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Nuclear plant licensees could face an added level of state regulation just as they move to cut costs.Permanent disposal capacity for low-level radioactive waste (LLW) and spent nuclear fuel, long a top priority for the nuclear industry, has not yet become a reality. But the storage question draws more attention for its impact on nuclear power costs as electric generation grows more competitive. So far, most discussion has centered on fuel-cycle costs: Whether "back-end" costs (waste storage, disposal, and decommissioning) will render nuclear generating assets uncompetitive.

At the same time, this lack of disposal capacity has created another significant, though more subtle, effect. It has forced commercial nuclear power plant licensees to rely more heavily on onsite storage for LLW and spent fuel, prompting state agencies to show increased interest in regulating nuclear operations. This heightened interest, coming as it does when nuclear utilities are increasingly sensitive to their relationships with state regulators, threatens to erode exclusive federal authority.

If the trend continues, power reactor licensees may attempt to protect their economic viability by accommodating state regulation of LLW and spent-fuel storage. But such action could expose licensees to the costs and uncertainty of overlapping and often inconsistent regulation. Preserving federal preemption in regulation-while ensuring favorable relations with state regulators and yet preserve traditional federal preemption-will require support from the Nuclear Regulatory Commission (NRC) and perhaps even from Congress. It will certainly require a unified proactive industry effort.Eroding Federal Preemption

Since the passage of the Atomic Energy Act in 1954, Congress has preserved the dual regulation of nuclear electric generation. The federal government (NRC) exercises exclusive authority over radiological safety; the states review nonradiological environmental protection and economic matters, such as ratemaking and need for power. Atomic Energy Act section 274c.(1) mandates NRC authority over the "operation" of nuclear facilities. NRC rules define "operation" to include "the storage and handling of radioactive waste" by the licensee. Thus, in theory, the doctrine of federal preemption bars states from applying their own requirements to onsite LLW and spent-fuel storage, and to decommissioning activities of NRC licensees.

But since the mid-1980s, there has been an erosion of traditional federal preemption over questions involving nuclear radiological safety. The trend began in 1983, when the U.S. Supreme Court upheld a California statute that imposed a moratorium on future nuclear plant construction pending availability of permanent spent-fuel disposal capacity. See, Pacific Gas & Elec. Co. v. California Energy Resources Conservation & Develop. Comm'n, 461 U.S. 190 (1983). In upholding the California law, the Court accepted that state's "avowed economic purpose." But that decision emboldened some states to give similar reasons for expanding regulatory control, when in reality they appeared driven more by activist concerns over radiological safety.

Preemption will likely erode further as state regulators increase their interest in nuclear waste management. Nuclear waste buildup has increased public sensitivity and political demands for state involvement. Over the past few years, some state legislators and regulators have increasingly sought to intrude into nuclear plant safety regulation. In doing so, they have frustrated the efforts of plant licensees and the NRC to develop safe, coherent, interim solutions to LLW and spent-fuel storage.Consequences of Dual Regulation

For the most part, states are actively pursuing solutions to permanent LLW disposal, either independently or through multistate compacts. In the meantime, however, their increased involvement in interim storage can complicate matters. Dual regulation can have safety implications. Both the NRC and licensees have argued that independent state regulatory actions could divert a licensee's attention from NRC safety priorities or cause a misinterpretation of NRC safety requirements. In comments on a 1989 NRC Policy Statement on cooperation with the states, plant licensees asserted that dual regulation could destabilize the regulatory process, causing delays in resolving safety issues and generally increasing the cost of doing business.

With respect to LLW and spent-fuel storage, state regulation could increase costs through overly restrictive requirements. Examples include hosting inspections, responding to inquiries, satisfying reporting obligations, and completing engineering or packaging forms for waste storage. These activities divert resources from tasks judged more "safety significant" by the NRC or the licensee. Undue pressures to minimize waste generation might undermine efforts at worker protection. Premature plant shutdowns could arise if licensees cannot meet absolute state-imposed limits on waste storage volumes.

Some licensees have succumbed to, or even supported, state regulatory initiatives to regulate waste storage or decommissioning activities, presumably to minimize political and public opposition to continued nuclear operations. But as some have argued, state initiatives can undermine a national energy policy that reserves a role for nuclear power.Examples of State Influence

The closure of the Barnwell LLW disposal facility to waste generators outside the Southeast Compact region has already intensified the concerns of some states regarding the possible safety and environmental consequences of longer-term storage of LLW by waste generators. South Carolina, for example, recently promulgated new rules on state licensing of LLW storage facilities, including interim onsite storage at power reactor sites. The rules include performance objectives as well as technical, procedural, and institutional requirements. The NRC and at least one power reactor licensee have opposed South Carolina's efforts to apply these regulations to onsite storage of LLW (including replaced steam generators) at power reactor sites within the state.

Part of the mischief in acquiescing to state intrusion into the regulation of LLW and spent-fuel storage is that it is unclear where to draw the line. If onsite storage of LLW and spent fuel is properly with state purview, what about storage of an entire reactor? Will more states seek to regulate power reactors that obtain NRC authority to employ the SAFSTOR (interim storage) option for decommissioning? If the past is prologue, then it seems certain they will do so.

Part of the mischief in acquiescing to state intrusion is that it is unclear where to draw the line.

Oregon, for example, recently adopted extensive regulations to govern decommissioning at the Trojan nuclear power plant. State laws bar the Trojan plant licensee from removing large components from the plant without prior approval of the Oregon Department of Energy (ODOE). The ODOE has formed a special advisory group-with representatives from the licensee, local public interest groups, local politicians, and Oregon State University-to assist the state and ODOE in reviewing the Trojan decommissioning plan. Oregon's rules also purport to bar placement of nuclear fuel in the Trojan reactor vessel and to preclude onsite storage of spent fuel in any facility other than the existing spent-fuel pool (except for radioactive materials awaiting mandatory disposal in a federally approved facility).

And where is the NRC in all of this? It too regulates the Trojan plant licensee in all of the above-mentioned activities. In Oregon, the high principle of federal preemption has unraveled into an accommodation of dual state-federal regulation over radiological safety.Outlook

As the nuclear industry continues to address the challenges of electric price competition, utilities seeking favorable rate treatment might be inclined to accommodate state regulation over waste storage. As a practical matter, utilities objecting to such state involvement may find it difficult to fight the battle on their own. A broader effort may provide the answer. Where states engage in such initiatives, the NRC should assert its exclusive authority to regulate nuclear safety.

The NRC has taken some positive steps. It has supported solutions to waste storage issues through technical and regulatory channels-such as licensing of dry cask spent-fuel storage technology and withdrawal of a proposed rule that would have complicated onsite storage of LLW. See, 59 Fed.Reg. 19,147 (Apr. 22, 1994). The NRC has gone on record that "the federal government, primarily NRC, is assigned exclusive authority and responsibility to regulate the radiological and national security aspects of [commercial nuclear power plant construction and operation]." See, Policy Statement on Cooperation With States at Commercial Nuclear Power Plants, 59 Fed.Reg. 7530 (1989). Finally, the NRC has become involved in specific cases-most recently by communicating to officials in South Carolina its view that state regulations should not apply to onsite storage of radioactive equipment by power reactor licensees in South Carolina. Nevertheless, the NRC has proved less effective in other cases in asserting its exclusive regulatory authority.

In the end, by asserting economic and political pressure, the states have thwarted the NRC's best efforts and forced power reactor licensees to submit to increased state regulation over onsite waste storage and decommissioning. The situation recalls the Supreme Court's admonition in the 1983 PG&E case: "[T]he legal reality remains that Congress has left sufficient authority to the states to allow the development of nuclear power to be slowed or even stopped for economic reasons."

In theory, this problem is transitory. It should disappear when the states and their compacts establish LLW disposal facilities and the federal government completes the high-level waste repository. (Reported progress in developing a private spent-fuel storage facility might present an alternative for interim relief.) In the meantime, perhaps Congress needs to speak directly to the issue. Congress could relieve the pressure by authorizing immediate construction of an interim storage facility for high-level waste-a concept now tied unnecessarily to construction of the permanent disposal facility.Nicholas S. Reynolds is a member of the law firm Winston & Strawn, resident in the firm's Washington, DC, office. Mr. Reynolds practices nuclear energy and public utility law, and has served in the American Bar Association as chair of the Atomic Energy Committee of the ABA's Section of Public Utility, Communications, and Transportation Law. Robert L. Draper is an associate in the nuclear regulatory practice at Winston & Strawn.

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