By Lawrence Hurley
WASHINGTON (Reuters) - An appeals court ruled on Tuesday that the U.S. government can no longer require nuclear power plant operators to pay fees into a nuclear waste fund, a victory for the utilities that challenged the fees.
The court in Washington said the fees could not currently be justified because the government's long-stalled plan to build a national waste facility at Yucca Mountain in Nevada had not come to fruition. The fund is intended to cover the cost of storing the waste.
President Barack Obama's administration has said it does not intend to pursue the decades-old proposal to build the facility. The court noted that there was "no viable alternative" to the proposed site.
As a result of the ruling, the U.S. Energy Department must now either ask Congress to reduce the fees to zero, or produce a new legal assessment of why they are justified.
An Energy Department spokesman referred calls to the Justice Department, which declined to comment.
Charles Gray, executive director of the National Association of Regulatory Utility Commissioners, said the ruling was ultimately a win for consumers.
"Thankfully, because of today's actions, nuclear power consumers will no longer have to pay for the government's mishandling of this program," he said in a statement.
The court, in an opinion by Senior Judge Laurence Silberman, said the Energy Department's assessment of why the fees were justified, as required by the Nuclear Waste Policy Act, was legally flawed.
Silberman said that until the government decides how nuclear waste will be deposited, "it seems quite unfair to force petitioners to pay fees for a hypothetical option."
The waste fund is currently worth around $40 billion, according to the utilities group. It accrues $1.3 billion in interest each year, according to a prior ruling in the same litigation. The government has been collecting about $750 million a year in fees, according to the ruling.
In the earlier June 2012 ruling, the court gave the government six months to produce a valid assessment. In Tuesday's ruling, Silberman said it had failed to do so.
Jack Spencer, a nuclear policy expert at the conservative-leaning Heritage Foundation, said the Energy Department "had done nothing to give the court reasons to do anything different to what it did.
"The government has demonstrated an inability to do anything productive with nuclear waste."
The Yucca Mountain facility, in discussion since the 1970s, called for the nation's nuclear waste to be buried inside the mountain in the Nevada desert about 100 miles northwest of Las Vegas. Congress chose the site in the 1980s because it is a secure location surrounded by federally owned land. Since 1983, the government has spent almost $15 billion assessing its suitability for long-term nuclear waste disposal.
But funding has been dropped under the Obama administration, with opposition to the project led in part by Democratic Senator Harry Reid of Nevada.
Nuclear waste - which can stay radioactive for thousands of years - is currently stored temporarily at more than 100 sites at nuclear plants around the United States. The Yucca Mountain project was envisioned as a single, safe place where all the waste could to be stored.
Tuesday's ruling comes a day after the U.S. Nuclear Regulatory Commission directed its staff to complete work on a key safety evaluation related to the Nevada facility.
This move was prompted by an August ruling by the same appeals court, which said that the commission could no longer delay a decision on whether to issue a permit.
The court said the commission must continue to work on the Yucca project evaluation, even though the commission has said it only had $11 million left to spend on the project.
(Reporting by Lawrence Hurley, editing by Ros Krasny and David Brunnstrom)