Price-Anderson Act: Nuclear Power Industry Liability Limits and Compensation to the Public After Radioactive Releases

Price-Anderson Act: Nuclear Power Industry Liability Limits and Compensation to the Public After Radioactive Releases

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Updated January 25, 2024
Price-Anderson Act: Nuclear Power Industry Liability Limits
and Compensation to the Public After Radioactive Releases
Since the establishment of the nuclear power industry in the
available, which was raised from $450 million to $500
1950s, the issue of how to handle nuclear accident liability
million per site on January 1, 2024. The secondary layer is
has been regularly debated in Congress. From the
a nuclear industry self-insurance system. In the secondary
beginning, it was argued that commercialization of nuclear
layer, any damages to the public from a nuclear incident
energy would require liability limits for electric utilities and
exceeding the $500 million available from the individual
reactor suppliers. Congress responded in 1957 by passing
reactor’s insurance under the primary layer are to be
the Price-Anderson Act, which added Section 170 of the
assessed equally against all 100-megawatt-and-above
Atomic Energy Act of 1954 (42 U.S.C. 2210), which has
power reactors. These assessments, called “retrospective
since been extended and amended several times. The law
premiums,” are currently capped at about $158.0 million
established accident liability limits for the nuclear industry
per reactor.
and a mechanism to ensure that damage compensation to
the public would be readily available within those limits.
Figure 1. Price-Anderson Insurance Layers
Authority to indemnify newly licensed reactors under the
For damage to the public from nuclear incidents
Price-Anderson liability system is set to expire after
December 31, 2025.
Critics of the Price-Anderson Act contend that its liability
limits protect the nuclear power industry from paying the
full cost of potential major accidents. Those critics view
Price-Anderson as an unjustified subsidy for nuclear power
that distorts energy markets. However, supporters of the
Price-Anderson system contend that it provides an assured
source of damage compensation that might not be available,
or be paid as quickly, under the normal tort process.
Nuclear Power Accident Liability
The Price-Anderson Act requires the Nuclear Regulatory
Commission (NRC), which issues licenses for building and

operating nuclear reactors, to limit the liability of its reactor
Source: Created by CRS with information from NRC and 10 C.F.R.
licensees for radioactive damages to members of the public.
140.11(4).
The liability limit is set at the maximum insurance available
Note: Some figures are rounded.
to the nuclear power industry, as described below. NRC
indemnifies (protects) its reactor licensees against damage
Total damage payments available under the secondary
awards above that limit. Reactor licensees indemnified by
insurance layer equal the maximum retrospective premium
NRC retain that coverage as long as they continue to
($158.0 million) multiplied by the number of covered
operate, although the liability limits may increase over time.
reactors. According to NRC, 94 commercial reactors are
Price-Anderson’s authority for NRC to indemnify
currently covered by the retrospective premium
additional reactors periodically expires and has been
requirement. (This includes one reactor, Vogtle 4, that has
extended four times, most recently through 2025 by the
been fueled but not begun operation.) For each nuclear
Energy Policy Act of 2005 (P.L. 109-58). NRC’s
incident, therefore, Price-Anderson’s primary and
regulations for Price-Anderson are at 10 C.F.R. 140.
secondary layers currently would provide up to $15.4
billion in public compensation. That total consists of the
Under Price-Anderson, the owners of commercial reactors
$158.0 million in retrospective premiums from each of the
must assume all liability for nuclear damages awarded to
94 currently covered reactors, totaling $14.9 billion, plus
the public by the court system, and they must waive most of
the $500 million in primary insurance coverage for the
their legal defenses following a nuclear incident that results
nuclear plant site where the incident occurred. On top of
in a severe radioactive release (“extraordinary nuclear
those payments, a 5% surcharge may also be imposed on
occurrence”). To pay such damages, Price-Anderson
the retrospective premiums, raising them to $165.9 million
established two layers of insurance for licensed reactors
per reactor and the total available compensation to about
with at least 100 megawatts of electric generating capacity
$16.1 billion (see Figure 1). Under Price-Anderson, the
(all current U.S. commercial reactors). For the primary
nuclear industry’s liability for an incident is capped at that
insurance layer, each licensed nuclear plant site must be
amount, which varies over time depending on the number
covered by the maximum liability insurance commercially
of covered reactors, the amount of available primary
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Price-Anderson Act: Nuclear Power Industry Liability Limits and Compensation to the Public After Radioactive Releases
insurance, and an inflation adjustment. Payment of any
for inflation every five years. The most recent inflation
damages above that liability limit would require
adjustment, in 2023, increased the limit to $16.6 billion.
congressional approval under special procedures in the act,
Price-Anderson authorizes DOE to indemnify its
which does not specify the source of the funds.
contractors for the entire amount of their liability, so that
damage payments for nuclear incidents at DOE facilities
The retrospective premiums would be paid at an annual rate
would ultimately be paid by the federal government.
of no more than $24.7 million per reactor, to limit the
However, the law also allows DOE to issue penalties on its
potential financial burden on reactor owners following a
contractors for safety violations, and contractor employees
major accident (and also potentially slowing damage
and directors can face criminal penalties for “knowingly
payments to the public). With 94 covered reactors, total
and willfully” violating nuclear safety rules. For nonprofit
annual retrospective premium payments would be capped at
contractors, civil penalties imposed for violating safety
about $2.3 billion. The caps on the total and annual
rules are limited to the amount of management fees paid
premiums are adjusted for inflation every five years.
under that contract. DOE’s Price-Anderson authority—as
Since Price-Anderson was enacted, no nuclear incidents
with NRC’s authority—is set to expire at the end of 2025.
have caused damage to the public above the primary layer
of insurance. The 1979 partial meltdown of the Three Mile
Continued Need and Adequacy
Island 2 reactor in Pennsylvania resulted in the largest
The Price-Anderson Act’s limits on liability were crucial in
number of claims under Price-Anderson, with damage
establishing the commercial nuclear power industry in the
payments totaling about $71 million in current dollars,
1950s. The nuclear power industry still considers them to
according to NRC. Dozens of other commercial reactor
be a prerequisite for any future U.S. reactor construction.
incidents over the years have resulted in far smaller
Supporters of the Price-Anderson system contend that it has
payments.
worked well in ensuring that nuclear accident victims have
a secure source of compensation, at little cost to the
Small Modular Reactors
taxpayer. Opponents contend that Price-Anderson
Price-Anderson specifies that a nuclear plant consisting of
inappropriately subsidizes the nuclear power industry by
multiple small modular reactors (SMRs) would be
reducing its insurance costs and protecting it from some of
considered a single reactor in determining its retrospective
the financial consequences of the most severe conceivable
premiums (although no such plants have yet been built).
accidents. For example, the 2011 Fukushima disaster
The electric generating capacity of the entire plant must be
involved simultaneous radioactive releases from three
no more than 1,300 megawatts, and each SMR must have a
reactors and required financial intervention by the Japanese
capacity of 100-300 megawatts. For example, in the event
government. Damages to the public have exceeded $90
of a severe release, a power plant with six 120-megawatt
billion, according to media reports. A similar U.S. nuclear
SMRs would be liable for retrospective premiums of up to
incident involving three reactors at a single site would have
$165.9 million (the amount for a single large reactor,
a liability limit of $47.3 billion ($500 million for the
including the 5% surcharge), rather than $995.6 million (the
primary layer and $15.6 billion in the secondary layer,
amount for six large reactors, including the surcharge).
including the 5% surcharge, for each of the three reactors).
Any compensation above that amount would be determined
NRC is currently reviewing an application for an SMR
by Congress.
standard design approval submitted by NuScale Power on
December 31, 2022. The NuScale design would consist of
International Liability Agreement
up to 6 reactors of 77 megawatts (electric), all immersed in
The U.S. government is party to an international liability
a single pool of water. Because the NuScale SMRs are
system that, among other purposes, covers U.S. nuclear
below 100 megawatts of electrical generating capacity, they
equipment suppliers conducting foreign business. The
are subject only to the primary layer of liability insurance.
Convention on Supplementary Compensation for Nuclear
Under NRC regulations, the primary layer for a reactor
Damage (CSC) entered into force April 15, 2015.
under 100 megawatts (electric) would be set by a formula
that includes reactor capacity and local population density
CSC implementing language for the United States was
but would be at least $4.5 million and no more than $74
included in the Energy Independence and Security Act of
million (10 C.F.R. 140.12). For example, one liability
2007 (P.L. 110-140, Section 934). Each party to the
insurance policy of up to $74 million would cover all six
convention is required to establish a nuclear damage
reactors at a single NuScale plant. Total liability for
compensation system within its borders analogous to Price-
reactors under 100 megawatts (electric) is limited to $560
Anderson. For any damages not covered by those national
million. The federal government would pay for any
compensation systems, the convention establishes a
damages to the public above the required liability insurance
supplemental tier of damage compensation to be paid by all
coverage, up to the $560 million limit (Atomic Energy Act
parties. P.L. 110-140 requires the U.S. contribution to the
§170 b. and c.). NRC has been studying whether higher
supplemental tier to be paid by suppliers of nuclear
coverage should be required.
equipment and services, under a formula to be developed by
DOE. Supporters of the convention contend that it will help
DOE Nuclear Contractors
U.S. exporters of nuclear technology by establishing a
The Price-Anderson Act also covers contractors who
predictable international liability system.
operate Department of Energy (DOE) nuclear facilities.
P.L. 109-58 set the liability limit on DOE contractors at $10
Mark Holt, Specialist in Energy Policy
billion per incident within the United States, to be adjusted
IF10821
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Price-Anderson Act: Nuclear Power Industry Liability Limits and Compensation to the Public After Radioactive Releases

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