99–006

107TH CONGRESS REPT. 107–299 " ! HOUSE OF REPRESENTATIVES 1st Session Part 1

PRICE-ANDERSON REAUTHORIZATION ACT OF 2001

NOVEMBER 19, 2001.—Ordered to be printed

Mr. TAUZIN, from the Committee on Energy and Commerce,

submitted the following

R E P O R T

together with

ADDITIONAL AND DISSENTING VIEWS

[To accompany H.R. 2983]

[Including cost estimate of the Congressional Budget Office]

The Committee on Energy and Commerce, to whom was referred

the bill (H.R. 2983) to extend indemnification authority under section 170 of the Atomic Energy Act of 1954, and for other purposes,

having considered the same, report favorably thereon with an

amendment and recommend that the bill as amended do pass.

CONTENTS

Page

Amendment .............................................................................................................. 2

Purpose and Summary ............................................................................................ 6

Background and Need for Legislation .................................................................... 6

Hearings ................................................................................................................... 7

Committee Consideration ........................................................................................ 8

Committee Votes ...................................................................................................... 8

Committee Oversight Findings ............................................................................... 10

Statement of General Performance Goals and Objectives .................................... 10

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 10

Committee Cost Estimate ....................................................................................... 10

Congressional Budget Office Estimate ................................................................... 10

Federal Mandates Statement ................................................................................. 15

Advisory Committee Statement .............................................................................. 16

Constitutional Authority Statement ...................................................................... 16

Applicability to Legislative Branch ........................................................................ 16

Section-by-Section Analysis of the Legislation ...................................................... 16

Changes in Existing Law Made by the Bill, as Reported ..................................... 20

Minority, Additional, or Dissenting Views ............................................................ 29

Exchange of Committee Correspondence ............................................................... 37

2

AMENDMENT

The amendment is as follows:

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Price-Anderson Reauthorization Act of 2001’’.

SEC. 2. EXTENSION OF INDEMNIFICATION AUTHORITY.

(a) INDEMNIFICATION OF NUCLEAR REGULATORY COMMISSION LICENSEES.—Section

170 c. of the Atomic Energy Act of 1954 (42 U.S.C. 2210(c)) is amended— (1) in the subsection heading, by striking ‘‘LICENSES’’ and inserting ‘‘LICENS- EES’’; and

(2) by striking ‘‘August 1, 2002’’ each place it appears and inserting ‘‘August

1, 2017’’. (b) INDEMNIFICATION OF DEPARTMENT OF ENERGY CONTRACTORS.—Section 170

d.(1)(A) of the Atomic Energy Act of 1954 (42 U.S.C. 2210(d)(1)(A)) is amended by

striking ‘‘August 1, 2002’’ and inserting ‘‘August 1, 2017’’. (c) INDEMNIFICATION OF NONPROFIT EDUCATIONAL INSTITUTIONS.—Section 170 k.

of the Atomic Energy Act of 1954 (42 U.S.C. 2210(k)) is amended by striking ‘‘August 1, 2002’’ each place it appears and inserting ‘‘August 1, 2017’’.

SEC. 3. MAXIMUM ASSESSMENT.

Section 170 b.(1) of the Atomic Energy Act of 1954 (42 U.S.C. 2210(b)(1)) is

amended— (1) in the second proviso of the third sentence— (A) by striking ‘‘$63,000,000’’ and inserting ‘‘$94,000,000’’; and

(B) by striking ‘‘$10,000,000 in any 1 year’’ and inserting ‘‘$15,000,000 in

any 1 year (subject to adjustment for inflation under subsection t.)’’; and

(2) in subsection t.— (A) by inserting ‘‘total and annual’’ after ‘‘amount of the maximum’’;

(B) by striking ‘‘the date of the enactment of the Price-Anderson Amendments Act of 1988’’ and inserting ‘‘July 1, 2001’’; and

(C) by striking ‘‘such date of enactment’’ and inserting ‘‘July 1, 2001’’.

SEC. 4. DEPARTMENT OF ENERGY LIABILITY LIMIT.

(a) INDEMNIFICATION OF DEPARTMENT OF ENERGY CONTRACTORS.—Section 170 d.

of the Atomic Energy Act of 1954 (42 U.S.C. 2210(d)) is amended by striking paragraph (2) and inserting the following:

‘‘(2) INDEMNIFICATION AGREEMENTS.—In an agreement of indemnification entered

into under paragraph (1), the Secretary—

‘‘(A) may require the contractor to provide and maintain the financial protection of such a type and in such amounts as the Secretary shall determine to

be appropriate to cover public liability arising out of or in connection with the

contractual activity; and

‘‘(B) shall indemnify the persons indemnified against such liability above the

amount of the financial protection required, in the amount of $10,000,000,000

(subject to adjustment for inflation under subsection t.), in the aggregate, for

all persons indemnified in connection with the contract and for each nuclear incident, including such legal costs of the contractor as are approved by the Secretary.’’.

(b) CONTRACT AMENDMENTS.—Section 170 d. of the Atomic Energy Act of 1954 (42

U.S.C. 2210(d)) is amended by striking paragraph (3) and inserting the following:

‘‘(3) CONTRACT AMENDMENTS.—All agreements of indemnification under which the

Department of Energy (or its predecessor agencies) may be required to indemnify

any person under this section shall be deemed to be amended, on the date of enactment of the Price-Anderson Reauthorization Act of 2001, to reflect the amount of

indemnity for public liability and any applicable financial protection required of the

contractor under this subsection.’’.

(c) LIABILITY LIMIT.—Section 170 e.(1)(B) of the Atomic Energy Act of 1954 (42

U.S.C. 2210(e)(1)(B)) is amended—

(1) by striking ‘‘the maximum amount of financial protection required under

subsection b. or’’; and

(2) by striking ‘‘paragraph (3) of subsection d., whichever amount is more’’

and inserting ‘‘paragraph (2) of subsection d.’’.

SEC. 5. INCIDENTS OUTSIDE THE UNITED STATES.

(a) AMOUNT OF INDEMNIFICATION.—Section 170 d.(5) of the Atomic Energy Act of

1954 (42 U.S.C. 2210(d)(5)) is amended by striking ‘‘$100,000,000’’ and inserting

‘‘$500,000,000’’.

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(b) LIABILITY LIMIT.—Section 170 e.(4) of the Atomic Energy Act of 1954 (42

U.S.C. 2210(e)(4)) is amended by striking ‘‘$100,000,000’’ and inserting

‘‘$500,000,000’’.

SEC. 6. REPORTS.

Section 170 p. of the Atomic Energy Act of 1954 (42 U.S.C. 2210(p)) is amended

by striking ‘‘August 1, 1998’’ and inserting ‘‘August 1, 2013’’.

SEC. 7. INFLATION ADJUSTMENT.

Section 170 t. of the Atomic Energy Act of 1954 (42 U.S.C. 2210(t)) is amended—

(1) by redesignating paragraph (2) as paragraph (3); and

(2) by adding after paragraph (1) the following:

‘‘(2) ADJUSTMENT.—The Secretary shall adjust the amount of indemnification provided under an agreement of indemnification under subsection d. not less than once

during each 5-year period following July 1, 2001, in accordance with the aggregate

percentage change in the Consumer Price Index since—

‘‘(A) that date, in the case of the first adjustment under this paragraph; or

‘‘(B) the previous adjustment under this paragraph.’’.

SEC. 8. PRICE-ANDERSON TREATMENT OF MODULAR REACTORS.

Section 170 b. of the Atomic Energy Act of 1954 (42 U.S.C. 2210(b)) is amended

by adding at the end the following new paragraph:

‘‘(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.’’.

SEC. 9. APPLICABILITY.

The amendments made by sections 3, 4, and 5 do not apply to a nuclear incident

that occurs before the date of enactment of this Act.

SEC. 10. PROHIBITION ON ASSUMPTION BY UNITED STATES GOVERNMENT OF LIABILITY FOR

CERTAIN FOREIGN ACCIDENTS.

Section 170 of the Atomic Energy Act of 1954 (42 U.S.C. 2210) is amended by adding at the end the following new subsection:

‘‘u. PROHIBITION ON ASSUMPTION OF LIABILITY FOR CERTAIN FOREIGN ACCIDENTS.—Notwithstanding this section or any other provision of law, no officer of the

United States or of any department, agency, or instrumentality of the United States

Government may enter into any contract or other arrangement, or into any amendment or modification of a contract or other arrangement, the purpose or effect of

which would be to directly or indirectly impose liability on the United States Government, or any department, agency, or instrumentality of the United States Government, or to otherwise directly or indirectly require an indemnity by the United

States Government, for nuclear accidents occurring in any country whose government has been identified by the Secretary of State as engaged in state sponsorship

of terrorist activities (specifically including any country the government of which,

as of September 11, 2001, had been determined by the Secretary of State under section 620A(a) of the Foreign Assistance Act of 1961, section 6(j)(1) of the Export Administration Act of 1979, or section 40(d) of the Arms Export Control Act to have

repeatedly provided support for acts of international terrorism).’’.

SEC. 11. TRANSPORTATION OF NUCLEAR MATERIALS.

(a) AMENDMENT.—Chapter 14 of the Atomic Energy Act of 1954 (42 U.S.C. 2201–

2210b) is amended by adding at the end the following new section:

‘‘SEC. 170C. TRANSPORTATION OF NUCLEAR MATERIALS.—

‘‘a. The Nuclear Regulatory Commission shall establish a system to ensure that—

‘‘(1) with respect to activities by any party pursuant to a license issued under

this Act, each vehicle transporting materials described in subsection b. in the

United States—

‘‘(A) from a facility licensed by the Nuclear Regulatory Commission;

‘‘(B) from a facility licensed by an agreement State; or

‘‘(C) from a country with whom the United States has an agreement for

cooperation under section 123,

carries a manifest describing the type and amount of materials being transported;

‘‘(2) each individual driving or traveling with such a vehicle has been subject

to a security background check by appropriate Federal entities; and

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‘‘(3) no such vehicle transports such materials to a destination other than a

facility licensed by the Nuclear Regulatory Commission or an agreement State

under this Act or other appropriate Federal facility, or to a destination outside

the United States in a country with whom the United States has an agreement

for cooperation under section 123. ‘‘b. Except as otherwise provided by the Commission by regulation, the materials

referred to in subsection a.(1) are byproduct materials, source materials, special nuclear materials, high-level radioactive waste, spent nuclear fuel, transuranic waste,

and low-level radioactive waste (as defined in section 2(16) of the Nuclear Waste

Policy Act of 1982 (42 U.S.C. 10101(16))).’’. (b) REGULATIONS.—Not later than 1 year after the date of the enactment of this

Act, and from time to time thereafter as it considers necessary, the Nuclear Regulatory Commission shall issue regulations identifying radioactive materials that,

consistent with the protection of public health and safety and the common defense

and security, are appropriate exceptions to the transportation requirements of section 170C of the Atomic Energy Act of 1954, as added by subsection (a) of this section.

(c) EFFECTIVE DATE.—The amendment made by subsection (a) shall take effect

upon the issuance of regulations under subsection (b).

(d) TABLE OF SECTIONS AMENDMENT.—The table of sections for chapter 14 of the

Atomic Energy Act of 1954 is amended by adding at the end the following new item:

‘‘Sec. 170C. Transportation of nuclear materials.’’.

SEC. 12. NUCLEAR FACILITY THREATS.

(a) STUDY.—The President, in consultation with the Nuclear Regulatory Commission and other appropriate Federal, State, and local agencies and private entities,

shall conduct a study to identify the types of threats that pose an appreciable risk

to the security of the various classes of facilities licensed by the Nuclear Regulatory

Commission under the Atomic Energy Act of 1954. Such study shall take into account, but not be limited to— (1) the events of September 11, 2001;

(2) an assessment of physical, cyber, biochemical, and other terrorist threats;

(3) the potential for attack on facilities by multiple coordinated teams of a

large number of individuals;

(4) the potential for assistance in an attack from several persons employed

at the facility;

(5) the potential for suicide attacks;

(6) the potential for water-based and air-based threats;

(7) the potential use of explosive devices of considerable size and other modern weaponry;

(8) the potential for attacks by persons with a sophisticated knowledge of facility operations;

(9) the potential for fires, especially fires of long duration; and

(10) the potential for attacks on spent fuel shipments by multiple coordinated

teams of a large number of individuals.

(b) SUMMARY AND CLASSIFICATION REPORT.—Not later than 180 days after the

date of the enactment of this Act, the President, shall transmit to the Congress and

the Nuclear Regulatory Commission a report— (1) summarizing the types of threats identified under subsection (a); and

(2) classifying each type of threat identified under subsection (a), in accordance with existing laws and regulations, as either— (A) involving attacks and destructive acts, including sabotage, directed

against the facility by an enemy of the United States, whether a foreign

government or other person, or otherwise falling under the responsibilities

of the Federal Government; or

(B) involving the type of risks that Nuclear Regulatory Commission licensees should be responsible for guarding against.

(c) FEDERAL ACTION REPORT.—Not later than 90 days after the date on which a

report is transmitted under subsection (b), the President, shall transmit to the Congress a report on actions taken, or to be taken, to address the types of threats identified under subsection (b)(2)(A). Such report may include a classified annex as appropriate.

(d) REGULATIONS.—Not later than 270 days after the date on which a report is

transmitted under subsection (b), the Nuclear Regulatory Commission shall issue

regulations, including changes to the design basis threat, to ensure that licensees

address the threats identified under subsection (b)(2)(B).

(e) PHYSICAL SECURITY PROGRAM.—The Nuclear Regulatory Commission shall establish an operational safeguards response evaluation program that ensures that

the physical protection capability and operational safeguards response for sensitive

nuclear facilities, as determined by the Commission consistent with the protection

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of public health and the common defense and security, shall be tested periodically

through Commission approved or designed, observed, and evaluated force-on-force

exercises to determine whether the ability to defeat the design basis threat is being

maintained. For purposes of this subsection, the term ‘‘sensitive nuclear facilities’’

includes at a minimum commercial nuclear power plants, including associated spent

fuel storage facilities, spent fuel storage pools and dry cask storage at closed reactors, independent spent fuel storage facilities and geologic repository operations

areas, category I fuel cycle facilities, and gaseous diffusion plants.

(f) CONTROL OF INFORMATION.—In carrying out this section, the President and the

Nuclear Regulatory Commission shall control the dissemination of restricted data,

safeguards information, and other classified national security information in a manner so as to ensure the common defense and security, consistent with chapter 12

of the Atomic Energy Act of 1954.

SEC. 13. INDUSTRIAL SAFETY RULES FOR DEPARTMENT OF ENERGY NUCLEAR FACILITIES.

Section 170 d. of the Atomic Energy Act of 1954 (42 U.S.C. 2210(d)) is amended

by adding at the end the following new paragraph:

‘‘(8)(A) It shall be a condition of any agreement of indemnification entered into

under this subsection that the indemnified party comply with regulations issued

under this paragraph.

‘‘(B) Not later than 180 days after the date of the enactment of this paragraph,

the Secretary shall issue industrial health and safety regulations that shall apply

to all Department of Energy contractors and subcontractors who are covered under

agreements entered into under this subsection for operations at Department of Energy nuclear facilities. Such regulations shall provide a level of protection of worker

health and safety that is substantially equivalent to or identical to that provided

by the industrial and construction safety regulations of the Occupational Safety and

Health Administration (29 CFR 1910 and 1926), and shall establish civil penalties

for violation thereof that are substantially equivalent to or identical to the civil penalties applicable to violations of the industrial and construction safety regulations

of the Occupational Safety and Health Administration. The Secretary shall amend

regulations under this subparagraph as necessary.

‘‘(C) Not later than 240 days after the date of the enactment of this paragraph,

all agreements described in subparagraph (B), and all contracts and subcontracts for

the indemnified contractors and subcontractors, shall be modified to incorporate the

requirements of the regulations issued under subparagraph (B). Such modifications

shall require compliance with the requirements of the regulations not later than 1

year after the issuance of the regulations.

‘‘(D) Enforcement of regulations issued under subparagraph (B), and inspections

required in the course thereof, shall be conducted by the Office of Enforcement of

the Office of Environment, Safety, and Health of the Department of Energy. The

Secretary shall transmit to the Congress an annual report on the implementation

of this subparagraph.’’.

SEC. 14. UNREASONABLE RISK CONSULTATION.

Section 170 of the Atomic Energy Act of 1954 (42 U.S.C. 2210) is amended by adding at the end the following new subsection:

‘‘v. UNREASONABLE RISK CONSULTATION.—Before entering into an agreement of indemnification under this section with respect to a utilization facility, the Nuclear

Regulatory Commission shall consult with the Assistant to the President for Homeland Security (or any successor official) concerning whether the location of the proposed facility and the design of that type of facility ensure that the facility provides

for adequate protection of public health and safety if subject to a terrorist attack.’’.

SEC. 15. FINANCIAL ACCOUNTABILITY.

(a) AMENDMENT.—Section 170 of the Atomic Energy Act of 1954 (42 U.S.C. 2210)

is amended by adding at the end the following new subsection:

‘‘w. FINANCIAL ACCOUNTABILITY.—(1) Notwithstanding subsection d., the Attorney

General may bring an action in the appropriate United States district court to recover from a contractor of the Secretary (or subcontractor or supplier of such contractor) amounts paid by the Federal Government under an agreement of indemnification under subsection d. for public liability resulting from conduct which constitutes intentional misconduct of any corporate officer, manager, or superintendent

of such contractor (or subcontractor or supplier of such contractor).

‘‘(2) The Attorney General may recover under paragraph (1) an amount not to exceed the amount of the profit derived by the defendant from the contract.

‘‘(3) No amount recovered from any contractor (or subcontractor or supplier of

such contractor) under paragraph (1) may be reimbursed directly or indirectly by

the Department of Energy.

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‘‘(4) Paragraph (1) shall not apply to any nonprofit entity conducting activities

under contract for the Secretary. ‘‘(5) No waiver of a defense required under this section shall prevent a defendant

from asserting such defense in an action brought under this subsection. ‘‘(6) The Secretary shall, by rule, define the terms ‘profit’ and ‘nonprofit entity’ for

purposes of this subsection. Such rulemaking shall be completed not later than 180

days after the date of the enactment of this subsection.’’. (b) EFFECTIVE DATE.—The amendment made by this section shall not apply to any

agreement of indemnification entered into under section 170 d. of the Atomic Energy

Act of 1954 (42 U.S.C. 2210(d)) before the date of the enactment of this Act.

SEC. 16. CIVIL PENALTIES.

(a) REPEAL OF AUTOMATIC REMISSION.—Section 234A b. (2) of the Atomic Energy

Act of 1954 (42 U.S.C. 2282a(b)(2)) is amended by striking the last sentence.

(b) LIMITATION FOR NONPROFIT INSTITUTIONS.—Subsection d. of section 234A of

the Atomic Energy Act of 1954 (42 U.S.C. 2282a(d)) is amended to read as follows: ‘‘d. Notwithstanding subsection a., a contractor, subcontractor, or supplier described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from

tax under section 501(a) of such Code shall not be subject to a civil penalty for a

violation under subsection a. in excess of the amount of any discretionary fee paid

to such contractor, subcontractor, or supplier under the contract under which such

violation occurs.’’. (c) EFFECTIVE DATE.—The amendments made by this Act shall not apply to any

violation of the Atomic Energy Act of 1954 occurring under a contract entered into

before the date of the enactment of this Act.

PURPOSE AND SUMMARY

The purpose of H.R. 2983, the Price-Anderson Reauthorization

Act of 2001, is to reauthorize the authorities under the Act for a

term of fifteen years. The legislation also contains provisions dealing with nuclear security and other miscellaneous matters.

BACKGROUND AND NEED FOR LEGISLATION

Enacted in 1957 to encourage the development of the nuclear industry, the Price-Anderson Act (PAA) provides for compensation of

injured parties in the event of a nuclear accident and sets a maximum liability amount per accident. The Act requires Nuclear Regulatory Commission (NRC) licensees to maintain financial protection to cover public liability claims resulting from a nuclear incident. PAA also requires indemnification of companies engaged in

Department of Energy (DOE) contractual activity that involves the

risk of a nuclear incident.

With respect to the nuclear power industry, the PAA requires

that reactor operators obtain primary financial protection equal to

the maximum amount of available liability insurance from private

insurance markets. Currently, American Nuclear Insurers (ANI) offers $200 million in insurance coverage per reactor, per incident.

For losses that exceed the $200 million primary insurance limit,

the Act requires that all nuclear operators participate in a retrospective rating program (using each operator’s own funds) set at

$88 million per reactor, per incident. Thus, the total amount of financial protection available for a nuclear incident is approximately

$9.5 billion—$200 million in primary insurance, plus $88 million

for each of the 106 reactors participating in the program. The reactor operators are indemnified for any financial liability that exceeds $9.5 billion. Should liability exceed this amount, the Act anticipates Congress would provide additional funds.

With respect to DOE contractors that engage in nuclear activities, the Act requires that the Department fully indemnify claims

for public liability up to the maximum liability amount of $9.5 bilVerDate 11-MAY-2000 08:09 Nov 21, 2001 Jkt 099006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR299P1.XXX pfrm11 PsN: HR299P1
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lion, except that the Secretary may also require that a contractor

provide an appropriate level of financial protection.

All existing NRC-licensed nuclear reactors ‘‘grandfathered’’ under

Price-Anderson, and protections under the Act continue regardless

of whether reauthorization occurs before August of 2002. However,

new nuclear plants seeking NRC licenses after August 2002 will

not receive PAA protections until reauthorization occurs. Similarly,

without reauthorization, PAA protections will not be available for

new DOE contracts after August 2002, and coverage will expire for

current DOE contractors when existing contracts expire after August 2002. Pursuant to the 1988 amendments, DOE and NRC were

required to provide reports to Congress concerning the need for

continuation or modifications of the PAA.

HEARINGS

The Subcommittee on Energy and Air Quality held a hearing on

Tuesday, March 27, 2001, on National Energy Policy: Nuclear Energy. The Subcommittee received testimony from: Anna Aurilio,

Legislative Director, U.S. PIRG; Senator Pete V. Domenici of New

Mexico; C. Randy Hutchinson, Senior Vice President, Business Development, Entergy Nuclear, on behalf of: the Nuclear Energy Institute; Mary J. Hutzler, Director, Office of Integrated Analysis and

Forecasting, Energy Information Administration; John R.

Longenecker, Longenecker & Associates, Inc., Management Consultants; William D. Magwood, Director, Office of Nuclear Energy,

Science and Technology, U.S. Department of Energy; Edward F.

Sproat, III, Vice President of International Programs, Exelon Corporation; Alfred C. Tollison, Jr., Executive Vice President, Institute

of Nuclear Power Operations; Dr. William D. Travers, Executive

Director for Operations, U.S. Nuclear Regulatory Commission.

The Subcommittee on Energy and Air Quality held a hearing on

Wednesday, June 27, 2001, on Hydroelectric Relicensing and Nuclear Energy. The Subcommittee received testimony from: Anna

Aurilio, Legislative Director, U.S. PIRG; The Honorable Richard

Meserve, Chairman, U.S. Nuclear Regulatory Commission; Mr.

William Magwood, Director, Office of Nuclear Energy, Science and

Technology, U.S. Department of Energy; Mr. Marvin Fertel, Senior

Vice President of Business Operations, Nuclear Energy Institute;

Mr. Jack Skolds, Chief Operating Officer, Exelon Nuclear; Mr.

George Davis, Director of Government Programs, Nuclear Systems,

Westinghouse Electric Company; Mr. Laurence Parme, General

Atomics; Dr. E. Womack, President, BMX Technology, Inc, on behalf of: Energy Contractors Price Anderson Group; Mr. John

Quattrocchi, Senior Vice President of Underwriting, American Nuclear Insurers; Mr. Ronald Shems, Attorney, Shems, Dunkiel

PLLC, on behalf of: Vermont Agency of Natural Resources; The

Honorable Curtis Hebert, Chairman, Federal Energy Regulatory

Commission, Accompanied by: Mr. J. Mark Robinson, Director, Office of Energy Projects, Ms. Kristina Nygaard, Associate Counsel

for Energy Projects, Office of General Counsel; Mr. Barry Hill, Director, Government Accounting Office, accompanied by: Mr.

Charles S. Cotton, Assistant Director, Ms. Erin Barlow, Senior Analyst, Natural Resources and Environment; Mr. John Prescott, Vice

President of Generation, Idaho Power Company; Ms. S. Birnbaum,

Director of Government Affairs, American Rivers.

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The Subcommittee on Energy and Air Quality held a hearing on

Thursday, September 6, 2001, on the Reauthorization of the PriceAnderson Act. The Subcommittee received testimony from: The

Honorable Francis Blake, Deputy Secretary, U.S. Department on

Energy.

COMMITTEE CONSIDERATION

On Thursday, October 4, 2001, the Subcommittee on Energy and

Air Quality met in open markup session and approved H.R. 2983,

The Price-Anderson Reauthorization Act of 2001, for full committee

consideration, as amended, by a voice vote. On Wednesday, October

31, 2001, the full committee met in open markup session and favorably ordered reported H.R. 2983, as amended, by a voice vote, a

quorum being present.

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion

to report legislation and amendments thereto. The following record

votes were taken in connection with ordering H.R. 2983 reported.

A motion by Mr. Tauzin to order H.R. 2983 reported to the House,

as amended, was agreed to by a voice vote.

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COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House

of Representatives, the Committee held oversight hearings and

made findings that are reflected in this report.

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

The goal of H.R. 2983 is to reauthorize the Price-Anderson Act

indemnification authority until August 1, 2017.

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the

House of Representatives, the Committee finds that H.R. 2983, the

Price-Anderson Reauthorization Act of 2001, would result in no

new or increased budget authority, entitlement authority, or tax

expenditures or revenues.

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by

the Director of the Congressional Budget Office pursuant to section

402 of the Congressional Budget Act of 1974.

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House

of Representatives, the following is the cost estimate provided by

the Congressional Budget Office pursuant to section 402 of the

Congressional Budget Act of 1974:

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, November 15, 2001.

Hon. W.J. ‘‘BILLY’’ TAUZIN, Chairman, Committee on Energy and Commerce, U.S. House of

Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2983, the Price-Anderson

Reauthorization Act of 2001.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contact is Lisa Cash Driskill.

Sincerely,

BARRY B. ANDERSON,

(For Dan L. Crippen, Director.)

Enclosure.

H.R. 2983—Price-Anderson Reauthorization Act of 2001—As ordered reported by the House Committee on Energy and Commerce on October 31, 2001

Summary: H.R. 2983 would make several changes to laws governing nuclear facilities. Specifically, the bill would reauthorize the

Price-Anderson Act through August 1, 2017. That act provides a

framework for liability coverage in the event of a nuclear accident.

H.R. 2983 also would require the Department of Energy (DOE) to

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apply health and safety standards that are substantially similar to

those imposed by the Occupational Health and Safety Administration (OSHA) at the nuclear facilities it operates. In addition, H.R.

2983 would require the Nuclear Regulatory Commission (NRC) to

issue rules relating to enhanced security at nuclear facilities and

the transportation of nuclear materials. Last, the bill would establish new civil penalties for noncompliance with health and safety

standards and repeal the exemption from paying civil penalties for

noncompliance with the Price-Anderson Act by nonprofit DOE contractors.

CBO estimates that the reauthorization of the Price-Anderson

Act would have no effect on the federal budget, primarily because

any payments by the federal government in connection with a nuclear accident would require additional legislation (i.e., Price-Anderson does not automatically trigger any such potential payments).

Assuming the availability of appropriated funds, we estimate

that implementing H.R. 2983 would cost $3 million over the 2002–

2006 period, for new health and safety regulations and inspectors

at DOE. Because the NRC is authorized to offset its costs through

fees, the net budgetary effects for studies relating to the strengthening security requirements at nuclear facilities and for transportation of nuclear materials would be negligible.

Finally, the bill could result in an increase in governmental receipts if additional civil penalties are collected, so pay-as-you-go

procedures would apply to H.R. 2983. CBO estimates, however,

that any increase in receipts would be less than $500,000 a year.

H.R. 2983 would impose both intergovernmental and private-sector mandates as defined by the Unfunded Mandates Reform Act

(UMRA). The bill would increase the cost of existing mandates on

NRC licensees by increasing the total and annual retrospective premium that can be assessed under the Price Anderson Act in the

event of a nuclear accident. In addition, the bill would authorize

the NRC to issue new security regulations for transporting nuclear

materials and for operating nuclear facilities.

CBO estimates that the cost of complying with the intergovernmental mandates in the bill would be unlikely to exceed the threshold as defined in UMRA ($56 million in 2001, adjusted annually for

inflation). The bill would impose no other costs on state, local, or

tribal governments.

The cost to comply with the private-sector mandates imposed by

the bill would depend in large part on future actions of the NRC

regarding the operation of nuclear facilities. As a result, CBO cannot determine whether the aggregate direct costs to privately

owned nuclear facilities of complying with all of the mandates in

the bill would exceed the annual threshold specified by UMRA

($113 million in 2001, adjusted annually for inflation).

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 2983 is shown in the following table. The costs

of this legislation fall within budget functions 270 (energy) and 050

(defense).

Basis of estimate: For this estimate, CBO assumes that H.R.

2983 will be enacted in 2001, and that amounts estimated to be authorized by the bill will be appropriated each year.

12

Price-Anderson Act reauthorization

H.R. 2983 would reauthorize the Price-Anderson Act through August 1, 2017. That act provides a framework for the structure of liability coverage in the event of a nuclear accident. CBO estimates

that its reauthorization would have no effect on the budget. If damages resulting from a nuclear accident exceed the liability coverage

established by the Price-Anderson Act (roughly $10 billion under

H.R. 2983), 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 DOE contractors working at nuclear facilities.

By fiscal year, in million of dollars

2002 2003 2004 2005 2006

CHANGES IN SPENDING SUBJECT TO APPROPRIATION 2

Gross NRC Spending:

Estimate Authorization Level ....................... 10 0 0 0 0

Estimated Outlays ........................................ 7 3 0 0 0

NRC Offsetting Collections:

Estimated Authorization Level ..................... ¥10 0 0 0 0

Estimated Outlays ........................................ ¥10 0 0 0 0

DOE Spending for Health and Safety:

Estimated Authorization Level ..................... 1 (1) (1) (1) (1)

Estimated Outlays ........................................ 1 (1) (1) (1) (1)

Net Changes Under H.R. 2983:

Estimated Authorization Level ..................... 1 (1) (1) (1) (1)

Estimated Outlays ........................................ ¥2 3(1) (1) (1)

1 Spending of less than $500,000.

2 Enacting H.R. 2983 could also affect revenues, but by less than $550,000 a year.

The bill would change the level of indemnification for DOE contractors to $10 billion from slightly more than $9 billion in current

law. Because DOE reimburses its contractors for property damage

and third-party liability claims, this increase to DOE contractor indemnification would not be likely to change any obligations of the

federal government to pay claims related to accidents at it facilities. Over the past 13 years, DOE has paid $108 million in claims

related to nuclear accidents at its facilities. Those claims arose

from DOE activities that occurred starting in the 1950s.

Spending subject to appropriation

H.R. 2983 would require the NRC to study and issue rules relating to nuclear security, and require DOE to apply health and safety

standards similar to those imposed by OSHA to the nuclear facilities it operates. CBO estimates that such changes would cost $3

million over the 2002–2006 period, assuming appropriation of the

necessary amounts. Additional significant costs could result from

applying new health and safety standards at DOE facilities, but

the cost to implement projects to correct health and safety problems at DOE facilities could also be incurred under current law.

Nuclear security

H.R. 2983 would require the NRC to conduct a study of the vulnerability of its licensed nuclear facilities to certain threats, and reVerDate 11-MAY-2000 08:09 Nov 21, 2001 Jkt 099006 PO 00000 Frm 00012 Fmt 6659 Sfmt 6602 E:\HR\OC\HR299P1.XXX pfrm11 PsN: HR299P1
13

port to the Congress. According to the NRC, the study would require testing the reaction of materials used at nuclear facilities to

several types of destructive forces. Based on information from the

NRC, CBO estimates that such studies would cost $7 million over

the 2002–2003 period.

The bill also would require a rulemaking to update the design

basis threat (DBT)—the attack scenario that nuclear facilities must

be capable of defeating. Based on information from the NRC, CBO

estimates that updating the DBT rule to met the new scenarios

outlined in the bill would cost $3 million over the 2002–2003 period. The bill also would require an additional rulemaking to enhance the security of nuclear materials being transported, but

based on information from the NRC, CBO expects this effort would

not have a significant cost.

Because the NRC has the authority to collect annual charges

from its licensees to offset 96 percent of its general fund appropriations in 2002, the net cost of these provisions would be less than

$500,000.

Health and safety rules at DOE nuclear facilities

H.R. 2983 would require DOE to issue industrial health and safety regulations that are substantially similar to those required by

OSHA and apply those standards to DOE nuclear facilities. Enforcement and inspections of these new standards would be conducted by the Office of Enforcement and Investigation within DOE.

Based on information from DOE, we estimate that such a change

would cost $3 million over the 2002–2006 period, for issuing new

rules and hiring new inspectors.

Contractors at DOE facilities are requested to meet DOE’s own

health and safety standards, many of which are similar to OSHA

standards. According to DOE, however, changing standards may

require changes in training protocol, a difference in emphasis on

types of safety concerns, and physical modifications to facilities. Because DOE contractors would be able to charge DOE for changes

in procedures, any additional costs because of the new regulations

would be paid by the federal government, subject to the availability

of appropriations.

According to DOE, about 30 of its facilities would be affected by

a change in standards. Many DOE facilities do not fully comply

with the department’s current health and safety standards. In most

cases corrective actions have not been taken because sufficient

funds have not been allocated to these projects. Changing standards is not likely to significantly change the overall need for health

and safety upgrades in many DOE facilities.

Revenues

Enacting H.R. 2983 could result in additional civil penalties for

nuclear safety violations at certain DOE facilities and for violations

of health and safety regulations that would be required under the

bill. CBO estimates that additional penalties would be less than

$500,000 a year.

14

Penalties for nuclear safety violations by nonprofit institutions

H.R. 2983 would repeal the exemption from civil penalties for nuclear safety violations that currently applies to nonprofit institutions operating laboratories for DOE. Under the bill, nonprofit institutions that are operating DOE laboratories would be subject to

penalties. According to DOE’s Office of Enforcement and Investigation, over the last four years, nonprofit contractors have been assessed $1,843,625 in penalties. All of those penalties have been

waived, in accordance with current law. Under H.R. 2983, any future penalties would be paid to the Treasury. Based on penalties

that have been assessed in the past, CBO expects that any additional revenues that would be collected under the bill would be less

than $500,000 a year.

Penalties for health and safety violations under the Price-Anderson Act

H.R. 2983 would impose civil penalties for noncompliance with

the new health and safety standards that would be required under

the bill. Such penalties would be required to be substantially similar to OSHA penalties. Based on information from DOE, CBO does

not expect the agency would impose significant fines on its contractors, so any additional receipts would be negligible.

Pay-as-you-go considerations: The Balanced Budget and Emergency Deficit Control Act sets up pay-as-you-go procedures for legislation affecting direct spending or receipts. CBO estimates that

enacting H.R. 2983 would result in changes in governmental receipts of less than $500,000 a year.

Intergovernmental and private-sector impact: H.R. 2983 would

impose both intergovernmental and private-sector mandates as defined by UMRA. The bill would increase the cost of existing mandates on NRC licensees by increasing the total and annual retrospective premium that can be assessed in the event of a nuclear

accident. In addition, the bill would authorize the NRC to issue

new security regulations for transporting nuclear materials and for

operating nuclear facilities.

CBO estimates that the cost of complying with the intergovernmental mandates in the bill would be unlikely to exceed the threshold as defined in UMRA ($56 million in 2001, adjusted annually for

inflation). The bill would impose no other costs on state, local, or

tribal governments.

The cost to comply with the private-sector mandates imposed by

the bill would depend in large part on future actions of the NRC

regarding the operation of nuclear facilities. CBO therefore cannot

determine whether the aggregate direct cost to privately owned nuclear facilities of complying with all of the mandates in the bill

would exceed the annual threshold specified by UMRA ($113 million in 2001, adjusted annually for inflation).

Increase in retrospective premium

Under current law, NRC licensees are required to obtain the

maximum amount of private insurance available to cover losses in

the event of a nuclear incident. If losses exceed the amount of private insurance, each licensee is assessed a charge, known as the

retrospective premium, up to a maximum of $84 million, to cover

15

any shortfall in damage coverage. Charges are assessed in annual

amounts until the entire premium is collected.

Section 3 of H.R. 2983 would increase the maximum retrospective premium from $84 million to $94 million, as well as increasing

the maximum annual premium from $10 million to $15 million.

CBO has determined that raising both the maximum total premium and the annual premium would increase the costs of an existing mandate and would thereby impose intergovernmental and

private-sector mandates under UMRA.

Currently, two nuclear power facilities are wholly owned and operated by the state of Nebraska, and a few municipalities own a

small percentage of other nuclear facilities. Because so few facilities are publicly owned (less than 5 percent) and because the probability of a nuclear accident resulting in losses exceeding the

amount of private insurance coverage is so low, CBO estimates

that the costs of complying with that mandate would not be significant over the next five years.

Based upon the low probability of a nuclear accident resulting in

losses exceeding the amount of private insurance coverage, CBO estimates that the annual cost to the private sector also would not

be substantial over the next five years.

Shipment of nuclear materials

Section 11 of the bill would direct the NRC to issue rules aimed

at improving the security of nuclear material shipments. The rules

would require federal background checks for individuals transporting nuclear materials, impose restrictions on where such shipments could travel, and require the shipper to carry a manifest detailing the contents. According to the NRC, only a small number

of nuclear material shipments are made to and from each nuclear

facility per year. Thus, CBO estimates that the costs of this mandate would not be significant.

Upgrading security at nuclear facilities

Section 12 would require the NRC to issue new regulations addressing security threats at facilities licensed by the NRC. NRC’s

rulemaking would be based upon the results of a nine-month study

of facility security and consultation with other federal, state, and

local agencies. At this time, the agency could not give any indication as to the scope of the new regulations. Consequently, CBO

cannot determine the costs of complying with the new regulations.

Estimate prepared by: Federal Costs: Lisa Cash Driskill, Impact

on State, Local, and Tribal Governments: Elyse Goldman, and Impact on the Private Sector: Lauren Marks.

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office

pursuant to section 423 of the Unfunded Mandates Reform Act.

16

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the

Federal Advisory Committee Act were created by this legislation.

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House

of Representatives, the Committee finds that the Constitutional authority for this legislation is provided in Article I, section 8, clause

3, which grants Congress the power to regulate commerce with foreign nations, among the several States, and with the Indian tribes.

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the

terms and conditions of employment or access to public services or

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act.

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

Section 1 provides the short title of the legislation, the Price-Anderson Reauthorization Act of 2001.

Section 2. Extension of indemnification authority

Section 2 authorizes a fifteen year extension of Price-Anderson

indemnification authority, to August 1, 2017, for Nuclear Regulatory Commission (NRC) licensees, DOE contractors, and DOE

nonprofit educational institutions.

Section 3. Maximum assessment

The 1988 Price Anderson Amendments Act established an inflation adjustment for the $63 million standard deferred premium.

However, there was no inflation adjustment requirement for the

annual maximum premium assessment, which was set at $10 million. Over time, the effect of not adjusting the $10 million maximum premium assessment for inflation results in a substantially

longer payout period in the event of a nuclear accident. The last

inflation adjustment on the standard deferred premium was in

1998, which adjusted it to $88 million. The standard deferred premium is currently scheduled to be adjusted again next year. This

section adjusts for inflation to July 1, 2001, both the standard deferred premium to $94 million, and the maximum premium assessment to $15 million, based on the Consumer Price Index for all

urban consumers (CPI–U). Both will be adjusted for inflation from

the July 1, 2001 baseline not less than once every five years.

Section 4. Department of Energy liability limit

This section sets the limitation on aggregate public liability for

DOE contractors for a single nuclear incident. Under current law,

DOE contractor indemnity and liability provisions are linked to the

amount of protection required of nuclear power reactor licensees by

setting the amount of DOE contractor indemnity to the amount of

protection which is available to nuclear power reactor licensees.

This section de-links the DOE contractor provisions for liability and

17

indemnification from the NRC licensee provisions, and establishes

the amount of indemnification of DOE contractors at $10 billion,

subject to adjustment for inflation, for all persons indemnified in

connection with the contract, and for each nuclear incident.

Section 5. Incidents outside the United States

This section increases the amount of indemnification and liability

limit for incidents outside of the United States from $100,000,000

to $500,000,000 for DOE contractors.

Section 6. Reports

The section requires the NRC and DOE, by August 1, 2013, to

submit detailed reports to Congress concerning the Price-Anderson

Act and related matters, such as the availability of private insurance.

Section 7. Inflation adjustment

This section takes the new July 1, 2001 baseline established in

section 3 for the $94 million standard deferred premium and the

$15 million maximum annual assessment, and requires an inflation

adjustment for both not less than every five years following July

1, 2001.

Section 8. Price-Anderson treatment of modular reactors

Section 8 is intended to encourage the development of a new generation of smaller or ‘‘modular’’ reactors. The Committee received

testimony from several companies that are developing modular reactors that may be deployed in groups of as many as ten, and operated from one central control room. The size of known modular reactors designs currently under development generally is expected

to be less than 300 megawatts. Exelon Corporation, for instance,

expects that its pebble bed modular reactor will operate in the

range of 100 to 150 megawatts, and General Atomics provided testimony that its gas turbine modular helium reactor will operate in

the range of 250 to 300 megawatts.

This section would allow a combination of two or more modular

reactors each with a rated capacity between 100 and 300

megawatts, and built at the same site, to be considered one facility

for purposes of indemnification under Section 170. Thus, a combination of such reactors would be assessed only one standard deferred premium, with a cap on the combined rated capacity of 1,300

megawatts. For example, a site with ten 110 megawatt modular reactors, having a combined rated capacity of 1,100 megawatts,

would be considered one facility under Section 170. A site with five

300 megawatt reactors, with a combined rated capacity of 1,500

megawatts, would be considered two facilities. This new definition

of ‘‘facility’’ in this section applies only for purposes of Section 170

financial protection requirements.

Section 9. Applicability

This section ensures that the amendments made by sections 3,

4, and 5 do not apply to a nuclear incident that occurs before the

date of enactment of the Act.

18

Section 10. Prohibition on assumption by United States Government

liability for certain foreign accidents

Section 10 prevents any instrumentality of the United States

Government from entering into any arrangement that would impose liability on any instrumentality of the United States Government for nuclear accidents that occur in any country identified by

the Secretary of State as a sponsor of terrorist activities, including

countries known to have repeatedly provided support for acts of

international terrorism.

Section 11. Transportation of nuclear materials

This section directs the Commission to establish a system to ensure that: (1) vehicles transporting certain radioactive materials

carry a manifest describing the type and amount of materials being

transported; (2) individuals driving or traveling with such vehicles

are subject to background checks; and, (3) vehicles transporting

such materials must travel to a NRC licensed facility, an appropriate Federal facility, or a country with whom the United States

has an agreement for cooperation under section 123. The effective

date of the system is delayed until the NRC, not later than one

year of enactment, issues regulations identifying, consistent with

the protection of public health and safety and the common defense

and security, radioactive materials that are appropriate exceptions

to the system.

The Committee intends that the rulemaking in this section apply

only to the potential for a particular material to be used in a terrorist attack or other destructive act. Accordingly, the Commission

need not include within the scope of its rulemaking materials with

small quantities of radioactivity that would have little or no impact

on public health or safety. The NRC should focus particular attention on identifying radiopharmaceuticals and other medical materials for appropriate exemption from the new requirements, to assure the uninterrupted availability of these materials to patients

that need them. Of course, the regulations promulgated pursuant

to section 11 are not intended to alter any other applicable rules

relating to the proper use, handling, or disposal of any nuclear materials.

Section 12. Nuclear facility threats

Section 12 requires the President to conduct a study to identify

the types of threats that pose an appreciable risk to the security

of the various classes of NRC-licensed facilities. In preparing the

study, the President is to consult with the NRC and other governmental and nongovernmental entities. The study must consider:

the events of September 11, 2001; physical, cyber, biochemical, and

other terrorist threats; the potential for attack on facilities and

spent fuel shipments by multiple coordinated teams of a large number of individuals; the potential for assistance in an attack from

several employees at the facility; the potential for suicide attacks;

the potential for water-based and air-based threats; the potential

use of explosive devices of considerable size and other modern

weaponry, the potential for attacks by persons with a sophisticated

knowledge of facility operations; and, the potential for fires, especially fires of long duration.

19

After the study is completed and within 180 days after enactment, the President is to submit a report to Congress and the NRC.

The Report must summarize the types of threats identified and

must classify each type of threat as either involving attacks and

destructive acts, including sabotage, directed against the facility by

an enemy of the United States or otherwise falling under the responsibilities of the Federal Government, or involving the type of

risks that the NRC licensees should be responsible for guarding

against.

Following submission of the report, the President is required to

transmit a report to Congress within 90 days on actions taken, or

to be taken, to address the types of threats identified in the President’s report as involving attacks and destructive acts, including

sabotage, directed against the facility by an enemy of the United

States or otherwise falling under the responsibilities of the Federal

Government.

The NRC is required to promulgate regulations, including

changes to the design basis threat, to ensure that licensees address

the threats identified in the President’s report as involving the type

of risks that the NRC licensees should be responsible for guarding

against. The NRC must promulgate such regulations not later than

270 days after the President transmits his initial report to the

Commission and Congress.

Section 12(e) is intended to provide statutory direction to the

Commission in implementing an operational safeguards response

evaluation program. In doing so, the Committee is very concerned

that the Commission conduct a rigorous program that will ensure

accurate measurements of a facility’s ability to defeat design basis

threats. The Committee is deeply troubled about reports that terrorists may target domestic nuclear facilities, and envisions a fully

developed program as being the first line of defense against any

such attacks.

To address these concerns, the language of section 12(e) directs

the Commission to take a dominant role in the implementation of

force-on-force exercises. The Commission controls the three critical

aspects for carrying out tests of operational safeguards: it must either design or approve the design for each force-on-force exercise;

it must physically observe the exercises; and, it is the final arbiter

on the results of the exercises. The Commission should not serve

as a rubber stamp at any step of the way. For instance, to the extent a licensee has devised all or any part of an exercise design,

the NRC should scrutinize the design rigorously to ensure that it

will provide the information necessary to determine whether a licensee can defeat design basis threats. The Committee contemplates, in particular, that any design approval process would be

an iterative, collaborative one, reflecting the work of both a licensee

and Commission staff in composing a plan appropriate to the facility involved.

Section 13. Industrial safety rules for Department of Energy nuclear

facilities

Section 13 requires DOE to develop regulations including civil

penalties, that provide a level of protection of worker health and

safety that is substantially equivalent to or identical to that provided by the industrial and construction safety regulations of the

20

Occupational Health and Safety Administration. These regulations

would apply only to contractors and subcontractors who are covered

under Price Anderson 170 d. or e. indemnity agreements, and

would be effective within 240 days after the date of enactment.

This section is not intended to require expensive retrofitting of

DOE’s decommissioned facilities that are closed and/or scheduled to

be torn down. For closed facilities that have alternate uses now or

in the future, this section would apply consistent with the intended

uses of the facility.

Section 14. Unreasonable risk determination

Section 14 requires the NRC to consult with the Assistant to the

President for Homeland Security (or any successor official) concerning whether the location and design of a proposed utilization

facility provides for adequate protection of public health and safety

if subject to a terrorist attack. The consultation is required before

NRC enters into an agreement of indemnification with a utilization

facility under Section 170.

Section 15. Financial accountability

Section 15 authorizes the Attorney General to bring an action to

recover from a DOE contractor, subcontractor, or supplies amounts

paid by the Federal government under a Section 170 indemnity

agreement for public liability resulting from conduct which constitutes intentional misconduct of any corporate officer, manager,

or superintendent of the DOE contractor, subcontractor, or supplier. The Attorney General, however, may not recover an amount

exceeding the amount of profit derived by the defendant under the

contract. DOE cannot reimburse the contractor of the amount recovered. This provision does not apply to any nonprofit entity conducting activities under the DOE contract. DOE is required to define the terms ‘‘profit’’ and ‘‘nonprofit entity’’ in a rulemaking to be

completed within 180 days after enactment.

Section 16. Civil penalties

Section 16 ends the automatic remission of civil penalties for

nonprofit institutions listed in Section 234A(d). This section also

ends the Secretary’s authority to determine whether nonprofit educational institutions should receive automatic remission of any civil

penalty issued under section 234A. It is the intent of this Section

to make all of DOE’s nonprofit contractors, subcontractors, and

suppliers subject to civil penalties for nuclear safety violations

under 234A. The replacement language for section 234A(d) provides an upper limit on the amount of civil penalties that may be

collected from a nonprofit contractor. This limit is the amount of

the discretionary fee paid to the contractor under the contract

under which the nuclear safety violation occurs. The term ‘discretionary fee’ refers to that portion of the contract fee which is paid,

or not, at the discretion of the DOE contracting officer based on the

contractor’s performance.

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the

House of Representatives, changes in existing law made by the bill,

as reported, are shown as follows (existing law proposed to be omitVerDate 11-MAY-2000 08:09 Nov 21, 2001 Jkt 099006 PO 00000 Frm 00020 Fmt 6659 Sfmt 6602 E:\HR\OC\HR299P1.XXX pfrm11 PsN: HR299P1
21

ted 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

* * * * * * *

TABLE OF CONTENTS

* * * * * * *

TITLE I—ATOMIC ENERGY

* * * * * * *

CHAPTER 14. GENERAL AUTHORITY

Sec. 161. General provisions.

* * * * * * *

Sec. 170C. Transportation of nuclear materials.

* * * * * * *

TITLE I—ATOMIC ENERGY

* * * * * * *

CHAPTER 14. GENERAL AUTHORITY

* * * * * * *

SEC. 170. INDEMNIFICATION AND LIMITATION OF LIABILITY.—

a. * * *

* * * * * * *

b. AMOUNT AND TYPE OF FINANCIAL PROTECTION FOR LICENS- EES.—(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

22

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 ø$63,000,000¿ $94,000,000 (subject to adjustment for inflation under subsection t.), but not more than

ø$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.

* * * * * * *

(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 øLICENSES¿ LICENSEES BY NUCLEAR REG- ULATORY COMMISSION.—The Commission shall, with respect to licenses issued between August 30, 1954, and August 1, ø2002¿

2017, 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 August

1, ø2002¿ 2017, the requirements of this subsection shall apply to

any license issued for such facility subsequent to August 1, ø2002¿

2017. d. INDEMNIFICATION OF CONTRACTORS BY DEPARTMENT OF ENERGY.—(1)(A) In addition to any other authority the Secretary of

23

Energy (in this section referred to as the ‘‘Secretary’’) may have,

the Secretary shall, until August 1, ø2002¿ 2017, enter into agreements of indemnification under this subsection with any person

who may conduct activities under a contract with the Department

of Energy that involve the risk of public liability and that are not

subject to financial protection requirements under subsection b. or

agreements of indemnification under subsection c. or k.

* * * * * * *

ø(2) In agreements of indemnification entered into under paragraph (1), the Secretary may require the contractor to provide and

maintain financial protection of such a type and in such amounts

as the Secretary shall determine to be appropriate to cover public

liability arising out of or in connection with the contractual activity, and shall indemnify the persons indemnified against such

claims above the amount of the financial protection required, to the

full extent of the aggregate public liability of the persons indemnified for each nuclear incident, including such legal costs of the

contractor as are approved by the Secretary.

ø(3)(A) Notwithstanding paragraph (2), if the maximum amount

of financial protection required of the contractor, shall at all times

remain equal to or greater than the maximum amount of financial

protection required of licensees under subsection b.

ø(B) The amount of indemnity provided contractors under this

subsection shall not, at any time, be reduced in the event that the

maximum amount of financial protection required of licensees is reduced.

ø(C) All agreements of indemnification under which the Department of Energy (or its predecessor agencies) may be required to indemnify any person, shall be deemed to be amended, on the date

of the enactment of the Price-Anderson Amendments Act of 1988,

to reflect the amount of indemnity for public liability and any applicable financial protection required of the contractor under this

subsection on such date.¿

(2) INDEMNIFICATION AGREEMENTS.—In an agreement of indemnification entered into under paragraph (1), the Secretary—

(A) may require the contractor to provide and maintain the

financial protection of such a type and in such amounts as the

Secretary shall determine to be appropriate to cover public liability arising out of or in connection with the contractual activity; and

(B) shall indemnify the persons indemnified against such liability above the amount of the financial protection required, in

the amount of $10,000,000,000 (subject to adjustment for inflation under subsection t.), in the aggregate, for all persons indemnified in connection with the contract and for each nuclear

incident, including such legal costs of the contractor as are approved by the Secretary.

(3) CONTRACT AMENDMENTS.—All agreements of indemnification

under which the Department of Energy (or its predecessor agencies)

may be required to indemnify any person under this section shall

be deemed to be amended, on the date of enactment of the Price-Anderson Reauthorization Act of 2001, to reflect the amount of indemVerDate 11-MAY-2000 08:09 Nov 21, 2001 Jkt 099006 PO 00000 Frm 00023 Fmt 6659 Sfmt 6603 E:\HR\OC\HR299P1.XXX pfrm11 PsN: HR299P1
24

nity for public liability and any applicable financial protection required of the contractor under this subsection.

* * * * * * *

(5) In the case of nuclear incidents occurring outside the United

States, the amount of the indemnity provided by the Secretary

under this subsection shall not exceed ø$100,000,000¿

$500,000,000.

* * * * * * *

(8)(A) It shall be a condition of any agreement of indemnification

entered into under this subsection that the indemnified party comply with regulations issued under this paragraph.

(B) Not later than 180 days after the date of the enactment of this

paragraph, the Secretary shall issue industrial health and safety

regulations that shall apply to all Department of Energy contractors

and subcontractors who are covered under agreements entered into

under this subsection for operations at Department of Energy nuclear facilities. Such regulations shall provide a level of protection

of worker health and safety that is substantially equivalent to or

identical to that provided by the industrial and construction safety

regulations of the Occupational Safety and Health Administration

(29 CFR 1910 and 1926), and shall establish civil penalties for violation thereof that are substantially equivalent to or identical to the

civil penalties applicable to violations of the industrial and construction safety regulations of the Occupational Safety and Health

Administration. The Secretary shall amend regulations under this

subparagraph as necessary.

(C) Not later than 240 days after the date of the enactment of this

paragraph, all agreements described in subparagraph (B), and all

contracts and subcontracts for the indemnified contractors and subcontractors, shall be modified to incorporate the requirements of the

regulations issued under subparagraph (B). Such modifications

shall require compliance with the requirements of the regulations

not later than 1 year after the issuance of the regulations.

(D) Enforcement of regulations issued under subparagraph (B),

and inspections required in the course thereof, shall be conducted by

the Office of Enforcement of the Office of Environment, Safety, and

Health of the Department of Energy. The Secretary shall transmit

to the Congress an annual report on the implementation of this subparagraph.

e. LIMITATION ON AGGREGATE PUBLIC LIABILITY.—(1) The aggregate public liability for a single nuclear incident of persons indemnified, including such legal costs as are authorized to be paid under

subsection o. (1)(D), shall not exceed—

(A) * * *

(B) in the case of contractors with whom the Secretary has

entered into an agreement of indemnification under subsection

d., øthe maximum amount of financial protection required

under subsection b. or¿ the amount of indemnity and financial

protection that may be required under øparagraph (3) of subsection d., whichever amount is more¿ paragraph (2) of subsection d.; and

* * * * * * *

25

(4) With respect to any nuclear incident occurring outside of the

United States to which an agreement of indemnification entered

into under the provisions of subsection d. is applicable, such aggregate public liability shall not exceed the amount of ø$100,000,000¿

$500,000,000, together with the amount of financial protection required of the contractor.

* * * * * * *

k. EXEMPTION FROM FINANCIAL PROTECTION REQUIREMENT FOR

NONPROFIT EDUCATIONAL INSTITUTIONS.—With respect to any license issued pursuant to section 53, 63, 81, 104 a., or 104 c. for the

conduct of educational activities to a person found by the Commission to be a nonprofit educational institution, the Commission shall

exempt such licensee from the financial protection requirement of

subsection a. With respect to licenses issued between August 30,

1954, and August 1, ø2002¿ 2017, for which the Commission grants

such exemption:

(1) * * *

* * * * * * *

Any licensee may waive an exemption to which it is entitled under

this subsection. With respect to any production or utilization facility for which a construction permit is issued between August 30,

1954, and August 1, ø2002¿ 2017, the requirements of this subsection shall apply to any license issued for such facility subsequent to August 1, ø2002¿ 2017.

* * * * * * *

p. REPORTS TO CONGRESS.—The Commission and the Secretary

shall submit to the Congress by August 1, ø1998¿ 2013, 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 øthe date of the enactment of the Price-Anderson

Amendments Act of 1988¿ July 1, 2001, in accordance with the aggregate percentage change in the Consumer Price Index since— (A) øsuch date of enactment¿ July 1, 2001, in the case of the

first adjustment under this subsection; or

(B) the previous adjustment under this subsection.

(2) ADJUSTMENT.—The Secretary shall adjust the amount of indemnification provided under an agreement of indemnification

under subsection d. not less than once during each 5-year period

following July 1, 2001, in accordance with the aggregate percentage

change in the Consumer Price Index since— (A) that date, in the case of the first adjustment under this

paragraph; or

(B) the previous adjustment under this paragraph.

26

ø(2)¿ (3) For purposes of this subsection, the term ‘‘Consumer

Price Index’’ means the Consumer Price Index for all urban consumers published by the Secretary of Labor.

u. PROHIBITION ON ASSUMPTION OF LIABILITY FOR CERTAIN FOR- EIGN ACCIDENTS.—Notwithstanding this section or any other provision of law, no officer of the United States or of any department,

agency, or instrumentality of the United States Government may

enter into any contract or other arrangement, or into any amendment or modification of a contract or other arrangement, the purpose or effect of which would be to directly or indirectly impose liability on the United States Government, or any department, agency, or instrumentality of the United States Government, or to otherwise directly or indirectly require an indemnity by the United States

Government, for nuclear accidents occurring in any country whose

government has been identified by the Secretary of State as engaged

in state sponsorship of terrorist activities (specifically including any

country the government of which, as of September 11, 2001, had

been determined by the Secretary of State under section 620A(a) of

the Foreign Assistance Act of 1961, section 6(j)(1) of the Export Administration Act of 1979, or section 40(d) of the Arms Export Control Act to have repeatedly provided support for acts of international

terrorism).

v. UNREASONABLE RISK CONSULTATION.—Before entering into an

agreement of indemnification under this section with respect to a

utilization facility, the Nuclear Regulatory Commission shall consult with the Assistant to the President for Homeland Security (or

any successor official) concerning whether the location of the proposed facility and the design of that type of facility ensure that the

facility provides for adequate protection of public health and safety

if subject to a terrorist attack.

w. FINANCIAL ACCOUNTABILITY.—(1) Notwithstanding subsection

d., the Attorney General may bring an action in the appropriate

United States district court to recover from a contractor of the Secretary (or subcontractor or supplier of such contractor) amounts

paid by the Federal Government under an agreement of indemnification under subsection d. for public liability resulting from conduct which constitutes intentional misconduct of any corporate officer, manager, or superintendent of such contractor (or subcontractor

or supplier of such contractor).

(2) The Attorney General may recover under paragraph (1) an

amount not to exceed the amount of the profit derived by the defendant from the contract.

(3) No amount recovered from any contractor (or subcontractor or

supplier of such contractor) under paragraph (1) may be reimbursed

directly or indirectly by the Department of Energy.

(4) Paragraph (1) shall not apply to any nonprofit entity conducting activities under contract for the Secretary.

(5) No waiver of a defense required under this section shall prevent a defendant from asserting such defense in an action brought

under this subsection.

(6) The Secretary shall, by rule, define the terms ‘‘profit’’ and ‘‘nonprofit entity’’ for purposes of this subsection. Such rulemaking

shall be completed not later than 180 days after the date of the enactment of this subsection.

* * * * * * *

27

SEC. 170C. TRANSPORTATION OF NUCLEAR MATERIALS.— a. The Nuclear Regulatory Commission shall establish a system

to ensure that— (1) with respect to activities by any party pursuant to a license issued under this Act, each vehicle transporting materials

described in subsection b. in the United States— (A) from a facility licensed by the Nuclear Regulatory

Commission;

(B) from a facility licensed by an agreement State; or

(C) from a country with whom the United States has an

agreement for cooperation under section 123,

carries a manifest describing the type and amount of materials

being transported;

(2) each individual driving or traveling with such a vehicle

has been subject to a security background check by appropriate

Federal entities; and

(3) no such vehicle transports such materials to a destination

other than a facility licensed by the Nuclear Regulatory Commission or an agreement State under this Act or other appropriate Federal facility, or to a destination outside the United

States in a country with whom the United States has an agreement for cooperation under section 123.

b. Except as otherwise provided by the Commission by regulation,

the materials referred to in subsection a.(1) are byproduct materials,

source materials, special nuclear materials, high-level radioactive

waste, spent nuclear fuel, transuranic waste, and low-level radioactive waste (as defined in section 2(16) of the Nuclear Waste Policy

Act of 1982 (42 U.S.C. 10101(16))).

* * * * * * *

CHAPTER 18. ENFORCEMENT

* * * * * * *

SEC. 234A. CIVIL MONETARY PENALTIES FOR VIOLATIONS OF DEPARTMENT OF ENERGY SAFETY REGULATIONS.—a. * * *

b. (1) * * *

(2) In determining the amount of any civil penalty under this

subsection, the Secretary shall take into account the nature, circumstances, extent, and gravity of the violation or violations and,

with respect to the violator, ability to pay, effect on ability to continue to do business, any history of prior such violations, the degree of culpability, and such other matters as justice may require.

øIn implementing this section, the Secretary shall determine by

rule whether nonprofit educational institutions should receive automatic remission of any penalty under this section.¿

* * * * * * *

ød. The provisions of this section shall not apply to:

ø(1) The University of Chicago (and any subcontractors or

suppliers thereto) for activities associated with Argonne National Laboratory;

ø(2) The University of California (and any subcontractors or

suppliers thereto) for activities associated with Los Alamos National Laboratory, Lawrence Livermore National Laboratory,

and Lawrence Berkeley National Laboratory;

28

ø(3) American Telephone an Telegraph Company and its subsidiaries (and any subcontractors or suppliers thereto) for activities associated with Sandia National Laboratories;

ø(4) Universities Research Association, Inc. (and any subcontractors or suppliers thereto) for activities associated with

FERMI National Laboratory;

ø(5) Princeton University (and any subcontractors or suppliers thereto) for activities associated with Princeton Plasma

Physics Laboratory;

ø(6) The Associated Universities, Inc. (and any subcontractors or suppliers thereto) for activities associated with the

Brookhaven National Laboratory; and

ø(7) Battelle Memorial Institute (and any subcontractors or

suppliers thereto) for activities associated with Pacific Northwest Laboratory.¿

d. Notwithstanding subsection a., a contractor, subcontractor, or

supplier described in section 501(c)(3) of the Internal Revenue Code

of 1986 and exempt from tax under section 501(a) of such Code

shall not be subject to a civil penalty for a violation under subsection a. in excess of the amount of any discretionary fee paid to

such contractor, subcontractor, or supplier under the contract under

which such violation occurs.

* * * * * * *

(29)

MINORITY ADDITIONAL OR DISSENTING VIEWS

ADDITIONAL VIEWS OF MR. MARKEY OF MASSACHUSETTS REGARDING

NUCLEAR SECURITY PROVISIONS OF H.R. 2983

During its markup of H.R. 2983, the Committee approved by

voice vote an amendment which I, along with Chairman Tauzin

and Ranking Member Dingell, offered to improve the security of

nuclear power plants against the threat of terrorist attacks. While

the Committee Report briefly describes this amendment, I would

like to provide some additional background on why it is necessary.

Under the Atomic Energy Act, the Nuclear Regulatory Commission has the obligation to assure that our nation’s nuclear power

plants are operated in a manner which protects public health, public safety, and the environment. Pursuant to the authorities conferred by the Congress to the Commission under the Act, the NRC

has issued regulations requiring licensees to protect its plants

against the ‘‘design basis threat’’ (see 10 CFR 73). These rules require licensees to be able to protect nuclear facilities against acts

of radiological sabotage or theft of special nuclear material.

For more than 10 years, I have been concerned that the NRC’s

efforts to prevent and respond to terrorist attacks or major accidents at nuclear reactors have been sorely lacking.

In 1991, in the wake of U.S. bombing of Iraqi nuclear reactors

and Saddam Hussein’s call for acts of terrorism against the U.S.,

I wrote two letters to the NRC concerning the threat of truck

bombs at nuclear reactors, and called for an upgrade of the plans

to defend nuclear reactors against larger and better-armed groups

of attackers. The NRC responded that ‘‘we have determined that

there continues to be no credible threats of terrorist actions against

any NRC-licensed facility that warrants implementation of contingency plans against truck bombs at this time.’’ It was not until

years later that the NRC finally revised its truck bomb rule. And

even then, it remains inadequate—as it assumes that the largest

truck bomb threat is a truck bomb in a 4 wheel drive SUV.

Over the years, the NRC has continued to have a checkered

record on nuclear security. In 1998, for example, the NRC senior

staff tried to eliminate the program that tested the adequacy of the

licensees’ guard forces through force-on-force exercises, citing budget problems. Funding for this program was only restored after I

wrote the NRC to complain and several NRC staffers were forced

to take the extraordinary step of filing formal ‘‘Differing Professional Opinions’’ protesting this ill-advised action. This prompted

the Commission to reverse the decision made by its senior staff to

cancel funding for the OSRE program.

Today, the current NRC ‘‘Design Basis Threat’’—published in the

Federal Register—that is supposed to be used to design safeguards

systems, fails to adequately reflect the true nature of the terrorist

30

threat to our nuclear plants. For example, the NRC says that the

plants are supposed to be able to defend against attacks by ‘‘several

persons’’. How many is that? Well, the exact number is confidential, but suffice it to say that it is far, far less than the number

of people that carried out the September 11th attacks. The Design

Basis Threat rules talk about ‘‘Inside assistance’’ which may include ‘‘a knowledgeable individual’’. In other words, one insider. In

reality, we need to be concerned about multiple insiders. The rules

talk about ‘‘Suitable weapons, up to and including hand-held automatic weapons’’ and ‘‘hand-carried equipment’’ including explosives.’’ In reality, terrorists can probably obtain access to larger, vehicle-mounted weapons. The rules talk about a ‘‘four wheel drive

land vehicle bomb.’’ What about a large truck or tractor-trailer

filled with explosives? What about water-borne threats to reactors

located along rivers or the ocean? And what about air-borne

threats—like a commercial airliner filled with jet fuel? The Commission’s current regulations regarding the design basis threat

says nothing about such threats, and in an October 16, 2001 letter

responding to concerns I had earlier raised about security in the

aftermath of the events of September 11th, Chairman Meserve

stated that none of the current commercial reactors are capable of

withstanding a hit from a large commercial airliner. In addition,

spent fuel pools, dry cask storage, switching yards, and other areas

of these plants may be even more vulnerable to destructive acts.

The reality is that the Commission’s Design Basis Threat rules

simply ignore many of the risks that the NRC decided prior to September 11th were just unthinkable, or which they had arbitrarily

assumed had such a remote probability of occurring that they did

not have to be addressed. Now we know that threats that had been

considered to be unthinkable can happen here. The provision

adopted by the Committee will compel the Commission to evaluate

these threats and respond to them with new rules and procedures

aimed at beefing up security and safeguards at these facilities in

the aftermath of the September 11th attacks. It is intended to force

a complete, top-to-bottom review of the nature and adequacy of the

defenses currently in place to protect nuclear facilities from the terrorist threat.

Under the amendment, the President is required to undertake an

immediate study of the terrorist threat to nuclear facilities and materials, focusing on (but not limited to) an examination of 10 specific threats. Based on that examination, the President would determine what types of threats properly are considered attacks by

enemies of the United States, such as attacks using surface to air

missiles launched by a foreign government, and what types of

threats involve the type of risks, such as radiological sabotage or

theft of nuclear materials, that NRC licensees should be responsible for guarding against. Following the submission of this report,

the NRC will be required to undertake an immediate rulemaking

to revise the Design Basis Threat and issue other appropriate rules

to upgrade the security around nuclear licensees.

Another problem addressed by the amendment relates to the

NRC’s force-on-force exercises designed to prevent terrorist attacks

at nuclear reactors. Because of the inadequacies in the Design

Basis Threat, we know that the mock terrorist forces in these drills

31

must labor under numerous artificial restrictions and limitations,

and far too few exercises are conducted. Currently, we are informed

that licensees have been required to undergo an operational safeguards response evaluation (OSRE) test only once every eight

years. But even within these limitations, the NRC has reported

that about half of the plants tested had inadequacies in their test

programs—some of them quite serious in nature. According to

press reports, at a test a few years ago a simulated attack by an

NRC team would have been able to cause a core melt at one nuclear power plant. And at Vermont Yankee, a few years ago, a

team reportedly was able to scale plant fences undetected at several locations and to slip a fake handgun past a plant security

check. Numerous other problems have been found at other plants.

What has been the Commission’s and the nuclear industry’s response to this situation? They decided to try to get rid of the program—first trying to defund it and then trying to replace it with

a toothless industry-designed and managed alternative, which

would have allowed the nuclear industry to design, implement and

assess its own security performance. In the first weeks following

September 11, I learned that lobbyists for the nuclear industry

were pressuring the Commission to scale back the enhanced security measures that had been taken, despite numerous warnings by

Federal officials that additional security threats to the U.S. existed.

The nuclear industry has also lobbied Members of Congress in recent weeks, urging them to reject my efforts to improve security at

nuclear facilities.

My amendment attempts to assure that the OSRE program is

placed on a sound statutory basis. It represents a compromise that

has been worked out between myself, the Chairman, and Ranking

Member Dingell. It will require the NRC to establish an Operational Safeguards Response Evaluation Program to ensure the

physical protection capability and operational safeguards response

for sensitive nuclear facilities. This program will test the licensee’s

security guards through frequent Commission-approved or designed, observed, and evaluated force-on-force exercises to determine whether the ability to defeat the design basis threat is being

maintained.

As noted in the Committee report, this amendment directs the

Commission to take a dominant role in the implementation of

force-on-force exercises. The Commission controls the three critical

aspects for carrying out tests of operational safeguards: it must design, or approve the design for each force-on-force exercise; it must

physically observe the exercises; and, it is the final arbiter on the

results of the exercises. The Commission should not serve as a rubber stamp at any step of the way. For instance, to the extent a licensee has devised all or any part of an exercise design, the NRC

should scrutinize the design rigorously to ensure that it will provide the information necessary to determine whether a licensee can

defeat design basis threats. The amendment contemplates, in particular, that the design approval process will be an iterative, collaborative one, reflecting the work of both a licensee and Commission staff in composing a plan appropriate to the facility involved.

It is my personal view that if the Commission wants to restore

public confidence in the safety of nuclear facilities, it should use

32

the authorities conferred under this section to immediately cancel

the nuclear-industry’s so-called Safeguards Performance Assessment (or SPA) program. Under SPA, the nuclear industry would

design, conduct and evaluate tests of its own guard forces. Such

tests cannot, in my view, replace the role of NRC-designed, supervised and evaluated force-on-force exercises. In the aftermath of

the September 11th attack, the public does not have confidence in

industry self-regulation when it comes to safety. The public would

have even less confidence in this particular industry if it was

aware of the extent of the nuclear industry’s lobbying of both the

Commission and the U.S. Congress to prevent improvements to security at nuclear facilities from being made. It wants the federal

government to assume a direct role.

Finally, in light of reports indicating that terrorists may have obtained licenses to transport hazardous waste, including radioactive

waste, the amendment directs the NRC to undertake an immediate

rulemaking to improve transportation safety.

The purpose of this amendment is to address the risk that terrorists might target shipments of radioactive materials. We know that

there are persistent problems with the current system of controls

for the transportation and accounting of radioactive and other hazardous wastes. Recently, Northeast Utilities reported that after

conducting a $9 million internal investigation, it has been unable

to account for two missing spent fuel rods that disappeared some

time during the last 20 years. According to the utility, the fuel

might still be in spent fuel storage pools, or it might have been

transported to other facilities or it may have been stolen. Records

do not allow them to account for its whereabouts.

According to NRCs Annual Safeguard Summary Event List for

1999, the threat of theft or diversion of nuclear materials is very

real. The NRC report indicates that 3 men in Chechnya were

caught stealing radioactive Cobalt-60 from a facility there. It is not

known what they planned to do with the materials, but we do

know that Osama Bin Laden works with some of the Chechnyan

factions. And the Committee is aware of the press reports indicating that suspected terrorists have successfully obtained licenses

to drive radioactive and hazardous waste around from an unscrupulous state examiner in Pennsylvania. Some of these reports

quoted sources in the trucking industry as saying that anyone with

a criminal record could get a license to drive hazardous materials

as long as they were over 21 years old. We can only imagine what

terrorists might have done with radioactive materials if they got

them.

We also know from the Attorney General that we must be on

guard for future terrorist attacks against other targets. Under the

amendment, the NRC would be required to issue rules to strengthen the safeguards associated with transportation of radioactive materials. First of all, the amendment requires that anyone authorized to drive or accompany these materials must pass a background

check to determine whether they pose a security threat. Second,

the amendment requires NRC to develop a manifest system that

accurately describes the radioactive contents of each shipment so

that any recipient would know what they were receiving. Finally,

the amendment prohibits any shipments of radioactive material

33

from being sent to anywhere other than a licensed NRC facility, an

agreement state licensed facility, or an appropriate Federal facility,

so that we ensure that the materials are only going places where

the expertise to handle them exists. The amendment allows the

NRC to exempt out from coverage certain materials, such as certain radio-pharmaceuticals used in nuclear medicine, that might

not need to be subjected to these requirements. Such exemptions

must follow only after a determination that doing so is fully consistent with the protection of public health and safety and the common defense and security has been made. The rulemaking would

only be for the purposes of determining whether the transportation

of a particular radioactive material would pose a terrorist threat,

and should not serve as a precedent for any non-terrorist-related

matter.

EDWARD J. MARKEY.

DISSENTING VIEWS OF REPRESENTATIVE EDWARD J. MARKEY (D–MA)

ON H.R. 2983, REAUTHORIZATION OF THE PRICE-ANDERSON ACT

Back in the 1950s, when I was a boy, we were told that nuclear

power was going to be safe, efficient, and too cheap to meter. In

order to promote this new technology, the nuclear utility industry

sent us kids nifty little Reddy Kilowatt pins to tout their new technology. And they came with a catchy little jingle, which I’d like to

share with you:

‘‘I’m a Busy Little Atom

I split myself in two

And multiply as many times

As I have jobs to do!

I’ll work for you for pennies,

I’m fast, efficient, steady,

So any time . . . to ease your work

Just ‘plug in,’ folks—I’m Reddy.

The Mighty Atom—Reddy Kilowatt.’’

And so, we learned at a very early age that Reddy Kilowatt was

our friend, standing ready to ease the nation’s work. Unfortunately,

it turned out at the time that our little friend was having some

problems getting insurance coverage, because the insurance industry wasn’t convinced that he was as ‘‘fast, efficient and steady’’ as

the nuclear utilities were claiming. So, the Congress decided to

step in and give our little buddy Reddy Kilowatt a boost by capping

the nuclear industry’s liability in the event that those ‘‘busy little

atoms’’ got out of control and began multiplying TOO MUCH—resulting in a catastrophic core meltdown at a civilian nuclear power

plant.

Americans were told at the time that this would just be temporary assistance that we were going to be providing for a developing new industry and technology help get on its feet—so the private insurance markets could take over the job of insuring its risks.

The Senate Report said that Price-Anderson would only be needed

for ten years because, ‘‘. . . the problem of reactor safety will be

to a great extent solved and the insurance people will have had an

experience on which to base a sound program of their own.’’ That

34

was 44 years ago. But as this program became entrenched, the sun

never set on the Price-Anderson subsidy!

Despite the persistence of this and other federal subsidies, the

nuclear industry has remained unable to compete economically in

the energy marketplace. No new nuclear power plants have been

successfully ordered since 1973 because nuclear power is more expensive than natural gas; it costs about $1700 per kilowatt hour of

power generated to build a nuclear plant, while a gas plant costs

as little as $420 per kilowatt hour. And if capital costs are included, nuclear power costs 6 cents a kilowatt-hour, compared to 4

cents a kilowatt-hour for gas or coal.

There is nothing stopping any utility or power generating company from ordering a nuclear power plant today. They haven’t done

so. Why? Not because of the opposition of a bunch of granolachomping, tree-hugging anti-nuclear activists, as the nuclear industry would have us believe. No. No new nuclear power plants have

been ordered because Republican Wall Street investment bankers

know that the bottom line is that despite all the subsidies, nuclear

power is still too expensive when compared to natural gas or coal.

Geoffery Rothwell of the CATO Institute has said that ‘‘A more

efficient solution would have been to assign full liability to those

parties and let the insurance market determine the probability of

an accident, its consequences and the proper premiums for coverage. . . . If nuclear power cannot compete, however, it should not

be subsidized. Let the best energy win.’’ My view is that it is now

time for nuclear power to grow up and compete in the free market

without further market distorting government subsidies. This is no

longer a fledgling industry, and it needs to be weaned from its reliance on government support and compete freely against other energy generation technologies and against technologies which would

reduce the need for new power plants by making us more energy

efficient. If nuclear power is so safe, we should not be capping liability and we should not be subsidizing the industry’s insurance

needs.

During the Committee markup of the legislation, I offered an

amendment that would have required the nuclear industry to attempt to obtain private sector insurance prior to obtaining taxpayer-funded coverage through the Price-Anderson Act. All a nuclear reactor owner would have had to do in order to get Price-Anderson coverage is prove that they tried to obtain private sector insurance and that they were rejected.

All of us have to have insurance for our cars into order to be able

to get a drivers license. If you are a good driver, and never have

any accidents, you end up paying a lower rate. And if you are not

such a good driver, and have some accidents, you end up paying

higher rates. But, if you’ve just had your 12th accident in the past

12 months, you will soon receive a notice that your auto insurance

company is canceling your policy, and you may be unable to find

any private source of insurance, and you will need to get insurance

from your state’s ‘‘insurer of last resort,’’ also known as the assigned-risk pool. Being in the high-risk pool will hurt your wallet,

but if you drive safely while you’re in it, you can get back on the

road to more affordable insurance.

35

That’s the way the insurance markets work. Except, of course,

for nuclear power. Nuclear power was placed in the Price-Anderson

‘‘assigned risk pool’’ 44 years ago, and that is apparently where it

wants to stay, despite industry’s claims of a whole new generation

of new reactor designs that are inherently safe. Well—if these designs are safe, why are we going to throw them into the Price-Anderson ‘‘assigned risk pool’’? If the new advanced reactor designs

and the new pebble bed reactors are so safe, why shouldn’t the

companies that buy these technologies be asked to go into the private insurance markets first, before we automatically throw them

into Price-Anderson? Maybe they can get a lower rate from the insurance markets.

All my amendment said is that before we automatically put nuclear power into the Price-Anderson ‘‘assigned-risk pool’’, why not

see if it can prove it has improved its safety record and get private

insurance coverage first? My amendment was rejected. Before we

continue to promise bailouts to an industry that claims to be completely safe for the next 15 years, shouldn’t it at least attempt to

get insurance from companies who insure other completely safe industries?

Why should we establish a cap on the nuclear industry’s liability

in the event of a catastrophic nuclear accident and commit the

American taxpayers to picking up the tab for any accident which

results in more than $9 billion in damage without first establishing

that the nuclear industry is unable to obtain full insurance coverage from the private markets? If the industry is correct that no

company can get coverage from the private markets, then it should

not oppose this amendment, as every new licensee will be able to

demonstrate to the NRC that they have tried and failed to get full

coverage for their full nuclear liability.

The nuclear industry likes to claim that ‘‘there is no taxpayer

Money involved’’ in Price-Anderson. This is just nonsense. While the Act does require reactor operators to get $200 million of insurance per reactor per incident, and it also provides for a retroactive

assessment of all reactor operators that goes to just over $9 billion,

the very core of the entire Act is a commitment from the Congress

to pick up the tab for accidents that cost more than $9.4 billion.

Indeed, Section 170(e)(2) states ‘‘In the event of a nuclear incident involving damages in excess of the amount of aggregate public

liability under paragraph (1), the Congress will thoroughly review

the particular incident in accordance with the procedures set forth

in section 170i. And will in accordance with such procedures, take

whatever action is determined to be necessary (including approval

of appropriate compensation plans and appropriation of funds) to

provide full and prompt compensation to the public for all public

liability claims resulting from a disaster of such magnitude.’’ Section 170i, in turn sets up detailed expedited procedures to the submission by the Executive Branch of nuclear accident liability bailout bill. So, very clearly, billions, hundreds of billions, perhaps

even trillions of taxpayer dollars are involved.

All my amendment says is let’s subject the proposition that none

of these reactor operators can get private insurance to a market

test. If it is really true that the private insurance market can’t provide full coverage for nuclear liabilities, and that this industry

36

can’t judge the likely extent of their liability, then the operators

will easily be able to show that they can’t get insurance and can

join the Price-Anderson system. Now, I’m not so pessimistic about

the inherent genius and entrepreneurial abilities of the private sector. The insurance industry is in the business of making sophisticated judgements about complex risks, some of which involve unlikely, but high-cost pay-outs. That’s what their entire business is

about—making lots of money by collecting more in premiums than

they have to pay out in claims. So, if a nuclear accident is as improbable and remote as the nuclear industry claims it is, this

should be a very profitable business!

I respectfully dissent.

EDWARD J. MARKEY.

(37)

EXCHANGE OF COMMITTEE CORRESPONDENCE

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC, November 8, 2001.

Hon. F. JAMES SENSENBRENNER, Jr.,

Chairman, Committee on the Judiciary, U.S. House of Representatives, Washington, DC.

DEAR CHAIRMAN SENSENBRENNER: Thank you for your letter regarding to H.R. 2983, the Price-Anderson Reauthorization Act of

2001.

I appreciate your willingness not to exercise your right to a referral of H.R. 2983. I agree that your decision to forego action on the

bill will not prejudice the Committee on the Judiciary with respect

to its jurisdictional prerogatives on this or similar legislation. Further, I recognize your right to request conferees on those provisions

within the Committee on the Judiciary’s jurisdiction should they be

the subject of a House-Senate conference.

I will include your letter dated October 31, 2001 concerning the

Cox amendment, your November 7, 2001 letter, and this response

in the Committee’s report on H.R. 2983, and I look forward to

working with you as we bring this legislation to the Floor.

Sincerely,

W.J. ‘‘BILLY’’ TAUZIN, Chairman.

HOUSE OF REPRESENTATIVES,

COMMITTEE ON THE JUDICIARY,

November 7, 2001.

Hon. W.J. (BILLY) TAUZIN,

Chairman, Committee on Energy and Commerce, Washington, DC.

DEAR BILLY: I write regarding H.R. 2983, the ‘‘Price-Anderson

Reauthorization Act of 2001,’’ which was ordered reported by the

Committee on Energy and Commerce on October 31, 2001. As you

know, the Committee on the Judiciary has subject matter jurisdiction over at least one amendment adopted by your Committee. I

have previously written to you about the Cox Amendment (see enclosed). Because I understand the desire to have this legislation

considered expeditiously by the House and because the Committee

does not have a substantive concern with those provisions that fall

within its jurisdiction, I do not intend to hold a hearing or markup

on this legislation.

In agreeing to waive consideration by our Committee, the Committee does not waive its jurisdiction over H.R. 2983. The Committee on the Judiciary takes this action with the understanding

38

that the Committee’s jurisdiction is in no way diminished or altered, and that the Committee’s right to the appointment of conferees during any conference on the bill is preserved. I would also

expect your support for my request to the Speaker for the appointment of conferees from my Committee with respect to matters

within the jurisdiction of my Committee should a conference with

the Senate be convened on this or similar legislation.

I request that you include our exchange of letters (and my October 31, 2001, letter relating to the Cox Amendment) in your Committee’s report to accompany H.R. 2983. Thank you for your cooperation on this important matter.

Sincerely,

F. JAMES SENSENBRENNER, Jr., Chairman.

HOUSE OF REPRESENTATIVES,

COMMITTEE ON THE JUDICIARY,

October 31, 2001.

Hon. W.J. BILLY TAUZIN,

Chairman, Committee on Energy and Commerce, Washington, DC.

DEAR CHAIRMAN TAUZIN: I understand that Rep. Chris Cox intends to offer an amendment that may fall within the jurisdiction

of the Committee on the Judiciary during your Committee’s markup of H.R. 2983, the ‘‘Price-Anderson Reauthorization Act of 2001.’’ The Cox Amendment would prohibit assumption by the United

States Government of liability for nuclear accidents in certain foreign countries.

I have reviewed this amendment and support it. Furthermore,

should the Cox Amendment be adopted during the mark-up of H.R.

2983, the Judiciary Committee will not seek a sequential referral

of H.R. 2983 on the basis of the adoption of the Cox Amendment.

If you have further questions about this matter, your staff should

contact Mr. William Moschella, Chief Legislative Counsel of the

Committee on the Judiciary.

Sincerely,

F. JAMES SENSENBRENNER, Jr., Chairman.

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE,

Washington, DC, November 19, 2001.

Hon. BILLY TAUZIN,

Chairman, Committee on Energy and Commerce, U.S. House of

Representatives, Washington, DC.

DEAR CHAIRMAN TAUZIN: The Committee on Energy and Commerce, on October 31, 2001, ordered reported H.R. 2983, the PriceAnderson Reauthorization Act of 2001. As introduced, the bill was

referred to Committee on Energy and Commerce. During consideration of the bill, it was modified to include an amendment by voice

vote. Part of that amendment (what is now Section 11 of the bill)

involves matters within the jurisdiction of the Committee on Transportation and Infrastructure under Rule X(q) of the Rules of the

House of Representatives, which grants this Committee jurisdiction

over ‘‘[r]oads and the safety thereof ’’ (Clause 19) and all

39

‘‘[t]ransportation . . . transportation safety (except automobile

safety), [and] transportation infrastructure’’ (Clause 20).

Our respective committees have addressed the jurisdictional

issue of transportation of nuclear material three times in the past

three Congresses, (See, Report 104–254, Part 1, Nuclear Waste Policy Act of 1995, Committee on Commerce, 104th Congress, 1st Session, page 40–41; Report 105–290, Part 1, Nuclear Waste Policy Act

of 1997, Committee on Commerce, 105th Congress, 1st Session,

page 53–54; Report 106–155, Part 1, Nuclear Waste Policy Act of

1999, Committee on Commerce, 106th Congress, 1st Session, page

46–48). I propose a similar accommodation in this instance.

Because you have expressed a desire to expeditiously act on this

measure, the Committee on Transportation and Infrastructure will

agree to be discharged from consideration of this measure if the bill

is modified on the House floor so as not to govern the overall

‘‘transportation’’ of nuclear materials, which would infringe on my

Committee’s jurisdiction. I believe that our staffs have reached a

mutually satisfactory compromise on this issue. In addition, the following proviso must be included to ensure that the bill does not

waive or otherwise affect any requirements governing motor carrier

and rail safety provisions under Title 49, or the Hazardous Materials Transportation Act:

(d) Nothing in this Act shall waive, modify, or affect the

application of chapter 51 of title 49, United States Code;

part A of subtitle V of title 49, United States Code; part

B of subtitle VI of title 49, United States Code, and title

23, United States Code.

Sincerely,

DON YOUNG, Chairman.

U.S. HOUSE OF REPRESENTATIVES,

COMMITTEE ON ENERGY AND COMMERCE,

Washington, DC, November 19, 2001.

Hon. DON YOUNG,

Chairman, Committee on Transportation and Infrastructure, Washington, DC.

DEAR CHAIRMAN YOUNG: Thank you for your letter regarding to

H.R. 2983, the Price-Anderson Reauthorization Act of 2001.

I appreciate your willingness not to seek a referral of H.R. 2983

so that we can move this legislation to the House floor expeditiously. Your letter is correct in that we will revise section 11 of

the bill (1) so as not to infringe on the jurisdiction of the Transportation and Infrastructure Committee and (2) to include the savings

clause you have proposed.

Again, thank you for your consideration. I will include your letter

and this response in the Committee’s report on H.R. 2983.

Sincerely,

W.J. ‘‘BILLY’’ TAUZIN, Chairman.

40

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, Washington, DC, November 19, 2001.

Chairman W. J. ‘‘BILLY’’ TAUZIN,

Chairman, Committee on Energy and Commerce, Washington, DC.

DEAR MR. CHAIRMAN: On October 31, 2001, the Committee on

Energy and Commerce ordered reported H.R. 2983, the Price-Anderson Reauthorization Act of 2001. As ordered reported by the

Committee on Energy and Commerce, this legislation contains a

number of provisions that fall within the jurisdiction of the Committee on Armed Services and, therefore, would be subject to sequential referral to our committee.

I understand that our staffs have been discussing these items

and have reached an understanding that would involve your agreement to modify two provisions before this legislation is brought before the House for floor consideration. Specifically: (1) section 10 relating to the assumption of liability for certain foreign accidents

and (2) section 13 relating to industrial safety rules for the Department of Energy. Accordingly, and based on this understanding, I do

not intend to request a sequential referral on this bill.

By agreeing not to seek sequential referral, the Committee on

Armed Services does not waive its jurisdiction over these provisions

or any other provisions of the bill that may fall within its jurisdiction. In addition, the Committee on Armed Services reserves the

right to seek conferee status on any provisions within its jurisdiction, which are considered in the House-Senate conference, and

asks for your support in being accorded such conferees.

Thank you for your cooperation on this matter and I request that

you include this letter as part of the report on H.R. 2983.

Sincerely,

BOB STUMP, Chairman.

U.S. HOUSE OF REPRESENTATIVES,

COMMITTEE ON ENERGY AND COMMERCE,

Washington, DC, November 19, 2000.

Hon. BOB STUMP,

Chairman, Committee on Armed Services, Washington, DC.

DEAR CHAIRMAN STUMP: Thank you for your letter regarding

H.R. 2983, the Price-Anderson Reauthorization Act of 2001.

I appreciate your willingness not to exercise your right to seek

a referral of H.R. 2983. I agree that your decision to forego action

on the bill will not prejudice the Committee on Armed Services

with respect to its jurisdictional perogatives on this or similar legislation. Further, I recognize your right to request conferees on

those provisions within the Committee on Armed Services’ jurisdiction should they be the subject of a House-Senate conference.

I will include your letter and this response in the Committee’s

report on H.R. 2983.

Sincerely,

W.J. ‘‘BILLY’’ TAUZIN, Chairman.