/>iKey Takeaways
- The fusion power industry has evolved from primarily government-led initiatives to include over 45 private companies with combined funding exceeding $7 billion
- The NRC is developing fusion-specific regulations with proposed rules anticipated in May 2025
- In 39 “Agreement States,” state authorities may regulate fusion under delegated NRC authority
- Beyond nuclear regulations, fusion facilities will face state and local permitting related to land use, environmental impact, and public safety
- Early engagement with both federal and state regulators is advisable for fusion companies to navigate this evolving regulatory landscape
Strategic Considerations for Stakeholders
- For Fusion Developers: Submit comments during the NRC's rulemaking period to shape regulations favorable to your technology approach
- For Investors: Evaluate potential fusion investments based partly on regulatory preparedness and engagement with authorities
- For Utilities: Begin exploring power purchase agreement structures that account for fusion's unique regulatory status
- For Communities: Prepare to participate in upcoming state and local permitting processes by developing informed positions on fusion facility siting
- For Policy Advocates: Identify gaps in current regulatory frameworks that could be addressed through state legislation or federal guidance
- For International Entities: Monitor the U.S. regulatory approach as a potential model for other jurisdictions developing fusion regulations
The energy source that powers the stars was first demonstrated in an experiment in 1934.
Ever since then the promise of clean, virtually limitless energy has been greatly anticipated with commercial fusion power perennially predicted to come “within the next ten years.” Recent advances in physics, materials science, and other fields may finally prove those predictions true. This article provides a brief overview of the current state of the fusion power industry and discusses the developing regulatory framework as we await the reality of commercial fusion power.
The Emerging Fusion Industry
Fusion R&D was historically dominated by national governments collaborating on major projects like Euratom's Joint European Torus (1973) and the International Thermonuclear Experimental Reactor (1985), which began with Euratom, Japan, the US, and Soviet Union and now includes 27 nations. While national projects in China, Japan, South Korea, France and elsewhere continue advancing fusion technology, they've been joined by private sector companies bringing new energy (pun intended) to commercial fusion development.
Today, over 45 companies worldwide are pursuing commercial fusion with funding exceeding $7 billion from venture capital, governments, and energy-intensive industries seeking to become fusion power customers. Unlike government efforts focused on limited technologies, private enterprises explore diverse innovative approaches. All stakeholders face challenges in high-temperature materials, plasma stability, commercial scalability, and system costs. This competition and collaboration between entrepreneurial companies and governmental projects fuels growing optimism that commercial fusion power may soon become a reality.
As technical development progresses, parallel efforts are creating regulatory frameworks that recognize fusion's unique characteristics, ensuring safe deployment without inhibiting industry growth.
...Congress and the U.S. Nuclear Regulatory Commission (USNRC) have taken a number of steps to develop a regulatory framework for fusion power.
Evolution of the U.S. Fusion Power Regulatory Framework
As discussed in previous articles in this series, there is an extensive statutory and regulatory framework applicable to fission-based nuclear power in the United States. This framework is predicated broadly on issues related to public safety and control of the fissile material that fuels commercial reactors which could present weapons proliferation concerns if not regulated appropriately. Recognizing that fusion facilities do not present these same risks, Congress and the U.S. Nuclear Regulatory Commission (USNRC) have taken a number of steps to develop a regulatory framework for fusion power.
The Nuclear Energy Innovation and Modernization Act of 2018 (NEIMA) included “fusion reactors” in the definition of “advanced reactors” and directed USNRC to develop a regulatory framework for the licensing of advanced reactors by December 31, 2027. Following USNRC Staff’s consideration of various licensing approaches, in 2023 USNRC directed its staff to develop rules for the licensing and regulation of fusion energy facilities that treat these facilities under the “byproduct material” regulations rather than the regulations applicable to commercial fission power facilities. Congress essentially codified this decision in Section 205 of the Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act of 2024 which amended the Atomic Energy Act (42 U.S.C. § 2014) and NEIMA to define “fusion machines” and classify the radioactive materials used in and produced by them as byproduct material.
This regulatory approach makes sense since fusion machines use certain byproduct materials as fuel and may produce additional byproduct materials through the fusion reaction. It offers the benefits of a streamlined process as compared to the 10 CFR Part 50 processes applicable to fission reactors and technology-neutral, risk-informed, performance-based regulations that could be relevant to multiple fusion technologies.
Since 2023, USNRC Staff has engaged with public stakeholders to develop proposed rules that will provide regulatory clarity and predictability for the US fusion power industry. USNRC has described this as a limited-scope rulemaking that considers known fusion systems and those that can be reasonably anticipated in the immediate future, builds on existing regulations as much as possible, and focuses on license application requirements and processes and other issues specific to fusion systems. USNRC’s proposed fusion power regulations will be located primarily in 10 CFR Part 30 – Rules of General Applicability to Domestic Licensing of Byproduct Material, with additional guidance in a new fusion-specific Volume 22 of NUREG-1566, Consolidated Guidance About Materials Licenses. A draft of NUREG-1566, Volume 22 was released in March 2024 and provides additional information for fusion system possession license applications and implementing guidance. Publication of the proposed rules is presently anticipated in May 2025 which will initiate the formal rulemaking proceeding.
Currently, 39 states have entered into such agreements and USNRC has indicated it intends to work with Agreement States to develop a comprehensive fusion regulatory framework.
The Agreement States Program and Other State Regulations
The Agreement States Program is based in Section 274b of the Atomic Energy Act and enables USNRC to authorize individual states to license and regulate nuclear materials - including source materials, special nuclear materials, and byproduct materials – in order to protect the public from radiation hazards associated with such materials. These agreements effectively delegate to the state USNRC’s authority to regulate the specified nuclear materials for the duration of the agreement. USNRC may also grant exemptions from certain licensing requirements of the Atomic Energy Act and from its regulations applicable to certain licensees as needed to carry-out the agreements. Such exemptions may include requirements and regulations related to byproduct materials. This is particularly relevant given that USNRC intends to regulate fusion power under the byproduct materials framework.
Currently, 39 states have entered into such agreements and USNRC has indicated it intends to work with Agreement States to develop a comprehensive fusion regulatory framework. In Agreement States, entities seeking regulatory approval to use byproduct materials for fusion applications will be required to apply to the relevant state authority; in non-Agreement States, the application will be filed with USNRC.
...it is also important to keep in mind that fusion facilities will also be regulated by state and local governments under their existing land use, environmental, public health and safety, and other relevant authority.
While states’ specific role in regulating not only byproduct materials used in fusion systems but also the systems themselves may evolve following completion of the USNRC rulemaking, states such as Massachusetts, Washington, and others are already regulating fusion systems being used for R&D purposes under their existing nuclear materials authority. Given the current state of fusion regulations and the unique technical and radiological issues associated with fusion, which state radiation control offices may be unfamiliar with, it is advisable for fusion companies to engage early with their relevant state regulators. Such engagement will allow time for states to gather relevant information and seek technical support from USNRC under the Agreement States program thereby increasing the likelihood of a timely state licensing decision that meets the company’s schedule.
While substantial attention is being paid to the federal regulations for fusion systems and, by extension, regulation by Agreement States, it is also important to keep in mind that fusion facilities will also be regulated by state and local governments under their existing land use, environmental, public health and safety, and other relevant authority. State and local permitting and siting authorities are likely to have many questions concerning how First-of-A-Kind fusion systems can be located appropriately and developed and operated consistent with public interests. Therefore, it is equally prudent for fusion companies to engage with these authorities at the appropriate stage in project development.
Conclusion
As we witness the convergence of technological breakthroughs, substantial private investment, and regulatory development, the long-promised potential of fusion energy appears increasingly within reach. USNRC’s proposed regulatory framework acknowledges fusion's unique characteristics while providing necessary oversight. For industry stakeholders across the spectrum—from developers and investors to utilities and communities—the next three years present a window of opportunity to shape this emerging framework. By engaging proactively with federal and state regulators, participating in upcoming rulemaking processes, and preparing for implementation of the final regulations, stakeholders can help ensure that the regulatory environment supports rather than hinders fusion's commercial development. As fusion technology moves from laboratory to commercial deployment, this collaborative approach to regulation may well become a model for how emerging clean energy technologies can be safely and effectively integrated into our energy infrastructure, potentially unlocking one of humanity's most promising solutions to climate change and energy security challenges.
