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Each year thousands of people are the victims of disasters; they lose their homes, businesses and even the use of their property. The chances that the “unthinkable" will happen to you and your family are slight, and yet you probably have insurance-just in case. The fact is, Americans can buy insurance for virtually any risk imaginable: fires, floods, earthquakes, riots and even "acts of war."

But do

you

know..

that there is a clause in every insurance policy stating in effect: Loss by nuclear reaction or radioactive contamination is not insured against by this policy . . . and that you can't buy insurance to protect yourself from nuclear risks-for any amount of money.

Are you aware...

that back in 1957 Congress arbitrarily set a limit on how much money you can collect for damages in the event of a nuclear accident- and prohibits you from suing for more.

According to government studies, a serious accident at a nuclear power plant could cause radioactive contamination of property as far as 50 miles away. Right now tens of millions of people live near nuclear power plants; millions more live along nuclear transportation routes. If you are one of these people, you face the possibility of losing your home, your property, even your business- if there is a catastrophic nuclear accident.

This handbook does not provide a discussion of the overall "pros and cons" of nuclear power. What follows is a discussion of one controversial topic in the nuclear debate: the Price-Anderson Act, a law designed to shield the nuclear industry from full financial responsibility for its actions. In the 23 years since its passage, this law has gone virtually unnoticed by the general public, even though it denies American citizens the right to protect themselves from the potentially enormous losses which could result from a nuclear accident.

What is the
Price-Anderson Act?

The Price-Anderson Act is a federal law, originally passed by Congress in 1957, which limits the financial responsibility of the nuclear industry in the event of an accident.

Under the Act, a $560 million pool is made available (from a combination of private insurance, self-insurance and Federal contributions) to pay for the damages of an accident. The PriceAnderson Act "holds harmless" any individual or company responsible for a nuclear accident from any liability exceeding the $560 million available from the pool.1

Why a $560 million
limit-is

this realistic?

The $560 million limitation was never assumed to be a realistic figure, but rather an arbitrary cut-off.

According to Senator Clinton Anderson, co-author of the Act, the figure was chosen because it "would not frighten the country or the Congress to death," but would eliminate the problem of unlimited liability.2 Since 1957, not only has the cost of living for Americans nearly tripled, nuclear power plants have also significantly increased in size and proximity to dense population areas. The $560 million ceiling, however, has remained unchanged.

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How much could an
accident cost?

The government's own estimates of the potential losses from a nuclear accident range from $7 billion to $280 billion in property damages alone.

It is impossible to predict just how much personal injury and property damage there would be following a nuclear accident. All estimates are theoretical calculations and vary for each powerplant depending on numerous factors. The first study of the consequences of a reactor accident, known as WASH-740, was released by the Atomic Energy Commission (AEC) in 1957, prior to the adoption of the PriceAnderson Act. The study predicted that a nuclear catastrope could result in $7 billion in property damages; 3,400 immediate deaths and 43,000 injuries.3

An update of WASH-740, commissioned by the AEC with the expectation that it would be more reassuring than the earlier study, was completed in 1964. It revealed a substantial increase in the official estimate of the consequences of a major accident, predicting $17 to $280 billion in property damage, 27,000 fatalities and 73,000 injuries.* These unsettling figures were withheld from the public for nearly 10 years. The AEC finally released the report in 1973.5

The most recent government safety study, the Rasmussen Report of 1975, or WASH-1400, estimated that a major accident could cause $14 billion in property damage and 3,300 immediate deaths. This report included a prediction of 45,000 cancer deaths in the subsequent 10-40 years, and 5,100 genetic defects in later generations.6 The Rasmussen Report met with considerable criticism from within the government as well as from the independent scientific community. For example, an independent study commissioned by the Atomic Energy Commission, asserted that the long-term health effects cited in the Rasmussen Report were as much as 50 times too low. In early 1979, the Nuclear Regulatory Commission withdrew its support of the Rasmussen Report.

The Price-Anderson Act: a "temporary" solution

In 1954 Congress passed the Atomic Energy Act, which encouraged the commercial development of nuclear energy by private industry. Nuclear power promised to be a cheap and abundant new energy source. There was only one drawback: what if there was a serious accident at a nuclear power plant? The Federal government released its first nuclear reactor safety study in 1957. Known as WASH-740, it predicted that a nuclear accident could result in $7 billion of property damage, 3,400 immediate deaths and 43,000 injuries.

The insurance industry refused to write coverage for such an enormous risk. Nuclear power was new and untested; there was no operating history which could be used to calculate insurance premiums. Through newly-created nuclear insurance pools, the insurance industry as a whole agreed to provide a maximum of $60 million for nuclear accident liability coverage.

Companies interested in developing atomic energy were faced with a dilemma. Nuclear power was an attractive prospect, however, with only a limited amount of liability insurance, a single accident could bankrupt even a major corporation. A vice-president from General Electric echoed the fears of the entire industry when he told Congress that his company would not build nuclear power plants, unless they could be protected from full liability in the event of an accident.8

Anxious to get nuclear power off the ground, Congress came up with a temporary insurance scheme-the Price-Anderson Act of 1957. The Act had a two-fold purpose: to eliminate the roadblock inhibiting commercial development of nuclear energy and to protect the public from enormous losses following an accident. In the event of an accident Congress would contribute $500 million, in addition to the $60 million available from private insurance, to create a compensation pool. All of the companies involved in nuclear power would be “held harmless" for any damages exceeding this $560 million pool.

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