U.S. Supreme Court Takes Up Nuclear Waste Storage Cases

The U.S. Supreme Court on Oct. 4, 2024, granted certiorari in two cases related to the U.S. Nuclear Regulatory Commission's (NRC) authority to license temporary spent fuel storage facilities that are not co-located with a licensed reactor. The cases, which the Supreme Court has consolidated into a single case, are appeals from a U.S. Court of Appeals for the Fifth Circuit decision holding that the NRC exceeded its statutory authority by licensing a temporary away-from-reactor spent fuel storage facility to be operated by Interim Storage Partners LLC (ISP) in Andrews County, Texas. The decision breaks from rulings by the U.S. Courts of Appeals for the District of Columbia and Tenth Circuits, each of which previously held that the NRC has authority to license such facilities under the Atomic Energy Act (AEA) notwithstanding the lack of any express authority in the Nuclear Waste Policy Act (NWPA).

Further, prior to reaching the merits of the case, the Fifth Circuit held that the parties challenging the license had authority to do so under an ultra vires exception to the Hobbs Act. Two of the parties – private parties with interests in land near the proposed storage facility – attempted to intervene in the licensing proceeding but were denied by the NRC, and the denial was held up on judicial appeal. The third party, the state of Texas, submitted letters to the NRC registering its objections to the facility but never attempted to intervene in the proceeding. The Fifth Circuit, again breaking from four other circuits, held that failure to become a party to the licensing proceeding is not a barrier to a judicial challenge where the agency action is attacked as exceeding its power.

Hobbs Act

The exclusive statutory basis for jurisdiction for courts to review challenges to licenses issued under the AEA is the Hobbs Act, which limits judicial review to a "party aggrieved" by the agency proceeding. Petitioners ISP and the NRC argue that "party" has a specific meaning in this context and refers only to an actual party to the NRC licensing proceeding. At a minimum, the petitioners argue, a challenger must have attempted to become a party to the proceeding, which would exclude the state of Texas. The private party challengers and Texas argue instead that a plain language meaning of "party aggrieved" is any person who is injured by the agency's decision or, alternatively, at most requires the party to have participated in the proceeding in some fashion. Under the alternate interpretation, the private parties' attempts to intervene in the proceeding and Texas' submission of letters would meet the threshold for participation.

Although these arguments were addressed to some extent by concurring opinions to the Fifth Circuit's denial of en banc rehearing, the controlling Fifth Circuit decision expressly declined to address these arguments. Instead, the Fifth Circuit relied on an ultra vires exception (or judicially created exception) to the Hobbs Act that allows nonparties to an agency proceeding to challenge an action on the basis that it exceeds the agency's statutory authority or is unconstitutional. This exception stems from two 1980s Fifth Circuit cases regarding actions of the Interstate Commerce Commission (ICC) that linked the basis for the exception to ICC cases from the time before Congress brought the ICC within the Hobbs Act's purview in 1975. Four other circuit courts, the Second, Seventh, Tenth and Eleventh, have declined to recognize the Fifth Circuit's ultra vires exception, including a Tenth Circuit decision resulting from the ISP licensing proceeding that denied a challenge by the state of New Mexico.

The Supreme Court will be tasked with determining whether this ultra vires exception is appropriate, not only for the purposes of challenging NRC licensing actions, but for all agency proceedings under the jurisdiction of the Hobbs Act. Although the issue is a novel one for the Supreme Court, other recent cases may provide clues as to the direction the Court would be inclined to lean. The Court recently released several opinions that have expanded access to judicial review of agency actions. Though not directly on point, in a 2023 Supreme Court case, a unanimous Court held that a party can seek judicial review of an agency's authority to use a particular procedure without having first subjected itself to that procedure on the basis that 1) enduring the unlawful procedure itself is an injury even if the procedure ultimately results in an outcome that is favorable to the challengers and 2) the question presented of statutory or constitutional interpretation is not a question the agency is qualified to resolve. Another recent Supreme Court case concluded that parties need not exhaust administrative procedures when doing so could not provide the remedies sought, albeit within the confines of a particular statutory provision that expressly allowed such bypasses of procedure. Applying analogous logic, the Court could conclude that where NRC regulations shut out parties from participating in certain proceedings, but those parties could nonetheless be injured by unlawful action, there must be a means for those parties to obtain judicial review.

That is not to say the Court will necessarily take such a view. The Court may take a more restrained position and find that the Fifth Circuit's particular ultra vires exception lacks a statutory or constitutional basis because of its grounding in cases for which the Hobbs Act was inapplicable and return the case to the Fifth Circuit to decide in the first instance whether the challengers meet the statutory definition of "party aggrieved" or whether there is a more appropriate constitutional basis for an exception. The Court could also agree with ISP and NRC that the Hobbs Act forecloses a challenge by these parties – although such a ruling, without first giving the Fifth Circuit an opportunity to rule on the statutory definition of "party aggrieved," would be unusual.

The NRC's Licensing Authority

Assuming the Court holds that the private parties and Texas are allowed to challenge the license, the Court will next need to decide if the NRC actually has authority to issue temporary away-from-reactor spent fuel storage licenses. The Fifth Circuit opinion held that the NWPA creates a comprehensive scheme that occupies the entire field of nuclear waste storage to the exclusion of more generic authorities under other statutes. The NWPA directs the federal government to establish a permanent geologic repository for waste disposal. In the meantime, until such storage is available, the NWPA tasks the NRC and U.S. Department of Energy (DOE) with taking actions required to encourage and expedite the use of available storage space at the sites of civilian nuclear reactors. The NWPA also expressly states it is not meant to encourage private off-site storage. Only where reactors cannot reasonably provide such storage capacity, government is obligated to provide up to 1,900 metric tons of interim storage capacity. Lastly, DOE is authorized to construct additional "retrievable storage" only after a license has been issued for the permanent geologic storage facility. The Fifth Circuit held that this scheme plainly means that until construction of a permanent facility, spent fuel must be stored only on-site at the reactor or in a federal facility.

The Fifth Circuit further held that the generic licensing authority under the AEA to issue licenses for the possession of source, byproduct and special nuclear material cannot be interpreted as applying to possession of spent nuclear fuel. Each type of nuclear material is contained within spent fuel. The AEA allows licensing for possession of each type of material for certain enumerated reasons and each also contains a catchall allowing possession for other purposes deemed appropriate or necessary by the NRC. The Fifth Circuit held that each of these catchall provisions must be interpreted as consistent with the enumerated reasons, none of which involves storage or disposal. Specifically with respect to byproduct material, the Fifth Circuit held that licensing for disposal is limited to byproduct materials with similar radioactive properties to Radium-226, which is not the case for the constituent isotopes of spent fuel.

Tangentially to its merits decision, the Fifth Circuit held that the NRC's authority is constrained by the major questions doctrine. Under this line of reasoning, because the issue of spent fuel storage is one of vast political or economic significance, any statutory provision that could otherwise be read to give a broad grant of authority to the NRC should instead be read narrowly to allow only authority that is clearly granted by Congress. This would support resolving any ambiguity in authority against the NRC.

ISP and the NRC argue that at the time of the NWPA's passage, the NRC had already established an interpretation that the AEA granted it authority to license temporary away-from-reactor storage facilities. Because the NWPA did not repeal the AEA or otherwise expressly disturb the NRC's existing authority, this should be interpreted as congressional approval of the NRC's interpretation. The parties further argue that while catchall provisions must be read in light of the enumerated lists to which they are attached, they cannot be read so narrowly as to allow only the enumerated purposes, otherwise the catchall would be superfluous. The ability to license temporary storage of waste from the enumerated activities, including commercial power production, is necessary to promote such uses in accordance with the policy goals of the AEA.

Further, the parties argue that the Fifth Circuit's reading of the byproduct material provision is inappropriate because that provision applies only to disposal, not to temporary storage. Additionally, under petitioners' reading, the NWPA is not meant to provide the exclusive means of regulating storage and disposal. Instead, they say, though the NWPA is meant to encourage on-site storage, it expressly contemplates that such storage will not always be practicable. To the extent such storage is not practicable, the NWPA requires the federal government to provide a small amount of storage but, so as to not encourage the federal government to fail in its mandate to provide permanent storage, only authorizes broader federal storage once a permanent facility is licensed. In the interim time, to the extent that on-site storage is not practicable, the NWPA does not expressly prohibit off-site private storage. Instead, in accordance with the existing scheme under the AEA, petitioners argue that the NWPA allows off-site storage.

Lastly, they argue that the major questions doctrine is inapplicable because it applies only to novel exercises of agency authority where an agency purports to find some new authority in an old statute that had never previously been interpreted to grant such authority. Here, the NRC has an established practice of granting temporary away-from-reactor spent fuel storage licenses, and licensing the possession and use of radioactive materials is squarely within the NRC's ambit.

Resolving these questions will not be easy for the Court. Despite the Fifth Circuit's invocation of the major questions doctrine, this case does not cleanly fit within the recent line of cases restricting agency discretion. As the petitioners point out, this is not a case of the agency attempting to exercise some new authority that has not been accepted in the past. Instead, this is a pure question of statutory interpretation, whether the NWPA establishes a storage scheme to the exclusion of AEA authority and/or whether the text of the AEA can be interpreted to allow this type of licensing. These questions are not directly answered by the text and will require application of canons of interpretation that cut in different directions and, potentially, some evaluation of the intent of Congress when passing the NWPA. The current iteration of the Court has been reluctant to look to sources such as legislative history to resolve questions of congressional intent, making the task that much more difficult.

What to Look for at Oral Argument

Reading between the lines of statements made at oral argument is always a dangerous task because the justices often play devil's advocate to test theories they do not intend to incorporate into a ruling. That said, clues may be available based on the time the Court spends on each topic. Spending significantly more time on the Hobbs Act question than on the merits could be a sign that the court is leaning toward holding that the challengers are not allowed to bring a judicial challenge and the court does not anticipate reaching the merits. The inverse could be a sign that the Court believes it already has the votes to determine that the challenge was allowed and advance to the merits question.

With the question on the merits, time spent on certain topics should be treated more as an indication of what the Court thinks the most difficult questions are as opposed to an indication of the ultimate outcome. For example, if the Court spends the majority of the time on whether the NWPA is a comprehensive scheme, it may be an indication that it believes the NWPA issue is the dispositive issue and it doesn't need to reach the AEA question. At the same time, it could also be an indication that the Court believes the answer to the AEA question is both clear and dispositive but is torn on the outcome of the NWPA question and wants to test whether the NWPA question allows it to reach the AEA. Spending significant time on the major questions doctrine, which would be surprising, could be an indication that it does not believe the NWPA is comprehensive and it believes the AEA could allow such licensing on its face but is worried about the policy implications of allowing temporary off-site licensing.

Implications and Next Steps

The Hobbs Act question has the potential for a broad impact beyond the NRC and nuclear power industry. If the Court holds that the private parties and Texas have the right to judicially challenge the license, then it would open up all agency actions covered by the Hobbs Act to challenges from parties that did not participate in the agency proceeding. For the NRC and nuclear industry, this would likely mean additional time and expense litigating licensing issues for all types of facilities. As noted above, if the Court determines that the ultra vires exception adopted by the Fifth Circuit is not appropriate, it is not likely to categorically rule that the private parties and Texas have no basis for the challenge. Instead, it is more likely to return the case to the Fifth Circuit for evaluation of whether the entities otherwise qualify as "aggrieved parties" under the Hobbs Act or whether there is an alternate constitutional basis for an exception to the Hobbs Act.

If the Court reaches the merits argument and rules against the NRC, it will place the industry in the potentially untenable position of needing to indefinitely store spent fuel on site. It will additionally put existing off-site facilities, such as those located at the sites of decommissioned and dismantled reactors, in limbo as the NRC may not have authority to renew those licenses since they are not at the site of a civilian reactor. Lastly, it will require the federal government to quickly come up with a new strategy for long term storage of waste, something it has not historically executed effectively and may require congressional intervention to authorize a solution.

The case has not yet been scheduled for oral argument, which will occur after another opportunity for the parties to submit briefs. Oral argument could occur as early as December 2024, though will more likely occur in early 2025, and a decision will be rendered by the end of the Court's current term in summer 2025.

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