August 5, 2015 | Backgrounder on Energy and Environment
Commercial nuclear power provides 19 percent of America’s electricity and has safely generated affordable, reliable, and clean energy for decades. But nuclear technology and the industry have been held back by the utter dysfunction of a federally controlled, centrally planned program for nuclear waste management and disposal. A new bipartisan Senate bill—the Nuclear Waste Administration Act, intended to reform nuclear waste management—does nothing to fix the basic structure of America’s failed system. While the bill may meet some near-term government and industry interests, at best it delays a permanent waste repository for decades, and at worst makes implementing necessary reforms for rational, long-term management almost impossible. Given developments in the past several years to get nuclear waste management on track, Congress must seize the opportunity to put forth an approach that takes advantage of market forces and that properly aligns incentives and responsibility for lasting reform.
The federal government has failed to meet its legal obligations to manage and dispose of America’s spent nuclear fuel and nuclear waste. Once again, progress seems possible only after federal courts ended years of delay caused by the Obama Administration’s refusal to follow the law under the 1982 Nuclear Waste Policy Act, as amended. A new bill introduced by Senators Lisa Murkowski (R–AK), Maria Cantwell (D–WA), Lamar Alexander (R–TN), and Dianne Feinstein (D–CA) would only further delay and frustrate solutions to waste management and disposal.
The Nuclear Waste Administration Act (S. 854) does not solve fundamental problems in the current approach; it continues, if not expands, the dysfunction of waste management during the past 30 years. Most notably, it gives the perception of progress by transferring the Department of Energy’s (DOE) responsibilities for management to a new government entity. Simply re-assigning responsibility to another federal bureaucracy does nothing to fix the root problem—namely that the federal government is responsible for commercial nuclear waste management and disposal rather than the industry itself. Experience has shown that a federally controlled, centrally planned program for commercial nuclear fuel management does not work. Subjecting what should be a commercial activity to an endless political process has resulted in stunted technological growth, economic incoherence, and programmatic stagnation.
Even if the current approach of federal waste management were acceptable, the Nuclear Waste Administration Act fails to address the requirements for a repository at Yucca Mountain, Nevada, put forth by Congress in the 1982 Nuclear Waste Policy Act, as amended. It instead incorporates the Obama Administration’s shortsighted policy. Ultimately, the bill relieves economic pressure and political responsibility from the government in the short term by establishing temporary storage sites. Such an approach weakens the prospect of the permanent nuclear waste repository the nation needs. Rather than a problem or liability, nuclear waste management has the potential to be an asset—but only if Congress reforms the current broken system with market forces to spur competition and innovation.
The Nuclear Waste Policy Act of 1982 assigned responsibility for permanent disposal of spent nuclear fuel and high-level nuclear waste to the federal government, which was required to begin transporting nuclear waste to a repository by 1998. After evaluating alternative sites, Congress amended the act to designate Yucca Mountain as the site for a national repository. In 2008, the DOE applied for a license with the Nuclear Regulatory Commission (NRC) to build a facility at Yucca Mountain because the site “brings together the location, natural barriers, and design elements most likely to protect the health and safety of the public, including those Americans living in the immediate vicinity, now and long into the future.”
Despite the clear direction of the Nuclear Waste Policy Act, and lacking any technical or scientific justification, the Obama Administration unilaterally decided that Yucca Mountain was “not a workable option,” and directed the DOE to withdraw its license application. The Obama Administration then proposed its Strategy for the Management and Disposal of Used Nuclear Fuel and High-Level Radioactive Waste, a policy document lacking any technical details, calling for interim storage facilities and a permanent repository, just like the one proposed at Yucca Mountain, by 2048.
Following a series of court cases, the NRC was ordered to finish reviewing the DOE’s Yucca Mountain application, the reasoning being that “unless and until Congress says otherwise or there are no appropriated funds remaining,” the President must promptly execute the law. Further, the courts concluded that the Administration’s proposed alternative was inconsistent with the 1982 Nuclear Waste Policy Act, as amended. With no program in place, the court required the DOE to suspend collection of a fee it had charged nuclear power operators in order to pay for nuclear waste management and disposal. The pivotal decisions in essence brought matters back to where they were in 2008, when the DOE first applied for a license. The NRC technical staff finished its safety evaluation report of the DOE application in January 2015 and concluded that a repository at Yucca Mountain would be technologically feasible and safe. The NRC anticipates the process to complete the license will cost another $330 million, an amount it did not request in the President’s fiscal year 2016 budget.
Meanwhile, nuclear waste continues to pile up and taxpayer liability continues to grow. Today, the federal government remains liable for over 71,000 tons of commercial spent nuclear fuel, which it has yet to collect and for which electricity users have been paying into the Nuclear Waste Fund through a fee assessed by the utilities. This liability grows as America’s nuclear power reactors continue to produce roughly 2,000 tons of waste every year. The federal government has already paid out $4.5 billion in taxpayers’ money in settlements to nuclear power plants that store nuclear waste on site. The DOE estimates the remaining liability at $22.6 billion, assuming a pilot storage facility by 2021. Industry, however, assumes at least $50 billion in liabilities.
Introduced on March 24, 2015, the Nuclear Waste Administration Act (S. 854) focuses on three provisions intended to address the growing amount of spent fuel and provide permanent storage. It would transfer responsibility for nuclear waste facility siting, licensing, construction, and management from the DOE to a new government agency, the Nuclear Waste Administration. Second, it would create a new fee paid by utilities for nuclear waste management and disposal. Finally, the bill adopts the Obama Administration’s Strategy for a consent-based process for interim storage and a permanent repository.
While the intentions may be well-meaning, the bill would, at a minimum, likely delay action for decades and continue, if not further expose, waste management to the delays and politics of the past 30 years. It would further stunt growth and innovation in the nuclear industry. The bill keeps in place the federal government’s faulty approach to centrally plan a single waste disposal solution and work backwards to determine details, such as location and fees.
By contrast, removing government responsibility for management solutions would open the entire nuclear fuel cycle to innovation, as utilities would have a direct financial stake in how waste is produced as well as potential cost-effective ways to manage it. Utilities would have different variables to consider when deciding which fuels to purchase and which nuclear technologies to use, as these decisions would affect how they would ultimately manage their waste. For some utilities, it could be most cost-effective to place waste directly in a repository, while others might find interim storage or another process to be more economical. These choices would encourage new technologies (such as small nuclear reactors with different waste streams) and services (such as reprocessing) to be introduced as new market demands emerge. The current system, and the one recommended in S. 854, discourage such innovation.
Under the Act, the DOE’s responsibilities for waste management—from siting, constructing, and operating waste facilities to entering into contracts with commercial utilities as well as broad regulatory power—would be transferred to the new Nuclear Waste Administration. The Administrator and a Deputy Administrator would be appointed by the President to six-year terms and confirmed by the Senate.
S. 854 also establishes a bureaucracy of career assistants, as well as a second bureaucratic institution—the Nuclear Waste Oversight Board—to oversee the Administration in addition to an Inspector General. This board of five individuals consists of presidentially appointed members, no more than three of whom may be of the same political party, and is tasked with overseeing progress by the Administration, the fee on nuclear operators, use of funds, and government liability.
There are a number of problems with the new government entity as set up in S. 854. The bill:
The bill further deteriorates congressional participation by repealing §302(a)(4) of the Nuclear Waste Policy Act. Under current law, if the Secretary of Energy decides to adjust the fee levied on nuclear power providers, he must submit the change to Congress. The fee change would become effective after 90 days unless Congress votes to disapprove the change; S. 854 would eliminate that opportunity for congressional oversight. Though the Oversight Board must annually report its findings and recommendations to the President, Congress, and the Administrator on progress and the use of funds, the Administrator is required to do nothing beyond provide a written response to the board within 45 days.If Congress is determined to maintain federal control of an otherwise commercial activity, it must have responsibility and meaningful tools, such as control of appropriations, to enforce accountability. This is far from the ideal approach to run a commercial activity and underscores why reform is needed.
S. 854 fails to take this into account. The Nuclear Waste Administration Act is inherently political, from the presidentially appointed administration and board to the curious restriction that the Administrator’s salary not exceed that of the Tennessee Valley Authority’s chief executive officer. To pretend that these presidential appointees will not be politically driven is naïve. There is no guarantee that this system, too, will not be subject to the unpredictability of politics as Yucca Mountain has.
A “smarter” approach for less politicized federal management is not the solution, however. Politics is an inherent and necessary characteristic of any activity of a democratic government. But it is not an appropriate approach for the management of commercial nuclear waste, which, as with other aspects of nuclear power, is part of a for-profit business activity. Though there are unique aspects to nuclear power generation, it does not necessarily follow that a substantial portion of the commercial nuclear power industry should be turned over to government management. After all, American companies have been safely managing nuclear power construction and operation for half a century and are equally capable of managing waste. Indeed, they have been doing exactly that, given the federal government’s failure to meet its obligations by safely managing waste on-site with dry storage and pool re-racking. 
The right approach would return responsibility for waste management to the private sector—namely, the waste producers. Ultimately, the federal government should provide fair, and efficient, regulation of waste management (such as establishing public health and safety standards), just as it does with other aspects of the nuclear industry; but the specifics of how waste is managed should be left to the private sector.
Until May 2014, nuclear utilities paid a flat fee per kilowatt hour (kwh), called a mil, into the Nuclear Waste Fund for the purpose of building a waste facility. Never once adjusted even for inflation, the mil equaled one-tenth of 1 cent per kwh generated, or roughly $750 million a year and a total of $42.8 billion (including interest) in the Nuclear Waste Fund. The DOE was prohibited by the courts from continuing to collect the fee once it abandoned Yucca Mountain without a congressionally authorized alternative in place to justify the fee. That prohibition remains.
S. 854 would keep the federal government as a middle man and create a Nuclear Waste Administration Working Capital Fund under the Treasury Department. Congress could appropriate funds for defense waste management into the fund, and a new fee levied on nuclear power plants would be used to pay for commercial waste management. The Administrator would have full access to the fund without needing congressional appropriations, unlike the DOE, which currently does not have automatic access to the Nuclear Waste Fund. There are, however, a number of problems with the fee. Specifically, the fee:
On the surface, S. 854 seems to correct, or at least avoid, the problems of the past by zeroing out the fee in 2025 if a management facility is not operating (a sure sign that even the Senators believe their timeline for a pilot storage facility by 2021 is optimistic). Yet nuclear operators would still rightly lack any confidence that their fees would lead to a timely repository, given that the bill indirectly enables the same political maneuvering and negligence that has plagued Yucca Mountain. Unless there is a clear plan with correctly aligned responsibility for waste management, setting a fee is an arbitrary exercise with the risk that industry (through fees passed on to customers) will merely be footing the bill for an elongated bureaucratic exercise.
Most important, a centrally planned system forgoes all the benefits of a market approach. Accurate pricing is critical to any functional and efficient marketplace. Market-driven prices provide suppliers and customers with critical data points to determine the attractiveness of a product or service. Prices also give potential competitors the information they need to introduce new alternatives. Market-driven prices would take waste characteristics, such as heat load, toxicity, and volume, as well as repository space, into consideration. Nuclear utilities—the waste producers—would then have incentives to consider new technology and fuel types tied to their waste-management decisions.
The vision of S. 854 is the Obama Administration’s Strategy, a plan that fundamentally ignores the structural flaws of nuclear waste management in the United States. The bill would set in motion a consent-based process to site, license, build, and operate a pilot storage facility for waste at decommissioned reactors by 2021, and a storage facility for lower-priority waste by 2025 to be pursued in tandem with a permanent repository, similar to the one at Yucca Mountain, by 2048.
One positive aspect of the bill is that it allows non-federal entities to operate the interim and permanent facilities, potentially introducing positive market forces and diluting the inefficiencies of government bureaucracy. Also, in calling for a pilot interim storage facility the Senators take a good first step toward building familiarity and trust with the transportation of waste and protecting federal taxpayers from DOE liabilities. However, such a step is productive in the long run only insofar as it takes place simultaneously with completing the Yucca Mountain license. It must be recognized that interim storage is not a solution to waste disposal and is in fact largely redundant to current waste storage by the nuclear industry. Beyond this, however, the bill’s emphasis on fixing the federal government’s problems with nuclear waste leaves S. 854 lacking in long-term solutions for a sustainable approach to management. Specifically, the bill:
Nuclear waste management in America has the potential to be an incredible opportunity for growth and innovation, not only in waste management solutions but also in new nuclear power plant design. The Nuclear Waste Administration Act moves America further from a permanent repository, even if one accepts the flawed premise that nuclear waste should be managed by the government. Given the opportunity to once again make progress on nuclear waste management, Congress should:
The Nuclear Waste Administration Act addresses symptoms without looking at causes, ultimately locking in place a broken system for decades and moving Americans further from a cohesive nuclear waste management system. A rational, economical, and technologically diverse solution to nuclear waste management in America requires market reforms that have worked for every other successful industry—namely properly aligning incentives and responsibilities, market pricing, and competition. Admittedly, this will not be easy. But after decades of frustrated efforts and dead ends, tinkering around the edges of a broken system simply will not do.—Jack Spencer is Vice President of the Institute for Economic Freedom and Opportunity, and Katie Tubb is a Research Associate and Coordinator in the Thomas A. Roe Institute for Economic Policy Studies, of the Institute for Economic Freedom and Opportunity, at The Heritage Foundation.
 Katie Tubb, “Court Kicks Yucca Mountain Review Back in Motion,” The Daily Signal, August 13, 2013, http://dailysignal.com/2013/08/13/court-kicks-yucca-mountain-review-back-in-motion/.
 Nuclear Waste Administration Act of 2015, S. 854, 114th Cong., 1st Sess., https://www.congress.gov/bill/114th-congress/senate-bill/854/text (accessed June 22, 2015).
 U.S. Department of Energy, “Strategy for the Management and Disposal of Used Nuclear Fuel and High-Level Radioactive Waste,” January 2013, http://energy.gov/sites/prod/files/Strategy%20for%20the%20Management%20and%20Disposal%20of%20Used%20Nuclear%20Fuel%20and%20High%20Level%20Radioactive%20Waste.pdf (accessed June 16, 2015).
 Nuclear Regulatory Commission, “DOE’s License Application for a High-Level Waste Geologic Repository at Yucca Mountain,” June 3, 2008, http://www.nrc.gov/waste/hlw-disposal/yucca-lic-app.html (accessed July 27, 2015).
 U.S. Department of Energy, “Recommendation by the Secretary of Energy Regarding the Suitability of the Yucca Mountain Site for a Repository Under the Nuclear Waste Policy Act of 1982,” February 2002, http://energy.gov/sites/prod/files/edg/media/Secretary_s_Recommendation_Report.pdf (accessed June 16, 2015).
 U.S. Department of Energy, Steven Chu, Secretary of Energy, “Statement of Steven Chu Secretary of Energy Before the Committee on the Budget,” U.S. Senate, Washington, DC, March 11, 2009, http://energy.gov/articles/statement-steven-chu-secretary-energy-committee-budget (accessed June 16, 2015).
 U.S. Department of Energy, “Strategy for the Management and Disposal of Used Nuclear Fuel and High-Level Radioactive Waste.”
 Tubb, “Court Kicks Yucca Mountain Review Back In Motion.” See also Jack Spencer and Cornelius Milmoe, “Obama Administration: No Confidence in Nuclear Energy,” Heritage Foundation Backgrounder No. 2657, March 5, 2012, http://www.heritage.org/research/reports/2012/03/obama-administration-no-confidence-in-nuclear-energy.
 Katie Tubb, “Court Decision on Nuclear Waste Fee Offers Chance for Reform,” The Daily Signal, November 21, 2013, http://dailysignal.com/2013/11/21/court-decision-nuclear-waste-fee-offers-chance-reform/.
 U.S. Nuclear Regulatory Commission, “Safety Evaluation Report Related to Disposal of High-Level Radioactive Wastes in a Geologic Repository at Yucca Mountain, Nevada,” January 29, 2015, http://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1949/ (accessed June 16, 2015).
 “NRC: Yucca Mountain License Will Cost Another $330 Million,” Nuclear Energy Institute, March 5, 2015, http://www.nei.org/News-Media/News/News-Archives/NRC-Yucca-Mountain-License-Will-Cost-Another-330-M (accessed June 16, 2015).
 Nuclear Energy Institute, “On-Site Storage of Nuclear Waste: Used Nuclear Fuel and High-Level Radioactive Waste,” http://www.nei.org/Knowledge-Center/Nuclear-Statistics/On-Site-Storage-of-Nuclear-Waste (accessed June 16, 2015).
 U.S. Department of Energy, Fiscal Year 2014 Agency Financial Report, November 14, 2014, pp. 76–77, http://www.energy.gov/sites/prod/files/2014/11/f19/DOE_FY2014_AFR.pdf (accessed June 16, 2015).
 Similar versions of the bill were introduced in 2012 and 2013.
 Nuclear Regulatory Commission, “Stages of the Nuclear Fuel Cycle,” October 21, 2014, http://www.nrc.gov/materials/fuel-cycle-fac/stages-fuel-cycle.html (accessed July 27, 2015).
 Nuclear Waste Administration Act, §401(c).
 Ibid., §402(a).
 Ibid., §205(o).
 U.S. Government Accountability Office, “Spent Nuclear Fuel Management: Outreach Needed to Help Gain Public Acceptance for Federal Activities that Address Liability,” GAO–15–141, October 2014, http://www.gao.gov/assets/670/666454.pdf (accessed June 16, 2015).
 Nuclear Waste Administration Act, §202(a)(7)(B).
[21 ] “Safely Managing Used Nuclear Fuel,” Nuclear Energy Institute, August 14, 2015, http://www.nei.org/master-document-folder/backgrounders/fact-sheets/safely-managing-used-nuclear-fuel (accessed July 30, 2015).
 Nuclear Energy Institute, “Nuclear Waste Fund Payment Information by State,” April 2015, http://www.nei.org/Knowledge-Center/Nuclear-Statistics/Costs-Fuel,-Operation,-Waste-Disposal-Life-Cycle/Nuclear-Waste-Fund-Payment-Information-by-State (accessed June 16, 2015).
 Nuclear Waste Administration Act, §308(c).
 Ibid., §401(c).
 Ibid., §205(w).
 Ibid., §401(e).
 In re Aiken County, 725 F.3d 255 (D.C. Cir. 2013).
 Nuclear Waste Administration Act, §205(m)(1).
 U.S. Office of Management and Budget, The Budget for Fiscal Year 2015, p. 407, https://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/doe.pdf (accessed June 16, 2015).
 Nuclear Waste Administration Act, §401(f).
 Ibid., §305(a).
 Mark Gaffigan, “Disposal Challenges and Lessons Learned from Yucca Mountain,” testimony before the Subcommittee on Environment and the Economy, Committee on Energy and Commerce, U.S. House of Representatives, June 1, 2011, http://www.gao.gov/assets/130/126331.pdf (accessed July 27, 2015).
 U.S. Nuclear Regulatory Commission, “Safety Evaluation Report Related to Disposal of High-Level Radioactive Wastes in a Geologic Repository at Yucca Mountain, Nevada,” Vol. 3, “Repository Safety After Permanent Closure,” last update January 29, 2015, http://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1949/ (accessed June 22, 2015).
 Nuclear Waste Administration Act, §305(b)(4)(B).
 Ibid., §306(b)(2).
 Ibid., §306(c)(4)(B).
 Ibid., §305(b)(4)(C), and §306(e)(4).
 Edward F. Sproat III, “DOE’s Revised Schedule for Yucca Mountain,” testimony before the Subcommittee on Energy and Air Quality, Committee on Energy and Commerce, U.S. House of Representatives, July 19, 2006, http://www.yuccamountain.org/pdf/ocrwm_testimony071906.pdf (accessed June 16, 2015).
 U.S. Government Accountability Office, “Spent Nuclear Fuel: Accumulating Quantities at Commercial Reactors Present Storage and Other Challenges,” GAO–12–797, August 2012, http://www.gao.gov/assets/600/593745.pdf (accessed June 22, 2015).
 U.S. Government Accountability Office, “Spent Nuclear Fuel Management: Outreach Needed.”
 Nuclear Waste Administration Act, §306(c)(1) and §306(d)(1).
 U.S. Government Accountability Office, “Spent Nuclear Fuel Management: Outreach Needed.”
 Nuclear Waste Administration Act, §205(j)(2).
 Nuclear Regulatory Commission, “Locations of Low-Level Waste Disposal Facilities,” April 13, 2015, http://www.nrc.gov/waste/llw-disposal/licensing/locations.html (accessed July 27, 2015).
 Nuclear Waste Administration Act, §406(d).
 Hannah Northey, “NRC Finalizes Waste Rule, Lets Licensing Decisions Resume,” E&E News, August 26, 2014, http://www.eenews.net/greenwire/2014/08/26/stories/1060004936 (accessed July 23, 2015).
 Energy and Water Development Appropriations Bill of 2016, Report 114-92, 114th Cong., 1st Sess., p 79, https://www.congress.gov/114/crpt/hrpt91/CRPT-114hrpt91.pdf (accessed July 27, 2015).
 Jack Spencer, “Yucca Mountain and Nuclear Waste Policy: A New Beginning?” Heritage Foundation Issue Brief No. 3085, December 16, 2010, http://www.heritage.org/research/reports/2010/12/yucca-mountain-and-nuclear-waste-policy-a-new-beginning.
 Jack Spencer, “Nuclear Waste Management: Minimum Requirements for Reforms and Legislation,” Heritage Foundation Issue Brief No. 3888, March 18, 2013, http://www.heritage.org/research/reports/2013/03/nuclear-waste-management-minimum-requirements-for-reforms-and-legislation?ac=1.
 Jack Spencer, “Introducing Market Forces into Nuclear Waste Management Policy,” statement to the Reactor and Fuel Cycle Technology Subcommittee of the Blue Ribbon Commission on America’s Nuclear Future, August 30, 2010, http://www.heritage.org/research/testimony/introducing-market-forces-into-nuclear-waste-management-policy.