The Price-Anderson Nuclear Industries Indemnity Act (commonly called the Price-Anderson Act) limits liability for nuclear plant operators. It also makes available a pool of insurance funds to compensate people who are injured or incur damages from a nuclear or radiological incident. It indemnifies the nuclear industry for accidents by paying on a no-fault basis, and caps damages that may be rewarded as a result of a lawsuit. The act currently covers all nuclear facilities constructed in the United States before 2002. Environmental groups, consumer groups and taxpayer watchdogs have criticized the act as a handout to the nuclear power industry to the detriment of United States citizens.

Background

Buoyed by the euphoria of victory in the War to End all Wars, the United States government, led by President and General Eisenhower embarked on a utopian plan to deliver cheap and abundant "atomic" energy to the entire world. The Atomic Energy Act of 1954 was intended to spur the development of America's private nuclear power industry by allowing private industry to use atomic power for peaceful purposes, such as generating electricity. But government and industry officials soon realized that no-one was interested in building a nuclear power plant because of the price of insurance. Financial backers did not view nuclear power as an economic opportunity given the risk of enormous financial liability that would result from a catastrophic accident at a nuclear plant. At the same time, lawmakers in the United States Congress began to worry that there was not adequate financial protection for the public in the event of an accident. The Price-Anderson ammendment was passed in 1957 to address those dual concerns; the act encouraged the development of nuclear power by indemnifying the industry from fault including unlawful misconduct and created a smaller than otherwise required mechanism for compensating the public for injury or property damage in the event of a nuclear accident. [1] Most analysts and researchers, including the nonpartisan Congressional Research Service, concur that Price-Anderson enabled the United States' current nuclear power plants to be built despite the known risk of calamity.

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.

Criticism

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. According to Public Citizen, a 1990 study calculated that without Price-Anderson, nuclear power corporations would pay more than $3 billion annually to fully insure their operations. [2] Even the United States Department of Energy has said Price-Anderson is essentially a subsidy for the nuclear industry [3]. Public Citizen has been particularly critical of Price-Anderson, arguing that it understates the risks inherent in atomic power and does not require reactors to carry enough insurance — as a result taxpayers would have to foot most of the bill for a catastrophic accident, the group says.[4]

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. In 1957, according to Public Citizen, the United States Senate stated that Price Anderson should only be needed for ten years because "the problem of reactor safety will be to a great extent solved and the insurance people will have had an experience on which to base a sound program of their own." [5] 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." [6] The last civilian nuclear plant completed in the United States started up in 1996. Additionally, these groups argue that Price-Anderson unfairly protects the nuclear power industry from the financial consequences of the most severe conceivable accidents. [7]

The law has also been criticized by environmental groups such as Green Scissors. They assert that Price-Anderson distorts the energy market by providing companies and their financiers a strong financial incentive to remain invested in nuclear energy rather than exploring sustainable energy technologies. [8]

Additionally, Price-Anderson has drawn fire from these groups for a portion of the law that indemnifies Department of Energy private contractors from nuclear incidents even in cases of gross negligence and willful misconduct. "No other government agency provides this level of taxpayer indemnification to non-government personnel," Public Citizen has said. [9] Thus, any damage payments for nuclear incidents at Energy Department facilities — even those in cases of extreme negligence — would ultimately be paid by taxpayers. [10]

The law provides no fault liability for reactor operators, and injured victims are precluded from directly suing vendors or manufacturers responsible for the accident. Its critics argue that it poses legal hurdles to victims seeking compensation by removing state jurisdiction and restricts plaintiffs ability to utilize any state laws which go above and beyond federal protections.

Present day

The Act makes available a smaller pool of insurance funds to compensate people who are injured or incur damages from a nuclear or radiological incident than is required under law for all other corporations. 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. In the Act, each power reactor must pay up to $88 million in the event any of them has an accident.

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. Were similar circumstances to be repeated in America, the scale of the disaster likely would be more because Chernobyl is in an unpopulated area and the winds happened to blow the radioactive cloud north into Belarus rather than south into Kiev which is served by the plant and has a population of about 2 million souls.

Price-Anderson indemnifies DOE facilities, subcontractors and private nuclear power plants, but in reality it insures the population in the event of a radiologic catastrophy even under the most bizarre circumstances - for example if an airplane were to fly into a reactor, the public would be ensured to some small degree.

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

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