Order Code IB88090
CRS Issue Brief for Congress
Received through the CRS Web
Nuclear Energy Policy
Updated June 4, 2003
Mark Holt and Carl E. Behrens
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Overview of Nuclear Power in the United States
Nuclear Power Research and Development
Nuclear Power Plant Safety and Regulation
Safety
Domestic Reactor Safety
Reactor Safety in the Former Soviet Bloc
Licensing and Regulation
Reactor Security
Decommissioning and Life Extension
Nuclear Accident Liability
Nuclear Waste Management
Federal Funding for Nuclear Energy Programs
LEGISLATION

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Nuclear Energy Policy
SUMMARY
Nuclear energy policy issues facing
extend Price-Anderson through August 1,
Congress include questions about radioactive
2017.
waste management, research and development
priorities, power plant safety and regulation,
The September 11, 2001, terrorist attacks
terrorism, and the Price-Anderson Act nuclear
on the United States raised questions about
liability system.
nuclear power plant security. Reactor security
provisions are included in H.R. 6. Legislation
The Bush Administration has stressed the
to strengthen reactor security requirements (S.
importance of nuclear power in the nation’s
1043) was approved by the Senate Environ-
energy policy. The Administration’s FY2004
ment and Public Works Committee on May
budget request includes $35 million for a
15, 2003.
Department of Energy (DOE) effort to encour-
age deployment of new commercial nuclear
Disposal of highly radioactive waste has
power plants by 2010, about the same as the
been one of the most controversial aspects of
FY2003 appropriation. The Administration is
nuclear power. The Nuclear Waste Policy Act
also seeking $4 million for the Nuclear Hydro-
of 1982 (NWPA, P.L. 97-425), as amended in
gen Initiative, a new DOE program in which
1987, requires DOE to conduct detailed physi-
nuclear reactors would produce hydrogen to
cal characterization of Yucca Mountain in
fuel motor vehicles.
Nevada as a permanent underground reposi-
tory for high-level waste. President Bush
Energy legislation under consideration on
recommended approval of the site February
the Senate floor (S. 14) would authorize loan
15, 2002, and Nevada Governor Guinn on
guarantees and other financial assistance for
April 8, 2002, issued a “state veto” of the site,
construction of up to 8,400 megawatts of new
as allowed by NWPA. A resolution to over-
commercial nuclear generating capacity. Also
turn the “state veto” and allow further activity
included in the bill’s nuclear title is a $500
at Yucca Mountain to proceed was signed by
million authorization to construct a demon-
the President on July 23, 2002 (P.L. 107-200).
stration reactor in Idaho to produce hydrogen.
Whether progress on nuclear waste
Price-Anderson would be extended
disposal and other congressional action will
permanently by S. 14. The Senate Environ-
revive the U.S. nuclear power industry’s
ment and Public Works Committee approved
growth will depend primarily on economic
a bill April 9, 2003 (S. 156) that would extend
considerations. Natural gas- and coal-fired
Price-Anderson coverage for commercial
power plants currently are favored over nu-
nuclear plants through August 1, 2012. A
clear reactors for new generating capacity.
provision in an omnibus energy bill (H.R. 6)
However, some electric utilities are seeking
passed by the House April 11, 2003, would
approval of sites for possible new reactors.
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MOST RECENT DEVELOPMENTS
The Senate began debate May 6 on omnibus energy legislation (S. 14) that would
authorize loan guarantees and other financial assistance for building as much as 8,400
megawatts of new commercial nuclear generating capacity and authorize $500 million to
construct a demonstration reactor in Idaho to produce hydrogen. The bill also would
indefinitely extend the Price-Anderson Act nuclear liability system.
Omnibus energy legislation passed by the House on April 11 (H.R. 6) would extend the
Price-Anderson Act through August 1, 2017. The Senate Environment and Public Works
Committee approved a bill April 9 (S. 156) that would extend Price-Anderson coverage for
new commercial nuclear plants through August 1, 2012. An omnibus FY2003 continuing
resolution signed by the President on February 20 (P.L. 108-7) extends Price-Anderson
coverage for new commercial nuclear reactors through December 31, 2003. For DOE
contractors, Price-Anderson coverage was extended for 2 years by the FY2003 Defense
Authorization Act (P.L. 107-314), signed December 2, 2002. Under Price-Anderson,
commercial reactors must pay for any radiological damages to the public through a limited
industry self-insurance system, and DOE nuclear contractors are indemnified by the federal
government.
The Senate Environment and Public Works Committee on May 15 approved a bill (S.
1043) to strengthen security requirements at nuclear power plants. The bill would require the
Nuclear Regulatory Commission (NRC) to issue regulations updating the “design basis
threat” (DBT) that nuclear plants must be secured against. NRC on April 29 issued orders
to nuclear power plants to meet a stronger DBT, although nuclear power critics charged that
the new standard was compromised by nuclear industry pressure.
President Bush’s FY2004 budget request, submitted February 3, includes $387.6 million
for Department of Energy (DOE) nuclear energy research and development — including
advanced reactors, fuel cycle technology, and nuclear hydrogen production That request is
substantially higher than the $261.7 million appropriated for FY2003, but about $110 million
of the increase is related to the transfer of primary responsibility for the Idaho National
Engineering and Environmental Laboratory to the nuclear energy program from DOE’s
environmental management program.
BACKGROUND AND ANALYSIS
Overview of Nuclear Power in the United States
The U.S. nuclear power industry, while currently generating about 20% of the nation’s
electricity, faces an uncertain long-term future. No nuclear plants have been ordered since
1978 and more than 100 reactors have been canceled, including all ordered after 1973. No
units are currently under active construction; the Tennessee Valley Authority’s Watts Bar 1
reactor, ordered in 1970 and licensed to operate in 1996, was the most recent U.S. nuclear
unit to be completed. The nuclear power industry’s troubles include high nuclear power
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plant construction costs, public concern about nuclear safety and waste disposal, and
regulatory compliance costs.
High construction costs are perhaps the most serious obstacle to nuclear power
expansion. Construction costs for reactors completed since the mid-1980s have ranged from
$2-$6 billion, averaging more than $3,000 per kilowatt of electric generating capacity (in
1997 dollars). The nuclear industry predicts that new plant designs could be built for less
than half that amount if many identical plants were built in a series, but such economies of
scale have yet to be demonstrated.
Nevertheless, all is not bleak for the U.S. nuclear power industry, which currently
comprises 103 licensed reactors at 65 plant sites in 31 states. (That number excludes the
Tennessee Valley Authority’s (TVA’s) Browns Ferry 1, which has not operated since 1985;
the TVA Board decided May 16, 2002, to spend about $1.8 billion to restart the reactor by
2007.) Electricity production from U.S. nuclear power plants is greater than that from oil,
natural gas, and hydropower, and behind only coal, which accounts for more than half of
U.S. electricity generation. Nuclear plants generate more than half the electricity in six
states. The 772 billion kilowatt-hours of nuclear electricity generated in the United States
during 2002 was more than the nation’s entire electrical output in 1963, when the first of
today’s large-scale commercial reactors were being ordered.
Average operating costs of U.S. nuclear plants dropped substantially during the past
decade, and costly downtime has been steadily reduced. Licensed commercial reactors
generated electricity at a record-high average of more than 89% of their total capacity in
2002, according to industry statistics.1
Sixteen commercial reactors have received 20-year license extensions from the Nuclear
Regulatory Commission (NRC), giving them up to 60 years of operation. License extensions
for 14 more reactors are currently under review, and many others are anticipated, according
to NRC.
Industry consolidation could also help existing nuclear power plants, as larger nuclear
operators purchase plants from utilities that run only one or two reactors. Several such sales
have occurred, including the March 2001 sale of the Millstone plant in Connecticut to
Dominion Energy for a record $1.28 billion. The merger of two of the nation’s largest
nuclear utilities, PECO Energy and Unicom, completed in October 2000, consolidated the
operation of 17 reactors under a single corporate entity, Exelon Corporation.
Existing nuclear power plants appear to hold a strong position in the ongoing
restructuring of the electricity industry. In most cases, nuclear utilities have received
favorable regulatory treatment of past construction costs, and average nuclear operating costs
are currently estimated to be lower than those of competing fossil fuel technologies.2
Although eight U.S. nuclear reactors have permanently shut down since 1990, recent reactor
sales could indicate greater industry interest in nuclear plants that previously had been
1 “U.S. Units Exceed 89% Average Capacity Factor,” Nucleonics Week, February 13, 2003, p. 1.
2 “Production Costs Made Nuclear Cheapest Fuel in 1999, NEI Says,” Nucleonics Week, January 11,
2001, p. 3.
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considered marginal. Despite the shutdowns, total U.S. nuclear electrical output increased
by more than one-third from 1990 to 2002, according to the Energy Information
Administration. The increase resulted primarily from reduced downtime at the remaining
plants, the startup of five new units, and reactor modifications to boost capacity.
A spike in fossil fuel prices and shortages of electricity during 2000-2001 helped
encourage at least three nuclear operating companies to consider building new commercial
nuclear reactors. Exelon helped form an international consortium that may build a
demonstration Pebble Bed Modular Reactor (PBMR) in South Africa, a reactor cooled by
helium that is intended to be highly resistant to accidents. However, Exelon announced in
April 2002 that it would leave the consortium after a feasibility study is completed. Entergy,
Dominion Resources, and Exelon have chosen sites in Mississippi, Virginia, and Illinois,
respectively, for possible future nuclear units.3 The Department of Energy (DOE) is
implementing a program to encourage construction of new commercial reactors by 2010.
The Senate began debating an omnibus energy bill (S. 14) on May 6, 2003, that would
authorize loan guarantees and other financial assistance for building as much as 8,400
megawatts of new commercial nuclear generating capacity — or about six or seven reactors.
Such financial assistance, which would be subject to appropriations, would be limited to half
of eligible project costs. Also included in the nuclear title is a $500 million authorization to
construct a demonstration reactor in Idaho to produce hydrogen. Omnibus energy legislation
(H.R. 6) passed by the House on April 11, 2003, requires the Secretary of Energy to study
the feasibility of locating a commercial nuclear power plant at a DOE site.
Global warming that may be caused by fossil fuels — the “greenhouse effect” — is
cited by nuclear power supporters as an important reason to develop a new generation of
reactors. An air pollution bill introduced April 9, 2003, by Senator Carper (S. 843) would
provide potentially valuable emissions allowances to owners of incremental nuclear power
capacity. On May 19, 2003, New Hampshire became the first state to provide emissions
credits for incremental nuclear generating capacity. But the large obstacles noted above must
still be overcome before electric generating companies will risk ordering new nuclear units.
(For more on the outlook for nuclear power, see CRS Report RL31064, Nuclear Power:
Prospects for New Commercial Reactors.)
Nuclear Power Research and Development
For nuclear energy research and development — including advanced reactors, fuel cycle
technology, and nuclear hydrogen production — the Bush Administration is requesting
$387.6 million for FY2004. That request is substantially higher than the $261.7 million
appropriated for FY2003, but about $110 million of the increase is related to the transfer of
primary responsibility for the Idaho National Engineering and Environmental Laboratory
(INEEL) to the nuclear energy program from DOE’s environmental management program.
3 Beattie, Jeff. “Entergy Names Mississippi Site for Possible New Reactor,” Energy Daily, April
17, 2002. p. 4. Weil, Jenny. “Exelon Selects Clinton Site for Possible New Reactor,” Nucleonics
Week, May 2, 2002. p. 1.
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“Nuclear energy, which is already a vital component of our balanced energy portfolio,
presents some of our most promising solutions to the world’s long-term energy challenges,”
according to DOE’s FY2004 budget justification. However, opponents have criticized
DOE’s nuclear research program as providing wasteful subsidies to an industry that they
believe should be phased out as unacceptably hazardous and economically uncompetitive.
Within the nuclear energy budget, the Administration is requesting $48 million for the
nuclear energy technologies program, which focuses on development of new reactors. That
request is $3.0 million above the FY2003 appropriation. The program includes $35.0 million
for an initiative to encourage construction of new commercial reactors by 2010 (“Nuclear
Power 2010”) and $9.7 million for advanced (“Generation IV”) reactor designs that could
be ready for deployment after 2010.
According to the DOE budget justification, the Nuclear Power 2010 program “will
achieve near-term deployment of new power plants in the United States through cost-shared
demonstration of the new, untested regulatory processes and cost-shared development of
advanced reactor technologies.” The program seeks to deploy both a water-cooled reactor
(similar to most existing commercial plants) and a gas-cooled reactor. The current phase of
the initiative includes site approval, reactor design certification, license applications, detailed
design work, and development of improved construction techniques. DOE is soliciting
proposals for joint DOE/industry teams in which DOE will pay up to half the cost of these
activities.
DOE’s Generation IV program is focusing on six advanced designs that could be
deployed after 2010: two gas-cooled, one water-cooled, two liquid-metal-cooled, and one
molten-salt concept. Some of these reactors would use plutonium recovered through
reprocessing of spent nuclear fuel. The Administration’s May 2001 National Energy Policy
report contends that plutonium recovery could reduce the long-term environmental impact
of nuclear waste disposal and increase domestic energy supplies. However, opponents
contend that the separation of plutonium from spent fuel poses unacceptable environmental
risks and, because of plutonium’s potential use in nuclear bombs, undermines U.S. policy
on nuclear weapons proliferation.
The development of plutonium-fueled reactors in the Generation IV program is closely
related to the nuclear energy program’s Advanced Fuel Cycle Initiative (AFCI), for which
$63.0 million is requested for FY2004 — about $5 million above the FY2003 appropriation.
According to the budget justification, AFCI will “develop advanced proliferation-resistant
fuel treatment and fabrication technologies that could be deployed by 2015,” as well as
technologies that could reduce the long-term hazard of spent nuclear fuel. Such technologies
would involve separation of plutonium, uranium, and other long-lived radioactive materials
from spent fuel for re-use in a nuclear reactor or for transmutation in a particle accelerator.
AFCI includes a previously funded research program on accelerator transmutation called
Advanced Accelerator Applications. The program also includes longstanding DOE work on
electrometallurgical treatment of spent fuel from the Experimental Breeder Reactor II (EBR-
II) at INEEL.
In support of President Bush’s program to develop hydrogen-fueled vehicles, DOE is
requesting $4.0 million in FY2004 for a new “Nuclear Hydrogen Initiative.” According to
DOE’s budget justification, the program would investigate the use of high-temperature
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nuclear reactors to make hydrogen from water in a thermo-chemical process. According to
DOE, “preliminary estimates indicate that hydrogen produced using nuclear-driven thermo-
chemical processes would be only slightly more expensive than gasoline” and result in far
less air pollution. Activities planned in FY2004 include development of a “roadmap” for
developing nuclear hydrogen technologies and laboratory testing of thermo-chemical
processes and related research. Even if the technology is successful, however, DOE officials
have predicted that significant quantities of nuclear-produced hydrogen would not become
available until 2020-2030.4
The Nuclear Energy Research Initiative (NERI) provides grants for research on
innovative nuclear energy technologies. DOE is requesting $12.0 million for NERI in
FY2004, about half of the FY2003 appropriation. According to the budget justification, no
new grants will be awarded in FY2003 and FY2004, with new program funding to be used
only for completing previously initiated projects.
DOE proposes no new funding in FY2004 for the Nuclear Energy Plant Optimization
program (NEPO), which received $5.0 million in FY2003. The program supports cost-
shared research by the nuclear power industry on ways to improve the productivity of
existing nuclear plants.
The omnibus energy bills now under consideration, H.R. 6 and S. 14, include funding
authorizations for DOE nuclear energy programs that are similar to the Administration
funding request.
Nuclear Power Plant Safety and Regulation
Safety
Controversy over safety has dogged nuclear power throughout its development,
particularly following the March 1979 Three Mile Island accident in Pennsylvania and the
April 1986 Chernobyl disaster in the former Soviet Union. In the United States, safety-relat-
ed shortcomings have been identified in the construction quality of some plants, plant
operation and maintenance, equipment reliability, emergency planning, and other areas. In
a recent example, it was discovered in March 2002 that leaking boric acid had eaten a large
cavity in the top of the reactor vessel in Ohio’s Davis-Besse nuclear plant. The corrosion left
only the vessel’s quarter-inch-thick stainless steel inner liner to prevent a potentially
catastrophic release of reactor cooling water.
NRC’s oversight of the nuclear industry is an ongoing issue; nuclear utilities often
complain that they are subject to overly rigorous and inflexible regulation, but nuclear critics
charge that NRC frequently relaxes safety standards when compliance may prove difficult
or costly to the industry.
Domestic Reactor Safety. In terms of public health consequences, the safety record
of the U.S. nuclear power industry in comparison with other major commercial energy
4 EnergyWashington.com Daily Updates, February 5, 2003.
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technologies has been excellent. In more than 2,250 reactor-years of operation in the United
States, the only incident at a commercial power plant that might lead to any deaths or injuries
to the public has been the Three Mile Island accident, in which more than half the reactor
core melted. Public exposure to radioactive materials released during that accident is
expected to cause fewer than five deaths (and perhaps none) from cancer over the following
30 years. A recent study of 32,000 people living within 5 miles of the reactor when the
accident occurred found no significant increase in cancer rates through 1998, although the
authors note that some potential health effects “cannot be definitively excluded.”5
The relatively small amounts of radioactivity released by nuclear plants during normal
operation are not generally believed to pose significant hazards, although some groups
contend that routine emissions are risky. There is substantial scientific uncertainty about the
level of risk posed by low levels of radiation exposure; as with many carcinogens and other
hazardous substances, health effects can be clearly measured only at relatively high exposure
levels. In the case of radiation, the assumed risk of low-level exposure has been extrapolated
mostly from health effects documented among persons exposed to high levels of radiation,
particularly Japanese survivors of nuclear bombing in World War II.
The consensus among most safety experts is that a severe nuclear power plant accident
in the United States is likely to occur less frequently than once every 10,000 reactor-years
of operation. These experts believe that most severe accidents would have small public
health impacts, and that accidents causing as many as 100 deaths would be much rarer than
once every 10,000 reactor-years. On the other hand, some experts challenge the complex
calculations that go into predicting such accident frequencies, contending that accidents with
serious public health consequences may be more frequent.
Reactor Safety in the Former Soviet Bloc. The Chernobyl accident was by far
the worst nuclear power plant accident to have occurred anywhere in the world. At least 31
persons died quickly from acute radiation exposure or other injuries, and thousands of
additional cancer deaths among the tens of millions of people exposed to radiation from the
accident may occur during the next several decades.
According to a 2002 report by the Organization for Economic Cooperation and
Development (OECD), the primary observable health consequence of the accident has been
a dramatic increase in childhood thyroid cancer. About 1,000 cases of childhood thyroid
cancer were reported in certain regions surrounding the destroyed reactor — a rate that is as
much as a hundred times the pre-accident level, according to OECD. The death rate for
accident cleanup workers also rose measurably, the organization reported. The OECD report
estimated that about 50,000 square miles of land in Belarus, Ukraine, and Russia were
substantially contaminated with radioactive cesium from Chernobyl.6
5 Talbott, Evelyn O., et al. “Long Term Follow-Up of the Residents of the Three Mile Island
Accident Area: 1979-1998.” Environmental Health Perspectives. Published online October 30,
2002. [http://ehpnet1.niehs.nih.gov/docs/2003/5662/abstract.html]
6 OECD Nuclear Energy Agency. Chernobyl: Assessment of Radiological and Health Impacts.
2002.
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The United States is providing direct assistance for upgrading the safety of remaining
Soviet-designed reactors, a program being coordinated by DOE, NRC, the Agency for
International Development (AID), and the Department of State. DOE is seeking $14.1
million in FY2004 for improving the operation and physical condition of Soviet-designed
nuclear power plants, an increase of $2.5 million from FY2003. The General Accounting
Office estimates that $1.93 billion was provided through November 1999 by the United
States and other industrialized nations to improve the safety of Soviet-designed reactors. Of
that amount, $753 was contributed by the European Union, $532 by the United States, $43
million by the International Atomic Energy Agency, and the remainder from 14 other
countries.
Licensing and Regulation
For many years a top priority of the nuclear industry was to modify the process for
licensing new nuclear plants. No electric utility would consider ordering a nuclear power
plant, according to the industry, unless licensing became quicker and more predictable, and
designs were less subject to mid-construction safety-related changes required by NRC. The
Energy Policy Act of 1992 largely implemented the industry’s licensing goals, but no plants
have been ordered.
Nuclear plant licensing under the Atomic Energy Act of 1954 (P.L. 83-703; U.S.C.
2011-2282) had historically been a two-stage process. NRC first issued a construction permit
to build a plant, and then, after construction was finished, an operating permit to run it. Each
stage of the licensing process involved complicated proceedings. Environmental impact
statements also are required under the National Environmental Policy Act.
Over the vehement objections of nuclear opponents, the Energy Policy Act (P.L. 102-
486) provides a clear statutory basis for one-step nuclear licenses, which would combine the
construction permits and operating licenses and allow completed plants to operate without
delay if construction criteria are met. NRC would hold preoperational hearings on the
adequacy of plant construction only in specified circumstances. DOE’s Nuclear Power 2010
initiative proposes to pay up to half the cost of combined construction and operating licenses
for a water-cooled and a gas-cooled reactor.
A fundamental concern in the nuclear regulatory debate is the performance of NRC in
issuing and enforcing nuclear safety regulations. The nuclear industry and its supporters have
regularly complained that unnecessarily stringent and inflexibly enforced nuclear safety
regulations have burdened nuclear utilities and their customers with excessive costs. But
many environmentalists, nuclear opponents, and other groups charge NRC with being too
close to the nuclear industry, a situation that they say has resulted in lax oversight of nuclear
power plants and routine exemptions from safety requirements.
Primary responsibility for nuclear safety compliance lies with nuclear plant owners, who
are required to find any problems with their plants and report them to NRC. Compliance is
also monitored directly by NRC, which maintains at least two resident inspectors at each
nuclear power plant. The resident inspectors routinely examine plant systems, observe the
performance of reactor personnel, and prepare regular inspection reports. For serious safety
violations, NRC often dispatches special inspection teams to plant sites.
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In response to congressional criticism, NRC has begun reorganizing and overhauling
many of its procedures. The Commission is moving toward “risk-informed regulation,” in
which safety enforcement is guided by the relative risks identified by detailed individual
plant studies. NRC began implementing a new reactor oversight system April 2, 2000, that
relies on a series of performance indicators to determine the level of scrutiny that each
reactor should receive. However, the Union of Concerned Scientists has questioned the
validity of the individual plant studies on which risk-informed regulation is based.
Reactor Security
Nuclear power plants have long been recognized as potential targets of terrorist attacks,
and critics have long questioned the adequacy of the measures required of nuclear plant
operators to defend against such attacks. All commercial nuclear power plants licensed by
NRC have a series of physical barriers to accessing the operating reactor area, and are
required to maintain a trained security force to protect them. Following the September 11,
2001, terrorist attacks NRC activated its Emergency Response Center and advised all plant
operators to go to the highest level of security alert. It also began a “top-to-bottom” review
of its security requirements.
A key element in protecting nuclear plants is the requirement that simulated terrorist
attack exercises, monitored by NRC, be carried out to test the ability of the plant operator to
defend against them. The severity of attacks to be prepared for are specified in the form of
a “design basis threat” (DBT). After more than a year’s review, on April 29, 2003, NRC
changed the DBT to “represent the largest reasonable threat against which a regulated private
guard force should be expected to defend under existing law.” The details of the revised
DBT were not released to the public.
Several bills were introduced in the 107th Congress to change the way nuclear plants
would be protected from terrorist attack, including proposals to create a federal force to
replace private guards, but none was passed. In the 108th Congress several legislative
proposals have been introduced, and one, the Nuclear Infrastructure Security Act of 2003 (S.
1043) was reported out on May 15, 2003, by the Senate Environment and Public Works
Committee. (For details see CRS Report RS21131, Nuclear Power Plants: Vulnerability
to Terrorist Attack.)
Decommissioning and Life Extension
When nuclear power plants end their useful lives, they must be safely removed from
service, a process called decommissioning. NRC requires nuclear utilities to make regular
contributions to special trust funds to ensure that money is available to remove all radioactive
material from reactors after they are closed. Because no full-sized U.S. commercial reactor
has yet been completely decommissioned, which can take several decades, the cost of the
process can only be estimated. Decommissioning cost estimates cited by a 1996 DOE report,
for one full-sized commercial reactor, ranged from about $150 million to $600 million in
1995 dollars. Disposal of large amounts of low-level waste, consisting of contaminated
reactor components, concrete, and other materials, is expected to account for much of those
costs.
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Consolidation of the nuclear industry has raised questions about the tax treatment of
decommissioning funds when a commercial reactor is sold. H.R. 6 and an energy tax
incentives bill (S. 1149) introduced by Senator Grassley on May 23, 2003, specify that
dedicated nuclear decommissioning funds can be transferred to new reactor owners without
incurring additional tax liabilities.
Nuclear Accident Liability
Liability for damages to the general public from nuclear incidents is addressed by the
Price-Anderson Act (primarily Section 170 of the Atomic Energy Act of 1954, 42 U.S.C.
2210). The act was up for reauthorization on August 1, 2002, and it was extended for
commercial reactors through December 31, 2003, by the FY2003 omnibus continuing
resolution (P.L. 108-7). Even without an extension, existing reactors would continue to
operate under the current Price-Anderson liability system, but new reactors would not be
covered.
Under Price-Anderson, the owners of commercial reactors must assume all liability for
nuclear damages awarded to the public by the court system, and they must waive most of
their legal defenses following a severe radioactive release (“extraordinary nuclear
occurrence”). To pay any such damages, each licensed reactor must carry financial
protection in the amount of the maximum liability insurance available, which was increased
by the insurance industry from $200 million to $300 million on January 1, 2003. Any
damages exceeding that amount are to be assessed equally against all operating commercial
reactors, up to $83.9 million per reactor. Those assessments — called “retrospective
premiums” — would be paid at an annual rate of no more than $10 million per reactor, to
limit the potential financial burden on reactor owners following a major accident. Including
three that are not operating, 106 commercial reactors are currently covered by the Price-
Anderson retrospective premium requirement.
For each nuclear incident, therefore, the Price-Anderson liability system currently would
provide up to $9.2 billion in public compensation. That total includes the $300 million in
insurance coverage carried by the reactor that suffered the incident, plus the $83.9 million
in retrospective premiums from each of the 106 currently covered reactors. On top of those
payments, a 5% surcharge may also be imposed, raising the total per-reactor retrospective
premium to $88.1 million and total compensation to $9.6 billion. Under Price-Anderson, the
nuclear industry’s liability for an incident is capped at that amount, which varies depending
on the number of covered reactors, the amount of available insurance, and an inflation
adjustment that is made every 5 years. Payment of any damages above that liability limit
would require congressional approval under special procedures in the act.
The Price-Anderson Act also covers contractors who operate hazardous DOE nuclear
facilities. The liability limit for DOE contractors is the same as for commercial reactors,
except when the limit for commercial reactors drops because of a decline in the number of
covered reactors. Since 1998, the number of covered commercial reactors has dropped from
110 to 106, so the commercial liability limit has dropped from $9.43 billion to $9.19 billion
(excluding the 5% surcharge). Under the law, however, the limit for DOE contractors does
not decline and so remains at $9.43 billion. Price-Anderson authorizes DOE to indemnify
its contractors for the entire amount, so that damage payments for nuclear incidents at DOE
facilities would ultimately come from the Treasury. However, the law also allows DOE to
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fine its contractors for safety violations, and contractor employees and directors can face
criminal penalties for “knowingly and willfully” violating nuclear safety rules.
In the 107th Congress, the House approved a 15-year extension of the Price-Anderson
liability system November 27, 2001 (H.R. 2983). The total retrospective premium for each
reactor would have been raised to $94 million and the limit on per-reactor annual payments
raised to $15 million, with both to be adjusted for inflation every 5 years. For the purposes
of those payment limits, a nuclear plant consisting of multiple small reactors (100-300
megawatts, up to a total of 950 megawatts) would have been considered a single reactor.
Therefore, a power plant with six 120-megawatt pebble-bed modular reactors would have
been liable for retrospective premiums of up to $94 million, rather than $564 million. The
liability limit on DOE contractors would have been set at $10 billion per accident, also to be
adjusted for inflation.
The Senate included provisions in H.R. 4 to extend Price-Anderson coverage for new
commercial reactors for 10 years and indefinitely for DOE contractors. The liability limit
for commercial reactors would have remained the same, with a five-year inflation
adjustment, and the limit for DOE contractors would have been set at $10 billion with an
inflation adjustment. Modular reactors of 100-300 megawatts built together in a plant of up
to 1,300 megawatts would have been considered a single reactor under Price-Anderson.
The House-passed Price-Anderson bill would have authorized the federal government
to sue DOE contractors to recover at least some of the compensation that the government had
paid for any accident caused by intentional DOE contractor management misconduct. Such
cost recovery would have been limited to the amount of the contractor’s profit under the
contract involved, and no recovery would be allowed from nonprofit contractors.
Although DOE is generally authorized to impose civil penalties on its contractors for
violations of nuclear safety regulations, Atomic Energy Act §234A specifically exempts
seven non-profit DOE contractors and their subcontractors. Under the same section, DOE
automatically remits any civil penalties imposed on non-profit educational institutions
serving as DOE contractors. H.R. 2983 would have eliminated the civil penalty exemption
for future contracts by the seven listed non-profit contractors and DOE’s authority to
automatically remit penalties imposed on all non-profit educational institutions serving as
contractors. However, the bill would have limited the civil penalties against a non-profit
contractor to the amount of discretionary fees (incentive fees above actual cost
reimbursement) awarded by DOE under that contract. The Senate’s Price-Anderson
extension in H.R. 4 included similar provisions.
The House-Senate conference committee on H.R. 4 approved a compromise Price-
Anderson subtitle September 12, 2002. The compromise version would have extended Price-
Anderson indemnification authority for both NRC and DOE for 15 years, through August 1,
2017. The total retrospective premium per reactor would have been set at $94 million,
divided into annual payments of no more than $15 million (with both limits to be adjusted
for inflation every 5 years). The liability limit for DOE contractors would have been set at
$10 billion, adjusted for inflation every 5 years. Modular reactors of 100-300 megawatts
would have been treated as a single reactor under Price-Anderson, up to a limit of 1,300
megawatts. The civil penalty exemption for nonprofit contractors would have been replaced
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with a nonprofit penalty limit. However, the 107th Congress adjourned without completing
action on the measure.
In the 108th Congress, the Senate attached last year’s Price-Anderson conference
agreement to the FY2003 omnibus continuing resolution, but the enacted measure included
only a simple extension through the end of this calendar year. Representative Heather
Wilson introduced a Price-Anderson extension bill (H.R. 330) January 8, 2003, that also
includes all the provisions of the H.R. 4 Price-Anderson conference agreement. An
extension of Price-Anderson coverage for new commercial reactors through August 1, 2012
(S. 156) was approved by the Senate Environment and Public Works Committee April 9,
2003. H.R. 6, as passed by the House on April 11, 2003, includes provisions nearly identical
to the Price-Anderson extension bill passed by the House in the 107th Congress. On the same
day, the Senate Energy and Natural Resources Committee approved a permanent extension
of Price-Anderson in an unnumbered Chairman’s mark of omnibus energy legislation,
subsequently introduced as S. 14. Except for the permanent extension, the Price-Anderson
language in S. 14 is nearly identical to the H.R. 4 conference agreement in the 107th
Congress.
The Price-Anderson Act’s limits on liability were crucial in establishing the commercial
nuclear power industry in the 1950s. Supporters of the Price-Anderson system contend that
it has worked well since that time in ensuring that nuclear accident victims would have a
secure source of compensation, at little cost to the taxpayer. However, opponents contend
that Price-Anderson subsidizes the nuclear power industry by protecting it from some of the
financial consequences of the most severe conceivable accidents.
Because no new U.S. reactors are currently planned, missing the deadline for extension
would have little short-term effect on the nuclear power industry. However, any new DOE
contracts signed during Price-Anderson expiration would have to use alternate
indemnification authority. To prevent that problem, the National Defense Authorization Act
for FY2003 (P.L. 107-314), signed December 2, 2002, extended Price-Anderson coverage
for DOE contractors through December 31, 2004.
Nuclear Waste Management
One of the most controversial aspects of nuclear power is the disposal of radioactive
waste, which can remain hazardous for thousands of years. Each nuclear reactor produces
an annual average of about 20 tons of highly radioactive spent nuclear fuel and 50-200 cubic
meters of low-level radioactive waste. Upon decommissioning, contaminated reactor
components are also disposed of as low-level waste.
The federal government is responsible for permanent disposal of commercial spent fuel
(paid for with a fee on nuclear power) and federally generated radioactive waste, while states
have the authority to develop disposal facilities for commercial low-level waste. Spent fuel
and other highly radioactive waste is to be isolated in a deep underground repository,
consisting of a large network of tunnels carved from rock that has remained geologically
undisturbed for hundreds of thousands of years.
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The Nuclear Waste Policy Act of 1982 (NWPA, P.L. 97-425) as amended, names
Nevada’s Yucca Mountain as the sole candidate site for a national geologic repository.
Following the recommendation of Energy Secretary Abraham, President Bush on February
15, 2002, recommended to Congress that DOE submit an application to NRC to construct
the Yucca Mountain repository. As allowed by NWPA, Nevada Governor Guinn submitted
a “notice of disapproval” (or “state veto”) to Congress April 8, 2002. The state veto would
have blocked repository construction at Yucca Mountain if a congressional resolution
approving the site had not been enacted within 90 days of continuous session. The House
passed a Yucca Mountain approval resolution (H.J.Res. 87) on May 8, 2002, by a 306-117
vote. The Senate approved the resolution by voice vote July 9 (following a 60-39 vote to
consider S.J.Res. 34, the Senate version of the resolution), and the President signed it July
24, 2002 (P.L. 107-200).
The Administration is requesting $591 million for the DOE civilian nuclear waste
disposal program for FY2004, a 29% boost over FY2003. The increased budget is intended
primarily to pay for preparing a construction permit application for a national nuclear waste
repository at Yucca Mountain, Nevada. DOE expects to submit the 10,000-page application
to the Nuclear Regulatory Commission (NRC) in December 2004. The additional funds are
also needed for detailed repository design work, repository performance studies, and
transportation planning, according to DOE.
DOE contends that it cannot meet its 2010 target date for shipping nuclear waste to
Yucca Mountain without receiving its entire FY2004 budget request for the program.
Between FY2005 and FY2010, funding will have to further increase to an average of $1.3
billion per year, according to the budget justification. The Administration is proposing that
discretionary spending caps be adjusted to accommodate the program’s higher future
funding.
(For further details, see CRS Issue Brief IB92059, Civilian Nuclear Waste Disposal.)
Federal Funding for Nuclear Energy Programs
The following tables summarize current funding for DOE nuclear fission programs and
uranium activities, and for the NRC. The sources for the funding figures are Administration
budget requests and committee reports on the Energy and Water Development
Appropriations Acts, which fund all the nuclear programs. President Bush submitted his
FY2004 funding request to Congress February 3, 2003. FY2003 funding was provided by
a consolidated appropriations resolution signed February 20, 2003 (P.L. 108-7).
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Table 1. Funding for the Nuclear Regulatory Commission
(budget authority* in millions of current dollars)
FY2001
FY2002
FY2003
FY2004
Approp.
Approp.
Approp.
Request
Nuclear Regulatory Commission
Reactor Safety
227.6
259.3
273.7
305.8
Nuclear Materials Safety
53.1
58.8
60.3
71.2
Nuclear Waste Safety
64.1
68.3
73.2
70.1
International Nuclear Safety
5.1
5.0
5.2
5.4
Management and Support
149.7
161.0
165.8
166.2
Inspector General
5.8
6.2
6.8
7.3
(Homeland Security)
(36.0*)
(35.4)
(53.1)
TOTAL NRC BUDGET
505.5
558.7
584.6
626.1
AUTHORITY
Offsetting fees
453.2
479.0
526.5
546.6
Net appropriation
52.3
79.6
58.1
80.5
* Additional $36 million for nuclear plant security provided by FY2002 supplemental appropriations
included in FY2002 Defense Appropriations Bill (P.L. 107-117), approved by Congress December
20, 2001. The FY2002 supplemental security funding is not to be offset by fees. The security
funding is included in the other NRC programs, so it should not be added to the NRC total
as a separate funding category.
Table 2. DOE Funding for Nuclear Activities
(budget authority in millions of current dollars)
FY2001
FY2002
FY2003
FY2004
Approp.
Approp. Approp Request
Nuclear Energy (selected programs)
Program Direction
22.0
23.0
23.4
24.8
University Reactor Assistance
12.0
17.5
18.5
18.5
Nuclear Energy Plant Optimization
5.0
7.0
5.0
0
Nuclear Energy Research Initiative
35.0
32.0
25.0
12.0
Nuclear Energy Technologies
7.5
12.0
45.0
48.0
Nuclear Hydrogen Initiative
—
—
—
4.0
Advance Fuel Cycle Initiative
—
—
58.2
63.0
International Nuclear Safety*
20.5
21.1
11.6
14.1
Total, Nuclear Energy
259.9
250.5
261.7
387.6
Uranium Facilities Maintenance and
422.5
418.4
456.5
418.1
Remediation
Nuclear Waste Activities
Defense Environmental Management
6,122.2
6,489.2
6,723.1
6,809.8
Non-defense Environmental Manag.
288.8
236.4
213.6
170.9
Nuclear Waste Fund Activities**
390.4
375.0
457.0
591.0
* Funded under “Defense Nuclear Nonproliferation.”
** Funded by a 1-mill-per-kilowatt-hour fee on nuclear power, plus appropriations for defense waste
disposal.
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LEGISLATION
H.R. 6 (Tauzin)
Includes extension of Price-Anderson Act nuclear liability system and reauthorization
of nuclear R&D programs. Introduced April 7, 2003; referred to multiple committees.
Incorporates H.R. 39, H.R. 238, H.R. 1531, H.R. 1644. Passed by House April 11, 2003, by
vote of 247-145.
H.R. 238 (Boehlert)
Energy Research, Development, Demonstration, and Commercial Application Act of
2003. Authorizes appropriations for nuclear energy research programs. Introduced January
8, 2003; referred to Committee on Science and Committee on Resources. Incorporated into
H.R. 6.
H.R. 330 (H. Wilson)
Price-Anderson Amendments Act of 2003. Extends Price-Anderson Act nuclear
accident liability system for 15 years and increases liability limits. Introduced January 8,
2003; referred to Committee on Energy and Commerce.
H.R. 1644 (Barton)
Energy Policy Act of 2003. Includes extension of Price-Anderson Act nuclear liability
system and reauthorization of nuclear R&D programs. Introduced April 7, 2003; referred
to multiple committees. Reported by Committee on Energy and Commerce April 8, 2003
(H.Rept. 108-65, Part 1).
S. 6 (Daschle)
Comprehensive Homeland Security Act of 2003. Includes provisions from S. 131 on
nuclear facility security. Introduced January 7, 2003; referred to Committee on Judiciary.
S. 14 (Domenici)
Energy Policy Act of 2003. Provides federal assistance for new nuclear power plants,
authorizes nuclear research funding, and extends Price-Anderson Act indefinitely.
Introduced April 30, 2003; placed on Senate calendar. Identical to S. 1005, reported by
Senate Energy and Natural Resources Committee May 6, 2003 (S.Rept. 108-43). Senate
debate began May 6, 2003.
S. 131 (Reid)
Nuclear Security Act of 2003. Requires the federal government to study a wide variety
of security threats to nuclear facilities and determine which threats would come from
enemies of the United States and therefore be the responsibility of the federal government
and which threats should be guarded against by nuclear power plant owners. NRC would be
required to review the security and emergency response plans at all nuclear power plants and
other major nuclear facilities. An NRC employee is to be stationed at each nuclear facility
as a “federal security coordinator.” Introduced January 9, 3003; referred to Committee on
Environment and Public Works.
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S. 156 (Voinovich)
Price-Anderson Amendments Act of 2003. Extends Price-Anderson Act nuclear
liability coverage for new commercial nuclear power plants through August 1, 2012.
Introduced January 14, 2003; referred to Committee on Environment and Public Works.
Ordered reported by committee April 9, 2003; amended to include nuclear power plant
security provisions.
S. 843 (Carper)
Clean Air Planning Act of 2003. Provides emissions allowances for incremental
nuclear power capacity. Introduced April 9, 2003; referred to Committee on Environment
and Public Works.
S. 1043 (Inhofe)
Nuclear Infrastructure Security Act of 2003. Requires NRC to issue new regulations
for “design basis threat” that nuclear power plant security must be able to defeat. Introduced
May 12, 2003; referred to Committee on Environment and Public Works. Ordered reported
May 15, 2003.
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