Pacific Gas & Electric Co. v. State Energy Resources Conservation & Development Commn.

JUSTICE WHITE delivered the opinion of the Court.

The turning of swords into plowshares has symbolized the transformation of atomic power into a source of energy in American society. To facilitate this development the Federal Government relaxed its monopoly over fissionable materials and nuclear technology, and in its place, erected a complex scheme to promote the civilian development of nuclear energy, while seeking to safeguard the public and the environment from the unpredictable risks of a new technology. Early on, it was decided that the States would continue their traditional role in the regulation of electricity production. The interrelationship of federal and state authority in the nuclear energy field has not been simple; the federal regulatory structure has been frequently amended to optimize the partnership.

This case emerges from the intersection of the Federal Government's efforts to ensure that nuclear power is safe with the exercise of the historic state authority over the generation and sale of electricity. At issue is whether provisions in the 1976 amendments to California's Warren-Alquist Act, which condition the construction of nuclear plants on findings by the State Energy Resources Conservation and Development Commission that adequate storage facilities and means of disposal are available for nuclear waste, are pre-empted by the Atomic Energy Act of 1954.

I

A nuclear reactor must be periodically refueled and the "spent fuel" removed. This spent fuel is intensely radioactive and must be carefully stored. The general practice is to store the fuel in a water-filled pool at the reactor site. For many years, it was assumed that this fuel would be reprocessed; accordingly, the storage pools were designed as short-term holding facilities with limited storage capacities. As expectations for reprocessing remained unfulfilled, the spent fuel accumulated in the storage pools, creating the risk that nuclear reactors would have to be shut down. This could occur if there were insufficient room in the pool to store spent fuel and also if there were not enough space to hold the entire fuel core when certain inspections or emergencies required unloading of the reactor. In recent years, the problem has taken on special urgency. Some 8,000 metric tons of spent nuclear fuel have already accumulated, and it is projected that by the year 2000 there will be some 72,000 metric tons of spent fuel. Government studies indicate that a number of reactors could be forced to shut down in the near future due to the inability to store spent fuel.

There is a second dimension to the problem. Even with water pools adequate to store safely all the spent fuel produced during the working lifetime of the reactor, permanent disposal is needed because the wastes will remain radioactive for thousands of years. A number of long-term nuclear waste management strategies have been extensively examined. These range from sinking the wastes in stable deep seabeds, to placing the wastes beneath ice sheets in Greenland and Antarctica, to ejecting the wastes into space by rocket. The greatest attention has been focused on disposing of the wastes in subsurface geologic repositories such as salt deposits. Problems of how and where to store nuclear wastes has engendered considerable scientific, political, and public debate. There are both safety and economic aspects to the nuclear waste issue: first, if not properly stored, nuclear wastes might leak and endanger both the environment and human health; second, the lack of a long-term disposal option increases the risk that the insufficiency of interim storage space for spent fuel will lead to reactor shutdowns, rendering nuclear energy an unpredictable and uneconomical adventure.

The California laws at issue here are responses to these concerns. In 1974, California adopted the Warren-Alquist State Energy Resources Conservation and Development Act. The Act requires that a utility seeking to build in California any electric power generating plant, including a nuclear powerplant, must apply for certification to the State Energy Resources Conservation and Development Commission (Energy Commission). The Warren-Alquist Act was amended in 1976 to provide additional state regulation of new nuclear powerplant construction.

Two sections of these amendments are before us. Section 25524.1(b) provides that before additional nuclear plants may be built, the Energy Commission must determine on a case-by-case basis that there will be "adequate capacity" for storage of a plant's spent fuel rods "at the time such nuclear facility requires such . . . storage." The law also requires that each utility provide continuous, on-site, "full core reserve storage capacity" in order to permit storage of the entire reactor core if it must be removed to permit repairs of the reactor.

Section 25524.2 deals with the long-term solution to nuclear wastes. This section imposes a moratorium on the certification of new nuclear plants until the Energy Commission "finds that there has been developed and that the United States through its authorized agency has approved and there exists a demonstrated technology or means for the disposal of high-level nuclear waste." "Disposal" is defined as a "method for the permanent and terminal disposition of high-level nuclear waste . . . ." 25524.2(a), (c). Such a finding must be reported to the state legislature, which may nullify it.

II

Petitioners, the United States, and supporting amici, present three major lines of argument as to why 25524.2 is pre-empted. First, they submit that the statute - because it regulates construction of nuclear plants and because it is allegedly predicated on safety concerns - ignores the division between federal and state authority created by the Atomic Energy Act, and falls within the field that the Federal Government has preserved for its own exclusive control. Second, the statute, and the judgments that underlie it, conflict with decisions concerning the nuclear waste disposal issue made by Congress and the Nuclear Regulatory Commission. Third, the California statute frustrates the federal goal of developing nuclear technology as a source of energy. We consider each of these contentions in turn.

A
Even a brief perusal of the Atomic Energy Act reveals that, despite its comprehensiveness, it does not at any point expressly require the States to construct or authorize nuclear power plants or prohibit the States from deciding, as an absolute or conditional matter, not to permit the construction of any further reactors. Instead, petitioners argue that the Act is intended to preserve the Federal Government as the sole regulator of all matters nuclear, and that 25524.2 falls within the scope of this impliedly pre-empted field. But as we view the issue, Congress, in passing the 1954 Act and in subsequently amending it, intended that the Federal Government should regulate the radiological safety aspects involved in the construction and operation of a nuclear plant, but that the States retain their traditional responsibility in the field of regulating electrical utilities for determining questions of need, reliability, cost, and other related state concerns.

Need for new power facilities, their economic feasibility, and rates and services, are areas that have been characteristically governed by the States. Justice Brandeis once observed that the "franchise to operate a public utility . . . is a special privilege which . . . may be granted or withheld at the pleasure of the State." "The nature of government regulation of private utilities is such that a utility may frequently be required by the state regulatory scheme to obtain approval for practices a business regulated in less detail would be free to institute without any approval from a regulatory body." With the exception of the broad authority of the Federal Power Commission, now the Federal Energy Regulatory Commission, over the need for and pricing of electrical power transmitted in interstate commerce, these economic aspects of electrical generation have been regulated for many years and in great detail by the States. As we noted in Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc: "There is little doubt that under the Atomic Energy Act of 1954, state public utility commissions or similar bodies are empowered to make the initial decision regarding the need for power." Thus, "Congress legislated here in a field which the States have traditionally occupied. . . . So we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress."

The above is not particularly controversial. But deciding how 25524.2 is to be construed and classified is a more difficult proposition. At the outset, we emphasize that the statute does not seek to regulate the construction or operation of a nuclear power plant. It would clearly be impermissible for California to attempt to do so, for such regulation, even if enacted out of non-safety concerns, would nevertheless directly conflict with the NRC's exclusive authority over plant construction and operation. Respondents appear to concede as much. Respondents do broadly argue, however, that although safety regulation of nuclear plants by States is forbidden, a State may completely prohibit new construction until its safety concerns are satisfied by the Federal Government. We reject this line of reasoning. State safety regulation is not pre-empted only when it conflicts with federal law. Rather, the Federal Government has occupied the entire field of nuclear safety concerns, except the limited powers expressly ceded to the States. When the Federal Government completely occupies a given field or an identifiable portion of it, as it has done here, the test of pre-emption is whether "the matter on which the State asserts the right to act is in any way regulated by the Federal Act." A state moratorium on nuclear construction grounded in safety concerns falls squarely within the prohibited field. Moreover, a state judgment that nuclear power is not safe enough to be further developed would conflict directly with the countervailing judgment of the NRC, that nuclear construction may proceed notwithstanding extant uncertainties as to waste disposal. A state prohibition on nuclear construction for safety reasons would also be in the teeth of the Atomic Energy Act's objective to insure that nuclear technology be safe enough for widespread development and use - and would be pre-empted for that reason.

That being the case, it is necessary to determine whether there is a nonsafety rationale for 25524.2. California has maintained, and the Court of Appeals agreed, that 25524.2 was aimed at economic problems, not radiation hazards. The California Assembly Committee on Resources, Land Use, and Energy, which proposed a package of bills including 25524.2, reported that the waste disposal problem was "largely economic or the result of poor planning, not safety related." The Committee explained that the lack of a federally approved method of waste disposal created a "clog" in the nuclear fuel cycle. Storage space was limited while more nuclear wastes were continuously produced. Without a permanent means of disposal, the nuclear waste problem could become critical, leading to unpredictably high costs to contain the problem or, worse, shutdowns in reactors. "Waste disposal safety," the Reassessment Report notes, "is not directly addressed by the bills, which ask only that a method [of waste disposal] be chosen and accepted by the federal government."

Petitioners' second major argument concerns federal regulation aimed at the nuclear waste disposal problem itself. It is contended that 25524.2 conflicts with federal regulation of nuclear waste disposal, with the NRC's decision that it is permissible to continue to license reactors, notwithstanding uncertainty surrounding the waste disposal problem, and with Congress' recent passage of legislation directed at that problem.

Pursuant to its authority under the Act, the AEC, and later the NRC, promulgated extensive and detailed regulations concerning the operation of nuclear facilities and the handling of nuclear materials. The following provisions are relevant to the spent fuel and waste disposal issues in this case. To receive an NRC operating license, one must submit a safety analysis report, which includes a "radioactive waste handling syste[m]." The regulations specify general design criteria and control requirements for fuel storage and handling and radioactive waste to be stored at the reactor site. In addition, the NRC has promulgated detailed regulations governing storage and disposal away from the reactor. NRC has also promulgated procedural requirements covering license applications for disposal of high-level radioactive waste in geologic repositories. Congress gave the Department of Energy the responsibility for "the establishment of temporary and permanent facilities for storage, management, and ultimate disposal of nuclear wastes."

The NRC's imprimatur, however, indicates only that it is safe to proceed with such plants, not that it is economically wise to do so. Because the NRC order does not and could not compel a utility to develop a nuclear plant, compliance with both it and 25524.2 is possible. Moreover, because the NRC's regulations are aimed at insuring that plants are safe, not necessarily that they are economical, 25524.2 does not interfere with the objective of the federal regulation.

C
Finally, it is strongly contended that 25524.2 frustrates the Atomic Energy Act's purpose to develop the commercial use of nuclear power. It is well established that state law is pre-empted if it "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."

There is little doubt that a primary purpose of the Atomic Energy Act was, and continues to be, the promotion of nuclear power. The Act itself states that it is a program "to encourage widespread participation in the development and utilization of atomic energy for peaceful purposes to the maximum extent consistent with the common defense and security and with the health and safety of the public."

The Court of Appeals is right, however, that the promotion of nuclear power is not to be accomplished "at all costs." The elaborate licensing and safety provisions and the continued preservation of state regulation in traditional areas belie that. Moreover, Congress has allowed the States to determine - as a matter of economics - whether a nuclear plant vis-a-vis a fossil fuel plant should be built. The decision of California to exercise that authority does not, in itself, constitute a basis for pre-emption. Therefore, while the argument of petitioners and the United States has considerable force, the legal reality remains that Congress has left sufficient authority in the States to allow the development of nuclear power to be slowed or even stopped for economic reasons. Given this statutory scheme, it is for Congress to rethink the division of regulatory authority in light of its possible exercise by the States to undercut a federal objective. The courts should not assume the role which our system assigns to Congress.

The judgment of the Court of Appeals is Affirmed.