Las Vegas Review-Journal
November 28, 2001
Why does nuclear power industry still need special liability protection?
Why do motorcycles have carburetors?
The earliest machines used open pans of gasoline — the vapors rising from the open fuel source were vacuumed into the cylinder and ignited by the spark plug, powering the engine. But of course this was dangerous — the fuel sloshed about, fires were common, and the likelihood that any insurer would have issued a policy underwriting the rider’s safety was far-fetched.
Manufacturers knew they had to come up with a safer and more reliable arrangement — and the race to develop the enclosed carburetor was on.
Today, exploding motorcycle engines are not a big problem.
But imagine for a moment that Congress had intervened. After all, motorcycles are useful to the military. If the early motorcycle manufacturers had enjoyed better political connections, they might have asked Congress to pass a law sharply limiting their liability in the case of fires from those primitive engines. Should anyone suffer a truly serious injury, Congress would step in and pay the bill. The manufacturers would have been able to continue making their bikes the old-fashioned way — and they’d still be blowing up with regularity.
The problem isn’t just theoretical. Government interventions really do distort the free market. The Price-Anderson Act was enacted in 1957 and has been renewed three times since — it will expire Aug. 1 unless the Senate joins in renewing it again, as the House voted to do Tuesday.
The law was specifically created to help the fledgling nuclear power industry bypass private insurers who wanted prohibitively high premiums to indemnify manufacturers and operators against liability claims that might result from a meltdown — assuming they’d insure them at all. The odds of such an event were extremely difficult to calculate, given that no one had a baseline of experience with commercial reactors.
So Congress simply waved its magic wand, and said any damages above $9.5 billion would be paid by Congress, which is to say the taxpayers. The way was cleared to build commercial reactors.
With the insurers thus indemnified, no one bothered to investigate the potential liability should all the spent fuel rods end up stored “on site” for the next 100,000 years. The precedent having been set, it was simply assumed Congress could and would step in to wave its magic wand yet again … as it soon will, mandating that all nuclear waste be buried in Nevada, whether the locals like it or not.
The Price-Anderson renewal was brought to the House floor Tuesday under guidelines more commonly used to speed through non-controversial measures “like renaming post offices and federal buildings,” points out Jill Lancelot, legislative director for the watchdog group Common Sense. Yet, “There is nothing more controversial than limiting liability protection for a politically powerful industry at the expense of taxpayers.”
Wouldn’t this be a good time for the Congress to subpoena witnesses from the insurance industry and ask them — given the track record of the past 40 years — whether this warping of the market is still required?
One need not be “against” nuclear power to say it should stand on its own two feet in competition with other methods of power generation — with the final arbiter being the independent insurance actuaries setting their liability rates, absent any federal “bailout.”
That’s how the free market works.