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Price-Anderson Act

The Price-Anderson Nuclear Industries Indemnity Act, commonly known simply as the Price-Anderson Act, is a U.S. law that governs liability and compensation procedures in cases of nuclear accidents involving commercial power plants. Originally passed in 1957 to stimulate nuclear power production, the Price-Anderson Act was amended to have its coverage extended through 2025.

Regulatory History

The U.S. government began regulating nuclear energy production in the aftermath of World War II, when the atomic bombings of Hiroshima and Nagasaki dramatically demonstrated nuclear power's capacity to cause massive death and destruction, even as members of the scientific community urged its use for peaceful purposes, such as electricity generation. In 1946, Congress passed the first Atomic Energy Act, which classified pertinent information, prohibited private ownership of nuclear production material and facilities, and established the Atomic Energy Commission (AEC), a federal government agency that would oversee nuclear energy research and development until it was replaced by the Nuclear Regulatory Commission (NRC) in 1974.

A second Atomic Energy Act, which reversed the 1946 legislation's prohibition on private ownership and established a system for licensing nuclear power producers, was passed in 1954. A few months later, the AEC created an incentive program to encourage nongovernmental nuclear power production, research, and development. Utility companies were slow to respond, however, because of the great risk involved and private insurance companies’ unwillingness to underwrite more than a small fraction of their accident coverage needs. It was at this point that two Democratic legislators, Senator Clinton P. Anderson of New Mexico and Representative Melvin Price of Illinois, began working to secure legislation that would cap industry liability at $500 million and provide for the federal government to cover payouts beyond that cap. Although there was some initial controversy over the arbitrariness of the $500 million figure and the impracticality of generating realistic risk estimates, the Price-Anderson Act was signed into law as an amendment to section 170 of the Atomic Energy Act of 1954 on September 2, 1957.

Renewals and Amendments

When it was first passed, the Price-Anderson Act was set to remain in force for just over 10 years, by which point, it was believed, the nuclear power industry would have established a strong-enough track record to eliminate the need for the federal government to supplement private insurance coverage. This expectation went unfulfilled, however. In 1966, Congress renewed the legislation for another 10 years and amended it to standardize state laws so as to provide no-fault insurance in cases of “extraordinary nuclear occurrences,” or accidents resulting in significant releases of radiation. In 1975, the act was renewed once again and amended to begin phasing out the government indemnity. It was renewed for a third time in 1988, when its coverage was extended through 2002 and allowances were made to adjust coverage rates for inflation and to compensate individuals for precautionary evacuation. Congress did not renew the Price-Anderson Act immediately upon its expiration in 2003, but then passed the Energy Policy Act of 2005, which, in addition to numerous other provisions to deal with the United States’ mounting energy concerns, reinstated the Price-Anderson Act's coverage through the end of 2025.

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