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Federal court orders suspension of US DOE nuclear waste fund fee

A federal appeals court on Tuesday granted a request by the nuclear power industry and electric utilities to suspend collection of fees for the Nuclear Waste Fund by the US Department of Energy.

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"Because the secretary [of energy] is apparently unable to conduct a legally adequate fee assessment, the secretary is ordered to submit to Congress a proposal to change the fee to zero until such a time as either the secretary chooses to comply with the [Nuclear Waste Policy] Act as it is currently written, or until Congress enacts an alternative waste management plan," the US Court of Appeals for the District of Columbia Circuit said in its decision in National Association of Regulatory Utility Commissioners v. DOE, issued Tuesday.

At issue is a one-tenth of a cent fee that nuclear utility customers pay for every kilowatt hour of nuclear-generated electricity sold. Congress established the fee in the Nuclear Waste Policy Act of 1982 to fund DOE's civilian nuclear waste program and to pay for the disposal of utilities' spent fuel. The money is paid into the Nuclear Waste Fund, a federal trust fund, and then appropriated by Congress to the waste program.


The fund's balance is about $28.2 billion, according to a fee report filed with the court by DOE in January. Interest contributes about $1.5 billion a year to the fund, on top of the $750 million collected annually from nuclear utility customers, the report noted.

DOE terminated the Yucca Mountain repository project in Nevada in 2010 but has continued to collect the waste fee even though it no longer had a waste program to fund. Naruc and the Nuclear Energy Institute, which represents the US nuclear power industry, sued DOE the following year after the department refused to suspend its collection of the fee.

The court ruled in June 2012 that the fee assessment DOE released in 2010, which was based on costs incurred by the Yucca Mountain project, was "legally inadequate." Naruc and NEI challenged the fee report DOE filed in January, saying it was "fundamentally flawed" and should be rejected.

The appeals court agreed in its decision Tuesday, saying DOE's latest fee assessment "sets forth an enormous range of possible costs. 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 billion 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," the court said. "This presentation reminds us of the lawyer's song in the musical 'Chicago' -- 'Give them the old razzle dazzle.'"

The court criticized DOE's 2011 waste management strategy, saying that "[m]ost glaring is the conflict between the statutory requirements that sites other than Yucca Mountain cannot even be considered as an alternative to Yucca Mountain -- and the 'strategy's' assumption that whatever site is chosen, it will not be Yucca Mountain."

"Finally, the strategy projects completion of a permanent depository (located somewhere) not until 2048, in contrast to the statute, which directed completion by 1998," the court said. "That is truly 'pie in the sky.'"

Charles Gray, Naruc's executive director, said in a statement Tuesday that the decision is "great news for consumers of nuclear power."

"Nuclear utilities and their consumers have paid more than $30 billion since the early 1980s for the construction of a nuclear-waste repository," Gray said. "These 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. 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."

Ellen Ginsberg, NEI's general counsel, said in a separate statement Tuesday that "[t]he court's decision should prompt Congress to reform the government's nuclear waste disposal program."

"We strongly encourage Congress to establish a new waste management entity, and endow it with the powers and funding necessary to achieve the goals originally established in the Nuclear Waste Policy Act," she said.

DOE did not immediately respond Tuesday to a request for comment on the court's decision.

--Steven Dolley, steven.dolley@platts.com
--Elaine Hiruo, elaine.hiruo@platts.com
--Edited by Annie Siebert, ann.siebert@platts.com