE CHARGES WITH THESE RISKS IN MIND. H. R. REP. NO. 435, 85TH CONG., 1ST SESS. 18 (1957). THE WORKMEN'S COMPENSATION PREMIUMS FOR EMPLOYEES NOT WORKING IN CONNECTION WITH THE ACTIVITY DO NOT INCLUDE A CHARGE FOR SPECIAL PROTECTION. THEIR CLAIMS COULD BE PAID FROM THE INDEMNITY.

DAMAGES TO PROPERTY LOCATED AT THE SITE OF THE INCIDENT AND USED IN CONNECTION WITH THE ACTIVITY WHERE THE INCIDENT OCCURRED ARE EXCLUDED FOR SIMILAR REASONS. OTHER PROPERTY OWNED BY THE COMPANY BUT LOCATED OFF THE SITE WHERE THE INCIDENT OCCURRED IS INCLUDED AS PROPERTY TO WHICH THE INDEMNITY WOULD BE APPLIED.

DAMAGES CAUSED BY WAR, EVEN AN UNDECLARED WAR, ARE ALSO EXCLUDED FROM COVERAGE. THE JOINT COMMITTEE ON ATOMIC ENERGY, EXPLAINING THIS EXCEPTION, REASONED THAT "IN THE EVENT OF WAR THE DAMAGES WOULD BE SO GREAT AND THE TASK OF PROVING CAUSATION SO DIFFICULT THAT FURTHER CONGRESSIONAL STUDY WOULD BE NEEDED." ID. ACTS OF SABOTAGE WHICH ARE SHOWN NOT TO BE ACTS OF WAR, ARE COVERED. ID.

QUESTION 4: DOES THE ACT'S COVERAGE INCLUDE LIABILITY FOR PUNITIVE DAMAGES?

ANSWER: YES. ALTHOUGH THE ACT DOES NOT SPECIFICALLY ADDRESS COVERAGE OF PUNITIVE DAMAGES, IT REQUIRES NRC LICENSEES TO MAINTAIN A CERTAIN LEVEL OF FINANCIAL PROTECTION TO COVER PUBLIC LIABILITY CLAIMS. 42 U.S.C. SEC. 2210(A) (1976). THE DEFINITION OF "PUBLIC LIABILITY" - "ANY LEGAL LIABILITY ARISING OUT OF OR RESULTING FROM A NUCLEAR INCIDENT" - NEITHER EXPRESSLY NOR IMPLIEDLY EXEMPTS PUNITIVE DAMAGES FROM COVERAGE. 42 U.S.C. SEC. 2014(W) (1976). FURTHERMORE, IN FIXING THE AMOUNT OF AGGREGATE LIABILITY FOR A SINGLE NUCLEAR INCIDENT, THE ACT DOES NOT EXCLUDE PUNITIVE DAMAGES. THUS, IT SEEMS THAT THE ACT'S COVERAGE INCLUDES LIABILITY FOR PUNITIVE DAMAGES (FN5).

BASICALLY, THE DETERMINATION OF LIABILITY FOR A NUCLEAR ACCIDENT IS TO BE MADE IN ACCORDANCE WITH STATE TORT LAW. (FN6) THE ACT DOES NOT CREATE ANY CAUSE OF ACTION; IT MERELY LIMITS THE AMOUNT OF DAMAGES A PERSON MUST PAY ONCE LIABILITY HAS BEEN ESTABLISHED.

ONE OF THE PRINCIPLES LISTED BY THE JOINT COMMITTEE ON ATOMIC ENERGY AS A GUIDELINE IN DRAFTING THE LEGISLATION WAS THE DESIRE TO MINIMIZE INTERFERENCE WITH STATE TORT LAW:

"SINCE THE RIGHTS OF THIRD PARTIES WHO ARE INJURED ARE ESTABLISHED BY STATE LAW, THERE IS NO INTERFERENCE WITH THE STATE LAW UNTIL THERE IS A LIKELIHOOD THAT THE DAMAGES EXCEED THE AMOUNT OF FINANCIAL RESPONSIBILITY REQUIRED TOGETHER WITH THE AMOUNT OF THE INDEMNITY." H. R. REP. NO. 435 AT 9.

AT THAT TIME, THE U. S. DISTRICT COURT IN THE DISTRICT WHERE THE INCIDENT OCCURRED, UPON PETITION OF AN INDEMNITOR OR OTHER INTERESTED PERSON, CAN DECLARE LIABILITY LIMITED AND STAY THE PAYMENT OF CLAIMS. ID. AT 22. THIS PROCEDURE, INTERFERENCE WITH THE OPERATION OF STATE TORT LAW IN DETERMINING LIABILITY CAN BE AVOIDED. ID. THE ACT WOULD NOT COME INTO PLAY UNTIL LIABILITY HAS BEEN FIXED. THEN, THE ACT WOULD LIMIT THE AMOUNT OF LIABILITY.

THUS, PUNITIVE DAMAGES COULD BE AWARDED IF SUCH AN AWARD IS APPROPRIATE UNDER THE STATE'S TORT LAW. BUT, THIS AWARD IS SUBJECT TO THE ACT'S LIMITATION ON LIABILITY. AN AWARD OF PUNITIVE DAMAGES DOES NOT SUPPLEMENT THE MONEY AVAILABLE UNDER THE ACT (FN7).

QUESTION 5: HOW ARE FUNDS DISTRIBUTED UNDER THE ACT? IS THERE A MECHANISM FOR RAPID DISTRIBUTION OF FUNDS? IS THERE A MECHANISM FOR EMERGENCY DISTRIBUTION OF FUNDS?

ANSWER: THE ACT DOES NOT SPECIFY ANY PARTICULAR PROCEDURE FOR THE DISTRIBUTION OF FUNDS TO CLAIMANTS, ALTHOUGH IT DOES PROVIDE SOME DIRECTION.

GENERALLY, THE ACT LEAVES THE DEVELOPMENT OF A DISTRIBUTION MECHANISM TO NRC: "THE COMMISSION IS AUTHORIZED TO ENTER INTO AGREEMENTS WITH OTHER INDEMNITORS TO ESTABLISH COORDINATED PROCEDURES FOR THE PROMPT HANDLING, INVESTIGATION, AND SETTLEMENT OF CLAIMS FOR PUBLIC LIABILITY." 42 U.S.C. SEC. 2210(M) (1976). NRC IS ALSO AUTHORIZED TO USE ITS APPROPRIATIONS TO PROVIDE EMERGENCY ASSISTANCE TO CLAIMANTS. ID. THESE PAYMENTS CAN BE MADE PRIOR TO A DETERMINATION OF INJURY AND THE FIXING OF DAMAGES, AND THEY ARE NOT CONTINGENT ON A RELEASE SIGNED BY THE VICTIM. SEE DUKE POWER CO. AT 92 N. 38. THIS AUTHORITY TO MAKE EMERGENCY ASSISTANCE PAYMENTS IS TO BE EXERCISED AT NRC'S DISCRETION.

HOWEVER, WHEN IT IS DETERMINED THAT THE PUBLIC LIABILITY FROM A SINGLE INCIDENT MIGHT EXCEED THE LIMIT OF LIABILITY, THE U. S. DISTRICT COURT IN THE DISTRICT WHERE THE INCIDENT OCCURRED WILL ESTABLISH A PROCEDURE FOR DISTRIBUTING FUNDS. 42 U.S.C. SEC. 2210(O) (1976). NO MORE THAN 15 PERCENT OF THE TOTAL AVAILABLE CAN BE PAID PENDING COURT APPROVAL OF A DISTRIBUTION PLAN. ID. THE DISTRIBUTION OF THE REMAINING FUNDS SHOULD BE MADE IN ACCORDANCE WITH A PLAN ALLOCATING AMOUNTS FOR "PERSONAL INJURY CLAIMS, PROPERTY DAMAGE CLAIMS, AND POSSIBLE LATENT INJURY CLAIMS WHICH MAY NOT BE DISCOVERED UNTIL A LATER TIME." ID. THE COURT WILL ESTABLISH PRIORITIES AMONG CLAIMS AND DETERMINE THE PROPORTIONATE SHARE OF FUNDS AVAILABLE FOR EACH CLAIMANT. ID. THE PLAN SHOULD COMPENSATE THE MOST SEVERE AND MOST READILY COMPUTABLE COSTS FIRST. THE JOINT COMMITTEE ON ATOMIC ENERGY ENVISIONED THAT "CLAIMS FOR ACTUAL LOSSES TO PROPERTY, FOR ACTUAL AND REASONABLE MEDICAL EXPENSES, FOR LOSS OF WAGES, AND OTHER SUCH LOSSES" WOULD MERIT HIGHER PRIORITY THAN "SUCH CLAIMS AS THOSE FOR ALLEGED PAIN AND SUFFERING, EMOTIONAL HARM AND LOSS OF CONSORTIUM." H. R. REP. NO. 648 AT 14. THE COMMITTEE EXPLAINED ITS INTERPRETATION FURTHER SAYING THAT "IN CASES WHERE LESS THAN FULL COMPENSATION WILL BE MADE THROUGH THE AMOUNTS IMMEDIATELY AVAILABLE FROM INSURANCE AND GOVERNMENT INDEMNITY, LOSSES TO OFFSITE PROPERTY OF THE LICENSEE OF THE RESPONSIBLE FACILITY SHOULD BE ACCORDED LOWER PRIORITY THAN LOSSES TO THIRD PARTIES." ID. AT 15.

THE SUPREME COURT RECOGNIZED THAT SUCH A PROCEDURE WOULD RESULT IN SOME DELAY, BUT VIEWED IT AS EQUITABLE:

"THE STATUTORY SCHEME INSURES THE EQUITABLE DISTRIBUTION OF BENEFITS TO ALL WHO SUFFER INJURY - BOTH IMMEDIATE AND LATENT; UNDER THE COMMON LAW ROUTE, THE PROVERBIAL RACE TO THE COURTHOUSE WOULD INSTEAD DETERMINE WHO HAD 'FIRST CRACK' AT THE DIMINISHING RESOURCES OF THE TORTFEASOR (E.G., A UTILITY), AND FAIRNESS COULD WELL BE SACRIFICED IN THE PROCESS." DUKE POWER CO. AT 92.

QUESTION 6: ARE THERE OTHER DISASTER RELIEF PROGRAMS WHICH WOULD PROVIDE ASSISTANCE TO THE VICTIMS OF A NUCLEAR ACCIDENT?

ANSWER: YES. "THE PANOPLY OF FEDERAL RESOURCES, OTHER THAN MONETARY COMPENSATION, IS AVAILABLE IN THE EVENT OF A LARGE-SCALE NUCLEAR ACCIDENT, JUST AS IT WOULD BE IN CASE OF NATURAL DISASTERS." H. R. REP. NO. 648 AT 17.

THE DISASTER RELIEF ACT OF 1974 WOULD BE THE PRIMARY SOURCE FOR ADDITIONAL ASSISTANCE. 42 U.S.C. SECS. 3231-3236, 5121-5202 (1976). WHILE THE MAJOR FOCUS OF THE ACT IS TO PROVIDE ASSISTANCE IN THE EVENT OF A NATURAL DISASTER, ASSISTANCE CAN ALSO BE PROVIDED FOR FIRES, EXPLOSIONS OR "OTHER" CATASTROPHES. 42 U.S.C. SECS. 5122(1),(2) (1976).

THE DISASTER RELIEF ACT AUTHORIZES THE FOLLOWING FORMS OF ASSISTANCE TO BOTH COMMUNITIES AND INDIVIDUALS: REPAIR, RECONSTRUCTION, RESTORATION AND REPLACEMENT OF FEDERAL, STATE, AND LOCAL GOVERNMENT FACILITIES AND NONPROFIT EDUCATION, UTILITY, EMERGENCY, MEDICAL AND CUSTODIAL CARE FACILITIES; DEBRIS REMOVAL; PROTECTION OF THE ENVIRONMENT; EMERGENCY COMMUNICATIONS; EMERGENCY PUBLIC TRANSPORTATION; FIRE SUPPRESSION; ECONOMIC RECOVERY; TEMPORARY HOUSING; UNEMPLOYMENT ASSISTANCE; FOOD; RELOCATION ASSISTANCE; LEGAL SERVICES TO LOW-INCOME INDIVIDUALS; PROFESSIONAL COUNSELING SERVICES. 42 U.S.C. SECS. 5171 5187 (1976).

THIS ASSISTANCE IS INTENDED TO SUPPLEMENT THE EFFORTS AND AVAILABLE RESOURCES OF STATE AND LOCAL GOVERNMENTS. THE GOVERNOR OF THE STATE WHERE THE DISASTER OCCURRED MUST REQUEST ASSISTANCE FROM THE PRESIDENT. U.S.C. SEC. 5141 (1976). BASED UPON THE GOVERNOR'S REQUEST AND THE INFORMATION HE PROVIDES, THE PRESIDENT CAN DECLARE THAT A MAJOR DISASTER OR EMERGENCY EXISTS AND THE FORMS OF ASSISTANCE TO BE PROVIDED. THE ASSISTANCE PROGRAM WILL BE ADMINISTERED BY THE FEDERAL EMERGENCY MANAGEMENT AGENCY. REORG. PLAN NO. 3 OF 1978, 3 C.F.R. 329 (1978 COMPILATION), REPRINTED IN 5 U.S.C.A. APP., AT 155 (1979).

QUESTION 7: HOW DOES THE ACT DEFINE "EXTRAORDINARY NUCLEAR OCCURENCE?"

ANSWER: AN "EXTRAORDINARY NUCLEAR OCCURENCE" IS "ANY EVENT CAUSING A DISCHARGE OR DISPERSAL OF SOURCE, SPECIAL NUCLEAR, OR BYPRODUCT MATERIAL FROM ITS INTENDED PLACE OF CONFINEMENT IN AMOUNTS OFFSITE, OR CAUSING RADIATION LEVELS OFFSITE, WHICH THE COMMISSION DETERMINES TO BE SUBSTANTIAL, AND WHICH THE COMMISSION DETERMINES HAS RESULTED OR WILL PROBABLY RESULT IN SUBSTANTIAL DAMAGES TO PERSONS OFFSITE OR PROPERTY OFFSITE." 42 U.S.C. SEC. 2014(J) (1976). IN EFFECT, CONGRESS DELEGATED TO NRC THE FUNCTION OF MORE SPECIFICALLY DEFINING "EXTRAORDINARY NUCLEAR OCCURRENCE." NRC PUBLISHED ITS CRITERIA IN THE CODE OF FEDERAL REGULATIONS. 10 C.F.R. SECS. 140.81-140.85 (1979). CONGRESS FURTHER STIPULATED THAT "ANY DETERMINATION BY THE COMMISSION THAT SUCH AN EVENT HAS, OR HAS NOT, OCCURRED SHALL BE FINAL AND CONCLUSIVE, AND NO OTHER OFFICIAL OR ANY COURT SHALL HAVE POWER OR JURISDICTION TO REVIEW ANY SUCH DETERMINATION." 42 U.S.C. SEC. 2014(J) (1976).

FN1 AS THE SUPREME COURT POINTED OUT IN ITS DUKE POWER CO. OPINION, "IN THE PAST CONGRESS HAS PROVIDED EMERGENCY ASSISTANCE FOR VICTIMS OF CATASTROPHIC ACCIDENTS EVEN IN THE ABSENCE OF A PRIOR STATUTORY COMMITMENT TO DO SO." DUKE POWER CO. AT 86 N. 31. SEE, E.G., PUB. L. NO. 84-378, 69 STAT. 707 (1955) (TEXAS CITY EXPLOSION OF AMMONIUM NITRATE FERTILIZER); PUB. L. NO. 94-400, 90 STAT. 1211 (1976) (RELIEF FOR FLOOD VICTIMS OF COLLAPSE OF TETON DAM IN IDAHO).

FN2 THIS FACTOR WHEN CONSIDERED ALONG WITH EXPERT APPRAISALS OF THE SMALL RISK OF SUCH AN INCIDENT LED THE COURT TO CONCLUDE THAT THE $560 MILLION FIGURE IS A REASONABLE CEILING ON LIABILITY DUKE POWER CO. AT 85.

FN3 THE ACT REQUIRES NRC TO REPORT TO THE JOINT COMMITTEE ON ATOMIC ENERGY. 42 U.S.C. SEC. 2210(I) (1976). THIS COMMITTEE WAS ABOLISHED IN 1977. 42 U.S.C.A. SEC. 2258, PUB. L. NO. 95-110, 91 STAT. 884 (1977). THE ACT HAS NOT BEEN AMENDED TO REFLECT THIS FACT. SUCH A REPORT, THEN, SHOULD PROBABLY BE DELIVERED TO THE SENATE AND HOUSE COMMITTEES WHICH NOW HAVE JURISDICTION OVER THIS MATTER.

FN4 MR. FRANCIS K. MCCUNE, VICE PRESIDENT OF GENERAL ELECTRIC, TESTIFIED BEFORE THE JOINT COMMITTEE ON ATOMIC ENERGY IN MAY 1957, THAT THE INSURANCE POLICY WOULD COVER LEGAL, INVESTIGATIVE AND OTHER EXPENSES.

FN5 THE ONLY CASE TO DATE INVOLVING PUNITIVE DAMAGES AND THE NUCLEAR INDUSTRY IS SILKWOOD V. KERR-MCGEE CORP., CIV. AC. NO. 76-0888 (W.D. OKLA. 1979) (UNPUBLISHED). APPARENTLY, HOWEVER, THE ACT'S COVERAGE OF PUNITIVE DAMAGES WAS NOT AN ISSUE. GREEN, ENERGY LAW SERVICE AT SECS. 6C.46, 6C.63. THE CASE IS CURRENTLY ON APPEAL BEFORE THE U. S. COURT OF APPEALS FOR THE 10TH CIRCUIT.

FN6 IF AN INCIDENT IS DETERMINED BY NRC TO BE AN "EXTRAORDINARY NUCLEAR OCCURENCE," THE ACT'S WAIVER-OF-DEFENSE PROVISION WOULD PREEMPT A DETERMINATION OF NEGLIGENCE UNDER STATE TORT LAW BECAUSE "ANY ISSUE OR DEFENSE AS TO *** FAULT OF PERSONS INDEMNIFIED" WOULD BE WAIVED. SEE 42 U.S.C. SEC. 2210(N) (1976).

FN7 IN 1975, SENATOR GRAVEL ATTEMPTED TO AMEND THE ACT TO ALLOW VICTIMS TO RECOVER ADDITIONAL COMPENSATION UNDER NORMAL TORT LAW IF THE MONEY PROVIDED BY THE ACT PROVED INADEQUATE TO FULLY PAY CLAIMS. 121 CONG. REC. 40967 (1975). THE AMENDMENT WAS REJECTED. ID. AT 40986.