An Overlooked SCOTUS Case Could Decide the Future of Nuclear Power

Although barely mentioned in the mainstream media, in granting cert toInterim Storage Partners, LLC v. Texas, a case about the storage of spent radioactive fuel from nuclear power plants, the U.S. Supreme Court may have taken on potentially the most consequential case of its new term.

SCOTUS will decide whether or not to uphold a Fifth Circuit decision that the Nuclear Regulatory Commission (NRC) does not have the legal power to license a private corporation to construct an off-site storage facility to hold deadly radioactive waste from nuclear power plants.

Depending on the legal rationale for SCOTUS’ decision, it could further enhance the power of courts to overturn decisions of regulatory agencies.

The case could determine whether artificial intelligence companies like Microsoft and Google can build a new generation of nuclear power plants to service the voracious hunger of artificial intelligence for electricity. Depending on its rationale, it could also impact the ability of regulatory agencies to function efficiently without being second guessed by courts.

The issues in the case have brought together an unlikely coalition of environmentalists, Texas Republicans, New Mexico Democrats, and the oil and gas industry against an equally unlikely grouping of the Biden administration, the nuclear power industry, and AI tech companies like Microsoft and Google.

The Legal Substance Issues

The environmental and legal issues in the case have a long history. The nuclear power industry has accumulated nearly 100,000 metric tons of radioactive waste that need to be deposited in a place that could be safe for millions of years. Most of the waste is now stored in temporary facilities adjacent to the power plants that create them, but such sites are running out of space and may not be safe long-term. During the 1980s Congress passed and amended the Nuclear Waste Policy Act providing for a permanent waste site and then designating Yucca Mountain, Nevada as the sole site. But plans for the site were abandoned due to environmental and political opposition, leaving no permanent site for disposable nuclear waste.

In response, for the first time the Nuclear Regulatory Commission began to grant licenses for “interim” storage facilities which were off-site (and often hundreds of miles away) from the power plants which generated the waste, claiming authority under the Atomic Energy Act. One such license was for an off-site storage facility in the Permian Basin, Texas. Texas Republican Attorney General Ken Paxton and a private oil and gas company sued, claiming that the federal government lacked the statutory authority to issue a license for interim off-site storage.

The conservative Fifth Circuit agreed with the plaintiffs, opining “Texas is correct. The Atomic Energy Act does not confer on the commission the broad authority it claims to issue licenses for private parties to store spent nuclear fuel away-from-the-reactor. And the Nuclear Waste Policy Act establishes a comprehensive statutory scheme for dealing with nuclear waste generated from commercial nuclear power generation, thereby foreclosing the commission’s claim of authority.”

The Fifth Circuit vacated the license. The U.S. Supreme Court just granted cert and will hear the case this term. Its decision will likely be highly consequential, both for environmental and AI development reasons, and for legal reasons.

Environmentally, the building of new nuclear power plants has been stalled for decades, both because of cost and because of environmental catastrophes like Three Mile Island, Chernobyl, and Fukushima and anti-nuclear films like Mike Nichols’ Silkwood starring Meryl Streep.

The Role of High-Tech Companies in Expanding Nuclear for AI

But largely under the radar, the voracious demand for electricity to power AI is leading top high-tech companies like Microsoft and Google to reinvigorate nuclear energy. Goldman Sachs analysts say it takes nearly 10 times the energy to power a ChatGPT than a Google search—data center power center demand will grow by 160% in the next five years. Morgan Stanley projects global data center emissions to accumulate 2.5 billion metric tons carbon-dioxide equivalent by then.

Microsoft has contracted for the currently mothballed Three Mile Island plant to reopen and access its entire output for Microsoft’s data centers. The operator is seeking hundreds of millions in tax breaks from the federal government under President Joe Bidens’s Inflation Reduction Act, which it says are necessary to make the reopening economically feasible. Energy Secretary Jennifer Granholm has said in the past that federal subsidies could cut the cost of bringing a new plant online by as much as half.

In March an Amazon affiliate purchased a nuclear-powered data center in Pennsylvania for $650 million.

It will be highly consequential if SCOTUS simply upholds the Fifth Circuit’s result, which would greatly slow high tech’s attempts to kick start nuclear power without time to reexamine the environmental dangers.

Just this week Google announced that it will support building seven small nuclear-power reactors in the U.S., to help power its growing appetite for electricity for AI and jump-start a U.S. nuclear revival.

The tech companies claim that reviving nuclear power will decrease CO2 emissions and help with global climate change. But they ignore the long-standing warnings of environmentalists of the potentially catastrophic dangers of nuclear power.

If SCOTUS upholds the Fifth Circuit decision outlawing the licensing of off-site nuclear waste dumps, it could considerably slow the renewed push for nuclear power, particularly by high-tech companies. That might give more time to evaluate the potential dangers of widespread renewal of nuclear power.

But depending on the legal rationale for SCOTUS’ decision, it could further enhance the power of courts to overturn decisions of regulatory agencies.

The Fifth Circuit used several rationales to block the license of temporary off-site nuclear waste facilities. The first, and least concerning, is its statutory holding that the Atomic Energy Act is “unambiguous” and “nowhere authorizes issuance of a materials license to possess spent nuclear fuel for any reason, let alone for the sole purpose of storing such material in a standalone facility.” If SCOTUS upholds the Fifth Circuit purely on statutory interpretation grounds, it would create few problematic precedents for regulatory agencies in general.

The Major Questions Doctrine

But the Fifth Circuit unnecessarily went further, holding that “even if the statutes were ambiguous, the [government’s] interpretation would not be entitled to deference by the courts” pursuant to the Chevron Doctrine, under which for previous decades, until recently rejected by the Roberts Court, judges deferred to the expertise of regulatory agencies when reasonably interpreting ambiguous statutes.

The Fifth Circuit cited SCOTUS’ precedent-setting 2022 decision in West Virginia v. EPA, in which, for the first time, a conservative majority of SCOTUS justices relied on the “major questions” doctrine to overturn a major Environmental Protection Agency rule. Under the newly invented “major questions” doctrine, SCOTUS ruled that courts should not defer to agencies on matters of “vast economic or political significance” unless the U.S. Congress has explicitly given the agencies the authority to act in those situations.

Citing West Virginia v. EPA, the Fifth Circuit held that “[D]isposal of nuclear energy is an issue of vast ‘economic and political significance.’ What to do with the nation’s ever-growing accumulation of nuclear waste is a major questions that—as the history of the Yucca Mountain repository shows—has been hotly contested for over half a century.”

It’s questionable whether the Fifth Circuit needed to reach the issues concerning the major questions doctrine in order to block the waste depository. It had already decided that the statutes were “unambiguous” and therefore it was not necessary to decide what would happen if they were “ambiguous,” which is the only situation in which the major questions doctrine might arguably apply. If SCOTUS wants to affirm the Fifth Circuit’s result, it can simply agree that the statutes were unambiguous and treat the parts of the decision involving the major questions doctrine as mere dicta. That would set no additional precedent for when courts can question the expertise of regulatory agencies.

What Party Has the Right to Sue?

There’s also a procedural issue in the case, that depending on SCOTUS’ rationale, could set precedent allowing a wider range of entities to legally challenge regulatory agency decisions. Under the Hobbs Act, a “party aggrieved” by an agency’s final order may seek judicial review in a federal appeals court.

The NRC argued, however, that the plaintiffs were not parties aggrieved by the NRC’s licensing order because they were not parties to the underlying administrative proceeding. The Fifth Circuit cited its own precedent asserting that the Hobbs Act contains an “ultra vires” exception to the party aggrieved requirement when the petitioner attacks the agency action as exceeding its authority and therefore the plaintiffs had a right to sue.

In granting cert SCOTUS agreed to rule on two questions. First is the substance issue on whether the government exceeded its authority in granting the off-site nuclear storage license. The second is the procedural issue of whether an allegation of ultra vires can override statutory limitations on jurisdiction, as the Fifth Circuit held. If SCOTUS rules that the Fifth Circuit was wrong to grant jurisdiction to the plaintiffs, the likely result would be that the licenses for off-site nuclear waste facilities would go forward and expand.

It will be highly consequential if SCOTUS simply upholds the Fifth Circuit’s result, which would greatly slow high tech’s attempts to kick start nuclear power without time to reexamine the environmental dangers. At the same time, if SCOTUS also rules that the plaintiffs had an ultra vires right to sue, it could further cripple the ability of regulatory agencies to act to protect the public interest under broad grants of power.