The Politics of Nuclear Power

It’s easy to get bogged down in the technical, scientific aspects of the nuclear power issue. Most of us don’t feel qualified to comment on complicated-sounding matters such as core coolants and meltdowns. It may seem to us that only the opinions of scientists are of any relevance to the question. This is certainly the impression given by many nuclear power advocates. The impression is a dangerous one, of course, because the nuclear scientists who would seem to be best qualified to make judgments on this issue may also have vested interests in the promotion of nuclear power. A closer examination of the controversy will reveal that not only scientific questions but also matters of politics and economics are relevant here—aspects which are comprehensible to the well-informed layman. Indeed, an examination of the political and economic aspects of the nuclear power issue reveals questions far too important to be left to the nuclear power “experts.”

Political and economic considerations would seem to outweigh scientific ones, for example, when the extent of government involvement in the promotion and development of nuclear power is revealed. In recent weeks the public has become more and more aware of such involvement, especially in the wake of the Three Mile Island accident, when government and industry officials issued essentially identical statements assuring us that there was nothing to worry about. For those interested in examining this government-industry connection, a number of books and reports are available. Irvin C. Bupp, an American nuclear consultant, and Jean-Claude Derian, a French scientist, have written Light Water: How the Nuclear Dream Dissolved (Basic Books, 1977), a work which examines the parallel development of the American and European nuclear power industries and emphasizes the U.S. government’s promotion of the “light water” reactor over other, relatively less hazardous designs. An earlier book, The Careless Atom (Houghton Mifflin, 1969), by Sheldon Novick, a scientist and environmentalist, contains revealing sections on the government-sponsored development of nuclear power in the 1940s and 1950s, especially in the chapter entitled “The Problem of Insurance.”

What emerges from such an investigation is a portrait of a technology whose origins are to be found in wartime demands for advanced weaponry. With the passage of time, it became part of American foreign policy to promote civilian applications of this technology. But it quickly became apparent that the risks and costs involved were too great for the private sector of the economy to exploit the technology profitably. At this point, the government stepped in to underwrite the costs of civilian nuclear development and to limit the power companies’ liability for any accident that might result.

The origins of nuclear power

To begin the story of the civilian nuclear power industry, we must go further back than we might expect—to World War II. It is important to realize that the technology now being used for commercial nuclear power plants was first developed for wartime applications.

After the achievement of the first atomic chain reaction, scientists, including Albert Einstein, urged the American government to develop nuclear technology before the Germans could. The government finally heeded this advice, and the result, of course, was the Manhattan Project. The first reactors built by the government were designed not to generate electric power but to produce material for atomic bombs.

Another application of nuclear technology was as a power source for military vessels, especially nuclear submarines. The submarines in existence at the beginning of the war were constantly in need of refueling and could remain submerged only for short periods of time. But a submarine powered by an on-board nuclear reactor would be a much more effective weapon. The nuclear power source could function underwater, unlike fossil-fuel engines, and would require less frequent refueling. During the war, the top military brass haggled with each other over which aspect of nuclear technology—nuclear bombs or nuclear vessels—should be given highest priority. After the war, the building of nuclear bombs was cut back, but the search for a nuclear submarine continued. The reactors to be used by the nuclear subs were forerunners of the reactors to be employed by the commercial nuclear power industry. This development proceeded under the Atomic Energy Act of 1946, under which only the government could own reactors.

The next important episode in the development of commercial nuclear power came in the early 1950s. By then the United States had lost its monopoly on the bomb. The Soviet Union had exploded a device, and the United Kingdom was at work on its own weapons systems. The Eisenhower administration decided that the national interest dictated an effort at American control of nuclear development around the world. Hence, the “Atoms for Peace” program.

President Eisenhower outlined the “Atoms for Peace” policy in a speech before the United Nations General Assembly in December of 1953. The legislation to put the program in motion was passed by Congress several months later. In their book, Bupp and Derian examine the components of this program in some detail.

A new federal law opened the way for the foreign electric utility companies and governments to build “demonstration” nuclear power plants in cooperation with American manufacturers. Shortly thereafter, the United States Atomic Energy Commission created special incentives for foreign investment in similar projects.

By 1956, the Atomic Energy Commission and the Export/Import Bank had agreed on joint action to help finance demonstration reactors in countries which had entered into bilateral “Agreements for Cooperation” with the United States Government. These loans could only be used to buy equipment, materials, and technical services from the American nuclear industry.

The American government was thereby financing the development and refinement of commercial nuclear power technology in Europe. Ironically, incentives and loans were being made available to Europeans which were not available to American utilities. In comparison with Europe, then, American nuclear power technology was proceeding under a severe handicap.

This handicap did not prevent the construction of the nuclear plant in Shippingsport, Pennsylvania, however. The Shippingsport plant became the first nuclear plant in America to supply commercial electrical power. Its main supply purpose, however, was to provide a model for a reactor to power a nuclear aircraft carrier which the Navy hoped to build. The Navy, Westinghouse, and the Duquesne Light Company persuaded the House Appropriations Committee and the Joint Committee on Atomic Energy to provide partial funding. This reactor is described by Bupp and Derian as “the first major step toward commercial nuclear power in the United States.”

But, of course, the Shippingsport reactor was only a prototype; substantial obstacles to full-scale nuclear power development remained. The Congress undertook to rectify this situation with its rewrite of the Atomic Energy Act in 1954. Congress, according to Bupp and Derian, “completely rewrote federal atomic energy legislation to allow private ownership of reactors under Atomic Energy Commission license.” Although the reactors would be privately owned, government involvement in their construction would be substantial. “The AEC would, for acceptable proposals, waive all charges for the use of fissionable materials, undertake certain basic research in its National Laboratories at government expense, and enter into fixed-sum research and development contracts to procure technical and economic data for the applicants.”

It is at this point that a most curious development takes place in the promotion of nuclear power. Many of those most actively involved in the anti-nuclear movement approach the issue with a leftist, socialist orientation. But how many of them are aware that public utilities such as the TVA played a major role in the development of nuclear power technology?

The 1954 legislation left a substantial burden of the cost of development on the power companies themselves. As Bupp and Derian write, “The fixed-sum commitment placed a ceiling on AEC participation, so the applicants would bear the projects’ economic risks.” Public power advocates now began to fear that they might be left out of the nuclear bonanza. Private utilities had the financial capacity to bear risks and costs that the public-power groupings could not. The public utilities therefore prevailed upon the AEC to make the terms of the federal subsidy even more generous. The Commission chose to reinterpret its mandate from Congress to allow more direct government financing of nuclear plants. According to Bupp and Derian, “This time the Commission would consider requests for financing reactors in whole, or in substantial part, but it would retain title to that portion it financed.” This interpretation went into effect in September 1955.

Even after September 1955, however, private development of commercial nuclear power proceeded slowly. In Congress, complaints were being heard that the United States was lagging far behind Europe, and especially the United Kingdom, in the development of this technology. As a result, Congress in 1956 began consideration of the most blatant example of government intervention in electric power generation: The Price-Anderson Act, which was passed in 1957.

Insurance against nuclear disaster

It was discovered that the major obstacle to private nuclear power development was the problem of liability for possible accidents. Novick’s book quotes the report of the Joint Committee on Atomic Energy which accompanied the Price-Anderson Act: “It was brought to the attention of the Joint Committee in the 1956 hearings... that the problem of possible liability in connection with the operation of reactors is a major deterrent to further industrial participation in the program .The problem of liability has become a major roadblock” The Joint Committee therefore took testimony from representatives of the insurance industry so that the nuances of providing insurance for nuclear plants might come to light. Novick describes the gist of the insurance representatives’ testimony:

The problem was simply that insurance companies politely but firmly declined to insure reactors for anything like the full amount of risk. Testifying before the Joint Committee, several insurance company executives made the point that there was simply not enough experience with reactors to make normal insurance possible; since no estimate of the likelihood of an accident could be made, the insurance companies could have no basis on which to issue a policy.

It is especially interesting to consider some direct citations from the testimony given to the Joint Committee by one insurance industry representative. Novick quotes one Hubert W. Yount, who at the time was vice-president of Liberty Mutual Insurance. Mr. Yount appeared before the Committee as a representative of the American Mutual Alliance:

The catastrophe hazard is apparently many times as great as anything previously known in industry and therefore poses a major challenge to insurance companies... We have heard estimates of catastrophe potential under the worst possible circumstances running not merely into millions or tens of millions but into hundreds of millions and billions of dollars.

It is a reasonable question of public policy as to whether a hazard of this magnitude should be permitted, if it actually exists. Obviously there is no principle of insurance which can be applied to a single location where the potential loss approaches such astronomical proportions. Even if insurance could be found, there is a serious question whether the amount of damage to persons and property would be worth the possible benefit accruing from atomic development.

Of course, conservatives and other nuclear advocates would never concede that this is a “reasonable question of public policy”; they ridicule fears of a possible nuclear accident. But this assessment of risk comes not from a radical, a socialist, or an “eco-freak,” but rather from a representative of American capitalism itself. Surely the insurance industry can be assumed to have made as careful and rational an assessment of the risk as possible. If the risk is reasonably small, the companies can profit from insuring it, but if it is too great, they must refuse to insure it in order to protect themselves.

It must be concluded that the situation with regard to insurance companies’ willingness to underwrite private nuclear power plants remains essentially the same as it did in 1957. In 1965, the Price-Anderson Act was extended for a second ten-year period (1967–77), largely on the basis of testimony that indicated that the insurance companies were still unwilling to assume more than a small fraction of the potential risk. (As it is now written, the Act is to be automatically extended every ten years.)

Since 1965, the government has released the Rasmussen Report, which projected only a tiny risk of a catastrophic nuclear accident. But in the wake of Three Mile Island, the credibility of the Rasmussen Report must be considered to have been seriously impeached. In fact, the Nuclear Regulatory Commission (NRC) has since withdrawn its own endorsement of the report’s findings. According to the report, the chances of an accident such as the one at Three Mile Island should have been so minute as to have been almost impossible. Also, the development of a hydrogen bubble within the reactor was completely unanticipated. It would seem, then, that we still lack an accurate assessment of nuclear-plant risk.

We now turn to the details of the Price-Anderson Act itself. Novick describes it as providing “a straightforward federal subsidy to a multibillion dollar industry . . . an intrusion of the Federal Government into the power industry and into the insurance industry which establishes a radical precedent, and . . . effectively passes the risks of the reactor industry on to the taxpayer.” The Act limits liability for a nuclear accident to $560-million, or about one-fourteenth of the 1957 estimate of $7-billion in potential property damage from such an accident. As Novick writes, “This ‘limitation of liability’ clause assures private utilities that no matter how bad an accident is, they will not suffer any financial loss.”

The Act at least requires the utilities to obtain as much coverage as possible. Three insurance combines have been formed, one including mutual insurance companies, another including stock companies, and a third to draw on the insurance companies of Europe. Together, they have been able to muster $60-million worth of coverage—only one-ninth of even the federally limited liability of $560-million.

As a postscript to our consideration of the Price-Anderson Act, we should consider how vital it has been to the continued growth of the nuclear power industry. In its 1965 hearings on the extension of the Act, the Joint Committee heard from among others, Mel Frankel, a nuclear engineer and consultant to the Los Angeles Department of Water and Power. He testified: “Without the protection which presently is provided by the Price-

Anderson Act, it is doubtful that any utility would consider it prudent to build nuclear plants.” If the Act were to be repealed, existing nuclear power plants might even have to be shut down.

The growth of the nuke industry

With the passage of the Price-Anderson Act, the most important chapter in the story of government involvement in nuclear-power development comes to a close. After 1957, forces were set in motion that dictated that nuclear power was to provide an increasing percentage of America’s electricity. In December 1963, the Jersey Central Power and Light Company announced the purchase of a nuclear reactor from General Electric for use in a power plant at Oyster Creek. As Bupp and Derian write, “It was the first time a nuclear power plant would be built without any direct [italics mine] subsidy.” But, of course, only the combined efforts of the AEC and the Congress created the environment in which this purchase was possible. In 1979, dozens of such plants dot the American landscape.

A considerable bureaucratic framework with a vested interest in the continued growth of atomic power remains in place. The Joint Committee on Atomic Energy was formed as a Congressional watchdog over the Atomic Energy Commission, but the years have been a considerable exchange of staff between the Committee and the Commission, with the result that the Committee’s watchdog function has been compromised. Recent years have seen the formation of the Nuclear Regulatory Commission, which supposedly has taken over the regulatory functions of the AEC. Presumably the AEC’s only remaining function is nuclear power promotion.

The bureaucracy continued to bail out the industry whenever necessary; the latest instance has been in the area of waste disposal. As a recent Inquiry editorial pointed out, “It is the Department of Energy, not the utilities, that is pouring $449-million into disposal technology; the U.S. Geological Survey, not the utilities, that is searching for storage sites. As usual with nuclear power, the taxpayers are footing the bill.”

What we see here, then, is a scenario all too typical of our corporate-state economy. On the surface, we appear to have a clear case of private business interests on the one hand against anti-capitalist regulators on the other. Indeed, as we have noted, many of the nuclear critics have a left-of-center orientation. But if these critics appear to have a bias against capitalism, it could be due to their observations over the years of how “capitalism” seems to work in this country. As Novick writes, “This may sound like an odd sort of free enterprise—the taxpayer assuming the risk and private industry accepting the profits.”

In this light, it’s clear that the conservative tactic of ridiculing nuclear critics is destructive to the cause of maintaining a market economy within the energy industry in general. If the average John Q. Public gets a couple of DWI’s, thus becoming a “bad risk,” he can’t get the federal government to intervene on his behalf and underwrite his automobile insurance. The nuclear power industry, on the other hand, seems to be in a more privileged position. To the public, this kind of “free enterprise” seems to consist of bending or changing the rules whenever necessary to protect the profits of big business.

The commentators of the “vital center” answer this criticism by asserting that the country is already committed to nuclear power, that we’ll have shortages and brownouts without it, and that alternatives such as solar energy are economically feasible only in the extreme long run. This argument contains a whopping half-truth, however; responsibility for any such brownouts should rest with Congress, the AEC, and the utilities, not the anti-nuclear forces. We already have the technology to build commercial electric power plants using solar collectors; the only drawback is that the special metals needed to make the solar collectors are too expensive for the technology to be economically competitive. But reducing the cost of producing such devices is the type of problem that American industry has been solving ever since the Model T. With nuclear power, however, our problem is not nearly so simple; it could be compared to finding a container that would hold a universal solvent. If some of the resources that the government has channeled into nuclear research since World War II had gone into solar research instead, who’s to say that by now we wouldn’t have an economically feasible solar power technology?

Finally, we might observe that it’s unfair to characterize this criticism of nuclear power with the rhetoric that we’ve been hearing from the right wing. Both the Novick book and the one by Bupp and Derian bend over backwards to be fair to the nuclear industry. Here are representative excerpts, first from Novick,

Used properly, atomic energy might be a valuable force in the civilian as well as the military economy. Reactors can be safe and clean; further research might make them so, at a price which would still allow their use in a competitive economy. The passage of the Price-Anderson Act has removed the incentive to do the needed research, however, and instead we are developing, not safer, but more dangerous reactors . . . the hazards of which make even the present plans for huge reactors in the hearts of cities seem tame.

Now from Bupp and Derian:

[Let us] stress from the start that we are “for” nuclear power in the sense that we share with the majority of our colleagues and associates the belief that it has an important job to do. The world needs nuclear power to meet an important share of energy requirements. . . . We believe that a hard look at what appears to have happened in the past is the key to a more acceptable future.

Among all of the comments we have received on our manuscript in the past year, the one that has struck us most sharply was from a French government official. “What you have told,” he said, “is the story of the abuse of a technology.”

In truth, what is at issue is not whether we are “for” or “against” nuclear power, but whether we should permit such massive government intervention in the energy industry. Up to now, the nuclear interests have represented their opponents as advocates of excessive, unreasonable regulation. Why, then, doesn’t some Congressman with anti-nuclear leanings propose the repeal of the Price-Anderson Act? This would completely turn the tables of the debate, making the nuclear interests into the proponents of regulation. Such a proposal would be a genuinely novel approach to reform, breaking the stranglehold of stereotyped rightist and leftist positions. It could be the first step toward generating light rather than heat over the nuclear power issue.

David Cole is an undergraduate student at Louisiana State University in Baton Rouge.