Shieldalloy Metallurgical Corp. v. Nuclear Regulatory Commission, 624 F.3d 489

NRC may transfer regulatory authority over categories of nuclear materials to a state if the state's program is compatible with the NRC and adequate to protect health and safety under 42 U.S.C. § 2021(d)(2).
New Jersey sought such a transfer in Oct. 2008; the NRC found New Jersey's program adequate and compatible and the transfer took effect Sept. 30, 2009.
Shieldalloy operated a Newfield, New Jersey facility decommissioning project, with on-site disposal contemplated under NRC-approved plans and interim guidance.
Shieldalloy submitted multiple decommissioning plans; the NRC declined some and eventually forwarded files to New Jersey for review after the transfer.
Shieldalloy challenged the transfer as incompatible with criterion 25 (no interference with licensed activities or license processing) and as arbitrary and capricious under 5 U.S.C. § 706(2)(A); the NRC's explanations were deemed insufficient.
The DC Circuit vacated the transfer and remanded for proceedings consistent with the opinion, holding the NRC failed to provide a rational connection between facts found and the choice made.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the transfer complied with criterion 25 on uninterrupted licensing.	Shieldalloy argued New Jersey would interfere with decommissioning and license processing.	NRC staff said New Jersey would ensure a smooth transition and that criterion 25 was satisfied.	Transfer invalid; NRC failed to show rational connection to criterion 25.
Whether a partial transfer excluding Shieldalloy's site could have been justified.	Shieldalloy urged excluding the Newfield site to avoid interference.	Statute allows transfers of classes of materials; no clear rule requiring exclusion.	Court did not resolve but remanded to address acceptable arrangements.
Whether NRC's reliance on statutory interpretation is necessary or permissible without Chevron deference.	NRC provided interpretive arguments at argument; not controlling precedent.	NRC should be afforded deference in interpretation if warranted.	Court refused to defer; found explanations insufficient; transfer vacated.
Whether the NRC's broader compatibility explanations for ALARA, restricted use, and other standards were adequate.	New Jersey program could raise safety concerns beyond criterion 25.	Stringency differences acceptable under compatibility guidance; LTR category C.	Not addressed on the merits due to failure on criterion 25 and retention of jurisdiction.

Burlington Truck Lines, Inc. v. United States, 371 U.S. 156 (U.S. 1962) (arbitrary-and-capricious review requires rational connection between facts and choice)
Motor Vehicle Mfrs. Ass'n v. State Farm, 463 U.S. 29 (U.S. 1983) (requires reasoned explanation for policy changes)
Ramaprakash v. FAA, 346 F.3d 1121 (D.C. Cir. 2003) (requires explanation of changes in policy or law interpretation)
Farmers Union Cent. Exch., Inc. v. FERC, 734 F.2d 1486 (D.C. Cir. 1984) (must evaluate viable alternatives when considering agency action)
SEC v. Chenery Corp., 318 U.S. 80 (U.S. 1943) (requires courts to review agency actions for proper reasoning and not rely on counsel's arguments)
United States v. Mead Corp., 533 U.S. 218 (U.S. 2001) (limits reliance on agency interpretations; procedural context matters)