Price–Anderson Nuclear Industries Indemnity Act facts for kids

Quick facts for kids
Price–Anderson Nuclear Industries Indemnity Act

Long title	An Act to amend the Atomic Energy Act of 1954, as amended, and for other purposes.
Nicknames	Price-Anderson Act
Enacted by	the 85th United States Congress
Effective	September 2, 1957
Citations
Public law	85-256
Statutes at Large	71 Stat. 576
Codification
Titles amended	42 U.S.C.: Public Health and Social Welfare
U.S.C. sections created	42 U.S.C. ch. 23
Legislative history
Introduced in the House as H.R. 7383 Signed into law by President Dwight D. Eisenhower on September 2, 1957

Calvert Cliffs Nuclear Power Plant

The Price-Anderson Nuclear Industries Indemnity Act, often called the Price-Anderson Act, is a United States federal law. It was first passed in 1957. This law has been updated many times since then. It deals with who is responsible for costs if there's an accident at a non-military nuclear facility in the U.S. This applies to facilities built before 2026.

The main goal of the Act is to help nuclear companies. It protects them from huge costs if a nuclear accident happens. At the same time, it makes sure that people affected by an accident get paid. The Act sets up a system where the first about $15 billion (as of 2021) comes from the nuclear industry itself. If costs go over $15 billion, the U.S. Congress would step in. They would either make nuclear companies pay more or the government would cover the extra costs. When the Act was first created, it was important for encouraging private companies to build nuclear power plants. This was because the available insurance at the time (only $60 million) was not enough to cover potential accident costs.

In 1978, the Act was challenged in the Supreme Court. But the Supreme Court decided the Act was constitutional. This happened in the case called Duke Power Co. v. Carolina Environmental Study Group. The Act's protection policy was last updated in 2024. It is now set to continue until 2045 as part of the ADVANCE Act.

How the Law Works

Funding and Accident Procedures

Nuclear power plant operators must buy the most insurance they can get. This insurance covers them against nuclear accidents. As of 2017, this was $450 million for each reactor. If an accident happens, the insurance companies pay claims up to this amount.

After that, the Price-Anderson fund helps pay for more costs. This fund is paid for by the nuclear power companies themselves. As of September 2013, each company had to pay up to $121,255,000 per reactor if an accident's costs went over the $450 million insurance limit. In 2013, this fund could reach about $12.61 billion. This would happen if all 104 reactor companies had to pay their full share. Companies only pay into this fund if an accident actually occurs. However, the fund managers must have plans to borrow money. This ensures that people who are affected can get paid quickly. Companies' payments are capped at $18,963,000 per year. They pay until the claim is met or their maximum share is reached. This means a single reactor accident could have up to $13.06 billion in combined coverage.

If a covered accident happens, the Nuclear Regulatory Commission (NRC) must report the costs to the courts and Congress. If costs might go over the Price-Anderson fund's limit, the President must tell Congress. The President's plan would explain the accident's costs. It would also suggest how to raise money and pay people quickly. The fund managers can charge plants more if needed. If Congress does not provide money, people can still make claims. This is done under the Tucker Act, which allows claims against the government.

The Price-Anderson Act also covers facilities run by the Department of Energy (DOE). This includes private companies and their partners. Examples are uranium plants, national labs, and the Yucca Mountain nuclear waste repository. If an accident happens at a DOE facility, the U.S. government pays from its treasury. The fund size for these places is also $12.6 billion. This amount is set by law, not by how many plants contribute.

Since the Act started, nuclear insurance groups have paid about $151 million in claims. About $70 million of this was for the 1979 Three Mile Island accident. The Department of Energy has also paid $65 million for its own nuclear operations.

Changes to Court Rules

The Act changes some normal court rules for nuclear accidents:

• All lawsuits from a nuclear accident automatically go to federal courts. This happens no matter where the accident took place.
• All claims from the same accident are grouped together in one federal court. This court decides how to pay people and share funds fairly if there isn't enough money.
• Companies cannot say an accident was not their fault to avoid paying for damages.
• People have a long time to file a claim. They have three years from when they find out about the damage.
• People cannot sue companies for extra money meant to punish them (called punitive damages). The Act does not punish companies for accidents. However, nuclear rules allow fines for breaking safety rules. Other serious consequences for safety breaches can still apply.

History of the Act

Why the Law Was Created

The Price-Anderson Act is named after Representative Charles Melvin Price and Senator Clinton Presba Anderson. Both of them led Congress's Joint Committee on Atomic Energy.

After World War II, nuclear technology was developed. The Atomic Energy Act of 1946 set up rules for government-controlled nuclear plants. The government wanted to use this technology for peaceful purposes, like making electricity. In 1954, the Atomic Energy Act Amendments Act changed this. It allowed private companies to operate nuclear plants by getting a license.

Before 1955, insurance companies could not offer enough coverage for the risks of nuclear power. No single or group of insurance companies could provide the needed amount of insurance. A power plant called Shippingport was built. But electric companies worried about the small amount of liability coverage ($60 million). A major nuclear accident could bankrupt any company responsible. Insurance companies also could not offer policies beyond their own ability to pay. Because of these problems, it seemed unlikely that electric companies would enter the nuclear power industry.

Many studies have looked at the possible size of the worst nuclear accidents. These include WASH-740 and SOARCA. In November 2012, the Nuclear Regulatory Commission (NRC) published SOARCA. This study looked at safety failures that are very rare.

To solve these issues, Congress passed the Price-Anderson Act in 1957. The Act required companies to get the most insurance they could, which was $60 million. The government then promised an extra $500 million to cover claims over that amount. Companies were not responsible for any costs beyond the insured amount for radiation incidents. This was true no matter who was at fault. The Act was meant to be temporary. It was supposed to end in August 1967. It was thought that after companies showed they could operate safely, they would get enough private insurance. At the same time, Congress encouraged the insurance industry to find ways for power plant operators to meet their financial responsibilities. The insurance industry created a group called American Nuclear Insurers (ANI). Today, ANI includes 60 U.S. insurance companies.

Updates to the Act

By 1966, it was clear that the industry still could not get enough private insurance. So, the Act was extended until 1976. A new rule was added. It stopped companies from using certain defenses against damage claims. For example, they could not claim the accident was not their fault. A minimum time limit was also added. People had three years to make a claim after finding out about harm. These changes aimed to make it easier to get money from reactor companies. They also removed differences in laws across states. These new rules only applied to major radioactive releases (called an "extraordinary nuclear occurrence").

In 1975, the Act was extended for 12 more years, until 1987. The total insurance amount stayed the same. But a new rule required each of the 60 or so reactors to pay between $2 million and $5 million if an uninsured accident happened. The insurance limit for each company went up to $140 million. These changes meant the government no longer contributed to the insurance pool. However, Congress promised that for a larger accident, it would do whatever was needed to pay the public fully and quickly. This could include charging reactor companies more than the set limits.

In 1988, the Act was extended for 15 years, until August 2002. Individual insurance for each generator increased to $200 million. The total fund grew to $9.5 billion. For each reactor they owned, companies had to pay up to $63 million for claims against any company. But they could only pay a maximum of $10 million per year. These payments were adjusted for inflation every 5 years. The same level of protection was given to government DOE facilities. Small reactors (for education and research) needed $250,000 in insurance. They also had a government-backed fund of $500 million for accidents. This extension also made sure all cases from a nuclear accident were heard in a federal court.

In February 2002, the Act was temporarily extended to December 2003. After some discussion in 2003, it was extended to 2017. Individual insurance for each site increased to $300 million. Fund contributions per reactor went up to $95.8 million. In 2005, it was extended again until 2025 through the Energy Policy Act of 2005.

In July 2024, the Act was extended again. It is now set to continue until 2045 as part of the ADVANCE Act.

How the Act Has Been Used

For the first 43 years of the Price-Anderson Act, until 2000, the secondary insurance (the fund paid by companies) was not needed. A total of $151 million was paid for claims. This included legal costs. All of this came from the primary insurance. About $71 million was for the Three Mile Island accident. Also, the Department of Energy paid about $65 million for claims related to its own nuclear operations during the same time.

Court Challenge to the Act

The constitutionality of the Price-Anderson Act was confirmed in June 1978. This happened when the Supreme Court ruled in the case of Duke Power Co. v. Carolina Environmental Study Group. The lawsuit argued that the Act was unfair for two main reasons. First, it said the Act did not ensure enough money for accident victims. This was seen as a violation of the Fifth Amendment. Second, it claimed the Act treated nuclear accidents differently from other accidents. This was seen as a violation of the Fourteenth Amendment.

The Supreme Court decided:

• Congress wanted to remove money problems. This was to encourage private companies to develop nuclear power for electricity. At the same time, they wanted to pay the public if a big nuclear accident happened.
• The need for a limit on how much companies had to pay was clear. This limit encouraged private companies to get involved in nuclear energy. So, it made sense for Congress to set this limit.
• The Price-Anderson Act provides a fair replacement for older common-law or state laws.
• The idea that the Act makes companies less careful about safety is not true. The Act's liability limit does not change the strict rules for getting a license to build or run a nuclear plant. Also, if a nuclear accident happens, the company itself would likely suffer the biggest losses.
• Congress promised a fund of $560 million (at that time) for recovery. It also made a clear promise to "take whatever action is deemed necessary... to protect the public." This was seen as a fair and reasonable way to pay for damages. It was better than trying to get huge amounts of money from a company that might not have enough resources.
• There is no equal protection violation. The Act's liability limit makes sense. It helps encourage private companies in nuclear energy. This is a good reason for treating nuclear accident injuries differently from other injuries.

How Nuclear Industry Liability Compares to Other Industries

U.S. law requires 8 cents per barrel of oil to be paid into the Oil Spill Liability Trust Fund. This applies to all oil imported or produced. In return, operators of offshore oil platforms have a liability limit of $75 million for damages. This can be paid by the fund. However, they are still responsible for cleanup costs. As of 2010, before payments for the Deepwater Horizon drilling rig explosion, the fund had $1.6 billion.

The hydroelectric industry (dams that make electricity) is generally not held financially responsible for huge incidents like dam failures or floods. For example, dam operators were not responsible for the 1977 failure of the Teton Dam in Idaho. That accident caused about $500 million in property damage.

Many industries do not have a clear limit on how much they have to pay. But in reality, their responsibility might be limited to what the company owns. Also, it can be hard to prove who is responsible if there are no strict laws about it. For example, after the 1984 Bhopal disaster, the Union Carbide Corporation said the accident was caused by sabotage. They settled for only $470 million.

Criticisms of the Act

The Price-Anderson Act has been criticized by various groups. These include the Union of Concerned Scientists, Greenpeace International, Public Citizen, and the Cato Institute. Public Citizen has been very critical. They claim the Act makes nuclear power seem less risky than it is. They also say it does not require reactors to have enough insurance. This would mean taxpayers would pay most of the bill for a major accident.

In 2008, the Congressional Budget Office estimated the value of the government's help (subsidy) at only $600,000 per reactor per year. This is less than one percent of the cost for new nuclear power. All such calculations are debated. This is because it's hard to guess the true chances of a very expensive, catastrophic event. As fewer nuclear plants operate, the public's financial risk in an accident goes up. However, the Nuclear Waste Fund collects $750 million in fees each year from utilities. This money goes to the government. This is real money, unlike the idea of insurance in the Price-Anderson Act.

The Price-Anderson Act has been called an example of corporate welfare by Ralph Nader. This means it's seen as government help for big businesses.

Many groups criticize Price-Anderson because it protects the Department of Energy and private companies from nuclear incidents. This protection applies even if they were very careless or did something wrong on purpose. However, serious consequences for safety breaches would still apply. Critics say no other government agency gives this much taxpayer protection to non-government workers. The Energy Department argues that this difference doesn't matter. They say the damage to the public would be the same no matter who caused it.

These costs beyond insurance for worst-case scenarios are not only for nuclear power. For example, hydroelectric power plants are also not fully insured against major events. This includes disasters like the Banqiao Dam failure. Private insurers base dam insurance on limited scenarios. So, for major disasters in this area, the government also provides insurance.

See Also