Limiting the nuclear industry's liability

Pressure is on Congress to renew an arcane law crucial to the future of the nuclear industry. Known as the Price-Anderson Act, it provides a system of insurance to cover victims of nuclear accidents. Since Three Mile Island, for example, the system has paid out some $45 million in claims, including $1.3 million for the emergency evacuation of residents from around the plant.

The law, first passed in 1957, limits the liability of utilities that operate nuclear power plants to $700 million, while entirely shielding private contractors who work for the government on nuclear projects. The government would pay up to $500 million in damages for an accident at one of its contractor's facilities.

``It was the will of Congress to develop nuclear power, and that it be done in the private sector,'' says John Kearney, senior vice-president of the Edison Electric Institute. This law, he says, helped make that possible.

Without limits on their liability, private companies would almost certainly have resisted investing in nuclear technology. Critics, however, say the insurance arrangement lets many companies off the hook while leaving citizens underprotected.

The law was originally designed to last a decade - at which point Congress hoped the industry would have matured enough to make it unnecessary. A mature industry, they figured, would be able to get insurance just like any other. In fact, the act has been extended twice in the last 30 years and is once again due to expire this August.

The congressional debate is already heating up. Some lawmakers want to make private firms and utilities liable for more of the damages that an accident at one of their facilities might cause.

As it now stands, utilities are liable for up to $700 million, drawn from a combination of industry-financed insurance and an assessment of $5 million on each reactor in operation throughout the country. In return, the utilities give up many of the legal provisions that would normally allow them to challenge financial claims and drag out court settlements.

Government contractors, such as the builders of atomic weapons, are entirely shielded. The Department of Energy signs an agreement with each contractor that relieves them of responsibility and provides $500 million in coverage from the federal Treasury.

Congress would review any case where damages exceeded $700 million or $500 million, respectively. But critics say these sums would not begin to pay for the costs of a catastrophic accident. ``It's clear that the present level of liability is inadequate and is likely to be changed,'' says one industry observer. ``The argument now is over how high it should go.''

Critics say the law does not distinguish between accidents caused by negligence on the part of operators or contractors and those that are beyond their control.

``Federal contractors have no financial obligations whatsoever, even if they directly contribute to causing the accident through their own negligence,'' says Keiki Kehoe, a lobbyist for the Environmental Policy Institute, which is pushing to get the law amended.

Companies that supply equipment and services to utilities are also insulated. If a major accident at a nuclear power station were caused by a faulty part supplied by a small firm, for instance, that firm would not be liable for damages.

Renewal of the act is developing into a protracted struggle. Last year's disaster at Chernobyl damaged confidence in the nuclear industry, and some lobbyists say it gave them the momentum they need to make changes in the law. But the nuclear industry has powerful friends, including some key committee members.

The Senate Energy Committee is now wrangling over a bill that deals only with federal contractors.

It would increase the amount to be paid by the federal government in the case of an accident from $500 million to $6 billion. In addition, it would for the first time make federal contractors liable for $30 million in penalties, if they were found to be careless.

Meanwhile, a bill is being hashed out by the House Interior Committee which covers both power plants and federal contractors. It also significantly increases the minimum amount to be provided to pay claims in the case of an accident.

If Congress does not act before Aug. 1, insurance arrangements for currently licensed power plants and ongoing government contracts will continue. The problem will only come later, if new nuclear power plants are ordered or new government contracts are written.