The Price-Anderson Act, passed in 1957, limits the liability of civilian producers of nuclear power in the case of a catastrophic nuclear accident. In the case of such an accident, damages would be recovered from two sources: private insurance covering each plant and a common fund created by contributions from each nuclear power plant. This common fund would cover the difference in damages between the private insurance and the liability limit.

The act, named for its chief sponsors, Senator Clinton Anderson (NM) and Representative Melvin Price (IL), was passed to encourage private investment in nuclear power production. It was part of a general strategy to encourage and stimulate nuclear power production in the private sector. Without such liability limitations, the risk of nuclear power for utilities and manufacturers would be too great. Private insurance companies were not willing to underwrite the risks due to the uncertainty involved...