Lawsuits Filed Against US Nuclear Regulatory Commission by States and Startups

The recent surge in nuclear energy startups has led to multiple lawsuits against the U.S. Nuclear Regulatory Commission (NRC), highlighting tensions over regulatory processes that some argue hinder innovation in the nuclear sector.

One of the key figures in this movement is Isaiah Taylor, founder of Valar Atomics, a nuclear startup developing a small test reactor named after his great-grandfather, who worked on the Manhattan Project. Taylor claims that stringent regulations imposed by the NRC have compelled his company to relocate its test reactor development overseas.

In early April, Valar Atomics, along with another startup known as Deep Fission and several states--Florida, Louisiana, and Arizona--joined a lawsuit against the NRC. This lawsuit builds upon a previous filing from Texas and Utah, along with the nuclear company Last Energy, which accused the NRC of implementing regulations that are so restrictive that they effectively block new reactor construction.

Historically, the U.S. has been a leader in nuclear energy production. However, in the last quarter-century, only three reactors have been completed, all facing significant delays and budget overruns. In contrast, countries like China and South Korea have rapidly advanced their nuclear programs, raising concerns among U.S. stakeholders about the regulatory environment stifling local innovation.

Critics of the NRC's approach argue that the lengthy timelines and complex requirements for new designs--especially for smaller reactors--are largely responsible for the stagnation. Some suggest that smaller reactors should be exempt from NRC oversight altogether, while others caution against compromising safety standards.

The slow pace of the NRC's permitting process has long been a point of contention. Experts describe the regulatory framework as overly legalistic and adversarial, unlike the more cooperative regulatory environments in countries such as France and China.

The lawsuit argues that the NRC's regulations misinterpret the Atomic Energy Act of 1954, which set forth guidelines for nuclear facilities. The plaintiffs contend that their smaller reactors do not fall under the purview of the NRC as they do not pose a significant risk to public safety.

While the NRC has acknowledged the need for more efficient processes, many in the nuclear industry view the current changes as insufficient. The only small modular reactor (SMR) to gain NRC approval, NuScale, faced significant hurdles in its approval process, spending hundreds of millions of dollars and millions of hours in labor. The firm recently canceled plans for a new power plant in Idaho, citing high costs as a barrier to customer interest.

The current moment is pivotal for nuclear energy, with public support for nuclear power at a 15-year high. Investment in nuclear startups surged in 2024, indicating renewed interest and potential for growth in the sector. Advocates argue that the ongoing litigation is critical for advancing nuclear energy infrastructure in the U.S.

Deep Fission, one of the companies involved in the lawsuit, is exploring the potential of SMRs positioned underground, claiming that their model is both safer and more cost-effective compared to traditional reactors. Despite their participation in the lawsuit, they are also working to pre-license their design with the NRC, aiming to foster a more collaborative regulatory approach for SMRs.

The lawsuit proposes that individual states should take on the responsibility of regulating smaller reactors. Currently, 39 states are already licensed to manage and inspect nuclear materials, and the states involved in the lawsuit have passed laws aimed at expediting nuclear project development.

However, concerns remain regarding the variability of safety standards across states. Some experts warn that a fragmented regulatory landscape could lead to inconsistencies that might compromise safety.

Supporters of the lawsuit argue that allowing states to compete on regulatory frameworks could enhance safety through innovation. They emphasize that differing regulatory approaches might lead to improved outcomes as states learn from one another.

Despite the push for regulatory reform, challenges remain. The costs associated with nuclear energy development, even for smaller reactors, are substantial. Competing against cheaper alternatives, such as natural gas and renewables, continues to pose a significant hurdle for the industry.

The current climate of public acceptance for nuclear energy is promising, yet stakeholders recognize the need for careful regulation to maintain public trust. Balancing innovation with safety remains critical as the U.S. seeks to reclaim its status as a leader in nuclear technology.