The D.C. Circuit issued an opinion this week in National Association of Regulatory Utility Commissioners v. United States Department of Energy ordering the Secretary of Energy to submit a proposal to Congress to change the nuclear waste fee to zero.  Tuesday’s decision was the most recent in a string of court cases following the Obama Administration’s decision in 2009 to defund the Yucca Mountain repository.

Nuclear utilities have been paying statutorily mandated fees into the Nuclear Waste Fund since 1983.  The fee is 1 mill per kilowatt-hour of electricity generated, and the Department of Energy collects approximately $750 million annually.  In January, the fund was valued at $28.2 billion.

Under the Nuclear Waste Policy Act, the Secretary is obligated to review the adequacy of the nuclear waste fee annually.  Prior to 2010, the Secretary’s adequacy determinations were based on the expected costs and projected revenues of the Yucca Mountain repository.  However, in its 2010 review, after the decision to abandon Yucca Mountain, the Secretary did not identify any expected costs or revenues, but concluded that the uncertainty regarding future costs did not provide a basis for adjusting the fee.

On June 1, 2012, the D.C. Circuit held that the Secretary’s 2010 Fee Adequacy Determination was arbitrary and capricious and “legally inadequate.”  The Secretary responded in a new determination in January, finding that continuation of the fee could result in a final fund balance as low as negative $2 trillion or as high as $4.9 trillion.  The Secretary concluded that its assessment did not demonstrate that either insufficient or excess revenues are being collected.

In this week’s decision, the D.C. Circuit again rejected the Secretary’s adequacy determination, calling the Secretary’s determination of the range of possible final fund balances “absolutely useless” and the position of the Secretary “disingenuous.”  The court also noted several conflicts between a strategy report issued by DOE and relied on by the Secretary, and current statutory law.  Instead of remanding again, the court ordered the Secretary to submit a proposal to Congress to change the fee to zero, concluding that it was unfair to force the utilities to pay fees for hypothetical options, the costs of which might already be covered.  The court noted that fee payments could resume when the Secretary is able to issue a legally adequate fee determination.

In response to an earlier D.C. Circuit decision, the Nuclear Regulatory Commission (NRC) directed agency staff on Monday to resume work on DOE’s construction authorization application for Yucca Mountain with the $11 million of remaining funds appropriated for the review.  That announcement responds to a decision of the D.C. Circuit in August that ordered the NRC to continue its review of the Yucca Mountain application following DOE’s attempt to withdraw it in 2010.

Jessica Bayles, a law clerk in the Firm’s Washington, D.C., office, also contributed to this article.