Why Is the Nuclear Regulatory Commission Undervaluing American Lives?

If the NRC's cost-benefit analyses were more in line with other federal agencies' calculations, electric utilities would have to make their nuclear plants safer.
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How much is your life worth?

That's a key, but controversial, question for the federal government. Although it might seem distasteful to put a monetary value on a life, when federal agencies consider adopting new health and safety rules -- or strengthening old ones -- they often do just that and weigh the proposed rule's costs against its lifesaving benefits. The lower value they give to a life, the easier it is for them to reject a proposed safety measure as too costly.

Agencies determine what's called the "value of a statistical life" (VSL) based on a variety of economic and labor market studies that indicate what people are willing to pay to avoid certain risks or how much more employers pay workers to do a riskier job. For the most part, VSLs across agencies are in the same ballpark. For example, when estimating the benefits of a highway safety standard, the Department of Transportation calculates the value of a human life at $9.1 million. When the Environmental Protection Agency proposed strengthening the National Ambient Air Quality Standards for particulate matter last year, it pegged the VSL at $9.6 million. And when the Occupational Safety and Health Administration finalized its hazard communication rule in 2012, it used a value of $8.7 million.

Virtually all agencies periodically increase the VSL to reflect inflation and other factors. I say "virtually" all, because at least one agency -- the one responsible for ensuring the safety of commercial nuclear power plants -- is way behind the times. The Nuclear Regulatory Commission (NRC) has been using the same value -- $3 million -- for the past two decades. That's two to three times lower than other agencies' calculations.

"The $3 million amount used by the NRC is an outrageously low figure that is way out of line with other government agency practices and the economics literature," W. Kip Viscusi, the economist credited with developing the VSL concept, told me in a recent email. "I first got the government to use these numbers in 1982.... My estimate of VSL at that time was $3 million, which was in 1982 dollars.

"Inflation and the fact that society has gotten more affluent over time has boosted the VSL substantially over the past 33 years," added Viscusi, now a professor at Vanderbilt University. "My recent estimates using new Census of Fatal Occupational Injury data yield a VSL of around $9 million."

NRC Shortchanges Plant Safety

By maintaining a VSL more appropriate for 1982 than today, the NRC has been allowing nuclear plant owners to avoid making safety improvements that would better protect their workforce and the people who live within 50 miles of the plant.

"If the NRC increased that value to what other federal agencies use -- and made other long-overdue changes to the way it calculates the benefits of regulations -- it would have a major impact on nuclear plant license renewals and new reactor approvals," said Edwin Lyman, a physicist with the Union of Concerned Scientists. "Plant owners would have to add safety features that the NRC now considers to be too expensive because the agency lowballs the value of the lives that would be saved."

As it turns out, the NRC has been reconsidering its VSL formulation since August 2012, and the agency's staff is expected to soon recommend tripling the VSL to $9 million and tying it to the inflation rate going forward. Once that recommendation is officially proposed, which could happen any day now, the agency will open up a public comment period.

Undoubtedly, the nuclear power industry will object. It routinely complains about costly rules it finds burdensome.

"Resources are being spent complying with requirements that have little or no safety benefit," Anthony Pietrangelo, a senior vice president at the industry's premier trade association, the Nuclear Energy Institute, told Congress last December. "If the NRC more accurately estimated the cost of its regulatory requirements it would find that many of its requirements do not pass a simple cost-benefit test."

In fact, if the NRC more accurately estimated the cost and benefits of its regulatory requirements, plant owners might have to spend significantly more to ensure their facilities are safe. That would depend on reforming other NRC policies that favor the industry's bottom line at the expense of public and workplace safety, but it would be a good start.

Elliott Negin is a senior writer with the Union of Concerned Scientists.

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