Stucknation: Profit and Probability - Is Fukushima Another Ford Pinto?

The collapse of the World Trade Center towers, the failure of New Orleans' levies during hurricane Katrina, and the destruction of the half dozen Fukushima General Electric boiling water nuclear reactors are all monuments to "good enough" engineering.

In our free-market world, what gets built and how robust it is constructed is the result of a dynamic tension between profit and probability. What are the odds that "X" will happen versus the cost of preventing or anticipating it, otherwise known as the "Pinto principle."

Forty years ago, Ford Motor Company opted not to make an $11-per-car design change in their Pinto compact car model, which would have prevented its gas tank from exploding on impact. It was cheaper to pay the projected $50 million dollars in claims generated by the predicted deaths of 188 people than spend the $137 million dollars to fix the design.

No doubt design changes can be costly.

Processing new information that shakes prior presumptions that inform the foundation of a multi-billion dollar enterprise such as the American nuclear power industry is likely to be problematic. There's all that campaign cash and there is all that revolving door commerce at stake.

In the wake of the disaster at Japan's Fukushima plant, the American nuclear power industry and the Nuclear Regulatory Commission are no doubt ooking to see what they can glean from the ongoing tragedy even as they insist it can't happen here.

At the top of their list should be a review of the nature of their own relationship with each other. Historically, the NRC has acted more as a promoter of the industry than a watchdog.

Since the close-call at Three Mile Island in the 1970s, the NRC has not licensed any new power plants. But it has approved re-licenscing for dozens of America's aging nuclear power plants. On the "good to go for another 20 years" list are some that have the same controversial design as the Fukushima reactors, usin GE's Mach 1 model boiling water reactors.

In the 1960s, Federal regulators raised significant questions about this design, which was marketed as less costly because it did not call for the same extensive and expensive containment as pressurized water reactors. Ultimately, what was financially most beneficial for industry won out over internal technical reservations.

Long before this latest tragedy, Massachusets Congressman Edward Markey has cast a criticial eye on the seemingly symbiotic relationship between the NRC and the industry it regulates. In a 2010, letter Markey cites a September 2007 audit by the NRC's own inspector general of the group's license renewal program. That report concluded that most NRC audit team members did not conduct "independent verification" of how the plants up for renewal had actually operated but instead relied on the "licensee supplied information."

In the same correspondence, Markey describes a close call in 2007 when a 6.8 earthquake in Japan near the Kashiwazaki-Kariwa Nuclear Power station. The year before it had been seismically reinforced to withstand a 6.8 event. And yet that quake still overturned barrels of radioactive waste, caused a release of radioactice iodine gas and sparked a larger transformer fire.

Even before the Fukushima, Markey thought the NRC should push itself and the industry it regulates to factor in the latest information on seismic activity when assessing any plant's future.

You see it really is a misnomer to talk about "closing" a nuclear power plant. They're always going to be with us, because the vast quantities of deadly radioactive waste they generate must be kept on-site, under water or monitored in dry casks for decades.

As we see in Fukusima, spent fuel rods can catch fire and disperse vast quantities of deadly radioactive materials, contaminating water and food supplies as far away as 90 miles from the fire.

Currently the U.S. is generating 2,210 metric tons of new radioactive waste annually and the only plan is to keep going.

As reported in the Chicago Tribune, about 1,100 tons of highly radioactive fuel rods "stand about a football field away from Lake Michigan." That's the same Lake Michigan that's one of the world's largest sources of fresh water. Additionally, Illinois stores another six thousand tons, making the state the nation's biggest nuclear power producer.

The NRC and the atomic power plant operators tell us there is nothing to worry about; that Fukushima is a 'one off, can't happen here' kind of event.

Last year, even as President Obama - a former Illinois senator - spoke about the importance of constructing scores of new nuclear power plants, he canceled long-standing federal plans to build a radioactive waste repository in Yucca Mountain, Nevada.

Billions had been spent, but the state, which has an early primary and is already burdened with the legacy of the federal atomic policy, did not want it. Instead President Obama appointed a Blue Ribbon Panel for more study of the issue.

Study is good. The world changes - even the parts we can't see. New facts can rock the very foundations of massive capital investments made by folks with even grander designs.

Applying new scientific findings on something such as increased seismic activity is going to be a true test for the NRC, but it's one they say has already been underway for the last few years. In fact the NRC has identified 27 plants, including Indian Point - some 25 miles from New York City - for more study into their potential for additional "seismic hazard."

Indian Point plants number 2 and 3 were built in the 1970s and are up for a renewal. Indian Point 1 is no longer generating power, just storing spent fuel. Entergy, the plant's operator, says the complex is "earthquake proof."

The NRC has already signed off on its scientific review with a thumbs-up for life extension for Indian Point plants 2 and 3, which calls into question just how serious is their seismic review. All that's pending now for license renewable is the public comment period.

According to the scientists at Columbia University's Lamont Doherty Earth Observatory, the chance of significant quake is not as remote as previously believed. Seismologist John Armbruster says his focus is not just on the Ramapo fault line that runs by Indian Point, but a second fault line he discovered nearby.

"It is an alignment of earthquakes from Peekskill to the Southeast into the Long Island Sound," says Armbruster. He says the below-ground facts should inform the decisions about Indian Point's future. "We think that a thorough re-examination of the seismology and the engineering at Indian Point is appropriate."

Will it happen? It will all come down to profit and probability.