Notice of Inquiry
Preparation of Report to Congress on Price-Anderson Act
Agency: Office of General Counsel, DOE
Action: Notice of Inquiry concerning preparation of report to Congress on the Price- Anderson Act
Summary: The Department of Energy (the "Department" or "DOE") is requesting public comments concerning the continuation or modification of the provisions of the Price-Anderson Act (the "Act"). These comments will assist the Department in the preparation of a report on the Act to be submitted to Congress by August 1, 1998 as required by the Atomic Energy Act (AEA).
Dates: Public comments must be received by January 30, 1998. Reply comments must be received by February 13, 1998.
Addresses: Send 5 written copies of public comments or reply comments to: U.S. Department of Energy, Office of General Counsel, GC-52, 1000 Independence Ave. S.W., Washington, DC 20585. If possible, a copy should also be e-mailed to PAA.notice@hq.doe.gov. This Notice, the comments submitted to DOE, and other relevant information will be available on the internet at "www.gc.energy.gov". The comments also may be examined between 9 a.m. and 4 p.m. at the U.S. Department ofEnergy, Freedom of Information Reading Room, Room 1E-190, 1000 Independence Avenue, S.W., Washington, DC 20585, (202) 586-6020.
For further information, contact: Ben McRae or Jeanette Helfrich, U.S. Department of Energy, Office of General Counsel, GC-52, 1000 Independence Ave. S.W., Washington, DC 20585, (202) 586-6975.
SUPPLEMENTARY INFORMATION:
I. Background
Section 170p1. of the AEA requires DOE2 to submit to the Congress by August 1, 1998 a report on the need to continue or modify provisions of the Act (section 170 of the AEA). DOE believes it is important to provide an early opportunity for public participation in the development of this report in a manner consistent with its publicparticipation policy set forth in DOE P 1210.13. Thus, DOE is issuing this Notice of Inquiry to seek views from members of the public to assist DOE in development of its recommendations as to whether provisions of the Act should be continued, modified, or eliminated. In order to assist in the preparation of comments, the Department is including in this Notice: (1) a summary of the Act and (2) a list of questions concerning potential issues that might be addressed in the report to Congress. In order to promote public participation, the Department has established a website at which the public comments will be available. To promote a dialogue, additional comments may be filed to reply (reply comments) to the positions set forth in the original comments. These reply comments also will be available at the website.
II. Summary of the Act
A. Introduction
The Act was enacted in 1957 as an amendment to the AEA to establish a system of financial protection for persons who may be liable for and persons who may be injured by a nuclear incident4. In the case of most DOE activities, the system offinancial protection currently takes the form of an indemnification by DOE ("DOE Price- Anderson indemnification") for legal liability for a nuclear incident or a precautionary evacuation5 arising from activity under a DOE contract. The DOE Price-Anderson indemnification: (1) provides omnibus coverage of all persons who might be legally liable6; (2) indemnifies fully all legal liability up to the statutory limit on such liability (approximately $8.96 billion for a nuclear incident in the US)7; (3) covers all DOE contractual activity that might result in a nuclear incident in the US8; (4) is not subject to the availability of funds9; and (5) is mandatory 10 and exclusive11.
The Price-Anderson system has been extended and amended approximately every ten years. The most recent amendment occurred in 1988 with the enactment of the Price-Anderson Amendments Act of 1988, Pub. L. No. 100-408, ("1988 Amendments"), which extended the authority to grant the DOE Price-Anderson indemnification until August 1, 2002.12
B. Who Is Entitled to Indemnification?
Originally, the availability of the DOE Price-Anderson indemnification with respect to individual contractors was subject to agency discretion13. The 1988 Amendments modified the Price-Anderson system to make the DOE Price-Anderson indemnification mandatory. The 1988 Amendments require DOE to enter intoagreements to indemnify its contractors and other persons to the extent the contractor or other person is legally liable for damage resulting from a nuclear incident or precautionary evacuation arising out of or in connection with contractual activities.14
In addition to the contractor that is party to the indemnification agreement, indemnity coverage is available to all "persons indemnified" under the Act. The term "person" is broadly defined to include every possible individual or entity, except the Nuclear Regulatory Commission or DOE.15 The term "person indemnified" is defined as the person with whom an indemnity agreement is executed, e.g., a DOE contractor, "and any other person who may be liable for public liability" for a nuclear incident.16 This provision extends the protection of the DOE Price-Anderson indemnification to any person, including those persons who have no legal relationship to DOE or the indemnified contractor, who may be liable for a nuclear incident within the United Statesarising under a DOE contract.17 Thus, a subcontractor, a supplier, a shipper, or other third party is covered even if it is not party to the indemnity agreement between DOE and the contractor.18
DOE is not authorized to indemnify activities undertaken pursuant to a NRC license that extends NRC Price-Anderson coverage to such activities.19 Thus, if a nuclear incident resulted from an activity undertaken pursuant to a NRC license and the NRC license provided for Price-Anderson coverage, the NRC license would govern legal liability resulting from the incident, including the limit on the aggregate amount of liability and the source of funds to compensate the liability. If, however, the NRCdecided not to provide for Price-Anderson coverage in the license, the DOE Price- Anderson indemnification would apply to the incident.
C. What Liabilities Are Covered by the Indemnification?
Section 170d. of the AEA requires DOE to indemnify the contractor, and any other person who may be liable, for "public liability . . . arising out of or in connection with the contractual activities." The intended scope of this coverage can be derived from the statutory definitions of public liability and other related terms.
Public liability is defined as "any legal liability arising out of or resulting from a nuclear incident or precautionary evacuation . . . ."20 Legal liability is not defined in the Act, but the legislative history indicates clearly that state tort law determines what legal liabilities are covered.21 The 1988 amendments confirmed the substantive role of state tort law.22
In a limited number of situations, the Act provides that certain provisions of state law may be superseded by uniform rules prescribed by the Act such as the limitation on the awarding of punitive damages.23 In addition, with respect to an extraordinary nuclear occurrence, the Act provides for the waiver of certain defenses. Such waivers would result, in effect, in strict liability,24 the elimination of charitable and governmental immunities,25 and the substitution of a three-year discovery rule in place of statutes of limitations that would normally bar all suits after a specified number of years.26 Moreover, the Act provides that the U.S. District Court for the district in which a nuclear incident occurs shall have original jurisdiction "with respect to any [suit asserting] public liability . . . without regard to the citizenship of any party or the amount in controversy"27and provides for special procedures to expedite the legal proceedings and the distribution of compensation.28
D. What is a nuclear Incident?
"Nuclear incident" is defined in section 11q. of the Act, in pertinent part, as "any occurrence, . . . within the United States29 causing, within or outside the United States, [damage or injury] arising out of or resulting from the . . . hazardous properties of source,30 special nuclear,31 or byproduct material32 . . . ." (footnotes added). Congressintended to give a broad rather than restrictive meaning to the words and designed the definition of nuclear incident to protect the public against any form of damage arising from the special dangerous properties of the materials used in the atomic energy program.33 Furthermore, a contractor is fully indemnified for public liability even if the public liability was caused by acts of gross negligence or willful misconduct.34
Nuclear incident is defined also to include the following occurrences outside the United States: (1) activities pursuant to a DOE contract that involves nuclear material "owned by, and used by or under contract with, the United States,"35 or (2) an NRC- licensed reactor located on an offshore stationary platform,36 or (3) a shipment of nuclear material from one NRC licensee to another NRC licensee.37
The 1988 amendments added indemnity for a precautionary evacuation resulting from an event that is not a nuclear incident but poses an imminent danger of injury or damage from radiological properties of nuclear material, or high-level radioactive waste or spent nuclear fuel, or transuranic waste, and is initiated by an authorized State or local official to protect the public health and safety.38
E. What Is the Amount of Indemnification and Compensation Provided?
Section 170d.(2) provides that agreements of indemnification shall require the Secretary to "indemnify the persons indemnified against [public liability] . . . 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 its Secretary." Section 170e. establishes specific limits on the aggregate amount of public liability for any one nuclear incident. For a nuclear incident resulting from DOE contractual activity within the United States, public liability is limited by a formula that results in a current limit of approximately $8.96 billion.39 This limitation on aggregate public liability has theeffect of limiting the amount of legal liability for damage that courts in the United States can assess under applicable state tort law.
Section 170e.(2) provides that Congress will "take whatever action is deemed 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" if damage from a nuclear incident exceeds the statutory limit on aggregate public liability. Moreover, section 170i. requires the President to submit a compensation plan to Congress that "provide[s] for full and prompt compensation for all valid claims" no later than 90 days after the determination by a court that the liability limit may be exceeded.
F. To what extent are indemnified contractors, subcontractors and suppliers accountable for their actions?
The 1988 Amendments added a new section 234A to the AEA that establishes a system of civil penalties for violation of DOE nuclear safety requirements by contractors, subcontractors, and suppliers covered by the DOE Price-Anderson indemnification.40 The section 234A civil penalties were intended to improve theaccountability of indemnified contractors, subcontractors and suppliers for nuclear safety during the conduct of DOE activities without affecting the operation of the Price- Anderson system. Thus, the actual or potential imposition of a section 234A civil penalty does not affect the coverage by the DOE Price-Anderson indemnification of a contractor or any other person indemnified.
The procedural rules for implementing the section 234A civil penalties are set forth in 10 CFR Part 820.41 Pursuant to mandatory language in section 234A.d., these procedural rules exempt specific non-profit DOE contractors operating specific DOE facilities from the imposition of civil penalties.42 In addition, pursuant to discretionary authority granted by section 234A.b.(2), DOE promulgated procedural rules to provide for the automatic remission of civil penalties imposed on other nonprofit educational institutions.43
As a matter of policy, DOE has decided to impose the section 234A civil penalties only with respect to a DOE Nuclear Safety Requirement set forth in the Code of Federal Regulations, a Compliance Order, or any program, plan, or other provisionrequired to implement such Requirement or Compliance Order.44 DOE has set forth nuclear safety requirements in 10 CFR Part 830 (Nuclear Safety Management),45 and 10 CFR Part 835 (Occupational Radiation Protection).46
The 1988 amendments also added section 223c which provides specific criminal penalty provisions for knowing and willful violations by individual officers and employees of contractors, subcontractors and suppliers covered by the DOE Price-Anderson indemnification without exceptions for nonprofit entities.
III. List of Questions
The following list of questions represents a preliminary attempt to identify potential issues that might arise in responding to the section 170p. mandate that DOE report "concerning the need for continuation or modification of the provisions of [the Act] 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 otherrelevant factors." The list of questions does not represent a determination of the actual topics to be addressed in the Report. The list has been included in this Notice solely to assist in the formulation of comments and is not intended to restrict the issues that might be addressed in the comments or in DOE's report.
Comments should identify the specific provision of the Act to which a position is expressed, and the policy and legal rationale for the position. Comments should identify whether a position applies to all DOE activities 47or only to certain specified activities. If a position only applies to certain DOE activities, be specific, to the extent possible, as to the activities to which the position applies and the reasons for treating the identified DOE activities differently.
Should the DOE Price-Anderson indemnification be continued without modification?
Should the DOE Price-Anderson indemnification be eliminated or made discretionary with respect to all or specific DOE activities? If discretionary, what procedures and criteria should be used to determine which activities or categories of activities should receive indemnification?
Should there be different treatment for "privatized arrangements" (that is, contractual arrangements that are closer to contracts in the private sector than the traditional "management and operating" contract utilized by DOE and its predecessors since the Manhattan Project in the 1940's)? Privatized arrangements can include but are not limited to fixed-priced contracts, contracts where activity is conducted at the contractor's facility located off a DOE site, contracts where activity is conducted at the contractor's facility located on a DOE site, or contracts where a contractor performs the same activity for DOE as it does for commercial entities and on the same terms.
Should there be any change in the current system under which DOE activities conducted pursuant to an NRC license are covered by the DOE Price-Anderson indemnification, except in situations where the NRC extends Price-Anderson coverage under the NRC system? For example, (1) should the DOE Price-Anderson indemnification always apply to DOE activities conducted pursuant to an NRC license or (2) should the DOE Price-Anderson indemnification never apply to such activities, even if NRC decides not to extend Price-Anderson coverage under the NRC system?
Should the DOE Price-Anderson indemnification continue to provide omnibus coverage, or should it be restricted to DOE contractors or to DOE contractors, subcontractors, and suppliers? Should there be a distinction in coverage based on whether an entity is for-profit or not-for-profit?
If the DOE indemnification were not available for all or specified DOE activities, are there acceptable alternatives? Possible alternatives might include Pub. L. No. 85-804, section 162 of the AEA, general contract indemnity, no indemnity, or private insurance. To the extent possible in discussing alternatives, compare each alternative to the DOE Price-Anderson indemnification, including operation, cost, coverage, risk, and protection of potential claimants.
To what extent, if any, would the elimination of the DOE Price-Anderson indemnification affect the ability of DOE to perform its various missions? Explain your reasons for believing that performance of all or specific activities would or would not be affected?
To what extent, if any, would the elimination of the DOE Price-Anderson indemnification affect the willingness of existing or potential contractors to perform activities for DOE? Explain your reasons for believing that willingness to undertake all or specific activities would or would not be affected?
To what extent, if any, would the elimination of the DOE Price-Anderson indemnification affect the ability of DOE contractors to obtain goods and services from subcontractors and suppliers? Explain your reasons for believing that the availability of goods and services for all or specific DOE activities would or would not be affected?
To what extent, if any, would the elimination of the DOE Price-Anderson indemnification affect the ability of claimants to receive compensation for nuclear damage resulting from a DOE activity? Explain your reasons for believing the ability of claimants to be compensated for nuclear damage resulting from all or specific DOE activities would or would not be affected?
What is the existing and the potential availability of private insurance to cover liability for nuclear damage resulting from DOE activities? What would be the cost and the coverage of such insurance? To what extent, if any, would the availability, cost and coverage be dependent on the type of activity involved? To what extent, if any, would the availability, cost and coverage be dependent on whether the activity was a new activity or an existing activity? If DOE Price-Anderson indemnification were not available, should DOE require contractors to obtain private insurance?
Should the amount of the DOE Price-Anderson indemnification for all or specified DOE activities inside the United States (currently approximately $8.96 billion) remain the same or be increased or decreased?
Should the amount of the DOE Price-Anderson indemnification for nuclear incidents outside the United States (currently $100 million) remain the same or be increased or decreased?
Should the limit on aggregate public liability be eliminated? If so, how should the resulting unlimited liability be funded? Does the rationale for the limit on aggregate public liability differ depending on whether the nuclear incident results from a DOE activity or from an activity of a NRC licensee?
Should the DOE Price-Anderson indemnification continue to cover DOE contractors and other persons when a nuclear incident results from their gross negligence or willful misconduct? If not, what would be the effects, if any, on: (1) the operation of the Price-Anderson system with respect to the nuclear incident, (2) other persons indemnified, (3) potential claimants, and (4) the cost of the nuclear incident to DOE? To what extent is it possible to minimize any detrimental effects on persons other than the person whose gross negligence or willful misconduct resulted in a nuclear incident? For example, what would be the effect if the United States government were given the right to seek reimbursement for the amount of the indemnification paid from a DOE contractor or other person whose gross negligence or willful misconduct causes a nuclear incident?
Should the DOE Price-Anderson indemnification be extended to activities undertaken pursuant to a cooperative agreement or grant?
Should the DOE Price-Anderson indemnification continue to cover transportation activities under a DOE contract? Should coverage vary depending on factors such asthe type of nuclear material being transported, method of transportation, and jurisdictions through which the material is being transported?
To what extent, if any, should the DOE Price-Anderson indemnification apply to DOE clean-up sites? Should coverage be affected by the applicability of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) or other environmental statutes to a DOE clean-up site?
To what extent, if any, should the DOE Price-Anderson indemnification be available for liability resulting from mixed waste at a DOE clean-up site?
Should the definition of nuclear incident be expanded to include occurrences that result from DOE activity outside the United States where such activity does not involve nuclear material owned by, and used by or under contract with, the United States? For example, should the DOE Price-Anderson indemnification be available for activities of DOE contractors that are undertaken outside the United States for purposes such as non-proliferation, nuclear risk reduction or improvement of nuclear safety? If so, should the DOE Price-Anderson indemnification for these additional activities be mandatory or discretionary?
Is there a need to clarify what tort law applies with respect to a nuclear incident in the United States territorial sea? Should the applicable tort law be based on state tort law?
Should the definition of nuclear incident be modified to include all occurrences in the United States exclusive economic zone? What would be the effects, if any, on the shipment of nuclear material in the United States exclusive economic zone if such a modification were or were not made? What would be the effects, if any, on the response to an incident involving nuclear material in the United States exclusive economic zone if such a modification were or were not made?
Should the reliance of the Act on state tort law continue in its current form? Should uniform rules already established by the Act be modified, or should there be additional uniform rules on specific topics such as causation and damage? Describe any modification or additional uniform rule that would be desirable and explain the rationale.
Should the Act be modified to be consistent with the legal approach in many other countries under which all legal liability for nuclear damage from a nuclear incident is channeled exclusively to the operator of a facility on the basis of strict liability? If so, what would be the effect, if any, on the system of financial protection, indemnification and compensation established by the Act?
Should the procedures in the Act for administrative and judicial proceedings be modified? If so, describe the modification and explain the rationale?
Should there be any modification in the types of claims covered by the Price- Anderson system?
What modifications in the Act or its implementation, if any, could facilitate the prompt payment and settlement of claims?
Should DOE continue to be authorized to issue civil penalties pursuant to section 234A of the AEA? Should section 234A be modified to make this authority available with respect to DOE activities that are not covered by the DOE Price-Anderson indemnification? Should DOE continue to have authority to issue civil penalties if the Act is modified to eliminate the DOE Price-Anderson indemnification with respect to nuclear incidents that results from the gross negligence or willful misconduct of a DOE contractor?
To what extent does the authority to issue civil penalties affect the ability of DOE to attain safe and efficient management of DOE activities? To what extent does this authority affect the ability of DOE and its contractors to cooperate in managing the environment, health, and safety of DOE activities through mechanisms such as integrated safety management? To what extent does this authority help contain operating costs including the costs of private insurance if it were to be required?
Should there continue to be a mandatory exemption from civil penalties for certain nonprofit contractors? Should the exemption apply to for-profit subcontractors and suppliers of a nonprofit contractor? Should the exemption apply to a for-profit partner of a nonprofit contractor?
Should DOE continue to have discretionary authority to provide educational nonprofit institutions with an automatic remission of civil penalties? If so, should the remission be available where the nonprofit entity has a for-profit partner, subcontractor, or supplier?
Should the maximum amount of civil penalties be modified? If so, how?
Should the provisions in section 234A.c. concerning administrative and judicial proceedings relating to civil penalties be modified? If so, how?
Should there be any modification in the authority in section 223.c. to impose criminal penalties for knowing and willful violations of nuclear safety requirements by individual officers and employees of contractors, subcontractors and suppliers covered by the DOE Price-Anderson indemnification? Should this authority be extended to cover violations by persons not indemnified?
Issued in Washington, D.C. on December 23, 1997
______________________________
Eric J. Fygi,
Acting General Counsel
Converted by Andrew Scriven
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