On August 25, 2023, the U.S. Court of Appeals for the Fifth Circuit vacated the U.S. Nuclear Regulatory Commission (NRC) license granted to Interim Storage Partners, LLC (ISP) for its temporary spent nuclear fuel storage facility in Texas—known as a Consolidated Interim Storage Facility (CISF)—asserting that the NRC did not have the requisite statutory authority under federal law to issue licenses for private parties to store spent nuclear fuel away from the reactor site.

Under the Atomic Energy Act (AEA), supported by decades of regulatory precedent and case law, the NRC has wide ranging authority to license a broad array of facilities that use or possess radioactive material, including spent fuel. This authority has been recognized to extend to CISF licensing, as affirmed by the D.C. Circuit in Bullcreek v. Nuclear Regulatory Commission, 359 F.3d 536 (D.C. Cir. 2004) and the Tenth Circuit in Skull Valley Band of Goshute Indians v. Nielson, 376 F.3d 1223 (10th Cir. 2004), when the NRC licensed an away-from-reactor CISF in the early 2000s.

The Fifth Circuit decision creates a circuit split with the D.C. Circuit in Bullcreek and the Tenth Circuit in Skull Valley Band, and this may prompt the U.S. Supreme Court to take this case for review, among other considerations in the case. It remains to be seen whether the NRC will petition the Supreme Court to review the decision and if so, whether the Court would take the case under review—but unless and until the Fifth Circuit decision is overturned, it remains binding authority in the Fifth Circuit and could influence other courts. The NRC could also request that the Fifth Circuit review the case en banc (i.e. with all active Fifth Circuit judges presiding), but these requests are not granted often. Pursuant to Federal Rule of Appellate Procedure 35, this requires a majority of active judges on the Fifth Circuit voting in favor of en banc review, and will not ordinarily be ordered unless “necessary to secure or maintain uniformity of the court's decisions” or if “the proceeding involves a question of exceptional importance.”

As an immediate consideration, the NRC recently issued a similar CISF license to Holtec International, which would be located very close to the ISP project—about an hour drive away—but the distance between the two puts the Holtec project just across the Texas state line in New Mexico, which resides in the Tenth Circuit. The Holtec facility’s NRC license was challenged by New Mexico in State of New Mexico v. NRC, but the U.S. Court of Appeals for the Tenth Circuit granted the NRC’s motion to dismiss the New Mexico petition for lack of jurisdiction, finding that the Nuclear Waste Policy Act (NWPA) invoked by New Mexico “governs the establishment of a federal repository for permanent storage—not temporary storage by private parties like Interim Storage.”

The Fifth Circuit decision could also have more wide-ranging impacts for not just away-from-reactor spent fuel storage facilities, but any new type of license issued by the NRC, particularly if adopted by other circuits—as it seems to contemplate that if a facility is not expressly set forth in the AEA as being within the NRC’s licensing authority, the NRC does not have the ability to license that facility. However, with the exception of nuclear reactors, most nuclear facilities are not expressly set forth in the Atomic Energy Act and with good reason—the AEA gives the NRC a framework to license a broad array of technologies and uses as they emerge, and radioactive materials are used in such wide-ranging applications as smoke detectors and exit signs to critical, life-saving medical isotopes. In fact, the NRC has issued tens of thousands of licenses under its materials licensing authority, including licenses for fuel fabrication facilities, uranium enrichment facilities, dozens of spent fuel storage facilities, medical isotope production, medical devices, and construction equipment, among a range of other uses.

In the past, when the NRC has encountered a circuit court decision that does not align with the agency’s view or case law in other jurisdictions, it has limited that decision to only the territory covered by the deciding circuit court. For example, the NRC considers the Ninth Circuit’s decision on whether NEPA requires an assessment of potential terrorism to be binding only in the Ninth Circuit. See San Luis Obispo Mothers for Peace v. NRC, 449 F.3d 1016 (9th Cir. 2006). The NRC here similarly has the ability to limit the applicability of the Fifth Circuit’s decision to just the Fifth Circuit. In any event, the Fifth Circuit decision throws a wrench in CISF facility licensing, and with continued political paralysis regarding a permanent waste disposal solution in Congress, and the decommissioning of older nuclear power plants with no place to send their spent fuel, these types of consolidated interim storage projects have become important for the safe storage of spent nuclear fuel.

Brief History

Orano USA, the U.S. subsidiary of the French global nuclear fuel cycle company, and Waste Control Specialists (WCS) formed a joint venture, ISP, to construct and operate a CISF for spent nuclear fuel at an existing WCS site in Andrews County, Texas. In September 2021, the NRC issued a 40-year license to ISP to “receive, possess, store, and transfer” up to 5,000 metric tons of spent fuel and 231.3 metric tons of Greater than Class C waste at the CISF site. ISP had plans to store up to 40,000 metric tons of spent fuel over eight phases of the project.

By way of background, a CISF is a facility where nuclear waste is stored in casks on a concrete storage pad until such time as a permanent repository opens. There are dozens of similar facilities across the United States—roughly 80—that are located at reactor sites or at decommissioned nuclear power plant sites, where they are known as “Independent Spent Fuel Storage Installations”—or ISFSIs. A CISF is a type of ISFSI that is located away from a reactor site—in the ISP case, it would be located at the site of WCS’s low-level radioactive waste disposal facility. This is not the first away-from-reactor CISF licensed by the NRC. In fact, this type of NRC license is not even new. There are other ISFSIs in Texas, and other CISFs that have been licensed by the NRC—for example, the Holtec facility in New Mexico that received its NRC license in May 2023, and the Private Fuel Storage facility in Utah, which was licensed by the NRC in 2006 and resulted in the D.C. Circuit and Tenth Circuit cases supporting the NRC’s licensing authority under the Atomic Energy Act. So while the ISP CISF is new to Texas, it is not the only type of facility with this kind of license, and it is one of 80+ ISFSIs nationwide that are licensed by the NRC.

The ISP CISF project has survived multiple legal challenges, including earlier this year when the U.S. Court of Appeals for the D.C. Circuit rejected a suit brought by environmental groups that challenged the NRC’s license for the CISF, asserting deficiencies in the National Environmental Policy Act (NEPA) review conducted by the NRC.

In the case at issue, State of Texas v. NRC, Texas Governor Greg Abbott as well as state officials and west Texas oil and gas interests that opposed the facility petitioned the court to review the NRC’s September 13, 2021 order granting the license to the CISF.

Court Finds NRC Lacks Requisite Licensing Authority

Here, a three-judge panel of the Fifth Circuit found that although the Atomic Energy Act provides the NRC with authority over the construction and operation of nuclear power plants, as well as special nuclear material, source material, and byproduct material, the NRC does not have the specific authority to license storage facilities for spent nuclear fuel. The Court lists the enumerated purposes for which a license can be issued (e.g. for research, medical uses, industrial uses, etc.), and determines that because storage of spent fuel is not enumerated, then the NRC has no jurisdiction over it pursuant to the Atomic Energy Act. The court then turns to the Nuclear Waste Policy Act—or NWPA—to further conclude that the NRC does not have the authority to license the CISF.

Judge James Ho, writing for the Court, states that the NWPA provides a “comprehensive statutory scheme for dealing with nuclear waste generated from commercial nuclear power generation,” foreclosing the NRC’s claimed authority. Although the Court concedes that under the NWPA the Department of Energy (DOE) was tasked with establishing a permanent storage repository (e.g., Yucca Mountain) while the NRC has the licensing authority, the Court chooses to focus on the text specifying that this authority is limited to onsite storage of spent fuel “at the site” of the reactor. See 42 USC § 10152. The Court states that there is in turn no authority for the NRC to issue a license for a private entity to store spent fuel away from a reactor site, such as at the ISP CISF in Texas.

Notably, as stated above, the Court dismissed prior findings by circuit courts, including the D.C. Circuit’s holding in Bullcreek v. NRC, which held that the NWPA did not “repeal or supersede” the NRC’s authority under the AEA “to license private away-from-reactor storage facilities.” In that case, the State of Utah and others challenged the NRC's jurisdiction to grant a private license to develop and operate a private away-from-reactor storage facility on the grounds that § 10155(h) of the NWPA barred such facilities. The NRC cited the D.C. Circuit’s language in Bullcreek for its brief in State of Texas v. NRC: “’[I]t has long been recognized that the AEA confers on the NRC authority to license and regulate the storage and disposal of [spent] fuel.’” As additional precedent, the Tenth Circuit in Skull Valley Band struck down Utah state laws passed to regulate the storage and transportation of spent nuclear fuel, determining that they conflict with federal law and federal law preempts state law on matters of nuclear safety. The Tenth Circuit stated that the AEA and corresponding NRC regulations “establish requirements for the licensing of spent nuclear fuel storage facilities both at and away from the reactor site,” and that it was persuaded by the D.C. Circuit’s analysis in Bullcreek.

Yet the Fifth Circuit panel quickly dismisses this sister circuit precedent, stating that the D.C. Circuit in Bullcreek failed to engage in the proper “textual analysis of the Atomic Energy Act,” and the Tenth Circuit in Skull Valley Band “assumes the Commission’s authority without analyzing the statute.”

West Virginia v. EPA

The Fifth Circuit asserts that the AEA and NWPA, when read together, are “unambiguous” on the issue. The Court further states, however, that “even if the statutes were ambiguous, the [NRC]’s interpretation wouldn’t be entitled to deference,” citing last year’s Supreme Court decision West Virginia v. Environmental Protection Agency (EPA), which we previously wrote about after it was released, noting the impact it may have on this proceeding.

In West Virginia v. EPA, the Court relied on the "major questions" doctrine, which was invoked by a majority of justices for the first time, to overturn a major EPA rulemaking. As the Fifth Circuit decision states, the “major questions” doctrine provides that courts should not defer to agencies on matters of "vast economic or political significance" unless the U.S. Congress has explicitly given the agencies the authority to act in those situations. Furthermore, the Court stated that the doctrine “refers to an identifiable body of law that has developed over a series of significant cases all addressing a particular and recurring problem: agencies asserting highly consequential power beyond what Congress could reasonably be understood to have granted.”

In the Fifth Circuit decision, the Court notes that the issue of nuclear waste disposal constitutes a major question, so the Court would not have afforded the NRC deference on the issue—if reaching this decision had been necessary.

Standing and the Hobbs Act

The Fifth Circuit decision also rejected long-standing precedent and case law pertaining to standing to challenge an NRC licensing action. One form of standing that petitioners need to demonstrate to challenge a final NRC order in court is standing under the Hobbs Act, under which petitioners can demonstrate standing through having participated in the prior agency proceeding on the licensing action at issue. This has been interpreted to mean that the petitioner would have standing under the Hobbs Act if they had been an intervenor in a proceeding before the NRC pursuant to its regulations at 10 CFR 2.309—which the State of Texas and other petitioner in this case were not, and therefore the NRC argued they did not have standing. In its decision, the Fifth Circuit finds to the contrary, stating that “the plain text of the Hobbs Act requires only that a petitioner have participated—in some way—in the agency proceedings, which Texas did through comments and Fasken did by seeking intervention and filing contentions.” The mere fact that Texas commented on the issuance of the license and Fasken Land and Minerals, Ltd. (Fasken) attempted to intervene but was denied was sufficient for the Court to find standing for both under the Hobbs Act.

The Court acknowledges precedent from the D.C. Circuit and Tenth Circuit that require heightened participation dependent on the formality of the proceeding. But the Fifth Circuit dismisses what it terms the “extra-textual gloss” read into the Hobbs Act by its sister circuits, and then states that it ultimately does not need to resolve the issue because of the “ultra vires exception” recognized by the Fifth Circuit that allows a person to appeal an agency action even if not a party to the original agency proceeding, “(1) where ‘the agency action is attacked as exceeding [its] power’ and (2) where the person ‘challenges the constitutionality of the statute conferring authority on the agency.’” Although Texas only filed comments in the agency proceedings and Fasken only sought intervention and filed contentions in the proceeding, the Fifth Circuit states that the merits of the arguments made by Texas and Fasken permits the Fifth Circuit’s ultra vires exception to apply and grant them Hobbs Act standing.

Next Steps

The ball is now in the NRC’s court to determine next steps. Notably, the nuclear industry now also finds itself at the forefront of a challenge to long-standing NRC precedent and case law, the Supreme Court’s adoption of a new legal doctrine, the continued debate over nuclear waste disposal, and a debate on constitutional separation of powers—each of which can have potentially dramatic implications to the NRC and agencies more broadly. Time will tell how these issues may be resolved.