Essay: Adjusting the Regulatory Regime in the Face of a Changing Nuclear Industry

Nuclear energy represents roughly eleven percent of global energy production,  and is responsible for almost one fifth of all energy generation in the United States.  The process is clean, efficient, and utilizes a domestically available fuel source.  However, despite nuclear energy’s numerous benefits, the technology is not without its faults.  Nuclear energy brings with it inevitable threats to both national security and environment.  Concerns about proliferation and sabotage color any discussion regarding the expansion of nuclear energy production,  and the desire for a carbon-neutral energy source must always be weighed against the danger of contamination and catastrophe.  The recent revelation that Florida’s Turkey Point Nuclear Plant has been steadily leaking contaminated water in into nearby Biscayne Bay has thrown this concern into sharp relief,  eliciting alarm from environmentalists and government officials alike, and leading many to question the effectiveness of current regulatory practices.
Apprehensions about the potential for environmental degradation are just one small part of the broader—and markedly polarized—conversation regarding nuclear energy. Under the recently announced Clean Power Plan, alternatives to coal, including nuclear, are receiving greater attention.   However, the high cost of nuclear energy production is an additional concern for those on both sides of the nuclear debate, with the generation costs rising to an average of $36.27 per megawatt hour (MWh) in recent years.   For this reason, natural gas-fired power plants, as well as alternative energy sources such as solar and wind power, are increasingly giving nuclear a run for its money.  These alternatives may appear additionally appealing in light of events such as the Turkey Point leakage  and the devastating aftermath of the Fukushima meltdown in Japan.   Additionally, despite being heavily subsidized in the United States, nuclear power has the potential to levy steep rate increases on consumers,  as companies shell out millions of dollars to keep older plants operating safely and avoid the aforementioned environmental and safety risks.   Even with the effective risk insurance provided by legislation like the Price-Anderson Act,  nuclear remains a relatively costly form of power production.
As the nuclear industry adapts to cope with rising costs and reservations about environmental contamination and facility security, the regulatory community is also adjusting their organization and practices. This article introduces the Nuclear Regulatory Commission (“NRC”), the principal agency that regulates nuclear energy production in the United States, and discusses how the Commission is changing to accommodate a changing domestic nuclear industry. Part II explains the issues shaping the commercial nuclear industry and necessitating change on the part of the NRC. Part III describes Project Aim,  the Commission’s plan to increase agency competence and efficacy by 2020, including a discussion of the projected changes to the Commission’s workload over the next five years. Part IV then concludes by discussing the requirements for the project’s success and reiterating the need for a more efficient, streamlined, and unified nuclear regulatory regime.
a) The Need for Nuclear Regulation
Given the concerns about security, potential environmental issues, and rising production costs, it is perhaps not surprising that Congress has long recognized the need to regulate nuclear activity. The Atomic Energy Act of 1946  created the Atomic Energy Commission (“AEC”) and tasked it with preserving the public wealth fare without curtailing the nuclear industry’s burgeoning growth.   The Act recognized the potentially abundant benefits of nuclear power, but also acknowledged the need for strict regulation and security.  The Atomic Energy Act of 1954 replaced the earlier act,  and enabled commercial power production to begin to develop for the first time, allowing the United States to maintain its status as a global leader in nuclear technology.   The Act also delegated three major functions to the AEC: (1) maintaining the country’s nuclear weapons program, (2) promoting commercial nuclear power, and (3) safeguarding against any potential abuses of either of these applications.  However, the AEC struggled to fulfill its admittedly daunting mandate, and its programs soon faced considerable opposition.  Critics argued that the commission’s regulations fell short in several key areas.   It was clear that although regulatory oversight of the growing nuclear industry was inarguably necessary, the current regime was an ineffective one.
b) Creation of the Nuclear Regulatory Commission
The criticism of the AEC’s regulatory programs had grown so strong that by 1974 Congress decided to eliminate the agency altogether.  However, supporters and critics alike agreed that the AEC’s duties were inarguably valuable ones, and should therefore be allocated to a different agency rather than disregarded entirely.  No appropriate agency existed at the time, necessitating the creation of a new one.  Accordingly, the Energy Reorganization Act of 1974  created the Nuclear Regulatory Commission (“NRC”) to take over the defunct AEC’s duties, and the Commission commenced operations on January 19, 1975.  The Act also established the U.S. Energy Research and Development Administration (ERDA),  which was tasked with “[] bring[ing] together and [] direct[ing] Federal activities relating to research and development on the various sources of energy, [] increase[ing] the efficiency and reliability in the use of energy, and [] carry[ing] out the performance of other functions, including but not limited to the Atomic Energy Commission’s military and production activities and its general basic research activities.”  ERDA was eventually incorporated into the Department of Energy,  but the NRC has continued to operate as an independent agency.
c) The Nuclear Regulatory Commission Today
The modern NRC serves many of the same functions originally intended to be fulfilled by the AEC, but now focuses primarily on regulating commercial nuclear power.  The Commission’s regulatory activities center around promoting reactor safety and renewing licenses for reactors of existing plants,  managing materials safety oversight and various other licensing duties,  and adjudicating any legal matters brought before it.  Five Commissioners, all nominated by the President and confirmed by the Senate for staggered five-year terms run the NRC.  Notably, no more than three can be from the same political party.  One of the Commissioners is selected by the President to serve as Chairman and official spokesperson,  a role currently filled by the Honorable Allison M. Macfarlane.
II. Issues Shaping the Commercial Nuclear Power Industry
Three of the most pressing issues facing the nuclear power industry are long-term waste management and security, environmental protection, and economic competitiveness. This section explores each of those issues in greater detail, outlining: (A) the nuclear process and practices for managing the resulting waste, (B) the need for increased structural fortitude to avoid environmental contamination, using the Fukushima Dai-ichi disaster as a case study, and (C) the cost of nuclear production and effects on the industry a result of regulation and the current surplus of cheap natural gas.
a. Nuclear Waste Management and Security
i. The Nuclear Process and Waste Production
One of the most important tasks overseen by the NRC is the management of both high-level and low-level nuclear waste.  Managing the high-level waste produced as byproduct of nuclear energy generation is no easy task, but the potential—and very literal—fallout from a nuclear catastrophe is a risk that neither policymakers nor regulators afford to ignore. There are sixty-five commercial nuclear power plants currently in operation in the United States.  These plants operate a total of one hundred nuclear reactors.  Although the majority of plants in the United States utilize Pressurized Water Reactors (PWRs), a handful employs Boiling Water Reactors (BWRs) instead.  Both PWRs and BWRs operate using nuclear fuel in the form of pellets of enriched uranium.  The individual pellets are packaged in rods, which are then arranged in bundles before being inserted into a reactor.  Each bundle contains enough energy potential to power a reactor for roughly three years.  Once a bundle has exceeded its useful lifespan, it is considered “spent”.  Spent bundles are removed from the reactor and replaced.  At this point, the fuel in the rods is categorized as high-level radioactive waste due to the intensity of radiation it emits.  It is possible to reprocess nuclear waste, but although three domestic reprocessing facilities exist, none are currently in operation.  As a result, spent fuel is stored on-site at most plants.
ii. Security Measures
Although a central repository for spent nuclear waste has been in the works since passage of the Nuclear Waste Policy Act in 1982,  the project has struggled in the face of significant political controversy.  In the absence of a central repository however, extensive security measures are necessary to ensure the safety of the nation’s extant dry storage facilities. The NRC is required to conduct security evaluations of every licensed nuclear facility in the country at least once every three years.  These evaluations include “force-on-force exercises,” which assess the ability of each facility’s private security force to defend against all conceivable threats.  The structural integrity of the units themselves is also subject to frequent inspection, as any leak or breach could represent a possible exposure risk.  However, despite all the precautionary measure already in place, security remains a pressing concern for utilities around the country, particularly in the aftermath of high profile terrorist attacks in recent years.  As such, nuclear security remains an important focus for the NRC going forward.
b. Environmental Concerns
The potential for leakages like those recently exposed at Florida’s Turkey Point Nuclear Plant is not the only environmental concern faced by operators and regulators.  Sometimes, rather, the surrounding environment itself is cause for alarm, as clearly exhibited by the devastating effects of the Great East Japan Earthquake on March 11, 2011.  Shortly following the 9.0 magnitude earthquake, a series of tsunami waves pounded sites along Japan’s northeast coast, including the Fukushima Dai-ichi Nuclear Power Plant.  The towering waves far exceeded the height the plant was designed to withstand, resulting in significant structural damage.  Three of the plant’s units were plunged immediately into an extended blackout.  The emergency cooling systems also failed, leading to extensive damage to the plant’s reactors in the days following the earthquake.  In the final disastrous blow, combustible gases built up in the reactor buildings, culminating in a series of detrimental explosions.  These explosions crippled the plant entirely and resulted in a release of radioactive materials, which in turn necessitated the evacuation of over 100,000 residents of the surrounding area, many of which have yet to return.
In the aftermath of the Fukushima disaster, nuclear plant operators and regulators the world over have taken steps to bolster protective measure and operating procedures.  The NRC, acknowledging that the growing threat to nuclear power plants from events like the Great East Japan Earthquake, created a task force to draft recommendations for augmenting the structural defenses of domestic nuclear power plants.   The task force focused on several key areas, including physical improvements to U.S. plants, better planning to mitigate the consequences of a core-damaging accident if one were to occur, and increased emergency preparedness measures to protect the public from undue exposure.  The NRC has consequently incorporated these initiatives in the continued development of their regulatory scheme.
c. Economic Disruption
Unfortunately, increased regulation frequently goes hand in hand with increased operating expenses.  With regard to nuclear power, this issue had been further exacerbated by steep start-up costs and relatively inexpensive natural gas and renewables.  Nuclear plants in wholesale markets face the greatest challenges; while plants operating in regulated markets—like North Carolina — make about $70 per MWh, the return for plants in competitive wholesale markets is only about $35 per MWh.  Cue growing numbers of operators in deregulated markets scrapping plans to construct new plants and decommissioning existing reactors rather than upgrading them for continued service.
Issues of federal and market regulation aside, the true threat to the nuclear industry’s profitability is the fresh generation of natural gas-fired power plants and low-cost renewables that are driving down the wholesale price of electricity.  An explosion in the market for fracking and shale gas, as well as high natural gas storage levels and a warming climate, have sent natural gas prices in the U.S. spiraling lower than they have in years.  Meanwhile, tax breaks accompanied by a marked decline in the costs associated with utility-scale wind and solar projects have allowed the price of renewable energy to drop even lower than that of natural gas in some areas of the country.  Despite the nuclear industry’s proven track record as a provider of clean and reliable energy, the industry is currently unable to compete economically.  Effective cost control is therefore a critical topic for consideration as the NRC looks to the future.
III. Project Aim
a. Purpose
In light of the issues facing the nuclear power industry, and recognizing the need for the regulatory community to adapt in response, the NRC launched Project Aim in June of 2014.  The team consulted both internal and external stakeholders to determine a five-year outlook for the NRC.  Based on this projection, as well as a review of the current literature and agency work products, the project team recommended several strategies for improving the NRC’s “effectiveness, efficiency, and agility.”  The team’s recommendations focused on improving the NRC’s current and projected performance while accommodating changes in the agency’s workload and managing fluctuations in resource levels and workforce staffing.  Ultimately, the team identified four key goals, including “right sizing” the agency to improve efficiency of operations, streamlining internal processes, enhancing timeliness, and promoting the idea of unity as “one NRC.”
b. Industry Forecast by 2020
The majority of the project team’s recommendations were based on forecasted changes to the commercial nuclear industry in the next five years.  In terms of workload, the number of operating reactors is anticipated to decrease slightly by 2020, while the number of new reactors coming on line will go down significantly.  The number of nuclear fuel facilities will also decrease.  The amount of low-level radioactive waste from decommissioned plants will remain relatively stable, as will the amount of spent fuel that needs to be processed and stored.  Overall, the number of nuclear material users will also remain fairly stagnant.
With regard to the projected demand on the workforce itself, operating reactors will provide little additional demand, as their numbers are expected to stay comparatively unchanged.  The same will likely be true for nuclear fuel facilities, as well as the amount of low-level waste, spent fuel, and nuclear material users.  The sharp decrease in the construction of new reactors will likewise diminish the need for regulatory oversight in that area.  On the corporate front, the agency anticipates shifts in its financial management, IT, and human resources needs.
c. Approach
Project Aim’s implementation will require internal agency alignment, clear and actionable strategies, strong leadership, ongoing performance monitoring, effective communication, and continuing stakeholder engagement to be successful.  In approaching these tasks, the NRC has already begun to reach out for feedback from both internal and external sources.  The input provided by these sources was vital in the project’s initial stages and will also be essential going forward.  Gap analysis has also already played an important role, allowing the agency to critically evaluate areas for potential improvement.  The strategies and recommendations developed as a result of the project’s initial planning phase are already being implemented,  but will likely require further refinement as time goes on.  The project is currently in the monitoring stage, where it will remain until its completion in the year 2020.
IV. Conclusion
The commercial nuclear industry is currently tackling concerns about environmental contamination and facility security in the face of rising production costs and increased market completion, and the regulatory community must adjust in turn if the United States is to continue their reliance on nuclear power. To this end, the successful implementation of the NRC’s Project Aim is therefore not only prudent, but also necessary. Adaption on the part of the agency is requisite if they aspire to fulfill their directive to ensure the safe—and ongoing—commercial use of nuclear materials in the United States.