By RICHARD NEBELI would like to take issue with Ed Brinbaum’s recent letter (link) on government regulation. Government (over)regulation can be a serious problem. Let me give you some examples.
When I was an undergraduate student in the early 1970s, I worked a couple of summers for a civil engineering firm. One of our clients was a small utility that was building a coal-fired power plant. The utility load was too small for nuclear power and natural gas was then too expensive to be practical, so coal was really the only option they had.
This was when the EPA was new, and the utility was being required to put pollution control equipment on their new plant. I had an occasion to talk with the site manager, and he was not a happy camper. They were being required to use a combination of electrostatic precipitators and a lime slurry process to clean up the flue gas. This was going to take 10 percent of the power and half of his staff to operate. On top of that, the lime slurry process was a new technology and it only had a proven capacity factor of 25 percent (i.e. 75 percent of the time it didn’t work). Furthermore, they had no idea what they were going to do with the slurry when they were done with it, but the EPA hadn’t regulated that yet.
In short, they were building a plant that was a turkey and they knew it.
This technology clearly wasn’t ready for prime time yet. However, they needed the power and they didn’t have any other options.
So what happened? In 2000 a pond in Martin County Kentucky containing this type of coal slurry was breached. The resulting spill was 30 times the size of the Exxon Valdez oil spill and it contaminated the water supply for 27,000 people. It cost $47,000,000 to clean it up. Then in 2008 a spill that was even 3 times bigger occurred at a TVA plant in Roane county Tennessee. And all this is from a technology that was prematurely mandated into existence by the EPA.
My second example is the cell phone. This story comes from one of our consultants at Tibbar Plasma Technologies who used to be the executive vice president for research at Motorola. As such, he worked directly for Bob Galvin, the renowned CEO of Motorola.
In the 1980s Motorola, which invented the cell phone, was trying to bring this new product to the marketplace. However, they were having trouble getting bandwidth from the FCC. It just so happened that Bob Galvin was due to receive an award from President Reagan at the White House, so Mr. Galvin dropped a cell phone into his pocket and took it with him.
After the award ceremony, he went up to the President and handed him the cell phone saying “Mr. President, I would like you to be the first person to use one of these”. He told him to dial a phone number, and much to Mr. Reagan’s delight he made a phone call on the cell phone.
Now that was really cool! Mr. Reagan asked Mr. Galvin when this technology might be available to the public. Mr. Galvin explained to President Reagan that Motorola was having problems with the FCC, and if he would like to call the chairman of the FCC, here was his phone number. So Reagan called him. The conversation went something like this: “This is President Reagan. I have Bob Galvin here with me, and he tells me you are impeding progress…”
Motorola got their bandwidth and now everyone owns a cell phone. Regulation almost killed that technology before it got started.
So, can regulation kill new technologies? My final example also comes from our consultant, but it doesn’t have such a positive outcome. After he retired from Motorola, Bob Galvin took an interest in advanced energy technologies. Our consultant was one of the people who evaluated technologies for him. One technology that he recommended for investment was pebble bed nuclear reactors. These are simple, passively safe fission systems that cannot melt down. He told Mr. Galvin that this would require about a $1,000,000,000 investment.
In the course of their due diligence, they set up a meeting with the NRC to see what it would take to license this technology. They were told that the NRC was really busy and it would take at least 12 years to get it licensed.
That was the end of the project.
Finally, in his letter, Mr. Birnbaum also stated that “I don’t know anyone of any political persuasion who likes regulating business or industry for the sake of regulation”. I think there are a lot of people like that.
First of all, regulators have as much of a vested monetary interest in making regulations as businesses do in avoiding them. Regulations are how they make their money. If they want to build their little governmental empire, they are constantly looking for ways to expand their regulatory domain. The EPA and their carbon dioxide rules are a good example of that. Secondly, a lot of people just like to tell other people what they can and cannot do. Maybe it’s a power thing or an ego thing, but it’s definitely there.
