Price-Anderson Act
The Price-Anderson Act is a U.S. federal law enacted on September 2, 1957, aimed at facilitating the commercial development of nuclear energy by limiting the liability of nonmilitary nuclear facilities in the United States. Before this legislation, the absence of available insurance made it virtually impossible for nuclear power plants to operate, as the financial risks associated with potential accidents were deemed too high. The act mandates that each nuclear facility purchase a certain amount of liability insurance, initially set at $60 million, with the government covering additional liabilities up to $500 million. Over the years, the act has undergone several renewals and modifications, reflecting the ongoing challenges of securing adequate insurance for nuclear operations.
Under the current provisions, owners of nuclear reactors are held accountable for damages awarded by courts, with a structured insurance system that includes a primary insurance layer and a secondary self-insurance layer. Critics argue that the act functions as a government subsidy for the nuclear industry, potentially compromising fair competition with other energy sources. Additionally, concerns have been raised regarding the adequacy of the insurance limits, suggesting that they may fall short in the event of a significant nuclear accident. The Price-Anderson Act remains a pivotal piece of legislation in the landscape of nuclear energy regulation in the United States, with its current expiration set for December 31, 2025.
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Subject Terms
Price-Anderson Act
THE LAW: U.S. federal law that limits the liability of nonmilitary nuclear facilities in the United States
DATE: Enacted on September 2, 1957
Passage of the Price-Anderson Act enabled the commercial development of nuclear energy in the United States by making it possible for nuclear power plants to purchase liability insurance.
The Price-Anderson Act (also known as the Price-Anderson Nuclear Industries Indemnity Act) limits the extent of liability of a nuclear power plant for a nuclear accident in the United States. Before passage of the act, no insurance company would insure a nuclear power plant, and thus no such plants could function, as the possibility existed that claims resulting from any accidents would bankrupt the facilities. Many believed that nuclear power would never be developed in the United States unless some insurance plan was made available, and the Price-Anderson Act was designed to remedy this problem. The act required each nuclear facility to purchase the maximum amount of available insurance, only $60 million in 1957. The government would then be liable for another $500 million. Plants would not be allowed to deny claims even if they could show that they were not at fault in any accidents; claims were to be paid whether a plant was negligent or not.
The act was originally limited to ten years because it was thought that after nuclear plants had shown they could operate safely, commercial insurance would become available. In 1966, insurance was still not available, however, and the act was extended until 1976. In addition to extending the act, Congress added a provision that made it easier for damaged parties to make claims against a plant; the provision defined a nuclear accident in such a way that a claimant only had to show a monetary value for injury or property damages owing to exposure. The act was extended another ten years in 1975, when the insurance plan was changed again, to the plan that has since remained in place. The act was renewed with new monetary values both in 1988 and in 1998.
In 2005, the act was renewed for twenty years, so it will expire after December 31, 2025. According to the Price-Anderson Act, owners of reactors are responsible for nuclear damages awarded to the public by the courts. To pay these damages, the act established two layers of insurance. For the primary insurance layer, each licensed nuclear plant has a maximum liability insurance limit of $500 million. (This was raised from $450 million in 2024.) The secondary layer is a self-insurance system. Any damages exceeding $500 million are to be assessed equally against all power reactors that are 100-megawatt or above, which includes all reactors in the United States, with a cap of about $158 million per reactor.
Critics of the Price-Anderson Act argue that it is a government subsidy to the nuclear power industry, which could not exist without the subsidy. The act thus favors nuclear power at the expense of other energy sources. Another complaint is that the plants are protected even in cases of negligence or misconduct. Many have objected also that the amount of the insurance is not enough—a large accident would result in much higher costs than could be covered by the funds available.
Bibliography
Collier, Charles S. Are the “No Recourse” Provisions of the Price-Anderson Act Valid or Unconstitutional? Washington, D.C.: Jarboe, 1965.
Greenberg, Michael R. “Time and Flexibility Criterion: Nuclear Power Revisited.” In Environmental Policy Analysis and Practice. New Brunswick, N.J.: Rutgers University Press, 2007.
Holt, Mark. "Price-Anderson Act: Nuclear Power Industry Liability Limits and Compensation to the Public After Radioactive Release." Congressional Research Service, 25 Jan. 2024, crsreports.congress.gov/product/pdf/IF/IF10821. Accessed 22 July 2024.
Murray, Raymond L. “Reactor Safety and Security.” In Nuclear Energy: An Introduction to the Concepts, Systems, and Applications of Nuclear Processes. 6th ed. Burlington, Vt.: Butterworth-Heinemann/Elsevier, 2009.
US Senate Committee on Environment and Public Works. Subcommittee on Transportation, Infrastructure, and Nuclear Safety. Price-Anderson Act Reauthorization: Hearing Before the Subcommittee on Transportation Infrastructure and Nuclear Safety of the Committee on Environment and Public Works, United States Senate, One Hundred Seventh Congress, Second Session on January 23, 2002. Washington, D.C.: Government Printing Office, 2003.