Regulatory Capture 15
Regulatory Capture
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Table of Contents
Regulatory Capture 3
Regulatory Explanation of the Fukushima Daiichi disaster 5
Regulatory Capture in Japan 6
Role of Safety Regulation 7
Regulatory Capture in China and U.S 9
Weakness of Chinese nuclear regulation systems 9
Regulatory Capture in Chinese Nuclear Industry 9
Regulatory System in US 10
Conclusion 11
Recommendations 12
References 14
Regulatory Capture
The examination of the Fukushima Daiichi nuclear accident by parliamentary panel reveals that disaster was primarily caused by a collusion between the government regulatory wing and the industry, similar thought is evidenced in other research throughout the world. Regulatory capture is a major factor cited by the research among nuclear controlling agencies, from the minor authorities to the Atomic Energy Agency, this is a case of regulatory capture, the industries fully dominates the decision of the agencies set to check and control their conduct (Fujioka & Krolicki, 2011). The panel as the main reason behind the accident cited a collaboration between TEMPCO government and the regulatory body coupled with the lack of proper regulatory measure, the investigation argues that accident was foreseen and deemed preventable, however, lack of enforcement by the relevant authorities allowed the nuclear plan to continue operating despite the accident in waiting. The idea of natural catastrophe to be the cause of the accident is wrongly cited, the earthquake blamed for the accident only accelerate the schedule. An accident of a similar nature occurring because of lack or responsibility from the regulators is a betrayal of the nation’s right to safety from nuclear related accidents.
The world second fatal accident after the Chernobyl accident serves as a reminder that failure of the regulatory bodies makes nuclear plant susceptible to natural disasters and results in massive loss of lives. It should be noted that cases of regulatory capture are not new to Japan nuclear industry, fully blamed on the low efficiency of the Atomic Energy Agency in performing its duties. Sadly, the limitations of the agency are arising from the competition from stakeholders and political opinions misguiding the way, leaving the body with unclear guidelines to follow.
An earthquake of about 9.1 in magnitude followed by tsunami of March 2011 completely disabled the plant cooling system leading to the accident. A major question is why other power plant in the same region was not affected by the disasters. The regulatory documents before the accident reveal that Fukushima Daiichi has been listed among plants prone to accidents in Japan for the past decade. Reuters affirm the factory was listed as the most dangerous place for workers, with exposure to radiation exceeding regulatory limits and among the top five hazardous plants by Japanese standards between 2004 and 2008. The major concern is why the regulatory body allowed the plant to operate without correction to the system. A year before the accident, employee at the facility scheduled to conduct a major maintenance to unit six were misdirected and instead commenced work on unit five. They had to alter work plan and programs without by themselves without consultations, which rendered the units cooling system inoperative. With the Nuclear and Industrial Safety Knowledge of the mistake, they allowed the facility to continue operating and even approving the extension of contract for its unit 1 for a period of ten years. The extension was after the reactor had served to the end of its design lifecycle.
The IAEA regulatory capture in this case is obvious. Despite the body having strict rules on nuclear nonproliferation, its recommendations are optional for adoption by the government, regions, and sections of the industry. The Director General stated in a March 2011 interview that the body is not a nuclear watchdog but a formulator of policies regarding nuclear safety. Today, the world is running on nuclear power, peoples safety from nuclear risk is therefore a role to be played by the regulatory bodies, however, their interests and motives have deviated from the people will and work to for the best of the industry players. Such a regulatory capture must be fixed, learning from the consequences of Fukushima Daiichi disaster.
Unfortunately, motives to avoid forms of regulatory capture are not promising arguing from the IAEA ministerial meeting followed by United Nations meeting on nuclear safety and regulations. Both meeting come up with very few constructive solutions to the problem of regulatory capture in the nuclear industry. The failures are partly from competition among governments serving their interests and poor leadership aiming at solving the problem, the misguided opinions from the stakeholder could only yield generation of unsatisfactory ideas to follow.
A better solution to the problem can only be gained by thorough assessment of the Japan nuclear problems and investigations into the nature of constructive regulation on nuclear in Japan, the United States (which ones the largest number of operating nuclear plants) and China. This paper seeks to explore the causes of Japan regulatory capture, the key deficits in nuclear regulation system in US, China, and outlining policy recommendations against their deficits (Wang, Chen, & Yang, Remaking the international atomic energy agency energy agency. , 2012).
Regulatory Explanation of the Fukushima Daiichi disaster
On overview of Japan performance in general governance rates Japan among the top countries as stated by the World Governance Indicators, however, it is ranked among the bottom nation when it comes to countries for Economic Corporation and Development. The country has among the best corruption reducing mechanisms by rule of law. After two six years term helping the government develop their bid for nuclear power as Japans energy of the future, KANO, an elected representative for the seat of nation’s largest business lobby group, returned to TEPCO as an adviser (NISA, 2011). With his advice, the facility should not be a victim such catastrophic accident. However, his relation to the regulatory body and being among the most influential identities in its application of regulations interrelate with the leniency of Fukushima plant on regulations without clear action. In 2002, facility was found to have fabricated false report on its performance; it was never fined the 100 million punishment for such an action. The only thing TEPCO did following the incident was in-house in nature, by firing its four top managers, most of which started doing business with TEPCO. This is an example of corruption surrounding the Japan accident.
Regulatory Capture in Japan
Japans regulatory capture partly arises from the nature of its agency regulations. The country has three major regulatory bodies, the AEC, NSC, and the NISA (Clenfield & Sato, 2007). However, Japans regulatory work is done by the NISA. Though it is the body charged with the responsibility of overseeing all the energy standards, it is part of the Ministry of Economy, Trade, and Industry. The body is also responsible for promoting the benefits of nuclear power, selling the technology to other nations, while trying to regulate its conduct. The business relationship between the body and industry lead to shared interests. It is therefore impractical for it to formulate regulations and policies or act in a way that promotes public interest; this appears like the agency acting against itself. The promoter regulator role played by Japan agencies are inflicting responsibilities, for the US, the roles are split between the US Department of Energy which plays the promoter role and Nuclear Regulatory Commission since 1970s which control nuclear safety following the closure of Atomic Energy Commission (Morse, 2011). France has adopted a similar system by making their regulatory agency and an independent body from government bureaucracy. The nature of Japan system gives NISA a positon among the parties seeking to make profits out of the energy business, thus, the measures introduced in such a situation are guided by motive to gain profits than its sole duty. As a regulator, the agency cannot enjoy independence while excursing is control duties since it is under government bureaucracy and politically influenced. NISA lacks the clearance to assure safety and protect public interest when its duties are conflicting. The inspection process is planned by NISA, traditionally, the body inspects the plants once in 13 months, however safety checks are done every quarter, the body does not conduct any surprise inspection though inspector may visit nuclear plant regularly. Some plant has been shut down temporarily following checks, or cover up reports. The aftermath of Fukushima Daiichi accident is a reminder of what failure in regulatory system can cause a persuader for the Japan’s promoter regulator to divide responsibility and seek independence.
Role of Safety Regulation
Regulation capture occurs when the rules regarding nuclear safety are seriously flowed. In the case of Japan, they have a comprehensive regulatory law that directs safety conditions that all nuclear plants must follow. The Atomic Energy Act of 1956 defines all the basic limits, philosophy for the use of nuclear power, the 1967 act on nuclear fuel, nuclear material, and reactor standards covers the role of government in regulating the use, and installation of nuclear plants, it defines the duties and responsibilities to be observed by the operators (IAEA, 2006). The law on regulating radiation effects resulting from radioactive isotopes should be given proper force is the regulations are function without failure.
Japan’s safety laws are given lesser force, the regulatory body is deeply flowed and lack of dedicated experts to come up with guidelines that protects public safety. The body depends on retired and active nuclear engineers to set the standards for industry regulations. Such interests have lagged same safety that could insulate the public from nuclear faults. For instance, before the North Japan earthquake, NISA had not studies the effect of such catastrophes on nuclear reactors, the earthquake had caused radioactive leaks, minor fire, and cracks in a facility managed by the same company that was responsible for the TEPCO accident.
Following the incidence, NISA formed a subgroup to look into the effect of tsunamis and earthquakes on nuclear plants. The committee would report to larger meetings in assessing the damage and appropriate remedy for future problems of a similar kind. The transcripts of the meeting shows that committee members rarely challenged each other and the rule making was done with little consideration to the real situation and hand, ideas were not deeply checked to arrive into a generalization on how the policies will be implemented, certified through checks and how to make sure that they are integrated into the industry. After four years of discussions, the committee specifically considered the impact of tsunamis and earthquakes on nuclear plants were drafted for the first time, after years of operation without guidelines of natural disaster safety precautions (Zhou, Rengifo, Chen, & Hinze, 2011).
The worst fact about development of rules to be used by NISA is that the agency depends on rules drafted by the industry to control themselves; nuclear companies are business entities, which are always willing compromise public interest for profits. As a result, the safety rules applied by NISA are to the best interest of the key industry players and not designed to punish wrong and streamline the industry. In the cases of Fukushima, TEPCO drafted a safety guideline for the plant and in the one page report, they stated that sea waves in the region cannot exceed 5.7m, which will be adopted by NISA as a regulation. However, the March 2011 disaster featured sea waves to the degree of 14m, way above the figure stated by TEPCO’s safety regulation approved by NISA (Fukushima, 2008). Seawater racked the plants causing a shutdown of power to the reactor cooling system; the resultant overheating caused the Fukushima Daiichi nuclear accident.
The parliamentary committee investigating the accident discovered that TEPCO’s one-page recommendations did not include fundamental parts of the report it was not accompanied by vital details such as data collection and assumption applied which would help to determined if the calculations and result found on sea wave intensity made sense. NISA failed to act in its capacity as the regulator to demand such information to verify the correctness of TEPCO results or scrutinized the findings. If the regulator looked into the matter, they would discovered that the guideline was an in-house affair with 22 of the people involved in the calculations had personal ties with the industry, included the three member for TEPCO and one from an affiliate company to TEPCO. The other thirteen member were selected from other Japan electricity companies (Wang, China needing a cautious approach to nuclear power strategy., 2009).
Regulatory Capture in China and U.S
Nuclear regulatory capture is not a respecter of boundaries, the Chinese version of nuclear regulation if unsteady while the US regulations needs critical improvements basing arguments on the level of regulations applied in other traditional industries. The nuclear industry seems to be relaxed and the governments making little efforts to improve the situation. Comparing the three countries, Japan, China, and US, U.S polies are at a better position and constantly improving
Weakness of Chinese nuclear regulation systems
China is in the process of constructing an additional 27 nuclear plants, this make the nation to host over 40% of words nuclear power plants (Bunn & Heinonen, 2011). However, the country has no strict regulation concerning the safety of nuclear plants. The regulatory act of 2003 only covered the management of radioactive pollutants, most of the standards in China were drafted over a ten years ago and do not meet the current industry standards.
Regulatory Capture in Chinese Nuclear Industry
Chinese regulatory roles are divided between many agencies; however, the National Nuclear Safety Administration plays the greatest role in managing nuclear power. NNSA have little resources to perform its duties, this can be a favorable factor to allow industry players to proliferate NNSA. Currently, Nuclear Energy Administration has more authorities on regulatory role than the other agencies. While NNSA is part of the environmental protection ministry, NEA is subset of National Development Reform Commission that has critical roles in planning and supervision of the Chinese economy. The NEA is the sole authority that conducted inspections on nuclear plants, certification of construction of nuclear plants and formulation of regulatory guidelines. It can approve of a plant adherence to safety or recall a nuclear power generation plant’s license if found to be improperly designed. The NNSA is concerned with the formulation of policies and standards affecting civilians, civilian power plants, and inspector role on civilian nuclear facilities.
Regulatory System in US
The regulatory system in US is much developed than the Japan and China case. Through differentiation in role of government as a regulator and as promotor, the country properly controls the industry while promoting it for better gains. Since 1970s, the country established independent bodies for regulating the use of nuclear materials and maintaining industry standards of safety. However, the regulatory role still faces the problem of evolving industry; the group has the highest density of Ph. D in government for a better job result. However, the NRC is seem not to be regulating the industry in an effective way. The NRC is more like a preparatory school for the regulatory officials, people who know that they can land better jobs from the very people they are supposed to control. Therefore, the body is under a form regulatory capture mostly due to the insufficient enforcement of regulation.
Conclusion
In this paper, the idea of regulatory capture is discussed for three countries, the US, Japan and China. The industry in all nation are regulated, however, the assigned agency is susceptible to regulatory capture. However, the problems makes the country to be at much higher risk than regulation in other sectors, citing Fukushima and Daiichi case in Japan, Three Mile Island in USA and Chernobyl in China. Investigation reveals that the problem can be blamed on regulatory capture. An important issue in trying to implement proper regulations is the problem of regulatory failure or commonly called regulatory capture. This is the tendency of firms and the body to regulate their performance join hands for mutual benefits, the move maybe be harmful to the economy, public safety and risk to employees. The benefits to the firms can be in form of taxation, profits, protection and government leniency.
The benefits to the regulator might be in form post employment benefits, special treatment and favors or political contributions which can be implicit or explicit. The issues behind regulatory capture is beyond the industry itself, the problem in some industries is called crony capitalism, it is common in industries in which government play critical roles which are the most common in today economy. This paper studies the problem of regulatory capture and present recommendations on how the problem can be improved. Among the possible solution is involvement of all the governments in design and implementation of regulation, insulation of personal interest from affecting implementation of regulations and development of enforceable standards.
Recommendations
To some degree, the case of Fukushima Daiichi is a matter of luck, China and US are in the same state of regulatory problem. Many efforts should be placed to fix the problem and limit future cases of similar accidents. Most importantly, governments with nuclear power should come together and form an oversight authority independent of particular nation bureaucracies with the intention of serving public interest and not for political gains. For efficient working of the regulations, three factors must be considered.
1. The government should regulate the flow of personnel from public to private sector. This move can help to curb the problem of personnel involvement with the possible employers they are supposed to keep in line. The personnel involved nuclear regulation should be protected from conflict of interest in performing their duties through restrictive employment opportunities.
2. The role of keeping the reactor safe should be assigned to a body that is independent from government influence, industry influence, authoritative and credible in performance of its tasks.
3. The idea of international nuclear assessment should be implemented with the body operating without borders. Internal peer assessment should be part of industry practice. Countries should not be allowed to modify the regulations, implement the regulation voluntarily or to apply section of the regulatory standards according to the condition of the country.
In addition to the recommendations, the US, Japanese and China should take a leading role in formulating applicable standards. As the leading nation in nuclear energy, US should be an example to other nations in reactor design, management supervision, and adherence to regulatory standards. Collectively, the three being among the leading in nuclear power should be modern regulatory principles, improved fuel technology, better thermal efficiency, and superior design that aid safety and management costs.
References
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Clenfield, J., & Sato, S. (2007). Japan nuclear energy drive compromised by conflicts of energy. Bloomberg.
Fujioka, C., & Krolicki, K. (2011). Special report: Fukushima long ranked most hazardous plant. Reuters.
Fukushima, A. (2008). Improvement of Inspection System and Ageing Management in Japan. Tokyo.
IAEA. (2006). Plant life management for long term operation of light water reactors. International Atomic Energy Agency, Vienna.
Morse, A. (2011). Reactors had high rate of problems. The Wall Street Journal, 14(5), 130-156.
NISA. (2011). Report of Japanese government to the IAEA ministerial conference on nuclear safety: the accident at TEPCO’s Fukushima power stations. Tokyo: Nuclear and Industrial Safety Agency.
Wang, Q. (2009). China needing a cautious approach to nuclear power strategy. Energy Policy, 37(7), 2487–91.
Wang, Q., Chen, X., & Yang, D. (2012). Remaking the international atomic energy agency energy agency. . Environmental Science & Technology.
Zhou, Y., Rengifo, C., Chen, P., & Hinze, J. (2011). Is China ready for its nuclear expansion? Energy Policy, 39(2), 771–81.
