The Price-Anderson Nuclear Industries Indemnity Act (1957) amends the Atomic Energy Act to hold nuclear contractors faultless and irresponsible for their actions. It make available a pool of insurance funds to compensate people who are injured or incur damages from a nuclear or radiological incident. Under the Act, DOE nuclear contractors are indemnified by the federal government. This means that taxpayers must foot the bill for any negligence on the part of the nuclear industry. The act currently covers all nuclear facilities constructed in the United States before 2002.

The Atomic Energy Act as ammended under Price-Anderson, removed the burden of liability and insurance for nuclear operators in an effort to kick-start the nuclear power industry. Because the risk is high, insurance preimiums would have rendered nuclear energy uncompetative in the US, which might have allowed other countries to gain a headstart on an industry with national security implications. For a number of stated reasons and quite likely for unstated reasons of national defense and global economic competativeness, the Congress felt it was a paramount objective to establish a private nuclear industry and so they subsidized investments by assuming liability for nuclear accidents without any consideration of fault or negligence. It is widely held by analysts and researchers, including the nonpartisan Congressional Research Service, that the Price-Anderson Act enabled the construction of the nuclear power industry in the United States. [1]

However, the law is not without its detractors, including Greenpeace International, Public Citizen, Taxpayers for Common Sense and other interest groups, who charge that Price-Anderson has amounted to an enormous giveaway to private industry at the American taxpayers' expense. Even the United States Department of Energy has said Price-Anderson is essentially a subsidy for the nuclear industry [[2]. Some of these groups also argue that the Price-Anderson Act was enacted when nuclear power was an immature industry that needed governmental protections to spur development, but that after 48 years such protections are no longer needed. However, the Energy Department has said it is "widely perceived that no new nuclear plants would be built in the United States without the cap on liability provided by the Price-Anderson Act." [3]

In so much as no serious accidents have occured however, the potential cost of the act on taxpayers has never been realized. The real effect has been to reduce the amount of investment capital available for alternative technologies while at the same time satisfying a market demand with a subsidized good which floods the market and lowers the return on investment for non-subsidized goods. This increases the problem of reducing available capital for the most effecient solution to energy demand. As a consequence, the cost of energy is inflated due to the cost of the subsidy, plus the cost of market distortion, which is inefficiency.

The law suspends U.S. liability laws for nuclear power plants. Liability laws in the United States provide for actual damages as well as punitive damages to punish irresponsible behavior; as a consequence, businesses are motivated to act responsibly or face devastating losses in court.

The pool of money — which as of 2004 stood at about $9.5 billion — is contributed entirely by the nuclear industry, primarly through power reactor licensees, who are required to have $200 million worth of primary insurance as of 2001. In the event that claims deplete the pool of funds, the Congress of the United States is required to consider covering the excess cost, possibly by establishing additional assessments against the industry. [A catastrophic nuclear event — such as the 1986 Chernobyl accident — would arguably deplete the current pool of money. Though the Soviet Union never released official estimates of the accident's economic impact, Greenpeace International estimated it to have been about $280 billion, not including medical costs for victims. However, were similar circumstances to be repeated in America, the scale of the disaster likely would be less — Chernobyl were RBMKs, unlike American plants, and the Chernobyl units did not have containment buildings around its reactors.]

The constitutionality of the Price-Anderson Act was challenged in 1975 (Duke Power vs. Carolina Environmental Study Group, Inc.) and upheld by the Supreme Court in June, 1978. The suit had challenged the act on two grounds — first, that it violated the Fifth Amendment because it did not ensure adequate compensation for victims of accidents, and that it violated the Fourteenth Amendment because it treats nuclear accidents different than other accidents. The court found that the act did not violate the United States Constitution's equal protection provisions because the importance of nuclear power must be balanced against the burden of those who would potentially be harmed.

Price-Anderson covers DOE facilities but not the nuclear Navy.

Nuclear insurance pools have paid $151 million ($70 million of which was related to the 1979 Three Mile Island meltdown) and the DOE $65 million since Price-Anderson was enacted 48 years ago.

External Links and references

• Industry synopsis of Price-Anderson
• ANS synopsis of Price-Anderson
• GAO report on Price-Anderson
• Congressional Research Service report on Nuclear Energy Policy