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Nuclear headache: What to do with 65,000 tons of spent fuel?

Nuclear Regulatory Commission

Most spent nuclear fuel is stored in pools like this one, with rods typically under 30 feet of water.

In a blow to the nuclear energy industry, a federal appeals court on Friday threw out a rule allowing plants to store spent nuclear fuel onsite for decades after they've closed, and ordered regulators to study the risks involved with that storage -- 65,000 tons now spread across the country, and growing at 2,000 tons a year. 

The Nuclear Regulatory Commission "apparently has no long-term plan other than hoping for a geologic repository," the unanimous ruling stated. "If the government continues to fail in its quest to establish one, then SNF (spent nuclear fuel) will seemingly be stored on site at nuclear plants on a permanent basis. The Commission can and must assess the potential environmental effects of such a failure."

Nuclear plants have been storing spent fuel onsite for decades and the NRC recently said, barring a repository, they may continue to do so even after they shut down.

That regulation was challenged by New York and other Northeast states, as well as environmentalists.

The New York attorney general's office said the ruling means the NRC cannot license or relicense any nuclear power plant until it examines those risks.

That process could take a couple of years, Geoff Fettus, an attorney who argued in court on behalf of the Natural Resources Defense Council, told msnbc.com.

CNBC's Brian Shactman takes a look at how the nuclear industry has been altered one year after the disastrous earthquake and tsunami in Japan.

"This is a game changer," he said. "The opinion is quite clear that the agency must comply with the National Environmental Policy Act and do a substantive, searching environmental review of well established legal standards."

The Nuclear Energy Institute, which represents the industry, said it was disappointed with the ruling but urged the NRC to "act expeditiously to undertake the additional environmental analysis."

In recent years, the industry had hoped for a "nuclear renaissance" based on smaller reactors with fewer mechanical parts and less nuclear waste. But Japan's Fukushima nuclear disaster last year was a major setback in building public support.

Nuclear plant operators have been paying $750 million a year to the Energy Department for construction of a central repository. It was being built under Nevada's Yucca Mountain, but engineering issues and a political backlash in Nevada killed the project after $12 billion was spent.

In January, a panel commissioned by President Barack Obama reported that a first step must be to find a site that isn't forced on a particular region by the federal government.

"The need for a new strategy is urgent," the panel wrote in its report, "not just to address these damages and costs but because this generation has a fundamental, ethical obligation to avoid burdening future generations with the entire task of finding a safe, permanent solution for managing hazardous nuclear materials they had no part in creating."

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