HOUSTON - Community officials in southeast New Mexico want to expand a nuclear-waste storage facility deep inside an ancient salt bed to play a bigger role in handling spent fuel from U.S. reactors, a problem now under the spotlight due to the Japanese nuclear crisis.

After years of delay, the government terminated a plan for a permanent nuclear-waste repository at Yucca Mountain in Nevada. Operators at 104 U.S. reactors are storing used fuel rods, which remain radioactive for years, in pools of water and dry cask storage facilities in 30 states.

The largest risk in the United States from the Fukushima event is "overpacking of the spent-fuel pools," said John Heaton, a former state representative from Eddy County, New Mexico, who supports expanded use of the Waste Isolation Pilot Plant near the town of Carlsbad.

Since 1999, WIPP, an Energy Department program, has disposed of radioactive items from military facilities far below the desert floor in a 250 million-year-old salt bed.

By law, WIPP can only handle defense-generated waste, but Heaton said the geologic formation would be able to handle high-level commercial nuclear waste, pending more study.

"We are convinced more and more every day that we are on the right track," said Heaton.

On Monday, California Senator Dianne Feinstein urged U.S. nuclear regulators to rethink rules that allow spent fuel to remain in pools for long periods of time.

While courts wrestle with arguments over the failed Yucca Mountain plan, the industry awaits a Blue Ribbon Commission's interim report due in July on nuclear-waste disposal options.

Heaton hopes the commission report will mention WIPP's success in dealing with defense-related waste and the potential for putting commercial nuclear waste in salt beds.

He said a federal corporation should be created to solve the issue with money in a $24 billion nuclear waste fund.

Heaton isn't the only person looking at the billion-dollar fund created under the Nuclear Waste Policy Act, a 1982 law that gave DOE authority to charge nuclear operators a fee to develop spent-fuel storage.

The industry estimates consumers have contributed $31 billion to the fund since the early '80s, and add more than $750 million every year.

John Rowe, chairman of Exelon, the nation's largest nuclear operator, said shortly after the Fukushima crisis began that if U.S. regulations on spent-fuel management change, any increased cost to nuclear operators should come from the fund.

"I intend to suggest if something changes in the rules for spent-fuel management, the cost of that should come from the money the industry has already put into the fuel-disposal fund," Rowe said, noting legislation would likely be needed.

Days before the March 11 earthquake and tsunami struck northern Japan, the Nuclear Energy Institute, a U.S. trade group, and state utility regulators filed a lawsuit seeking to suspend annual payments until the storage issue is resolved.

"Our position is that Yucca Mountain should continue," said Mike Bauser, NEI's deputy general counsel. He said the Fukushima disaster will not affect the suit.

The state regulators' group is not opposed to the fee, but is opposed to consumers paying into the fund for 30 years and "not getting anything in return," said a spokesman.

"We want to work with the Energy Department to find a solution to the nation's nuclear waste problem, but consumers should be given a break until such a solution is found," said NARUC president, Tony Clark, a North Dakota regulator.

"The pressure to do something about the back-end of the fuel cycle — getting spent fuel out of those fuel pools — will intensify because of the now-considerable risk associated with them," said Heaton, the former New Mexico legislator.

(Editing by David Gregorio)

Copyright 2011 Reuters Environmental Online Report