Nuclear Energy Policy

Order Code IB88090

CRS Issue Brief for Congress

Received through the CRS Web

Nuclear Energy Policy

Updated March 15, 2006

Mark Holt

Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

CONTENTS

SUMMARY

MOST RECENT DEVELOPMENTS

BACKGROUND AND ANALYSIS

Overview of Nuclear Power in the United States

Nuclear Power Research and Development

Nuclear Power Plant Safety and Regulation

Safety

Domestic Reactor Safety

Reactor Safety in the Former Soviet Bloc

Licensing and Regulation

Reactor Security

Decommissioning

Nuclear Accident Liability

Nuclear Waste Management

Federal Funding for Nuclear Energy Programs

LEGISLATION

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Nuclear Energy Policy

SUMMARY

Nuclear energy policy issues facing

Congress include the implementation of federal incentives for new commercial reactors,

radioactive waste management policy, research and development priorities, power

plant safety and regulation, and security

against terrorist attacks.

nuclear power plant security. The new Energy

Policy Act includes several reactor security

provisions, including requirements to revise

the security threats that nuclear plant guard

forces must be able to defeat, regular force-onforce security exercises at nuclear power

plants, and the fingerprinting of nuclear facility workers.

The Bush Administration has called for

an expansion of nuclear power. For Department of Energy (DOE) nuclear energy research and development, the Administration is

seeking $632.7 million for FY2007, an 18.1%

increase from the FY2006 appropriation. The

request would boost funding for the Advanced

Fuel Cycle Initiative (AFCI) from $79.2

million in FY2006 to $243.0 million in

FY2007. The higher AFCI funding would

allow DOE to begin developing an

engineering-scale facility to demonstrate new

technology for separating plutonium and

uranium in spent nuclear fuel, as part of the

Administration’s Global Nuclear Energy

Partnership (GNEP).

Disposal of highly radioactive waste has

been one of the most controversial aspects of

nuclear power. The Nuclear Waste Policy Act

of 1982 (NWPA, P.L. 97-425), as amended in

1987, requires DOE to conduct a detailed

physical characterization of Yucca Mountain

in Nevada as a permanent underground repository for high-level waste. The opening of the

Yucca Mountain repository has been delayed

from the previous goal of 2010, and DOE

currently has no announced schedule for the

project. The Administration is requesting

$544.5 million for the civilian nuclear waste

program in FY2007, $50 million above the

FY2006 level.

Significant incentives for new commercial reactors are included in the Energy Policy

Act of 2005 (P.L. 109-58), signed by the

President August 8, 2005. These include

production tax credits, loan guarantees, insurance against regulatory delays, and extension

of the Price-Anderson Act nuclear liability

system. The act also authorizes $1.25 billion

for the design and construction of a nuclear-hydrogen cogeneration plant at Idaho

National Laboratory.

Whether progress on nuclear waste

disposal and other congressional action will

revive the U.S. nuclear power industry’s

growth will depend primarily on economic

considerations. Natural gas- and coal-fired

power plants are currently favored over nuclear reactors for new generating capacity.

However, some electric utilities are seeking

approval of sites for new reactors, and nuclear

industry officials have predicted that the

incentives in the Energy Policy Act of 2005

will lead to the first new U.S. reactor orders

since 1978.

The September 11, 2001, terrorist attacks

on the United States raised concern about

Congressional Research Service

˜

The Library of Congress

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MOST RECENT DEVELOPMENTS

The Bush Administration’s February 6 budget request for FY2007 includes $632.7

million for Department of Energy (DOE) nuclear energy research and development, an

18.1% increase from the FY2006 appropriation. The request would boost funding for the

Advanced Fuel Cycle Initiative (AFCI) from $79.2 million in FY2006 to $243.0 million in

FY2007. The higher AFCI funding would allow DOE to begin developing an engineeringscale facility to demonstrate new technology for separating plutonium and uranium in spent

nuclear fuel, as part of the Administration’s Global Nuclear Energy Partnership (GNEP). The

Administration is requesting $544.5 million for the civilian nuclear waste program in

FY2007, $50 million above the FY2006 level. The Energy and Water Development

Appropriations Act for FY2006 (P.L. 109-103, H.Rept. 109-275), funding DOE nuclear

programs, was signed by the President on November 19.

President Bush on August 8 signed the Energy Policy Act of 2005 (P.L. 109-58), which

provides strong incentives for the construction of new nuclear power plants. These include

production tax credits, loan guarantees, insurance against regulatory delays, and extension

of the Price-Anderson Act nuclear liability system.

The tax credit is available for up to 6,000 megawatts of new nuclear capacity for the

first eight years of operation, up to $125 million annually per 1,000 megawatts. That

capacity limit could accommodate five or six new commercial reactors, or it could be

allocated among a greater number of reactors (with the tax credit prorated accordingly) by

the Secretary of Energy. Nuclear power plants would also be eligible for federal loan

guarantees for up to 80% of construction costs.

Because the nuclear industry has often blamed past nuclear reactor construction cost

overruns on licensing delays, the energy act authorizes the Secretary of Energy to pay for up

to $500 million in costs resulting from Nuclear Regulatory Commission (NRC) delays for

the first two new reactors and up to $250 million for the next four.

The Energy Policy Act includes several provisions dealing with security at nuclear

power plants. NRC is required to conduct “force on force” security exercises at each nuclear

power plant at least once every three years (as is its current policy), and is required to revise

the “design basis threat” that nuclear plant security forces must be able to defeat. NRC’s

proposed revision was published in the Federal Register on November 7.

BACKGROUND AND ANALYSIS

Overview of Nuclear Power in the United States

The U.S. nuclear power industry, while currently generating about 20% of the nation’s

electricity, faces an unclear long-term future. No nuclear plants have been ordered in the

United States since 1978 and more than 100 reactors have been canceled, including all

ordered after 1973. No units are currently under active construction; the Tennessee Valley

Authority’s (TVA’s) Watts Bar 1 reactor, ordered in 1970 and licensed to operate in 1996,

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was the most recent U.S. nuclear unit to be completed. The nuclear power industry’s

troubles include high nuclear power plant construction costs, public concern about nuclear

safety and waste disposal, and regulatory compliance costs.

High construction costs are perhaps the most serious obstacle to nuclear power

expansion. Construction costs for reactors completed since the mid-1980s ranged from $2$6 billion, averaging more than $3,000 per kilowatt of electric generating capacity (in 1997

dollars). The nuclear industry predicts that new plant designs could be built for less than half

that amount if many identical plants were built in a series, but such economies of scale have

yet to be demonstrated.

Nevertheless, all is not bleak for the U.S. nuclear power industry, which currently

comprises 103 licensed reactors at 65 plant sites in 31 states. (That number excludes TVA’s

Browns Ferry 1, which has not operated since 1985; TVA is spending about $1.8 billion to

restart the reactor by 2007.) Electricity production from U.S. nuclear power plants is greater

than that from oil, natural gas, and hydropower, and behind only coal, which accounts for

more than half of U.S. electricity generation. Nuclear plants generate more than half the

electricity in six states. The near-record 818 billion kilowatt-hours of nuclear electricity

generated in the United States during 20051 was more than the nation’s entire electrical

output in the early 1960s, when the first large-scale commercial reactors were being ordered.

Average operating costs of U.S. nuclear plants dropped substantially during the past

decade, and costly downtime has been steadily reduced. Licensed commercial reactors

generated electricity at an average of 89.4% of their total capacity in 2005, according to

industry statistics.2

Thirty-nine commercial reactors have received 20-year license extensions from the

Nuclear Regulatory Commission (NRC), giving them up to 60 years of operation. License

extensions for 12 more reactors are currently under review, and many others are anticipated,

according to NRC (see website at [http://www.nrc.gov/reactors/operating/licensing/renewal/

applications.html]).

Industry consolidation could also help existing nuclear power plants, as larger nuclear

operators purchase plants from utilities that run only one or two reactors. Several such sales

have occurred, including the March 2001 sale of the Millstone plant in Connecticut to

Dominion Energy for a record $1.28 billion. The merger of two of the nation’s largest

nuclear utilities, PECO Energy and Unicom, completed in October 2000, consolidated the

operation of 17 reactors under a single corporate entity, Exelon Corporation, headquartered

in Chicago. Exelon and New Jersey-based Public Service Enterprise Group announced a

merger on December 20, 2004, that would boost the combined firm’s reactor fleet to 20.

Existing nuclear power plants appear to hold a strong position in the ongoing

restructuring of the electricity industry. In most cases, nuclear utilities have received

favorable regulatory treatment of past construction costs, and average nuclear operating costs

1

“World’s Nuclear Performance in 2005 Close to 2004’s,” Nucleonics Week, Feb. 9, 2006, p. 1.

2

Ibid.

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are currently estimated to be competitive with those of fossil fuel technologies.3 Although

eight U.S. nuclear reactors were permanently shut down during the 1990s, none has been

closed since 1998, and recent reactor sales could indicate greater industry interest in nuclear

plants that previously had been considered marginal. Despite the shutdowns, annual U.S.

nuclear electrical output increased by more than one-third from 1990 to 2005, according to

the Energy Information Administration and industry statistics. The increase resulted

primarily from reduced downtime at the remaining plants, the startup of five new units, and

reactor modifications to boost capacity.

The good performance of existing reactors and the relatively high cost of natural gas —

the favored fuel for new power plants for the past 15 years — have prompted renewed utility

consideration of the feasibility of building new reactors. During 2005, electric utilities

announced plans to apply for combined construction permits and operating licenses (COLs)

for 11 reactors; however, no commitments have been made to build them if the COLs are

issued. The Department of Energy (DOE) is assisting with some of the COL applications

and site-selection efforts as part of a program to encourage new commercial reactor orders

by 2010, as discussed in the next section.

Strong incentives for building new nuclear power plants are included in the Energy

Policy Act of 2005 (P.L. 109-58), signed by the President on August 8. Particularly

significant is a tax credit for up to 6,000 megawatts of new nuclear capacity for the first eight

years of operation, up to $125 million annually per 1,000 megawatts. That capacity limit

could make five or six new commercial reactors eligible for the 1.8-cents/kilowatt-hour tax

credit, or the capacity could be allocated among a greater number of reactors (with the tax

credit prorated accordingly) by the Secretary of Energy.

Because the nuclear industry has often blamed licensing delays for past nuclear reactor

construction cost overruns, the new law would authorize the Secretary of Energy to pay for

up to $500 million in costs resulting from NRC delays for the first two new reactors and up

to $250 million for the next four. Nuclear power plants would also be eligible for federal

loan guarantees for up to 80% of construction costs. The Energy Information Administration

(EIA) has previously concluded that the nuclear energy tax credit would stimulate

construction of new commercial reactors,4 and nuclear industry officials recently predicted

that the tax credits and other incentives would prove effective.5 Without such assistance,

EIA has projected that no new reactors would be built by 2025.6

Global warming that may be caused by fossil fuels — the “greenhouse effect” — is

cited by nuclear power supporters as an important reason to develop a new generation of

3

Energy Information Administration, Nuclear Power: 12 percent of America’s Generating Capacity,

20 percent of the Electricity, July 17, 2003, at [http://www.eia.doe.gov/cneaf/nuclear/page/analysis/

nuclearpower.html].

4

Energy Information Administration, Analysis of Five Selected Tax Provisions of the Conference

Energy Bill of 2003, February 2004.

5

Fialka, John J., “Energy Bill May Revive Nuclear Power in U.S.” Wall Street Journal, July 28,

2005, p. A4.

6

Energy Information Administration, Annual Energy Outlook 2005, DOE/EIA-0383(2005), February

2005, p. 6.

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reactors. On May 19, 2003, New Hampshire became the first state to provide emissions

credits for incremental nuclear generating capacity. But the large obstacles noted above must

still be overcome before electric generating companies will risk ordering new nuclear units.

(For more on the outlook for nuclear power, see CRS Report RL31064, Nuclear Power:

Prospects for New Commercial Reactors, by Larry Parker and Mark Holt.)

Nuclear Power Research and Development

For nuclear energy research and development — including advanced reactors, fuel cycle

technology, nuclear hydrogen production, and infrastructure support — DOE is requesting

$632.7 million for FY2007, an 18.1% increase from the FY2006 appropriation. The request

would boost funding for the Advanced Fuel Cycle Initiative (AFCI) from $79.2 million in

FY2006 to $243.0 million in FY2007. The higher AFCI funding would allow DOE to begin

developing an engineering-scale facility to demonstrate new technology for separating

plutonium and uranium in spent nuclear fuel, as part of the Administration’s Global Nuclear

Energy Partnership (GNEP). The nuclear energy program is run by DOE’s Office of Nuclear

Energy, Science, and Technology.

According to DOE’s budget justification, the nuclear energy R&D program is intended

“to enable nuclear energy to fulfill its promise as a safe, advanced, inexpensive and

environmentally benign approach to providing reliable energy to all of the world’s people.”

Under the Administration’s GNEP initiative, plutonium partially separated from spent

nuclear fuel would be recycled into new fuel to expand the future supply of nuclear fuel and

potentially reduce waste. The United States and other advanced nuclear nations would lease

new fuel to other nations that agreed to forgo uranium enrichment, spent fuel recycling (also

called reprocessing), and other fuel cycle facilities that could be used to produce nuclear

weapons materials; see [http://www.gnep.energy.gov/.]. The leased fuel would then be

returned to supplier nations for reprocessing. Solidified high-level reprocessing waste would

be sent back to the nation that had used the leased fuel, along with supplies of fresh nuclear

fuel, according to the GNEP concept.

However, opponents have criticized DOE’s nuclear research program as providing

wasteful subsidies to an industry that they believe should be phased out as unacceptably

hazardous and economically uncompetitive. Opponents are particularly concerned about

GNEP’s emphasis on spent fuel reprocessing, which they see as a weapons proliferation risk,

even if weapons-useable plutonium is not completely separated from other spent fuel

elements, as envisioned by the Administration.

Nuclear Power 2010. President Bush’s specific mention of “clean, safe nuclear

energy” in his 2006 State of the Union Address reiterated the Administration’s interest in

encouraging construction of new commercial reactors — for which there have been no U.S.

orders since 1978. DOE’s efforts to restart the nuclear construction pipeline are focused on

the Nuclear Power 2010 Program, which will pay up to half of the nuclear industry’s costs

of seeking regulatory approval for new reactor sites, applying for new reactor licenses, and

preparing detailed plant designs. The program is intended to provide assistance for advanced

versions of existing commercial nuclear plants that could be ordered within the next few

years.

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The Nuclear Power 2010 Program is helping three utilities seek NRC approval for

potential nuclear reactor sites in Illinois, Mississippi, and Virginia. In addition, two industry

consortia are receiving DOE assistance over the next several years to design and license new

nuclear power plants. DOE awarded the first funding to the consortia in 2004. The FY2006

Energy and Water appropriation included $65.3 million for the program, a $15.7 million

boost over FY2005. DOE’s FY2007 budget request includes $52.3 million for Nuclear

Power 2010. DOE assistance under the program, including the early site permits, is planned

to reach a multiyear total of $550 million.

The nuclear license applications under the Nuclear Power 2010 program are intended

to test the “one step” licensing process established by the Energy Policy Act of 1992 (P.L.

102-486). Even if the licenses are granted by NRC, the industry consortia funded by DOE

have not committed to building new reactors. Loan guarantees and tax credits to encourage

construction of new reactors are included in the Energy Policy Act of 2005 (P.L. 109-58).

The 2005 act also authorizes DOE to provide compensation to the first six new reactors for

regulatory delays beyond their control; the FY2007 budget request for the Nuclear Power

2010 Program includes $1.8 million to develop criteria for such assistance. The two

consortia receiving COL assistance under the Nuclear Power 2010 program are

!

A consortium led by Dominion Resources that is preparing a COL for an

advanced General Electric reactor (after originally considering a Canadian

design). The proposed reactor would be located at Dominion’s existing

North Anna plant in Virginia, where the company is seeking an NRC early

site permit with DOE assistance.

!

A consortium called NuStart Energy Development, which includes Exelon

and several other major nuclear utilities, announced on September 22, 2005,

that it would seek a COL for a Westinghouse design at the site of TVA’s

uncompleted Bellefonte nuclear plant in Alabama and for a General Electric

design at the Grand Gulf plant in Mississippi. DOE has agreed to provide

assistance to one of the two NuStart projects.

The advanced Westinghouse reactor selected by NuStart, the AP-1000, is also

competing for a contract in China. If Westinghouse were to prevail over designs being

offered by France and Russia, the four-reactor contract could help demonstrate the

commercial viability of the new design, which received final design approval from NRC in

September 2004. A preliminary commitment to provide almost $5 billion in financial

support for the proposed China reactor sale was approved February 18, 2005, by the ExportImport Bank of the United States. Critics contend that the tentative Ex-Im financing could

provide unwarranted subsidies to the nuclear power industry and unwisely transfer U.S.

nuclear technology to China.

Generation IV. Advanced commercial reactor technologies that are not yet close to

deployment are the focus of DOE’s Generation IV Nuclear Energy Systems Initiative, for

which $31.4 million is being requested for FY2007 — 30% less than the FY2006 request and

more than 40% below the final appropriation of $54.5 million. Most of the proposed

reduction would come from the Next Generation Nuclear Plant (discussed below), which

would drop from $40 million to $23.4 million.

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The Generation IV program is focusing on six advanced designs that could be

commercially available around 2020-2030: two gas-cooled, one water-cooled, two liquidmetal-cooled, and one molten-salt concept. Some of these reactors would use plutonium

recovered through reprocessing of spent nuclear fuel, using technologies being developed by

the Advanced Fuel Cycle Initiative.

Advanced Fuel Cycle Initiative. The nuclear energy program’s Advanced Fuel

Cycle Initiative (AFCI) is the primary component of GNEP. DOE’s $243 million budget

request for AFCI for FY2007 makes up nearly all of the $250 million GNEP program (with

the remaining $7 million requested for program direction). The FY2007 AFCI budget

request is more than triple the FY2006 appropriation of $79.2 million.

According to the budget justification, AFCI will develop and demonstrate nuclear fuel

cycles that could reduce the long-term hazard of spent nuclear fuel and recover additional

energy. Such technologies would involve separation of plutonium, uranium, and other longlived radioactive materials from spent fuel for re-use in a nuclear reactor or for transmutation

in a particle accelerator. Most of the proposed AFCI funding ($155 million) would be for

an engineering-scale demonstration of a separations technology called UREX+, in which

uranium and other elements are chemically removed from dissolved spent fuel, leaving a

mixture of plutonium and other highly radioactive elements. Proponents believe the process

is proliferation-resistant, because further purification would be required to make the

plutonium useable for weapons.

Removing uranium from spent fuel would eliminate most of the volume of spent

nuclear fuel that would otherwise require disposal in a deep geologic repository, which DOE

is developing at Yucca Mountain, Nevada. The UREX+ process also would reduce the heat

generated by nuclear waste — the major limit on the repository’s capacity — by removing

cesium and strontium for separate storage and decay over several hundred years. Plutonium

and other long-lived elements would be destroyed in accelerators or fast reactors (such as the

type under development by the Generation IV program) to reduce the long-term hazard of

nuclear waste. Even if technically feasible, however, the economic viability of such waste

processing has yet to be determined, and it still faces significant opposition on nuclear

nonproliferation grounds, as noted above.

Nuclear Hydrogen Initiative. In support of President Bush’s program to develop

hydrogen-fueled vehicles, DOE is requesting $18.1 million in FY2007 for the Nuclear

Hydrogen Initiative, a 25% reduction from the FY2006 level. According to DOE’s FY2005

budget justification, “preliminary estimates ... indicate that hydrogen produced using nucleardriven thermochemical or high-temperature electrolysis processes would be only slightly

more expensive than gasoline” and result in far less air pollution.

Nuclear Power Plant Safety and Regulation

Safety

Controversy over safety has dogged nuclear power throughout its development,

particularly following the March 1979 Three Mile Island accident in Pennsylvania and the

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April 1986 Chernobyl disaster in the former Soviet Union. In the United States,

safety-related shortcomings have been identified in the construction quality of some plants,

plant operation and maintenance, equipment reliability, emergency planning, and other areas.

In a relatively recent example, it was discovered in March 2002 that leaking boric acid had

eaten a large cavity in the top of the reactor vessel in Ohio’s Davis-Besse nuclear plant. The

corrosion left only the vessel’s quarter-inch-thick stainless steel inner liner to prevent a

potentially catastrophic loss of reactor cooling water. Davis-Besse remained closed for

repairs and other safety improvements until NRC allowed the reactor to restart in March

2004.

NRC’s oversight of the nuclear industry is an ongoing issue; nuclear utilities often

complain that they are subject to overly rigorous and inflexible regulation, but nuclear critics

charge that NRC frequently relaxes safety standards when compliance may prove difficult

or costly to the industry.

Domestic Reactor Safety. In terms of public health consequences, the safety record

of the U.S. nuclear power industry in comparison with other major commercial energy

technologies has been excellent. During approximately 2,000 reactor-years of operation in

the United States,7 the only incident at a commercial nuclear power plant that might lead to

any deaths or injuries to the public has been the Three Mile Island accident, in which more

than half the reactor core melted. Public exposure to radioactive materials released during

that accident is expected to cause fewer than five deaths (and perhaps none) from cancer over

the following 30 years. A study of 32,000 people living within 5 miles of the reactor when

the accident occurred found no significant increase in cancer rates through 1998, although

the authors note that some potential health effects “cannot be definitively excluded.”8

The relatively small amounts of radioactivity released by nuclear plants during normal

operation are not generally believed to pose significant hazards, although some groups

contend that routine emissions are risky. There is substantial scientific uncertainty about the

level of risk posed by low levels of radiation exposure; as with many carcinogens and other

hazardous substances, health effects can be clearly measured only at relatively high exposure

levels. In the case of radiation, the assumed risk of low-level exposure has been extrapolated

mostly from health effects documented among persons exposed to high levels of radiation,

particularly Japanese survivors of nuclear bombing in World War II.

The consensus among most safety experts is that a severe nuclear power plant accident

in the United States is likely to occur less frequently than once every 10,000 reactor-years

of operation. (For the current U.S. fleet of about 100 reactors, that rate would yield an

average of one severe accident every 100 years.) These experts believe that most severe

accidents would have small public health impacts, and that accidents causing as many as 100

deaths would be much rarer than once every 10,000 reactor-years. On the other hand, some

7

Nuclear Engineering International, “Country averages as at end September 2004,” January 2005,

p. 37.

8

Evelyn O. Talbott et al., “Long Term Follow-Up of the Residents of the Three Mile Island Accident

Area: 1979-1998,” Environmental Health Perspectives, published online October 30, 2002, at

[http://ehp.niehs.nih.gov/docs/2003/5662/abstract.html].

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experts challenge the complex calculations that go into predicting such accident frequencies,

contending that accidents with serious public health consequences may be more frequent.

Reactor Safety in the Former Soviet Bloc. The Chernobyl accident was by far

the worst nuclear power plant accident to have occurred anywhere in the world. At least 31

persons died quickly from acute radiation exposure or other injuries, and thousands of

additional cancer deaths among the tens of millions of people exposed to radiation from the

accident may occur during the next several decades.

According to a 2002 report by the Organization for Economic Cooperation and

Development (OECD), the primary observable health consequence of the accident has been

a dramatic increase in childhood thyroid cancer. About 1,000 cases of childhood thyroid

cancer were reported in certain regions surrounding the destroyed reactor — a rate that is as

much as a hundred times the pre-accident level, according to OECD. The death rate for

accident cleanup workers also rose measurably, the organization reported. The OECD report

estimated that about 50,000 square miles of land in Belarus, Ukraine, and Russia were

substantially contaminated with radioactive cesium from Chernobyl.9

Licensing and Regulation

For many years a top priority of the nuclear industry was to modify the process for

licensing new nuclear plants. No electric utility would consider ordering a nuclear power

plant, according to the industry, unless licensing became quicker and more predictable, and

designs were less subject to mid-construction safety-related changes required by NRC. The

Energy Policy Act of 1992 (P.L. 102-486) largely implemented the industry’s licensing goals,

but no plants have been ordered.

Nuclear plant licensing under the Atomic Energy Act of 1954 (P.L. 83-703; U.S.C.

2011-2282) had historically been a two-stage process. NRC first issued a construction permit

to build a plant, and then, after construction was finished, an operating permit to run it. Each

stage of the licensing process involved complicated proceedings. Environmental impact

statements also are required under the National Environmental Policy Act.

Over the vehement objections of nuclear opponents, the Energy Policy Act of 1992

provides a clear statutory basis for one-step nuclear licenses, which would combine the

construction permits and operating licenses and allow completed plants to operate without

delay if construction criteria were met. NRC would hold preoperational hearings on the

adequacy of plant construction only in specified circumstances. DOE’s Nuclear Power 2010

initiative (discussed above) proposes to pay up to half the cost of combined construction and

operating licenses for two advanced reactors. The Energy Policy Act of 2005 authorizes

federal payments to the owner of a completed reactor whose operation is delayed by

regulatory action.

A fundamental concern in the nuclear regulatory debate is the performance of NRC in

issuing and enforcing nuclear safety regulations. The nuclear industry and its supporters have

regularly complained that unnecessarily stringent and inflexibly enforced nuclear safety

9

OECD Nuclear Energy Agency, Chernobyl: Assessment of Radiological and Health Impacts, 2002.

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regulations have burdened nuclear utilities and their customers with excessive costs. But

many environmentalists, nuclear opponents, and other groups charge NRC with being too

close to the nuclear industry, a situation that they say has resulted in lax oversight of nuclear

power plants and routine exemptions from safety requirements.

Primary responsibility for nuclear safety compliance lies with nuclear plant owners, who

are required to find any problems with their plants and report them to NRC. Compliance is

also monitored directly by NRC, which maintains at least two resident inspectors at each

nuclear power plant. The resident inspectors routinely examine plant systems, observe the

performance of reactor personnel, and prepare regular inspection reports. For serious safety

violations, NRC often dispatches special inspection teams to plant sites.

In response to congressional criticism, NRC has been reorganizing and overhauling

many of its procedures. The Commission is moving toward “risk-informed regulation,” in

which safety enforcement is guided by the relative risks identified by detailed individual

plant studies. NRC’s risk-informed reactor oversight system, inaugurated April 2, 2000,

relies on a series of performance indicators to determine the level of scrutiny that each

reactor should receive.

Reactor Security

Nuclear power plants have long been recognized as potential targets of terrorist attacks,

and critics have long questioned the adequacy of the measures required of nuclear plant

operators to defend against such attacks. All commercial nuclear power plants licensed by

NRC have a series of physical barriers to accessing the operating reactor area, and are

required to maintain a trained security force to protect them. Following the terrorist attacks

of September 11, 2001, NRC began a “top-to-bottom” review of its security requirements.

A key element in protecting nuclear plants is the requirement that simulated terrorist

attack exercises, monitored by NRC, be carried out to test the ability of the plant operator to

defend against them. The severity of attacks to be prepared for are specified in the form of

a “design basis threat” (DBT). After more than a year’s review, on April 29, 2003, NRC

changed the DBT to “represent the largest reasonable threat against which a regulated private

guard force should be expected to defend under existing law.” The details of the revised

DBT were not released to the public.

The Energy Policy Act of 2005 requires NRC to revise the DBT based on an assessment

of terrorist threats, the potential for multiple coordinated attacks, possible suicide attacks,

and other criteria. NRC’s proposed DBT revision was published in the Federal Register on

November 7, 2005. The new energy law also requires NRC to conduct force-on-force

security exercises at nuclear power plants every three years (which was NRC’s previous

policy), authorizes firearms use by nuclear security personnel (preempting some state

restrictions), establishes federal security coordinators, and requires fingerprinting of nuclear

facility workers.

(For background on security issues, see CRS Report RS21131, Nuclear Power Plants:

Vulnerability to Terrorist Attack, by Carl Behrens and Mark Holt.)

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Decommissioning

When nuclear power plants end their useful lives, they must be safely removed from

service, a process called decommissioning. NRC requires nuclear utilities to make regular

contributions to special trust funds to ensure that money is available to remove radioactive

material and contamination from reactor sites after they are closed. The first full-sized U.S.

commercial reactors to be decommissioned were the Trojan plant in Oregon, whose

decommissioning received NRC approval on May 23, 2005, and Maine Yankee, for which

NRC approved most of the site cleanup on October 3, 2005. The Trojan decommissioning

cost $429 million, according to reactor owner Portland General Electric, and the Maine

Yankee decommissioning cost about $500 million.10 Those costs are within the range

estimated by a 1996 DOE report of about $150 million to $600 million in 1995 dollars.

The tax treatment of decommissioning funds has been a continuing issue. The Energy

Policy Act of 2005 provides favorable tax treatment to nuclear decommissioning funds,

subject to certain restrictions.

Nuclear Accident Liability

Liability for damages to the general public from nuclear incidents is addressed by the

Price-Anderson Act (primarily Section 170 of the Atomic Energy Act of 1954, 42 U.S.C.

2210). The Energy Policy Act of 2005 extends Price-Anderson coverage for new reactors

and new DOE nuclear contracts through the end of 2025.

Under Price-Anderson, the owners of commercial reactors must assume all liability for

nuclear damages awarded to the public by the court system, and they must waive most of

their legal defenses following a severe radioactive release (“extraordinary nuclear

occurrence”). To pay any such damages, each licensed reactor must carry financial

protection in the amount of the maximum liability insurance available, which was increased

by the insurance industry from $200 million to $300 million on January 1, 2003. Any

damages exceeding that amount are to be assessed equally against all covered commercial

reactors, up to $95.8 million per reactor (most recently adjusted for inflation on August 20,

2003). Those assessments — called “retrospective premiums” — would be paid at an annual

rate of no more than $10 million per reactor, to limit the potential financial burden on reactor

owners following a major accident. According to NRC, 103 commercial reactors are

currently covered by the Price-Anderson retrospective premium requirement.

For each nuclear incident, the Price-Anderson liability system currently would provide

up to $10.9 billion in public compensation. That total includes the $300 million in insurance

coverage carried by the reactor that suffered the incident, plus the $95.8 million in

retrospective premiums from each of the 103 currently covered reactors, totaling $10.2

billion. On top of those payments, a 5% surcharge may also be imposed, raising the total

per-reactor retrospective premium to $100.6 million and the total available compensation to

about $10.7 billion. Under Price-Anderson, the nuclear industry’s liability for an incident

is capped at that amount, which varies depending on the number of covered reactors, the

10

Sharp, David, “NRC Signs Off On Maine Yankee’s Decommissioning,” Associated Press, October

3, 2005.

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amount of available insurance, and an inflation adjustment that is made every five years.

Payment of any damages above that liability limit would require congressional approval

under special procedures in the act.

The Price-Anderson Act also covers contractors who operate hazardous DOE nuclear

facilities. The liability limit for DOE contractors had been the same as for commercial

reactors, excluding the 5% surcharge, except when the limit for commercial reactors drops

because of a decline in the number of covered reactors. Price-Anderson authorizes DOE to

indemnify its contractors for the entire amount, so that damage payments for nuclear

incidents at DOE facilities would ultimately come from the Treasury. However, the law also

allows DOE to fine its contractors for safety violations, and contractor employees and

directors can face criminal penalties for “knowingly and willfully” violating nuclear safety

rules.

Under the Price-Anderson extension in the Energy Policy Act of 2005, the total

retrospective premium for each reactor is set at the current level of $95.8 million and the

limit on per-reactor annual payments raised to $15 million, with both to be adjusted for

inflation every five years. For the purposes of those payment limits, a nuclear plant

consisting of multiple small reactors (100-300 megawatts, up to a total of 1,300 megawatts)

would be considered a single reactor. Therefore, a power plant with six 120-megawatt

pebble-bed modular reactors would be liable for retrospective premiums of up to $95.8

million, rather than $574.8 million. The liability limit on DOE contractors is set at $10

billion per accident, also to be adjusted for inflation.

Although DOE is generally authorized to impose civil penalties on its contractors for

violations of nuclear safety regulations, Atomic Energy Act §234A specifically exempted

seven non-profit DOE contractors and their subcontractors. Under the same section, DOE

automatically remitted any civil penalties imposed on non-profit educational institutions

serving as DOE contractors. The Price-Anderson extension eliminates the civil penalty

exemption for future contracts by the seven listed non-profit contractors and DOE’s authority

to automatically remit penalties imposed on all non-profit educational institutions serving

as contractors. However, the new law limits the civil penalties against a non-profit

contractor to the amount of management fees paid under that contract.

The Price-Anderson Act’s limits on liability were crucial in establishing the commercial

nuclear power industry in the 1950s. Supporters of the Price-Anderson system contend that

it has worked well since that time in ensuring that nuclear accident victims would have a

secure source of compensation, at little cost to the taxpayer. Extension of the act was widely

considered a prerequisite for new nuclear reactor construction in the United States.

Opponents contend that Price-Anderson subsidizes the nuclear power industry by protecting

it from some of the financial consequences of the most severe conceivable accidents.

Nuclear Waste Management

One of the most controversial aspects of nuclear power is the disposal of radioactive

waste, which can remain hazardous for thousands of years. Each nuclear reactor produces

an annual average of about 20 tons of highly radioactive spent nuclear fuel and 50-200 cubic

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meters of low-level radioactive waste. Upon decommissioning, contaminated reactor

components are also disposed of as low-level waste.

The federal government is responsible for permanent disposal of commercial spent fuel

(paid for with a fee on nuclear power) and federally generated radioactive waste, while states

have the authority to develop disposal facilities for commercial low-level waste. Spent fuel

and other highly radioactive waste is to be isolated in a deep underground repository,

consisting of a large network of tunnels carved from rock that has remained geologically

undisturbed for hundreds of thousands of years. Under the Nuclear Waste Policy Act (42

U.S.C. 10101 et seq.), Yucca Mountain in Nevada is the only candidate site for the national

repository.

Energy Secretary Samuel Bodman told the House Appropriations Committee’s Energy

and Water Development Subcommittee on March 8, 2006, that construction of a repository

at Yucca Mountain would probably not begin for at least five years. That scenario would

push the opening of the repository well past DOE’s previous goal of 2010.

Delays in the Yucca Mountain project prompted the House Appropriations Committee

to include language in its report on the FY2006 Energy and Water appropriations bill

directing DOE “to begin the movement of spent fuel to centralized interim storage at one or

more DOE sites within FY2006.”11 The interim storage requirement was not included in the

enacted Energy and Water bill, but the measure does provide $50 million for DOE to develop

a spent nuclear fuel recycling plan. The detailed program plan is to be submitted by March

31, 2006, and a “site selection competition” for an integrated reprocessing facility is to begin

by June 30, 2006. A reprocessing site is to be selected in FY2007, with construction to begin

in FY2010. “The site competition should not be limited to DOE sites, but should be open

to a wide range of other possible federal and non-federal sites on a strictly voluntary basis,”

according to the conference report. Applicants for a reprocessing facility can receive up to

$5 million per site, up to a total of $20 million, to prepare detailed proposals.

In submitting its FY2007 budget request, the Administration announced that it was

preparing draft legislation to address problems in the civilian nuclear waste program,

possibly including provisions for interim storage. The Administration is requesting $544.5

million for the waste program in FY2007, $50 million above the FY2006 level. The waste

program is run by DOE’s Office of Civilian Radioactive Waste Management (OCRWM).

The delays in the Yucca Mountain program follow a July 9, 2004, ruling by the U.S.

Court of Appeals for the District of Columbia Circuit that overturned a key aspect of the

Environmental Protection Agency’s (EPA’s) regulations for the planned repository. The

three-judge panel ruled that the 10,000-year compliance period was too short, but it rejected

several other challenges to the rules. EPA proposed a new standard on August 9, 2005, that

would allow higher radiation exposure from the repository after 10,000 years.

The quality of scientific work at Yucca Mountain was called into question by DOE’s

March 16, 2005, disclosure of e-mails from geologists indicating that some quality assurance

documentation had been falsified. DOE currently is determining whether the problems affect

11

H.Rept. 109-86, May 18, 2005.

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the completeness and accuracy of information submitted to NRC in support of the planned

Yucca Mountain license application.

Further delays in the nuclear waste program could prove costly under a settlement

announced August 10, 2004, between the Department of Justice and Exelon Corporation,

which had filed a breach-of-contract suit over DOE’s failure to begin accepting spent fuel

by 1998 as required by NWPA. Under the settlement, Exelon is to be reimbursed from the

federal Judgment Fund for its spent fuel storage costs caused by the waste program delays.

Exelon estimates that it will receive up to $600 million if waste acceptance does not begin

until 2015. Several other utilities have also negotiated settlements, and the Tennessee Valley

Authority on January 31, 2006, won a $34.9 million judgment from the U.S. Court of Federal

Claims for waste storage costs incurred through September 2004. Numerous other utility

claims are pending.12

(For further details, see CRS Issue Brief IB92059, Civilian Nuclear Waste Disposal, by

Mark Holt.)

Federal Funding for Nuclear Energy Programs

The following tables summarize current funding for DOE nuclear fission programs and

NRC. The sources for the funding figures are Administration budget requests and committee

reports on the Energy and Water Development Appropriations Acts, which fund all the

nuclear programs. President Bush submitted his FY2007 funding request February 6, 2006.

The FY2006 energy and water conference report was approved by Congress on November

14, 2005, and signed into law on November 19, 2005 (H.Rept 109-275, P.L. 109-103).

Table 1. Funding for the Nuclear Regulatory Commission

(budget authority in millions of current dollars)

FY2006

Approp.

Nuclear Regulatory Commission

— Reactor Licensing

— Reactor Inspection

— Fuel Facility Licensing and Inspection

— Nuclear Materials

— High-Level Waste Repository

— Decommission. and Low-Level Waste

— Spent Fuel Storage and Transportation

— Inspector General

Total NRC budget Authority

— Offsetting fees

Net appropriation

302.8

212.4

40.1

80.1

45.7

27.4

24.8

8.3

741.5

624.7

116.8

12

FY2007

Request

341.3

222.0

37.6

74.3

41.0

25.7

26.5

8.1

776.6

627.7

148.9

Hiruo, Elaine, and Tom Harrison. “TVA, Negotiated Settlements Add to Taxpayers’ Yucca Mt.

Bill.” NuclearFuel. March 13, 2006. p. 11.

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Table 2. DOE Funding for Nuclear Activities

(budget authority in millions of current dollars)

FY2005

Approp.

Nuclear Energy (selected programs)

University Reactor Assistance

Nuclear Power 2010

Generation IV Nuclear Systems

Nuclear Hydrogen Initiative

Advanced Fuel Cycle Initiative

Nuclear R&D Infrastructurea

Program Direction

Total, Nuclear Energy

Civilian Nuclear Waste Disposalb

23.8

49.6

38.8

8.7

66.4

249.0

60.1

503.8

572.4

FY2006

Approp.

26.7

65.3

54.5

24.8

79.2

241.1

60.5

535.7

495.0

FY2007

Request

0

54.0

31.4

18.7

243.0

220.9

67.6

632.7

544.5

a. Funded under “other defense activities” and naval reactors until FY2007. In FY2007 request, all

infrastructure except $75.9 million for Idaho Sitewide Safeguards and Security is transferred to the

Energy Supply and Conservation account.

b. Funded by a 1-mill-per-kilowatt-hour fee on nuclear power, plus appropriations for defense waste disposal

and homeland security.

LEGISLATION

H.R. 6 (Barton)

Energy Policy Act of 2005. Omnibus energy legislation that provides incentives for

new nuclear power plants, extends Price-Anderson nuclear liability system, authorizes

nuclear R&D programs, and requires security measures at nuclear facilities. Introduced April

18, 2005; referred to multiple committees. Passed House April 21, 2005, by vote of 249-183.

Passed Senate June 28, 2005, by vote of 85-12. Conference report (H.Rept. 109-90) passed

House July 28, 2005, by vote of 275-156; passed Senate July 29 by vote of 74-26. Signed by

President August 8, 2005 (P.L. 109-58).

H.R. 526 (Berkley)

Redirect the Nuclear Waste Fund established under the Nuclear Waste Policy Act of

1982 into research, development, and utilization of risk-decreasing technologies for the

onsite storage and eventual reduction of radiation levels of nuclear waste, and for other

purposes. Introduced February 2, 2005; referred to Committees on Energy and Commerce;

Science; Ways and Means.

H.R. 966 (Saxton)

Require the Nuclear Regulatory Commission to consider certain criteria in relicensing

nuclear facilities, and to provide for an independent assessment of the Oyster Creek Nuclear

Generating Station by the National Academy of Sciences prior to any relicensing of that

facility. Introduced February 17, 2005; referred to Committee on Energy and Commerce.

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H.R. 2419 (Hobson)

Energy and Water Development Appropriations for FY2006. Includes funding for DOE

nuclear programs. Introduced and reported as an original measure by the House

Appropriations Committee May 18, 2005 (H.Rept. 109-86). Passed House May 24, 2005,

by vote of 416-13. Passed Senate July 1, 2005, by vote of 92-3 (S.Rept. 109-84). Signed by

President November 19, 2005 (P.L. 109-103).

H.R. 4538 (Matheson)/S. 2099 (Reid)

Spent Nuclear Fuel On-Site Storage Security Act of 2005. Requires commercial nuclear

power plants to transfer spent fuel from pools to dry storage casks and then convey title to

the Secretary of Energy. Introduced December 14, 2005. House bill referred to Committee

on Energy and Commerce; Senate bill referred to Committee on Environment and Public

Works.

H.R. 4825 (Weller)/S. 2348 (Obama)

Nuclear Release Notice Act of 2006. Requires notification of federal and state agencies

about releases of radioactive materials above allowable limits. Introduced March 1, 2006;

referred to House Committee on Energy and Commerce and Senate Committee on

Environment and Public Works.

S. 10 (Domenici)

Energy Policy Act of 2005. Includes provisions on electricity regulation and reliability,

energy research and development, alternative fuels, and energy access to public lands.

Introduced as an original bill and reported June 9, 2005, by the Committee on Energy and

Natural Resources (S.Rept. 109-78). Ordered reported May 26 by a vote of 21-1. Text

substituted for H.R. 6.

S. 387 (Hagel)

Amend the Internal Revenue Code of 1986 to provide tax incentives for investment in

greenhouse gas intensity reduction projects, including a production tax credit for nucleargenerated electricity. Introduced February 15, 2005; referred to Committee on Finance.

S. 388 (Hagel)

Amend the Energy Policy Act of 1992 to direct the Secretary of Energy to carry out

activities that promote the adoption of technologies that reduce greenhouse gas intensity,

including advanced nuclear power plants, and to provide credit-based financial assistance and

investment protection for projects that employ advanced climate technologies or systems.

Introduced February 15, 2005; referred to Committee on Energy and Natural Resources.

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