At the time of the Act's passing, it was considered necessary as an incentive for the private production of nuclear power — this was because electric utilities viewed the available liability coverage (only $60 million) as inadequate.

[1] In 1978, the Act survived a constitutional challenge in the Supreme Court case Duke Power Co. v. Carolina Environmental Study Group (see below).

If a coverable incident occurs, the Nuclear Regulatory Commission (NRC) is required to submit a report on the cost of it to the courts and to Congress.

Price-Anderson also covers Department of Energy (DOE) facilities, private licensees, and their subcontractors including the USEC uranium enrichment plants, national laboratories and the Yucca Mountain nuclear waste repository.

The structure of the insurance industry as it existed until 1955 was incapable of providing the extent of coverage needed to adequately address the risks of nuclear power.

[5] A power plant, Shippingport, was eventually constructed, but electric utility executives expressed concerns about limited size of liability coverage offered by the insurance market ($60 million).

The act was intended to be temporary, and to expire in August 1967 as it was assumed that once the companies had demonstrated a record of safe operation, they would be able to obtain insurance in the private market.

A minimum time limit was also introduced (which could be surpassed by state law), giving claimants three years after discovering harm in which to make a claim.

The new provisions only applied to incidents where a significant escape of radioactive material was deemed to have occurred (an ENO, extraordinary nuclear occurrence).

However, an explicit commitment was made that in the event of a larger accident, Congress would take whatever actions were necessary to provide full and prompt claims to the public.

The same level of indemnity was provided for government DOE facilities, while small reactors (education and research oriented) were required to obtain $250,000 insurance and have a government-backed pool of $500 million in the event of accident.

[13] The constitutionality of the Price-Anderson Act was upheld in June 1978 by the Supreme Court in the case of Duke Power Co. v. Carolina Environmental Study Group link.

In exchange for the payment, operators of offshore oil platforms, among others, are limited in liability to $75 million for damages, which can be paid by the fund, but are not indemnified from the cost of cleanup.

[15][16] The Price-Anderson Act has been criticized by various think tanks and environmental organizations, including Union of Concerned Scientists, Greenpeace International, Public Citizen and the Cato Institute.

Public Citizen has been particularly critical of Price-Anderson; it claims that the Act understates the risks inherent in atomic power, does not require reactors to carry adequate insurance, and would therefore result in taxpayers footing most of the bill for a catastrophic accident.

[20] All such calculations are controversial, as they rely on the difficult assessment of extrapolating what the "true" probabilities are of a catastrophic event at the extreme cost brackets.

[21] However, going in the other direction, the Nuclear Waste Fund was/is used to transfer $750 million in fee revenues each year from utilities to the Government and this is hard currency, unlike the conceptual insurance/indemnity Act.

[21] Price-Anderson has been criticized by many of these groups due to a portion of the Act that indemnifies Department of Energy and private contractors from nuclear incidents even in cases of gross negligence and willful misconduct (although criminal penalties would still apply).