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Spent Nuclear Fuel and the U.S. Response to Fukushima

By Kimbery Reome and Krista Haley – November 21, 2011

The Japanese tsunami and subsequent events at the Fukushima Dai-ichi nuclear power plant have caused much interest and concern over nuclear power in the United States. Specific focus has been given to the safety of spent nuclear fuel pools, which gained much attention at Fukushima.

Spent nuclear fuel in the United States has a long history of political, regulatory, and legal challenges. A snapshot of the issue at present shows over $30 billion dollars paid by utilities to the U.S. government, no performance by the Department of Energy (DOE) in creating a promised storage facility, more than 13 years of litigation, 76 lawsuits, $170 million spent by the government to defend the lawsuits, and $16 billion in potential liability. How has the industry responded to Fukushima while still addressing these challenges?

Spent Nuclear Fuel Litigation
Nuclear utilities have been litigating with DOE regarding this issue for over 13 years. To date, utilities have filed 76 cases in the U.S. Court of Federal Claims, seeking damages resulting from the need to temporarily store increasing amounts of spent fuel at their plant sites.

Under the terms of the Nuclear Waste Policy Act of 1982, nuclear utilities entered into mandatory contracts with DOE under which the utilities pay the federal government one mill (or one tenth of a cent) for every kilowatt hour of nuclear-generated electricity sold to their customers. In return, DOE assumed responsibility for the development, construction, and maintenance of a facility that would be ready to accept spent nuclear fuel from utilities beginning no later than January 1998.

DOE has not accepted any spent nuclear fuel as required under the contracts. However, nuclear utilities have provided DOE with over $18 billion to date in direct payments, which, including interest, adds up to over $30 billion recorded to the Nuclear Waste Fund. Nonetheless, nuclear utilities continue to pay over $750 million in fees every year to DOE.

With the contracts in place, nuclear utilities did not anticipate having to add storage capacity for spent nuclear fuel generated after 1998. Instead, due to DOE’s nonperformance, utilities are collectively incurring billions of dollars in added costs for the installation and expansion of highly technical onsite storage technologies—primarily by increasing the capacity of their spent fuel pools through storing spent fuel in casks at dry fuel storage facilities at their plants. A legal battle to recover these added costs has been underway since DOE first missed its 1998 contractual deadline.

Accordingly, of the 76 suits filed to date, 23 cases are pending at the claims court, 17 are pending appeal, 19 have settled, 7 were withdrawn, and 10 have reached final judgment. The Department of Justice (DOJ) reported in February 2011 that the government’s liability for judgments (most of which are not final because of appeals and remands) and settlements was over $2 billion, of which $956 million had been paid. (Since DOJ published this data in February 2011, more settlements and final court judgments occurred, resulting in now over $1.4 billion in total paid.) DOJ also reported at that time that it had spent nearly $170 million defending DOE in these lawsuits. DOE has estimated that the total liabilities could be over $16 billion.

Yucca Mountain and Blue Ribbon Commission
Since 1987, DOE planned to handle spent nuclear fuel by permanently disposing of it at Yucca Mountain, Nevada. DOE encountered myriad regulatory, political, and legal hurdles in its attempts to license and construct a repository, including numerous challenges by the State of Nevada. In March 2010, DOE moved to withdraw its Yucca Mountain license application from the Nuclear Regulatory Commission (NRC). In June 2010, NRC’s Atomic Safety and Licensing Board (ASLB) denied DOE’s motion to withdraw its application. More than a year later, the full NRC has yet to rule on this decision. In fact, NRC Chairman Gregory Jaczko has yet to schedule a formal meeting to register the votes the other commissioners have submitted. The U.S. House Committee on Science, Space, and Technology called this the “slow-walking of the ASLB decision.” Majority Staff of the House Science, Space, and Technology Committee, “Yucca Mountain: The Administration’s Impact on U.S. Nuclear Waste Management Policy,” June 2011.

Many have challenged the legality of DOE’s motion and NRC’s subsequent failure to act on DOE’s motion. Several states, municipalities, individuals, and industry groups filed suits contesting DOE’s ability to withdraw its application. The D.C. Circuit dismissed these petitions in July 2011, finding that the issues were not ripe for judicial determination until NRC makes its final decision. In re Aiken County, 645 F.3d 428 (D.C. Cir. 2011). Later in July 2011, many of the same parties filed a new suit against NRC for unreasonably delaying its decision on Yucca Mountain. In re Aiken County, D.C. Cir. Case 11-1271.

Additionally, industry groups and nuclear utilities filed suit challenging DOE’s continuing annual collection of $750 million in nuclear waste fees given the current status of DOE’s spent fuel program. The D.C. Circuit dismissed this case in December 2010, finding that request also unripe. Nat’l Ass’n of Regulatory Util. Comm’rs v. DOE, 405 Fed.Appx. 507, 2010 WL 5108663 (C.A.D.C). The parties filed a new suit in the D.C. Circuit in March 2011, again challenging the nuclear waste fees, but this time challenging the secretary of energy’s annual fee assessment. This suit is pending. Nat’l Ass’n of Regulatory Util. Comm’rs v. DOE, D.C. Cir. Case 11-1066. 

Further, various government organizations have criticized DOE’s decision to terminate its only permanent storage facility for the nation’s spent fuel. The U.S. Government Accountability Office found in April 2011 that DOE’s decision to terminate Yucca Mountain was made “for policy reasons, not technical or safety reasons.” U.S. Government Accountability Office, “Commercial Nuclear Waste: Effects of a Termination of the Yucca Mountain Repository Program and Lessons Learned,” GAO-11-229, April 2011. The former acting director of DOE’s Office of Civilian Radioactive Waste Management (the organization in charge of Yucca Mountain before the program was cancelled) testified to Congress: “[B]esides its questioned legality, the Administration’s decision to terminate the Yucca Mountain Project is disturbing because Yucca Mountain has not failed any technical or regulatory test.” Christopher A. Kouts, Statement Before the Committee on Energy and Commerce, Subcommittee on the Environment and the Economy, U.S. House of Representatives, June 1, 2011.

At President Obama’s direction, in January 2010, Secretary of Energy Chu established a “Blue Ribbon Commission” to evaluate options and make recommendations for a long-term waste management solution. The Blue Ribbon Commission issued a draft report in July 2011, and its final findings are expected by January 2012. Blue Ribbon Commission on America’s Nuclear Future, Draft Report to the Secretary of Energy, July 29, 2011. The secretary specifically asked the Commission not to comment on the suitability of Yucca Mountain. Instead, the Commission recommended finding new locations for a permanent geologic repository, and also establishing several consolidated interim storage facilities. Under the interim storage facilities scenario, DOE would begin accepting spent fuel from utilities, thereby beginning to staunch the outflow of liability for damages because of its breach of contract.

The Blue Ribbon Commission also recommended changing the funding for the nuclear waste program. The Commission recommended removing the Nuclear Waste Fund from the congressional budget process so that the fees utilities (and their customers) pay can be used not for the general obligations of the U.S. government but specifically for its intended purpose—spent fuel disposal. The Commission also recommended establishing a new organization to manage the waste program. The new organization would be a federal corporation chartered by Congress (similar to the structure of Tennessee Valley Authority (TVA)) and also be outside of DOE. Further, the Commission called for the parties involved in the breach of contract cases at the Court of Federal Claims to “conclude these proceedings expeditiously,” either through settlement agreements, arbitration, or mediation.

While the government determines a final solution for spent nuclear fuel, the fuel remains stored at the reactor sites. In December 2010, NRC updated its waste confidence decision and rule, determining that spent nuclear fuel can be safely stored for at least 60 years (updated from 30 years in the 1990 rule) beyond the licensed life of a nuclear power plant, including license extensions. NRC officials still consider at-reactor storage to be an interim measure and state that a deep geologic repository is necessary for the ultimate disposal of spent nuclear fuel.

U.S. Response to Fukushima
On March 11, 2011, the Japanese earthquake caused a tsunami that is estimated to have exceeded 45 feet in height at the Fukushima Dai-ichi nuclear power plant. The tsunami resulted in extensive damage to site facilities and a loss of electrical power (i.e., station blackout) at five of the six units. Within a few days, cooling was lost to the fuel in three of the reactors. In addition, the operators were unable to restore normal cooling to the spent fuel pools at four of the units. U.S. Nuclear Regulatory Commission, “Recommendations for Enhancing Reactor Safety in the 21st Century: The Near-Term Task Force Review of Insights from the Fukushima Dai-ichi Accident,” July 12, 2011.

In response to Fukushima, NRC, nuclear power plant operators and nuclear industry groups immediately began investigating seismic and other safety issues at U.S. nuclear power plants. NRC established a task force to review NRC processes and regulations. The task force reported in July 2011 that “continued operation and continued licensing activities do not pose an imminent risk to public health and safety”; however, the task force recommended improvements to the current regulatory framework. The task force will perform a longer-term review in the following six months.

Since Fukushima, various anti-nuclear activists have raised concerns about whether such an event could happen in the United States. The Union of Concerned Scientists expressed concerns about station blackout and the need for onsite backup power. The union also called attention to the “vulnerability of spent fuel pools,” and for reducing the inventory of spent fuel in the pools by moving more spent fuel out of spent fuel pools and into dry cask storage. David Lochbaum, Union of Concerned Scientists, Statement Before the U.S. Senate Energy and Natural Resources Committee, March 29, 2011.

In May 2011, the Institute for Policy Studies called for the U.S. government to move all spent nuclear fuel older than five years to dry cask storage. The institute estimated this would cost between $3.5 billion and $7 billion. The institute recommended that this effort could be funded by increasing electricity rates to consumers, or from the $18 billion in the Nuclear Waste Fund. Robert Alvarez, “Spent Nuclear Fuel Pools in the U.S.: Reducing the Deadly Risks of Storage,” Institute for Policy Studies, May 2011. Of course, this recommendation ignores that the intention of the Nuclear Waste Fund is to provide permanent disposal and that removing the money from the fund for purposes of dry cask storage still leaves the United States without a permanent repository. Further, this recommendation ignores the Court of Appeals for the Eleventh Circuit’s finding that the Nuclear Waste Fund could not be used to pay for damages because of DOE’s delay (damages that include dry cask storage). Alabama Power Co. v. U.S. Department of Energy, 307 F.3d 1300 (11th Cir. 2002).

At least one utility has decided to take steps in this direction. Pacific Gas & Electric announced plans to reduce the amount of spent nuclear fuel in the spent fuel pools at Diablo Canyon in California by about 45 percent over the next five years by moving more fuel to dry storage.

In contrast to these views, the NRC task force stated that “the number of spent fuel assemblies in the spent fuel pool does not significantly affect the ability to cool the spent fuel in the pool.” The task force recommended enhancing spent fuel pool makeup water capability and instrumentation, but made no recommendations regarding emptying the spent fuel pools into dry cask storage.

New Nuclear and License Extensions
Prior to Fukushima, the nuclear industry had made some strides toward a “nuclear renaissance”—building new nuclear capacity in the United States. Since Fukushima, some utilities are pressing ahead, although others have altered their plans. Three utilities furthest along in building new nuclear capacity (Southern Nuclear, South Carolina Electric & Gas (SCE&G), and TVA) have continued work building or completing new nuclear plants. Southern Nuclear and SCE&G continue early construction activities at the Vogtle and V.C. Summer plants. NRC’s review of the Combined Operating License applications for those plants is expected to be complete by late 2011 to early 2012. In August 2011, NRC’s technical staff issued final safety evaluation reports for Vogtle and V.C. Summer, finding that the designs are safe and meet regulatory requirements.

TVA decided in 2007 to complete the unfinished Watts Bar Unit 2. Watts Bar Unit 2 is under construction and is expected to start up by 2013 (which is behind the prior schedule of 2012, partly due to post-Fukushima safety modifications). In August 2011, TVA decided to complete Bellefonte Unit 1, expected to be in commercial operation between 2018 and 2020. 

At least one utility has changed its new nuclear plans post-Fukushima. NRG Energy, with Toshiba, had planned to build two nuclear units at the South Texas Project. However, in April 2011, due to uncertainties of U.S. nuclear development post-Fukushima, NRG Energy decided to write off its $331 million investment and discontinue its involvement with the project. Toshiba currently plans to continue to pursue the project.

The U.S. nuclear industry is also extending the operating licenses of certain existing plants by an additional 20 years. After Fukushima, NRC granted license extensions for five existing nuclear plants. NRC is currently reviewing license extension applications for 13 nuclear units, and anticipating applications to be filed for an additional 19 units within the next six years.

Since Fukushima, anti-nuclear groups and states have pushed back on license extensions. For example, this spring, the Commonwealth of Massachusetts and intervener groups filed petitions to suspend the license renewal proceeding for Entergy’s Pilgrim plant until NRC completes its review of Fukushima. NRC has yet to issue a decision on Pilgrim’s license extension application.

As another example, NRC granted a license extension to Vermont Yankee 10 days after Fukushima, causing a backlash from various politicians and intervener groups. The Vermont state legislature is trying to shut down the plant in 2012. Entergy and the State of Vermont are currently in litigation regarding whether the state’s authority is preempted by the Atomic Energy Act, which grants NRC the right to make these decisions. Entergy Nuclear Vermont Yankee, LLC v. Shumlin, D. Vt. Case 11-0099. 

As the numerous disputes continue and the regulatory bodies determine how ultimately to address the impacts of Fukushima, electric utilities press forward with new nuclear units and license extensions, and the United States still struggles to find a solution for the disposal of the country’s spent nuclear fuel.

Keywords: Fukushima, nuclear fuel, Department of Energy, DOE, Fukushima Dai-ichi

Kimberly Reome is a vice president, and Krista Haley is a principal, in the Chicago office of Kenrich Group.

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