Ryan Mack
Associate Editor
Loyola University Chicago School of Law, JD 2027
As the nuclear energy industry pivots toward small modular reactors (SMRs) to meet the growing demand for a clean, efficient, and reliable energy source, developers face a multilayered regulatory landscape. Navigating the Nuclear Regulatory Commission’s (NRC) licensing process, evolving legislation, and supply chain challenges present both legal and operational risks as the United States attempts to achieve energy independence.
The current Nuclear Regulatory Commission’s licensing framework
SMRs are compact nuclear power plants with power capacities of up to 300 megawatts that can be manufactured in factories and transported to sites for assembly. While traditional nuclear plants require refueling every 1 and 2 years, SMRs offer infrequent refueling usually ranging between of 3 to 7 years, while some may not need refueling for decades. SMRs are designed to offer safety, flexibility, and affordability which traditional large-scale reactors cannot offer. Some features include passive safety systems which does not require active intervention or power to shut down the reactor. The reactor’s design means multiple units can be added incrementally to meet growing energy demands, making them an attractive alternative.
The path to a large-scale SMR deployment begins with navigating the NRC’s rigorous certification and licensing process. To date, NuScale Power is the only corporation to have achieved the distinction of having its SMR design be fully certified by the NRC, leaving NuScale as the only corporation with NRC-approved SMR technology in the United States. While the NRC completed its review of NuScale’s US460 design in just under 24 months, years of foundational work led to NRC approval.
The NRC may certify a standard nuclear plant design through the rulemaking procedure process that is not tied to any specific site. Such certification by the NRC will remain valid for 15 years. Corporate applicants seeking NRC certification must include “proposed inspections, tests, analyses, and acceptance criteria,” while also demonstrating their compliance with the applicable NRC regulations. If the NRC determines that the application satisfies all applicable requirements, they will initiate rulemaking—the process of creating new regulations—to issue the standard design certification as an appendix to the regulations in 10 C.F.R. 52. A combined license application may reference an already certified design, which prevents reexamination of issues that were addressed during the design certification process. An application for a combined license can incorporate by reference a design certification, with the advantage that issues resolved during design certification period are precluded from reconsideration at the combined license stage.
Case Study: Oklo’s regulatory journey and legal setbacks
The experiences of Oklo, Inc., an advanced nuclear technology company, illustrates the legal risks inherent in seeking SMR deployment. In March 2020, Oklo submitted a combined license application, the first such application, to the NRC for an advanced non-light water reactor, one that uses non-water coolants such as liquid sodium or helium gas, to be built and operated at the Idaho National Laboratory. The combined license is a one-step application that permits Oklo to operate their Aurora powerhouse, which can produce 75MWe of electrical power that can be fueled by recycled nuclear waste, subject to the NRC’s approval. However, the NRC denied Oklo’s application in early 2022 without prejudice, stating that Oklo had not provided additional technical information concerning its maximum credible accident analysis and the safety classification of its reactor systems, structures, and components.
Oklo’s denial highlights the rigid evidentiary burden nuclear developer applicants face when seeking NRC approval. Oklo has engaged with the NRC over the last decade, yet the corporation still encounters significant compliance deficiencies. As of today, Oklo is seen as the industry leader with the company being the first in the nuclear industry to receive a site permit from the U.S. Department of Energy (DOE) for its fission plant and has been awarded three contracts under the DOE’s Reactor Pilot Program.
Moreover, legislative developments have provided additional relief for these nuclear companies. The U.S. House of Representatives passed the Atomic Energy Advancement Act (the Act) in 2024, designed to accelerate advanced nuclear energy projects. The Act calls for reduced costs associated with licensing fees while directing the NRC to restructure how it conducts environmental assessments, update its regulatory practices, and create a framework for placing new reactors on former industrial sites.
The HALEU supply chain crisis
SMR developers face a critical supply chain challenge that creates even more regulatory and contractual risks. Many SMR designs require the use of high-assay low-enriched uranium (HALEU), which has enrichment levels between 5% and 19.75% uranium-235, compared to the maximum 5% enrichment used in today’s commercial reactors. At present, only China and Russia have the necessary infrastructure to produce HALEU fuel at such levels, and Tenex, a Russian corporation, remains the sole company for commercial supply. In 2023, Centrus Energy, a U.S. based corporation, commenced HALEU production at a demonstration-scale uranium enrichment facility. Centrus Energy’s initiative marks a key step toward establishing a domestic supply chain for advanced nuclear fuel.
The U.S. nuclear industry has cautioned that the deployment timelines for certain SMR designs could be extended due to the limited commercial availability of HALEU. In response to this underlying issue, the DOE has awarded contracts aimed at expanding domestic HALEU production capacity, which is supported by a $3.4 billion funding commitment.
The NRC’s Part 53 rulemaking
A significant challenge facing SMR developers is the continued uncertainty surrounding the NRC’s Part 53 rulemaking procedure. In 2018, Congress passed the Nuclear Energy Innovation and Modernization Act, which directs the NRC to establish a new regulatory framework for advanced reactors by December 31, 2027. In October 2024, the NRC issued its proposed Part 53 rule in the Federal Register. This would revise NRC regulations with the goal to update its regulatory framework for commercial reactors by incorporating a risk-informed, performance-based, and technology-inclusive approach. Part 53 represents the first U.S. regulatory framework devoted to advanced reactor technologies in the search for clean and reliable energy.
As a result, Part 53’s implementation is projected to generate net cost savings that range from $53.6 million to $68.2 million per license applicant compared to the existing licensing framework. However, the proposed rule is not expected to be ready to receive applications until 2026 or potentially as late as 2027, thus creating a time gap for companies hoping to commercialize their technology sooner. This regulatory uncertainty forces nuclear developers to choose between proceedings under Parts 50 and 52 or wait for Part 53’s uncertain benefits, a risk management calculation that could affect project economics by millions of dollars. Furthermore, legal uncertainty exists around how the NRC would handle design changes, as reactor designs are tightly specified, and any modification could potentially trigger NRC review and recertification.
The regulatory landscape for SMR development presents legal challenges that only continue to gradually evolve in the growing energy industry. Although SMRs present a path toward achieving clean and reliable energy, the path to widespread SMR deployment is filled with complex regulatory, legal, and operational challenges. Nuclear corporations are required to navigate the NRC’s rigorous process, address supply chain vulnerabilities, and manage rulemaking uncertainties within the NRC, requiring them to plan both carefully and strategically. As the U.S. strives for energy independence, continued legislative activity and technological advancements offer hope for overcoming the current regulatory barriers, but these developers must remain adaptable to succeed in an evolving regulatory landscape.