Diane M. Grassi
Fallout from The Energy Policy Act of 2005:
The Nuclear Option
June 23, 2008
In this third chapter of this ongoing discussion and analysis of United
States energy policy and its ramifications both realized directly and
indirectly from the U.S. Energy Policy Act of 2005, (EPAct 2005) it
would be irresponsible not to include U.S. nuclear energy policy in such
As such, the EPAct 2005 and its previously referenced and unprecedented
mandates, in prior chapters of this report, play a role with the
reformulation of the regulation of U.S. nuclear energy and its projected
and rather overwhelming imminent comeback.
The nuclear energy industry has become a global proposition given the
changing geographic demands of energy needs in newly industrialized
nations such as India and China. And it would be foolish for the U.S. to
assume that it operates in a vacuum and that its future energy needs and
demands will not be impacted by such changes in a global economy; one in
which the U.S. is now primarily at the receiving end of offshore
manufactured goods, including more and more of America’s food supply.
But the global economy has but given the U.S. government and in
particular in this case, the U.S. Department of Energy, (DOE) an excuse
to take the proverbial lid off of sound national security policy which
has necessarily dictated U.S. energy policy for decades, until now, for
the safety of the American people and the integrity of its critical
Although the first large scale civilian nuclear plant started providing
electricity in 1957, it was basically between that time and the late
1970’s when all of the current operating nuclear reactor facilities were
constructed. And with an average lifespan up to 60 years for each, most
of the currently operating 104 U.S. nuclear plants are either in or have
applied for their 2nd 20-year licensing period extensions.
Since the last U.S. nuclear reactor was ordered in 1973, those handful
that were completed, after 1978 and post-3 Mile Island, were ordered
prior to 1973. To wit, in 1996, the last U.S. plant constructed, the
Tennessee Valley Authority’s Watts Bar 1 reactor in Tennessee, was the
result of a revived dormant license from 1970. And there are plans to
build the Watts Bar 2 from another previous license from dating back
Since U.S. nuclear energy policy has nearly come full circle today, it
is important to take stock of its history. The Atomic Energy Commission,
(AEC) was formed through the Atomic Energy Act of 1946, originally to
specifically oversee the military’s and civic atomic energy programs.
And it was given the expanded responsibility, for the first time, to
assume dual oversight and regulation of atomic energy both militarily as
well as commercially through the Atomic Energy Act of 1954.
But it was through the Energy Reorganization Act of 1974, that created
the Nuclear Regulatory Commission (NRC), the present U.S. nuclear
regulatory agency, to assume the oversight authority from the AEC. It
now regulates most U.S. commercial nuclear activities, including nuclear
power reactors and the use of radioactive materials in industry,
medicine, agriculture and scientific research as well as fuel cycle
facilities and nuclear waste management.
The 1974 law was seen as an opportunity to put trust back into the
oversight agency which took on the dual task of both promoting nuclear
power while safeguarding the American people, initially in 1954. And it
was after that point in time that the American people had already begun
to lose trust in the agency’s ability to do so. Apparently, the U.S.
government thought that changing the acronym of the agency would calm
the public’s displeasures.
But it was during the late 1960’s and early 1970’s when the nuclear
plant construction boom was in full gear and simultaneous reassurances
from the federal government to keep safeguards in place fell on the deaf
ears of energy consumers. Most importantly, the agency was designated to
walk a fine line of both promoting commercially viable nuclear energy as
well as handling all of the required licensing for new construction of
nuclear power plants.
And in this global economy, at a time when the U.S. is seeing
extraordinary growth in the foreign direct investment and acquisition in
U.S. critical infrastructure, it appears reaped with conflict for the
licensing agency to also be able to independently assess potential
security risks both civilly and criminally.
Unfortunately, the notorious Browns Ferry Nuclear Plant fire in 1975 in
Decatur, AL could have been avoided and was the result of human error
rather than an unexpected meltdown. A mechanical technician foolishly
was looking for reported air leaks within the reactor with a lighted
candle which ultimately started the fire. But
Three Mile Island Unit 2 (TMI-2) nuclear power plant near Middletown,
Pennsylvania, on March 28, 1979, was the most serious nuclear plant
fiasco in U.S. history. The reactor sustained the melting of half its
core, which was later found to be a combination of technical and human
error and allowed for released radioactive gases into the atmosphere and
putting its employees immediately at risk.
The 3 Mile failure was followed in 1986 by the misfortune of Unit 4 of
the nuclear power station at Chernobyl, Ukraine
in the former USSR. It emitted radioactive material,
far more deadly an accident that 3 Mile Island, affecting 52,000 people
in the vicinity, immediately killing 30 people and possibly impacting up
to 5 million others. Nevertheless, it was 3 Mile Island that provided
the final nail in the coffin for skittish investors in U.S. nuclear
technology, although nuclear facilities throughout the U.S. still
provide 20% of electrical power generation. It remains very low in
greenhouse emissions and is considered a form of clean energy.
In spite of the NRC’s own damage control to restore safety measures in
nuclear plant facilities over the past 30 years, its ill-repute remains
along with remnants of trepidation in reinvesting in nuclear energy.
Therefore, the apparent overnight reverse course by the DOE in lining up
investors to submit license construction applications for nuclear energy
plants, with some 20 expected by mid-2009, has set off alarm bells of
And that brings us back to the EPAct of 2005 which provides for a vast
assortment of givebacks, subsidies and federally subsidized loan
guarantees including risk insurance packages to the brokers and
investors who come a-callin’, totaling billions of dollars worth of
incentives. And once again, foreign owned holding companies, foreign
government-owned entities and foreign-U.S. joint ventures, acquisitions
and mergers will be the recipients of these U.S. taxpayer provided
The nuclear energy industry not only remains a hot-button issue because
of its sullied past, but because of a heightened internal as well as
public awareness of its ever-present national security risks it now
poses in a post-9/11 world. In addition, there is the issue of the
failing power grid infrastructure, which has not been improved in
decades, and minimally maintained, along with a continued U.S.
deregulation policy from which the American economy may never recover.
All of the aforementioned but creates for a perfect storm, all the while
U.S. foreign policy dictates to other nations and regions on the ways in
which they may engage or use nuclear material, whether for weaponry or
for electrical power distribution.
The first step in trying to comprehend this multi-faceted and current
energy policy, based upon both its history as well as current law, is to
understand the revised NRC application process. Although the regulation
revisions date back to 1989, the most recent and final rules were not
certified and published in the Federal Register by the NRC until August
2007 (10 CFR Part 52).
The revisions have changed the entire regulatory review process and
framework for the construction of new nuclear reactors and facilities.
And over the next 18 months, such changes in the regulation process,
with ink barely dry, will be tested in a paint-by-numbers fashion.
The EPAct 2005 while not intrinsic to the actual changes in NRC rule
making, has played a consequential role in incentives for investors and
ultimately the NRC’s seeming rush to finalize regulation revisions over
a matter of months, after many years they were held in virtual abeyance.
And now the one time 2-step licensing process created for its
thoroughness and for compliance with the Environmental Protection Agency
(EPA) as well as providing enough time to have the appropriate number of
public hearings, has been whittled down to a 1-step process; one that
appears less investigative in scope and more equivalent to drive-through
In order to supposedly bring an improved regulatory model for U.S.
nuclear energy construction, which the NRC believes to be more
efficient, the COL, early site permits (ESP), and standard design
certifications pushes the process along more quickly. However, also cut
in the process will be preoperational hearings on plant construction
qualification that would be limited and not required by the NRC, and
minimizing public input.
The ESP procedure includes site safety issues and emergency plans apart
from the plant design. The NRC’s and nuclear industry’s reasoning is
that the new process will cut down on delays, cost overruns and reduce
the application process down to 42 months. In that regard, there is some
speculation that the next nuclear plant could break ground in the U.S.
by the end of 2010 and perhaps be completed by 2015.
In the final part of this series, the actual players or investors in new
U.S. nuclear plants construction will be addressed as well as who and
from where from these entities hale. And the mechanisms mandated in the
EPAct 2005 for lucrative financial rewards to these corporations will be
discussed. Whether or not such investors will be even remotely close to
ensuring the fiscal as well as environmental health of the American
people is an important question which will be asked.
And finally, that which is most crucial in this entire changing energy
landscape, that being the national security of the U.S, was etched into
law in the Atomic Energy Act of 1954 in 42 U.S.C. Sec. 2011 (1954) as
follows: "Aliens and entities owned, controlled or dominated by aliens
or foreign governments may not engage in operations involving the
utilization of energy. This restriction applies primarily to nuclear
reactors and reprocessing plants extracting plutonium.”
Yet, as will be
analyzed in Part 4 of this series, we will see that through the use of
joint ventures, foreign holding companies, license transfers and
majority subsidiary investment mergers, rubber-stamped by virtually all
branches of the U.S. government, historically held energy law no longer
remains the watchdog it was once meant to be. Therefore, the best
interests of the American people are now marginalized and the future
national security interests of the U.S. may be forever compromised.