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National Association of Regulatory Utility Commissioners v. United States Department of Energy

June 1, 2012


On Petitions for Review of Final Actions of the Department of Energy

The opinion of the court was delivered by: Silberman, Senior Circuit Judge

Argued April 20, 2012

Before: SENTELLE, Chief Judge, BROWN, Circuit Judge, and SILBERMAN, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge SILBERMAN.

Petitioners, nuclear power plant owners and operators, ask us to review a November 2010 determination by the Secretary of Energy finding that there was no basis for suspending, or otherwise adjusting, annual fees collected from them totaling some $750 million a year. Those fees are intended to cover the full costs of the government's long-term disposal of civilian nuclear waste.

But the Administration has discontinued development of Yucca Mountain, which was the designated location for the disposal of the waste. According to petitioners, the Secretary's 2010 determination, made subsequent to that decision, failed to examine (or even mention) the anticipated costs of disposal, or compare them to expected revenues from the fees (and associated interest and investment income). The Secretary's determination is claimed, thereby, to have violated the 1982 Nuclear Waste Policy Act ("the Act"), which obliges the Secretary to annually "evaluate whether collection of the fee will provide sufficient revenues" to offset program costs. In the absence of such evaluation, it is argued, the determination was invalid, and because no future program has replaced Yucca Mountain, petitioners contend that the Secretary is obliged to suspend the fees and report his action to Congress.

We conclude that the Secretary has failed to perform a valid evaluation, as he is obliged to do under the Act, but we do not think it appropriate to order the suspension of the fee at this time. Instead, we remand to the Secretary with directions to comply with the statute within six months. The panel will retain jurisdiction over this case so that any further review would be expedited.*fn1


The Act made the federal government responsible for permanently disposing of spent nuclear fuel and high-level radioactive waste produced by civilian nuclear power generation and defense activities. It provided that the government would do so through geologic disposal, which involves constructing a repository deep underground within a rock formation where the waste would be placed, permanently stored, and isolated from human contact. The Department of Energy was required to begin disposal by January 31, 1998. Since 1987, when the Act was amended, the Department has been directed to consider the suitability of one site only - Yucca Mountain, Nevada - for the repository.*fn2

Congress's best-laid plans have been frustrated. In 1995, the Department announced that it would be unable to meet the 1998 deadline; the earliest conceivable date for disposal was 2010.*fn3 In early 2009, the Department said that construction at Yucca Mountain would not begin until at least 2011, and that transportation and disposal of waste would not occur until 2020. Only a few months later the new Administration announced, in an abrupt volte face, that Yucca Mountain "was not a workable option." Instead, it established a Blue Ribbon Commission to reconsider "all alternatives" for permanently disposing of nuclear waste. But the Commission's 2011 Draft Report conceded that geologic disposal was really the only viable option. The Commissioners, however, were directed not to consider any particular site - whether Yucca Mountain or elsewhere. They estimated that selection and evaluation of a site would take another 15 to 20 years (the cliche "kick the can down the road" seems inadequate). Nevertheless, the Department has reaffirmed its obligation to permanently (if eventually) dispose of civilian nuclear waste. In the meantime, civilian nuclear plant operators and owners have stored their waste themselves, usually on-site.*fn4

The Act also made the generators of nuclear waste responsible for the full costs of the disposal of civilian nuclear waste. The owners and operators were to pay an initial fee to cover the costs of disposing of pre-1983 waste, as well as an annual fee of 1.0 mil (one-tenth of a cent) per kilowatt-hour of nuclear-generated electricity to cover ongoing waste generation. These funds are deposited in the government-managed Nuclear Waste Fund, where they earn interest and investment income. According to budget accounting rules, these funds also count against the federal government's budget deficit ("aye, there's the rub"). When this suit was filed in 2010, owners and operators had paid the fees for nearly three decades (about $750 million a year on top of the initial charge). With investment income, the Fund's balance exceeded $24 billion, and by the end of this year, it will exceed $28 billion.

Although the Act mandates that the Fund cover the lifetime costs of the civilian disposal program - estimated to last over a hundred years - any excess funds must be returned to the payors. Congress anticipated that costs would be uncertain and could well change as the program progressed, so the Secretary was obliged to "annually review the amount of the fees to evaluate whether collection of the fee will provide sufficient revenues to offset the costs as defined in subsection (d) herein." Those costs include the identification, development, construction, operation, and maintenance of repositories for the waste, as well as associated facilities; research and development; and administration. "[I]n the event the Secretary determines that either insufficient or excess revenues are being collected, in order to recover the costs incurred by the Federal Government . . . the Secretary shall propose an adjustment to the fee to insure full cost recovery" and submit it to Congress. The Act - which pre-dated INS v. Chadha, 462 U.S. 919 (1983) - provides that the proposed adjustment shall become effective unless, within 90 days of submission, either house of Congress adopts a resolution disapproving it.*fn5

The Secretary has never proposed an adjustment to the fee. Since at least 1990, the Department's policy has been "to conduct a thorough analysis annually and to recommend a change in the fee when there is a compelling case for the change." Between 1983 and 2008, fee adequacy assessments identified the expected costs of geologic disposal and compared them to projected revenues from the fee (which were based on projections of future nuclear power generation and interest accumulation).*fn6 Fee adequacy was calculated by creating models that adjusted for different key variables - for instance inflation, interest rates, future nuclear generation, program timing and total life cycle estimates - and forecasting whether the Fund would likely have a positive balance by the end of the program.

Between 1983 and 1987, the governing assumption was that two repositories would be used, but the Department had to account for a number of uncertainties that dramatically affected costs and revenues. It was unsure what type of rock - salt, tuff, basalt, or crystalline rock - would host the waste, or where the repositories would be located, and projected operational time frames varied widely. Fee adequacy reports dealt with these uncertainties by using a range of bounding cases; while there was tremendous variability among the different models, the Department nonetheless generated rough estimates of the expected margins of revenues over costs. The Secretary concluded that no fee adjustment was warranted during this period because ...

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