How federal agencies are exercising reactor authority without the NRC

That legal backdrop makes the Army's latest announcement particularly notable. On October 14, 2025, the U.S. Department of the Army announced Project Janus, a new program to build an initial series of advanced reactors on military bases in collaboration with DOE. The effort reflects the Administration's broader push to leverage all available federal tools to accelerate nuclear deployment and meet the President's energy and national security objectives outlined in Executive Order 14299.

Because these initiatives operate outside the traditional NRC licensing framework, they raise important jurisdictional and statutory questions—questions we frequently receive from clients and stakeholders. This article examines the source of DOE and DoD reactor authority under the AEA, how those provisions interact with NRC's licensing regime, and what this evolving landscape means for future efforts to advance nuclear deployment in the United States.

Existing Authorities for Building Out Nuclear

Understanding the legal foundation for federal reactor deployment begins with the existing statutory authorities that govern nuclear energy in the United States. For general background, under the Atomic Energy Act (AEA)—the federal statute governing the development, regulation, and use of nuclear materials and facilities—most nuclear reactors are licensed by the U.S. Nuclear Regulatory Commission, the U.S. nuclear regulatory authority.  However, the AEA provides that both the Department of Energy (DOE) and the Department of Defense (DoD) may, in limited circumstances, construct and operate nuclear reactors without obtaining a license from the NRC. These carve-outs, while rarely invoked, have gained renewed relevance under the President's recent executive orders promoting advanced nuclear deployment. For example, as mentioned, Executive Order 14299 directs DOE to designate federal and AI-data sites for reactor deployment, and mandates that DoD begin operation of a reactor at a domestic military installation by September 30, 2028.  

Separately, DOE is empowered under Executive Order 14301 (“Reforming Nuclear Reactor Testing at the Department of Energy”) to streamline authorizations and environmental reviews for advanced reactor projects under DOE's authority. We previously discussed the Administration's executive orders focused on nuclear here. 

These initiatives discussed in the executive orders and being deployed by DOE and DoD are being pursued outside the NRC's authority to license and oversee nuclear reactors.

So where does DOE and DoD's authority come from?  In short:

• DOE. Under the AEA, DOE has a limited authority to self-authorize and oversee the deployments of nuclear reactors—but that authority is narrow in scope. DOE may authorize reactors only for its own programs or internal missions and may not use this authority to demonstrate commercial suitability or to operate a reactor as part of a commercial power enterprise. This authority arises because DOE is not a “person” under the AEA (42 U.S.C. § 2014(s)), a status reinforced by Section 110(a).
• DoD. With respect to DoD, the AEA provides a separate—and in key respects broader—authorization to self-authorize and oversee nuclear reactors. This authority, set forth in AEA Sections 91 and 110(b), allows DoD to build and operate reactors (a type of “utilization facility” under the AEA) for military or other national security purposes. Unlike DOE, DoD is not subject to the same limitations on commercial demonstration or power generation. Accordingly, for reactors serving both defense and civilian needs, DoD may regulate the facility when its primary purpose is military or national security and any grid support or electricity sales are incidental; if commercial or electric-utility use predominates, NRC licensing is required.

Ultimately, much of the jurisdictional question turns on how each agency defines the mission of a given project. DoD generally has greater flexibility than DOE to treat a reactor as part of a national-security mission, while DOE's authority is tightly circumscribed by statutory limits on commercial demonstration and electric-utility use.

Below is a walk-through of the relevant statutory provisions relevant to when DOE or DoD oversight may apply, or when the NRC has sole licensing jurisdiction.

• License Authority Carve-outs for DOE and DoD

While NRC licensing remains the default framework, the AEA grants limited exceptions for reactors built or operated directly in support of federal missions.

As mentioned, the AEA establishes NRC licensing as the default requirement for civilian nuclear facilities but provides limited carve-outs for reactors built or operated directly in support of certain federal missions. Sections 91 and 110 authorize DOE and DoD to proceed without an NRC license when reactors are constructed or operated under contract with, and for the account of, the federal government.

• Section 91 (42 U.S.C. 2121(b)) allows the President to direct DOE to authorize DoD to “manufacture, produce, or acquire any … utilization facility for military purposes.” Presidential authorization is therefore a prerequisite for DoD to proceed. Once authorized, this forms the statutory basis for DoD, through DOE, to develop and operate reactors for military or national-security missions outside NRC oversight.
• Section 110(a) (42 U.S.C. §2140(a)), provides that “[n]othing in this subchapter shall be deemed … to require a license for … the construction or operation of facilities under contract with and for the account of the Commission.” This grants DOE limited authority to construct or operate reactors for its own programs and statutory missions, also outside NRC licensing, though DOE cannot use this authority to demonstrate commercial viability or to deploy reactors for utility purposes.

Together, these provisions confirm that while NRC jurisdiction is the rule for commercial nuclear projects, Congress preserved narrow self-regulatory authority for DOE and DoD when reactors are tied directly to federal purposes. In effect, the carve-outs provide flexibility for defense and government programs while ensuring that commercial and utility-scale activities remain under NRC's civilian licensing framework.

• Overview of Department of Energy Authority and Limits

The Department of Energy’s (DOE) authority to construct and operate nuclear reactors without NRC licensing represents one of the most significant—but also one of the most narrowly defined—carve-outs under the Atomic Energy Act.

As the statutory successor to the Atomic Energy Commission, DOE is not considered a “person” under the AEA (42 U.S.C. § 2014(s)) and therefore does not require an NRC license to construct or operate a reactor under its own authority. Section 110(a) reinforces this exemption, providing that “nothing in this subchapter shall be deemed … to require a license for … the construction or operation of facilities under contract with and for the account of the Commission” (42 U.S.C. § 2140(a)).

DOE’s authority, however, is narrowed by Section 202 of the Energy Reorganization Act (ERA), which explicitly reserves NRC jurisdiction over reactors operated as part of an electric-utility system or used to demonstrate commercial suitability. This limitation prevents DOE from using its carve-out to bypass NRC licensing for projects aimed at commercial adoption. Section 202 provides that the “Nuclear Regulatory Commission shall … have licensing and related regulatory authority … as to … demonstration nuclear reactors … when operated as part of the power-generation facilities of an electric-utility system, or … for the purpose of demonstrating the suitability for commercial application of such a reactor” (42 U.S.C. § 5842(2)).

This scope maintains conditions and practical limits, which include:

• DOE mission authority. DOE may construct and operate reactors for its own programs or R&D purposes when the work is carried out under DOE contract and for DOE’s account.
• Commercial demonstration restriction. DOE may not authorize a reactor if its purpose is to demonstrate commercial suitability—those projects must be licensed by the NRC.
• Electric-utility system restriction. DOE may not authorize a reactor operated as part of an electric-utility system (i.e., engaged in power sales). In such cases, NRC licensing applies.
• Mixed-use projects. Where a facility is primarily for DOE programmatic or research purposes and any power sales are incidental (e.g., behind-the-meter integration or testing), DOE oversight may still apply. However, agencies and GAO opinions often apply a functional analysis: if the project’s purpose is to demonstrate commercial viability, NRC jurisdiction attaches even if power sales are characterized as “incidental.”

Although DOE retains this narrow carve-out, in practice it has generally deferred to NRC licensing for projects with any significant commercial or utility character. DOE has occasionally exercised its authority for specialized R&D or programmatic missions, often with incidental power use.

Historical examples include reactors such as EBR-II, developed under DOE's predecessor agencies for research and demonstration purposes, where electricity sales were incidental to programmatic missions.

DOE's authority is limited, narrow, and mission-specific. It applies only where the project is under DOE contract and account, is not a commercial demonstration, and is not operated as part of an electric-utility system. In nearly all other cases, NRC remains the licensing authority.

• Overview of Department of Defense Authority and Limits

DoD has independent authority under the Atomic Energy Act (AEA) to construct and operate reactors for military purposes without obtaining an NRC license. However, DoD cannot act unilaterally: under Section 91, the President must authorize DoD to “manufacture, produce, or acquire any … utilization facility for military purposes” (42 U.S.C. 2121(b)). Once authorized, Section 110(b) provides that “nothing in this subchapter shall be deemed … to require a license for … the manufacture, production, or acquisition by the Department of Defense of any utilization facility authorized pursuant to section 2121 … or for the use of such facility by the Department of Defense or a contractor thereof” (42 U.S.C. § 2140(b)). Together, these provisions establish DoD’s pathway for military reactors outside of NRC jurisdiction.

As discussed above, this scope maintains practical limits, which include:

• Primary defense purpose. DoD authority applies when the reactor’s principal mission is military or national security (e.g., base-islanding for resilience, naval propulsion, forward-operating power, or classified data-center loads).
• Commercial or civilian use. If the facility functions as part of an electric-utility system—selling into wholesale markets, serving retail customers, or otherwise acting as a commercial generator—NRC licensing is required, even if some power continues to support defense installations.
• Mixed-use projects. For reactors with both defense and civilian functions, jurisdiction turns on the project’s primary purpose. Where defense use is dominant and sales are incidental, Section 91 authority can apply—as demonstrated by Project Pele.
• Coordination. Although DoD facilities authorized under Section 91 and exempted under Section 110(b) are not subject to NRC licensing, DoD often coordinates with NRC or DOE for technical input (e.g., safety reviews for Project Pele) to align safety expectations and ease any potential transition to civilian oversight.

Historical examples include the Navy's propulsion fleet, the Army's SM-1 and SM-1A reactors, and the more recent Project Pele microreactor, all overseen by DoD under Section 91 authority.

DoD authority under the Atomic Energy Act is broader than that of the DOE, reflecting its explicit statutory grounding in military and national security applications. This authority applies when the defense mission is primary; if a reactor's primary purpose is commercial or utility-related, NRC licensing requirements still apply.

Unlike DOE—whose reactor authority is generally limited to non-power-producing prototypes or research demonstrations— DoD may construct and operate reactors that serve both defense and civilian functions, provided they fulfill a “military purpose.” In practice, this means that while a DOE-built reactor intended to generate power for a DOE facility would require an NRC license, a reactor developed by DoD to provide power to a military base would not.

Developer Considerations

The Army announced that Project Janus will be executed under a milestone-based Other Transaction Agreement (OTA)—the same contracting framework used by NASA for its Commercial Orbital Transportation Services program and by the Department of Defense for Project Pele. This means several things for developers:

• Developers will be compensated based on performance milestones rather than cost reimbursement. Any cost overruns will be the developer’s responsibility.
• Accounting and reporting obligations are expected to be significantly streamlined compared to traditional federal procurement contracts.
• The Army is expected to employ commercially oriented contracting terms in place of standard Federal Acquisition Regulation (FAR) provisions.

A critical consideration for Project Janus will be ensuring appropriate indemnification for nuclear-related risks, as the project’s unique structure places it outside both DOE’s and the NRC’s existing indemnification frameworks. Although authorized by the DOE, DOE’s nuclear hazards indemnification authority would not statutorily extend to the participants of Project Janus, nor would the developers be part of the NRC’s indemnification system. The Army therefore has two options to extend this or similar coverage.

First, DoD could seek authorization from the Secretary of Defense under Public Law 85-804 by which the government can agree to indemnify contractors for unusually hazardous or nuclear activities. Second, DOE and DoD could structure their relationship in such a way that DoD operates under DOE’s auspices through an interagency agreement. The standard DOE nuclear hazardous indemnification agreement found in DOE Acquisition Regulations 952.250-70 could be flowed down from DOE to DoD and then to DoD’s contractors. This was the structure of the Project Pele agreement.

Conclusion

As developers bid on Project Janus and subsequently negotiate agreements with DoD, there are many considerations about which the Hogan Lovells team is uniquely qualified to advise. Our staff has experience negotiating nuclear agreements, including other transaction agreements with both DOE and DoD. We are prepared to advise you on all matters necessary to successfully participate in this exciting opportunity.