Federal Court Suspends Nuclear Waste Fee Payments

So long as the federal government has no viable alternative to Yucca Mountain as a repository for nuclear waste, nuclear power ratepayers should not be charged an annual fee to cover the cost of that disposal, the U.S. Court of Appeals for the D.C. Circuit ruled on Tuesday.

Finding for petitioners that include the National Association of Regulatory Utility Commissioners (NARUC) and industry group the Nuclear Energy Institute (NEI), the court ruled in its seven-page decision that because the Energy Secretary is “apparently unable” to conduct a legally adequate fee assessment, the Department of Energy (DOE) should call on Congress to change the fee to zero “until such a time as either the Secretary chooses to comply with the [Nuclear Waste Policy Act (NWPA)] as it is currently written, or until Congress enacts an alternative waste management plan.”

The decision puts to rest a legal dispute initiated by NARUC and the NEI in 2010, when they sued the DOE for the collection of a “legally defective” fee for nuclear waste disposal they say totaled nearly $750 million a year since 1983, even though development of the Yucca Mountain permanent spent fuel waste facility had been discontinued.

The D.C. Circuit in June 2012 ruled in NARUC and NEI v. DOE that the fee was unlawful, but it ordered the DOE to conduct a reevaluation of the Nuclear Waste Fund and report back to the court within six months. The DOE responded at the start of this year that the fees were necessary because the administration and Congress intended to pursue a new nuclear waste strategy, and that the agency itself had unveiled a strategy for the management and disposal of spent nuclear waste.

“Give Them the Old Razzle-Dazzle”

But in an often sardonic opinion filed by Senior Circuit Judge Lawrence Silberman on Tuesday, the court ruled, “On remand the Department has again declined to reach the statutorily required determination. Instead, we are presented with an opinion of the Secretary that sets forth an enormous range of possible costs.”

The court continued, “According to the Secretary, the final balance of the fund to be used to pay the costs of disposal could be somewhere between a $2 trillion deficit and a $4.9 trillion surplus. This range is so large as to be absolutely useless as an analytical technique to be employed to determine—as the Secretary is obligated to do—the adequacy of the annual fees paid by petitioners, which would appear to be its purpose. (This presentation reminds us of the lawyer’s song in the musical, ‘Chicago,’ ‘Give them the old razzle dazzle.’)”

A Costly Investment for a Hole in the Nevada Desert?

The 1982-passed NWPA established a broad policy framework for the permanent disposal of used nuclear fuel and high-level radioactive waste derived from nuclear power generation. The NWPA authorized the government to enter into contracts with reactor operators—the generators and current owners of used nuclear fuel—providing that, in exchange for the payment of fees, the government would assume responsibility for permanent disposal. The fees were to ensure that the reactor owners and power generators pay the full cost of the disposal of their used nuclear fuel and high-level radioactive waste.

More than 68,000 metric tons heavy metal (MTHM) of used nuclear fuel are stored at 72 commercial power plants around the country, with about 2,000 MTHM added to that amount every year, the DOE says. Because it failed to meet contractual obligations with nuclear generators to begin accepting used nuclear fuel by 1998, the federal government is facing other lawsuits from contract holders for damages to cover the costs of onsite spent nuclear fuel storage.

A November 2012–released independent audit of the DOE’s Nuclear Waste Fund balance sheet by consulting group KPMG found that as of Sept. 30, 2012, the Nuclear Waste Fund had a market value of $38.7 billion (compared to $35.1 billion at the end of 2011). Utilities paid $3.26 million to the fund in 2012.

Consumers “have upheld their end of the deal, but unfortunately all they have to show for their investment is a hole in the Nevada desert,” NARUC Executive Director Charles Gray said in a statement on Tuesday. “Putting aside the political dispute about the proposed Yucca Mountain facility, nuclear-power ratepayers should not be charged for a program the federal government has closed down. Thankfully, because of [the federal court’s] actions, nuclear-power consumers will no longer have to pay for the government’s mishandling of this program.”

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)