Showing posts with label regulation. Show all posts
Showing posts with label regulation. Show all posts

AMERICAN FORUM

By Dr. Jeffery Patterson

One crucial lesson from the BP oil spill is that measures to speed licensing, cut corners on safety and undermine regulation can lead to tragic consequences. Yet Congress appears on the verge of repeating mistakes that led to the environmental catastrophe in the Gulf.

Federal lawmakers are weighing a BP-type deregulation of new nuclear reactors - the one energy source in which damage from a major accident could dwarf harm done by a ruptured offshore oil well.

In this effort, the nuclear industry's backers are working both sides of the street. On one hand, they proclaim that the current nuclear regulatory system is so superior, it could well serve as a model for regulating the petrochemical industry.

At the same time, those nuclear proponents are working behind the scenes for regulatory rollbacks that would dramatically reshape safety and environmental requirements for new reactors. These provisions might be incorporated into a climate bill, or into a narrower "energy-only" bill that could be voted on by the Senate as early as this month.

The result of the changes making the rounds of Capitol Hill would further undermine Nuclear Regulatory Commission (NRC) safety reviews by truncating the licensing process for new reactors, scaling back environmental-impact reviews, and limiting public transparency in reactor licensing decisions. All are bad ideas.

Here are a few of the problematic provisions proposed in draft legislation that should not be included in a final climate or energy bill:

* The NRC would not be authorized to prevent startup of a new reactor, even if fundamental safety components already inspected were later compromised in the construction process.

* The NRC would be required to propose and implement an "expedited procedure" for issuing construction and operating licenses for new reactors under certain conditions.

* An impossibly high standard would be set for including an evaluation of the need for power, the cost of the new reactor, and alternative energy sources within the NRC licensing process.


* The NRC could no longer hold a mandatory hearing to do an independent safety and environmental review in new reactor licensing.

Nuclear reactors already have the most streamlined licensing process of any type of industrial facility in the United States. What is delaying the review of reactor applications isn't the licensing process, but the fact that the industry has been unable to submit adequate design proposals for reactors or to respond to the NRC in timely fashion.

Rather than weakening reactor safety rules, Congress should send the NRC the right message - safety over speed - by strengthening them.

For example, the NRC should be required to take into consideration "worst-case" accident situations. The NRC has resisted pressure to analyze risks posed by terrorist attacks on spent fuel storage casks, although such an attack could cause a severe release of radiation. As with the Deepwater Horizon offshore drilling rig, mere assurance that the worst-case situation won't happen is a hollow promise.

The notion that lack of a recent major reactor accident makes such an occurrence a "remote possibility," therefore justifying lax safety regulation, is the same illogical and irresponsible thinking that set the stage for the BP disaster.

As the oil spill illustrates all too well, the more complex the technology, the greater the chance of catastrophic failure. Because of human error, technological failure or unforeseen events, it is virtually guaranteed that there will be other major disasters. The catastrophic effects of these on human health and our environment will continue for generations. As we have seen at Chernobyl and are seeing in the Gulf, our environment cannot sustain this continued onslaught.

We must drastically change the direction of our energy future. This is possible through the use of clean, renewable and sustainable technologies. When it comes to disasters caused by technologies such as deep offshore drilling or nuclear power, even one accident is one too many.
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Patterson is president of Physicians for Social Responsibility and a professor in the Department of Family Medicine at the University of Wisconsin School of Medicine and Public Health in Madison.
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Copyright (C) 2010 by American Forum. 7/10


TEXAS LONE STAR FORUM
By Don Baylor

Commercial innovation remains at the heart of the American tradition. However, innovation should be used to increase American wealth, not destroy it.

Leading up to the financial crisis, gaps in our financial monitoring system unleashed a financial virus still worming through the American economy. Products like overdraft fees, payday loans, and “pick-a-payment” mortgages all damaged our economy. The resulting system crash led to historic levels of foreclosures, lost wealth and chronic unemployment.

As new, complex financial products enter the marketplace, our regulatory firewall must be able to detect toxic financial products and safeguard Americans from financial harm. We need a national solution that honors state authority in order to protect American wealth from future meltdowns. The proposed Consumer Financial Protection Agency (CFPA) would help avoid repeat financial disaster by ensuring that all “off-the shelf” financial products can be monitored by one inspector with a clear code book.

The financial crisis taught us several lessons. First, banking regulators are ill-equipped to be consumer watchdogs. Second, when financial institutions can shop around for the “regulator of least resistance,” Americans get the short end of the stick. Finally, economic crises transcend state lines, so we need a national standard for financial product safety and a strong watchdog entirely focused on consumer protection.

These lessons indicate the need for a better firewall to protect us from financial “malware.” Our federal regulatory structure stretches across seven agencies attempting to enforce 20 statutes. As a result, no one agency is accountable for financial product safety, and many consumers do not know where to file an effective complaint about financial services.

We should consolidate and strengthen consumer protection to prevent another viral outbreak from taking down the system and destroying American wealth. The CFPA would make this regulatory structure more efficient and effective by centralizing these functions and personnel.

We need a robust, independent body to protect consumers from unfair credit, payment and debt management products, no matter what company or bank sells them and no matter what agency may serve as the regulator. Financial institutions offering similar products should be held to the same standard for consumer safety.

The CFPA would examine commonplace checking account product “services” such as overdraft loans or fees. Most banks automatically include this “coverage” without consumer consent. Many financial institutions charge at least $35 when the customer overdraws by as little as $1, setting up a potential cascade of very expensive short-term loans. The FDIC calculates that the typical overdraft loan equates to a 3,520 percent annual interest rate. The customer is not typically given a choice to decline the fees at the time of transaction. Last year, banks made nearly $37 billion on overdraft charges, about $300 for each banking customer in the U.S.

This unfair “loan without consent” reduces consumer confidence and drives existing customers away from banks into higher cost, fringe financial markets that drain wealth. CFPA could require that issuers notify debit card users that a transaction would overdraft their account.

The proposed CFPA could also help increase the national savings rate. Over the past few decades, the national savings rate steadily declined to a point at or below zero, as recently as 2006. With the economic crisis, savings rebounded somewhat, but are still far below healthy household saving levels. The CFPA could make savings easier and more automatic so that more Americans build financial cushions and retirement security, leaving them more resilient when the economy dips. This agency would use a research-based approach to understand how Americans approach saving, investing and borrowing.

In Texas, we know a little bit about toxic financial products. With the lowest average credit scores, lax financial regulation and runaway payday loans, Texans are especially vulnerable to dangerous products that strip wealth from households and communities. Under the CFPA, many high-cost, “rinse and repeat” products like payday and automobile title loans—offered by credit services organizations—might receive increased scrutiny. That would be a welcome innovation.

Properly implemented, the CFPA will spur innovation through new asset-building products that promote a “race-to-the-top” challenge and lead to better consumer choice. The CFPA’s goal would be to ensure safety and transparency of financial products, and to detect and quarantine products designed to destroy wealth.

In other words, CFPA will help prevent another collapse of our economy due to hazardous financial products.
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Baylor is senior policy analyst at the Center for Public Policy Priorities, an Austin think tank.
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Copyright (C) 2009 by the Texas Lone Star Forum. 11/09