Nuclear developers and states are suing the U.S. government over decades-old regulations they say are crushing innovation and driving advanced energy overseas.
At a Glance
- Texas, Utah, and nuclear firms file lawsuit against NRC
- 1956 rule applies uniform licensing to all reactors
- Developers say high fees stifle innovation and delay rollout
- Lawsuit seeks modernized, risk-based regulatory framework
- Licensing cost drives small companies toward foreign markets
Legal Challenge to NRC Regulations
A coalition of advanced nuclear developers and U.S. states is mounting a legal battle against the Nuclear Regulatory Commission (NRC), arguing that outdated licensing rules are stifling innovation. In December 2024, Texas and Utah teamed up with microreactor company Last Energy to file suit over the “Utilization Facility Rule”—a regulation introduced in 1956 that treats all reactors, regardless of size or risk, as if they pose the same threats.
The coalition claims that applying this rule to small modular reactors and microreactors imposes regulatory burdens that were never designed for such technologies. In April 2025, Deep Fission, a startup developing underground microreactors, joined the lawsuit, arguing that these inflexible regulations jeopardize the future of affordable, domestic nuclear power. According to reporting by World Nuclear News, the goal is to force the NRC to adopt a more adaptable, risk-informed framework.
Watch BusinessWire’s report on the filing at Deep Fission Joins Federal Lawsuit to Modernize Nuclear Regulation.
The developers argue that micro-reactors pose dramatically less public risk than traditional large reactors, and yet they face the same million-dollar-plus regulatory demands. For companies like Last Energy, which has invested millions developing its PWR-20 micro-reactor, the added cost and delay are forcing them to pivot to Europe, where they’ve signed deals to build over 50 units across Poland and the UK.
Licensing Fees Crush Small Players
The economic challenge stems largely from the NRC’s cost-recovery model, which charges $317 per professional staff hour during licensing review, according to the Nuclear Innovation Alliance. Full-scale reactor developers can expect to pay more than $5.7 million in annual fees, as listed in the Federal Register.
These fees extend even to university research reactors, which must pay over $124,000 per year despite posing minimal radiological risk. Critics argue that these policies discourage innovation and force early-stage ventures out of the U.S. market.
The NRC acknowledges it is revising policies in response to recent executive orders. Its official site notes the agency is “in the process of rescinding or revising guidance and policies in accordance with Executive Order 14151 and Executive Order 14168,” which aim to eliminate what the administration calls “radical and wasteful” diversity and inclusion programs. This, however, does not directly address the licensing concerns raised by nuclear developers.
Push for a Risk-Based Future
The lawsuit’s backers argue that modernizing regulation isn’t about lowering safety—it’s about aligning oversight with actual risk. Advanced designs like underground micro-reactors, they argue, can’t be properly evaluated under a one-size-fits-all approach from the Cold War era.
As reported by Reason, the case may set the tone for America’s future role in nuclear technology. Advocates for reform hope the court will force the NRC to rethink its framework and establish a licensing pathway that promotes U.S.-based innovation.
With global energy demand rising, and AI and data centers requiring constant power, the push for safe, scalable nuclear solutions is accelerating. Whether U.S. regulators will keep pace—or continue to drive innovation abroad—remains to be seen.
Watch CGTN’s breakdown of nuclear reform efforts at Path Forward for Reactor Innovation.
