Price-Anderson Act Limits Nuclear Liability Summary

  • Last updated on November 10, 2022

Congress passed the Price-Anderson Act to limit how much money private producers of nuclear power would have to pay for damages caused by a catastrophic nuclear accident.

Summary of Event

On July 1 and August 16, 1957, the U.S. House of Representatives and the U.S. Senate passed, with little controversy or discussion, the Price-Anderson Act, which amended the 1954 Atomic Energy Act Atomic Energy Act (1954) . The bill required builders of nuclear reactors to maintain a limited amount of private insurance Insurance , while the government would provide the remainder of the insurance, up to a maximum of $500 million for damages from any single accident, at no cost to the nuclear power industry. This was done to encourage the power industry to invest in nuclear plants at a time when private companies had not yet built such a plant. [kw]Price-Anderson Act Limits Nuclear Liability (Aug., 1957)[Price Anderson Act Limits Nuclear Liability] [kw]Anderson Act Limits Nuclear Liability, Price- (Aug., 1957) [kw]Act Limits Nuclear Liability, Price-Anderson (Aug., 1957) [kw]Nuclear Liability, Price-Anderson Act Limits (Aug., 1957) [kw]Liability, Price-Anderson Act Limits Nuclear (Aug., 1957)[Liability, Price Anderson Act Limits Nuclear] Price-Anderson Act (1957)[Price Anderson Act] Nuclear energy;corporate liability Price-Anderson Act (1957)[Price Anderson Act] Nuclear energy;corporate liability [g]North America;Aug., 1957: Price-Anderson Act Limits Nuclear Liability[05500] [g]United States;Aug., 1957: Price-Anderson Act Limits Nuclear Liability[05500] [c]Laws, acts, and legal history;Aug., 1957: Price-Anderson Act Limits Nuclear Liability[05500] [c]Energy;Aug., 1957: Price-Anderson Act Limits Nuclear Liability[05500] [c]Business and labor;Aug., 1957: Price-Anderson Act Limits Nuclear Liability[05500] Anderson, Clinton P. Price, Charles Melvin

Nuclear plants cost too much, industry spokespersons explained, and a major cost was insurance. Power producers cited a 1957 Atomic Energy Commission Atomic Energy Commission, U.S.;nuclear accidents (AEC) report estimating that, in a worst-case accident Nuclear energy;accidents in a plant near a major city, the radioactive release of a core meltdown would immediately kill 3,400 people, cause serious injury to 43,000, and destroy about $7 billion in property in a region covering 150,000 square miles. Fear of such an accident and the costs involved prevented any company from constructing a nuclear power plant.

Congress hoped the Price-Anderson Act would help promote the growth of a private nuclear power industry by requiring the government to assume most of the insurance costs and the costs of any civilian damages. From 1945, when the government had begun studying uses of atomic power for peaceful purposes, the major research and experiments had been done in government laboratories. The Atomic Energy Act Atomic Energy Act (1946) of 1946 mandated that control, production, and ownership of nuclear energy should be under the control of the Atomic Energy Commission (AEC). Beginning in 1948, the commission authorized a special program to develop a reactor for the production of electricity, but not until 1951 was any electricity produced, and then only a very small amount. Production of electricity from nuclear reaction proved to be very expensive and failed to convince any private electric company that nuclear energy was the wave of the future.

In 1954, President Dwight D. Eisenhower Eisenhower, Dwight D. [p]Eisenhower, Dwight D.;nuclear technology asked Congress to create a program that would help beat the Soviets in the atomic power race. Cold War;nuclear energy The president had first proposed his Atoms for Peace program in a speech to the United Nations the previous year. He asked Congress to set aside the 1946 law restricting nuclear development to AEC projects and pressed for private development of nuclear energy plants. Congress debated the proposal vigorously and bitterly for several weeks. Advocates of public ownership of power plants argued that, since the federal government had already spent billions of dollars on research, it should not simply give away the information it had gathered to private companies without some control over prices these producers would charge for their product. The Eisenhower administration opposed any government controls.

The dispute ended in a victory for private power interests. Congress rejected arguments that, since taxpayers had paid for all development costs, they should benefit from low-cost government-owned power plants. The private companies, represented by the Edison Electric Institute Edison Electric Institute , explained that it would be better for electricity to be marketed through private companies at commercially competitive rates. Cheap government prices would destroy the whole industry. The final bill met the demands of the industry by forbidding the AEC from producing or selling atomic power. The only regulation would come from the Federal Power Commission, which could regulate rates only on electricity sold across state lines. The AEC was required to issue licenses for any nuclear plant that could demonstrate a “practical value for industrial or commercial purposes.” Still, there was no interest among private firms. Even after the addition of the Price-Anderson amendment in 1957, private electric companies believed that costs for building were too high.

Significance

In 1958, the AEC Atomic Energy Commission, U.S.;power generation announced a five-year plan for construction of the nation’s first nuclear generating plant Nuclear energy;power plants Power plants at Shippingport, Pennsylvania. After its construction, the plant was operated by the privately owned Duquesne Light Company Duquesne Light Company . By 1964, only thirteen plants were in operation nationwide, and they sold less than 1 percent of the total electrical power in the United States. Congress then authorized the AEC to provide research and development work for all proposed plants, waived charges for leasing nuclear fuels from the AEC, and helped pay construction costs. Only then did the industry begin to participate on a wider scale, though it still needed and received government assistance for its insurance obligations.

Congress created a new program for insurance coverage, however, that made the producers pay more than they had been required to pay under the 1957 law. Under provisions adopted in 1965, electric companies licensed to build nuclear plants by the AEC would have to carry as much insurance as was available through private sources, a figure Congress estimated to be about $60 million per facility. After the maximum of this insurance had been purchased, the government would provide extra coverage limited to the difference between that amount and $560 million. When this bill became law, that difference stood at about $500 million, but as more private insurance became available, it was expected that federal obligations would decline. Most experts still agreed that the possibility of any nuclear accident was very small, so that the government had little reason to fear financial obligation.

Concern over the safety of nuclear plants led to hearings by the Joint Committee on Energy Joint Committee on Energy in 1973 and 1974. The committee heard AEC officials testify that nuclear reactors were safer than any other means of generating power. Consumer rights advocate Ralph Nader Nader, Ralph then took the stand and called nuclear power a dangerous form of“technological suicide.” Antinuclear testimony Nuclear energy;safety concerns also came from a scientist affiliated with the Union of Concerned Scientists Union of Concerned Scientists . He cited a recent radioactive leak of 115,000 gallons of wastewater at the Hanford, Hanford Nuclear Reservation Washington, plant as a sign of growing danger, and he predicted a major accident in the future. The danger was so great, he believed, that all nuclear construction had to be stopped immediately. A committee member who had worked at Hanford, however, labeled such fears irresponsible and advised his colleagues to ignore such fear-mongering. These comments reassured the other senators and representatives, and they concluded that a major accident was highly unlikely.

To reassure doubters, the joint committee established a committee of experts, headed by Norman C. Rasmussen Rasmussen, Norman C. , dean of the engineering department at the Massachusetts Institute of Technology, to study in more detail the risks of nuclear reactors. Their report was to be completed by the end of 1974. While waiting for the report, Congress debated the insurance program once again. By that time, private insurance had been increased to nearly $110 million; the government’s obligation had declined since 1965. The law still limited the total amount of disaster insurance that would be available in case of an accident to $560 million.

Critics of this limit pointed out that three dozen new plants had been built since the limit had been established, and two hundred more were being planned. Each new plant increased the probability of a disaster, and it was believed that one serious accident could result in $7 billion in damages. Defenders of the lower limit pointed out that the government had actually never paid any claims under the Price-Anderson Act, there had been no major accidents, and many scientists believed there never would be a serious accident. After a lengthy debate in the Senate and the House, Congress voted for a five-year extension of the insurance program, with a provision allowing cancellation of the provisions if the Rasmussen Report concluded that reactors were unstable and dangerous.

Because of the latter provision, President Gerald R. Ford Ford, Gerald R. vetoed the bill, arguing that it took away his executive power. He would not sign legislation extending the insurance program if Congress insisted that it alone could cancel that program after publication of the Rasmussen Report Rasmussen Report (1975) . When Congress passed the same legislation in 1975 without the offending provision, the president quickly signed it into law. A few weeks later, Rasmussen presented his report, Reactor Safety Study, Reactor Safety Study (Rasmussen) to Congress. He concluded that the consequences of an accident were much smaller than were previously believed. The $560 million limit could adequately cover any “credible accident which might occur.” A disaster at a nuclear plant, the study announced, was as likely as a meteorite crashing into a city, and the chances of such an event occurring were about one every million years.

With such reassurance, there seemed to be little to fear and little to lose from an expanded government-sponsored insurance program. Republican John Anderson Anderson, John from Illinois argued that, without such financing, the private nuclear power industry would be put out of business by high insurance costs. The House easily defeated an amendment seeking to eliminate the $560 million limit. The final bill extended coverage to 1987 and kept in place the liability law. Price-Anderson Act (1957)[Price Anderson Act] Nuclear energy;corporate liability

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Browne, Corinne, and Robert Munroe. Time Bomb: Understanding the Threat of Nuclear Power. New York: William Morrow, 1981. An account by two journalists of the efforts by nuclear power industry lobbyists to keep the public in the dark concerning the dangers of a nuclear accident. Includes a brief bibliography and a useful index.
  • citation-type="booksimple"

    xlink:type="simple">Duffy, Robert J. Nuclear Politics in America: A History and Theory of Government Regulation. Lawrence: University Press of Kansas, 1997. A study of government policy and regulation of the nuclear power industry in the United States. Chapters include “Subgovernment Dominance, 1945-65,” “Redefining Nuclear Power,” and “The Demise of the AEC.”
  • citation-type="booksimple"

    xlink:type="simple">Lochbaum, David. Walking a Nuclear Tightrope: Unlearned Lessons of Year-Plus Reactor Outages. Cambridge, Mass.: Union of Concerned Scientists, 2006. A brief report that discusses “extended nuclear power reactor outages” and outlines how the Nuclear Regulatory Commission can avoid a catastrophic nuclear accident.
  • citation-type="booksimple"

    xlink:type="simple">Martin, Daniel. Three Mile Island: Prologue or Epilogue? Cambridge, Mass.: Ballinger, 1980. A brief account of the causes and consequences of this major accident. Examines the history of government and nuclear power industry contacts and concludes that the Department of Energy and the Nuclear Regulatory Commission were woefully negligent in their safety inspections. Criticizes the lack of concern for safety shown by nuclear power advocates. Useful bibliography and index.
  • citation-type="booksimple"

    xlink:type="simple">Nuclearfiles.org. An excellent resource for students studying the history of the atomic age. The site, a project of the Nuclear Age Peace Foundation, includes links to primary sources, time lines, study guides, suggested readings, and much more.
  • citation-type="booksimple"

    xlink:type="simple">Pringle, Peter, and James Jacob Spigelman. The Nuclear Barons. New York: Holt, Rinehart and Winston, 1981. A series of interviews of leading critics of the nuclear power industry, including Ralph Nader and members of the Union of Concerned Scientists. Finds much fault with government safety procedures and raises fears about future accidents on the scale of Three Mile Island and worse.
  • citation-type="booksimple"

    xlink:type="simple">Union of Concerned Scientists. http://www.ucsusa.org. The organization’s Web site includes outlines of its history and mission and a wealth of information on science, technology, the environment, and nuclear energy, among other topics.
  • citation-type="booksimple"

    xlink:type="simple">United States. General Accounting Office. Nuclear Regulation: NRC’s Liability Insurance Requirements for Nuclear Power Plants Owned by Limited Liability Companies. Washington, D.C.: Author, 2004. A Nuclear Regulatory Commission report to Congress on the state of nuclear liability insurance. Available at http://www.gao.gov/new.items/d04654.pdf.
  • citation-type="booksimple"

    xlink:type="simple">Walker, J. Samuel. A Short History of Nuclear Regulation, 1946-1999. Washington, D.C.: U.S. Nuclear Regulatory Commission, 2000. A seventy-page history of the Atomic Energy Commission and the Nuclear Regulatory Commission. Available at http://www.nrc.gov/who-we-are/short-history.html.
  • citation-type="booksimple"

    xlink:type="simple">Williams, Robert C., and Philip L. Cantelon, eds. The American Atom. Philadelphia: University of Pennsylvania Press, 1984. A history of U.S. nuclear policy from 1939 to 1984. Contains excerpts from key government documents.
  • citation-type="booksimple"

    xlink:type="simple">Wilpert, Bernhard, and Naosuke Itoigawa, eds. Safety Culture in Nuclear Power Operations. New York: Taylor & Francis, 2001. Examines the safety concerns and issues surrounding nuclear power plants. Discusses how employees deal with the safety concerns of the industry and discusses the management of safe work environments.

World’s First Nuclear Reactor Is Activated

Atomic Energy Commission Is Established

Construction Starts on Brookhaven Nuclear Reactor

Hanford Nuclear Reservation Becomes a Health Concern

World’s First Breeder Reactor Produces Electricity

Chalk River Nuclear Reactor Explosion and Meltdown

Soviet Union Completes Its First Nuclear Power Plant

First Commercial Nuclear Power Plant Opens

First U.S. Commercial Nuclear Plant Opens

General Public Utilities Announces Plans for a Commercial Nuclear Reactor

Union of Concerned Scientists Is Founded

Categories: History Content