“The Market Value of a Nuclear Waste Storage Facility”

by Barry A. Diskin, PhD, MAI, CRE
and Jack P. Friedman, PhD, MAI, CRE

Portions of this manuscript have been published in
Real Estate Issues, 31, No. 1, 2006.

By April 2005, the ISFSI and certain auxiliary facilities that are used for its security were the only physical remnants of the Maine Yankee Atomic Power Company, which was being decommissioned.

At one time the 820-acre site in Wiscasset, Maine, including Bailey Peninsula, had housed a nuclear reactor, a spent fuel pool inside a concrete building, a four-story, 69,000-square-foot staff office building, and sundry other facilities. By the spring of 2005, however, the reactor and all of the major facilities had been dismantled. Low-level nuclear waste had been hauled off. The ISFSI, an adjacent 10,500-square-foot security operations building, and a kiosk checkpoint guard station were all that remained standing.

What is an ISFSI?

ISFSI is an abbreviation for Independent Spent Fuel Storage Installation. There are fewer than 25 ISFSIs in the United States, so your chances of having seen one are remote. They are being used for interim storage of nuclear waste.

An ISFSI is typically in an open field, smaller than a football field. Parallel rows of vertical concrete casks stand on three-foot-thick concrete pads. Each concrete cask covers a sealed transportable storage cask filled with spent nuclear fuel, usually in the form of rods.

Maine Yankee’s ISFSI

At Maine Yankee, which was the only nuclear power generator in Maine, the ISFSI is 124 feet by 224 feet, enclosed on three sides by an earthen berm approximately 20 feet tall, which limits the view of the ISFSI. At one point the berm is joined with a metal building to form the fourth side. One might visualize the berm as representing the seating area of a sports facility such as a high school football stadium. The berm encloses a chain-link fence about 12 feet tall. A second chain-link fence, 8 feet tall, is inside the first fence. The fences form a protected area that keeps out stray animals but does not obscure the view of the casks from atop the berm or at ground level inside the berm. Within the inner fence are the three-foot-thick concrete pads, supporting a total of 64 vertical concrete casks. There are four rows of concrete pads, each having four 31′ × 31′ sections. Each section will hold four VCCs, allowing 16 VCCs in each row.

Visualize 64 storage tanks on half a football field, with the earthen berm where the stadium seating would be. A 68′×154′ building provides locker room facilities.

Content of VCCs

Each of the 64 vertical concrete casks (VCCs) encloses other parts, like a nesting doll. Most VCCs are 17′5″ tall, with a diameter of 11′4″ and 28-inch-thick walls. Each encloses a stainless steel tube, approximately 15 feet long by 5.5 feet in diameter, with ⅝″-thick walls, called a transportable storage cask (TSC). Inside each TSC, which weighs approximately 30,000 pounds (15 tons), lie 24 spent nuclear fuel rods that were used to generate electric power. The TSCs were filled with rods, then drained, welded shut, and checked for radioactive leaks before being covered by a VCC.

From 1972 until 2002, spent fuel rods had been stored in a pool of heavy water, known as the “spent fuel pool.” This pool was housed in a building adjacent to the reactor. When a rod was “spent” (exhausted), it was carefully moved from the reactor building to the spent fuel pool, where it was submerged and placed on a rack within the pool. A guard, armed with an M‑16 rifle, sat near the pool, in addition to security and radiation checks for personnel at the entrance to the spent fuel building.

Between 2002 and 2004, the spent fuel rods were carefully removed from the spent fuel pool and inserted into slots in the TSCs. Most TSCs hold 24 fuel rods. The TSCs were then welded shut and moved about 1200 feet to the ISFSI, where they were placed upright to be covered by the VCCs. The 28″-thick concrete wall of the VCCs protects against wind, rain, fire, an accidental plane crash, or a potential terrorist attack.

Each TSC cost approximately $387,000. They were manufactured elsewhere and shipped in. The VCCs, which cost about $237,000 each, were fabricated at the site because shipping costs would be high, as is the likelihood of damage in transit. The pads cost a total of $2 million.

Need for ISFSIs

There are fewer than 25 ISFSIs scattered around the United States, most located adjacent to a nuclear facility. Despite the high cost of VCCs and TSCs, ISFSIs, which are used for dry storage, are considered a less costly and safer method of long-term storage for Greater Than Class C (GTCC) nuclear waste than is wet storage in a spent fuel pool.

During the decommissioning process, items of low-level nuclear waste from Maine Yankee, such as the floors and walls of the reactor, were dismantled and trucked to an acceptable facility. The two locations principally used for this purpose are in Clive, Utah, and Barnwell, South Carolina. Those facilities, however, cannot accommodate GTCC waste.

In coming decades, the Department of Energy (DOE) is expected to provide permanent storage for GTCC waste. Meanwhile, virtually all GTCC waste from nuclear plants will remain stored at the site where it was used until the DOE has an operating facility and is ready to receive it.

Since 1983, the DOE has been charging a fee to nuclear power providers to establish a permanent nuclear waste repository, which the DOE is developing in the Yucca Mountains of Nevada. However, opponents have been able to prevent this facility from becoming operational. The “not in my back yard” (NIMBY) movement in Nevada became increasingly powerful after the World Trade Center and Pentagon attacks of September 11, 2001. Then Las Vegas hotel and casino owners noticed the sharp drop in vacation traffic, including vacation trips to other places such as Disneyland. They are concerned about customer reaction to even a minor radioactive leak that could occur within 100 miles of their casinos. Opposition to transporting and storing nuclear waste may further delay the timetable for implementing the storage at Yucca, or prevent it altogether. Litigation against the DOE has mounted as a result of its inability to provide a permanent repository as had been promised by the DOE and paid for by power generators.

Another 10 years or more from now could elapse before the DOE can begin storage at Yucca. At that time, an orderly process of shipping from various plants to Yucca for storage there could result in a further delay of 10 or more years before the DOE will take the waste from Maine Yankee. Hence, expectations are for the ISFSI to remain at Maine Yankee for at least 20 years.

Ultimately, the VCCs will be lifted off, and the TSCs will be loaded onto vehicles headed to Yucca or another site for permanent storage. In the interim, nuclear storage remains at the ISFSI in Wiscasset, Maine.

Maine Yankee’s ISFSI Location

Maine Yankee’s ISFSI is located within 1200 feet of the site of the reactor. The particular site, which had been used as an overflow employee parking lot, was chosen for several reasons. These include:

  1. Proximity to reactor and spent fuel pool. The site is less than a quarter mile from the spent fuel pool. There is an existing road that connects the two, minimizing transportation costs and distance for the hazardous shipment.
  2. Existing building. There was already a building at the site, furnished with telephone and electric connections. This building, which had been used as a staging area for materials and supplies, could easily be converted to serve as the security operations building for the ISFSI. Its dimensions are 68 feet by 154 feet (10,500 square feet) by 48 feet high.
  3. Existing rail spur. A railroad spur adjacent to the site could facilitate the eventual shipment of nuclear waste by rail or truck.
  4. Absence of natural hazards. The ISFSI site is not on a known hazard such as an earthquake fault. The soil is stable.

An engineering report, prepared later, indicated that there are at least eight other locations within the 820 acres of Maine Yankee’s property that could have been used as an ISFSI site.


The history of the Maine Yankee operating facility is very briefly described below in three segments: overview, operations, and closure.


Maine Yankee was built between 1968 and 1972. It was a single-unit 900-megawatt Pressurized Water Reactor that safely generated about 119 billion kilowatt-hours of electricity from 1972 through 1996. Located in Wiscasset, Maine, the plant was Maine’s largest generator of electricity.


From December 1972 to December 1996, Maine Yankee supplied power to a consortium of its owners. While operating, it employed more than 475 people, plus outside contractors. It negotiated its ad valorem tax bill with the Town of Wiscasset (2000 population 3,600) and paid millions of dollars annually in ad valorem tax in its final operating years and early years of decommissioning. It was by far the largest taxpayer in Wiscasset.


Maine Yankee Atomic Power Company was permanently closed in August 1997, allegedly for economic reasons. Safety violations were also cited.

Regional political issues concerning having a “nuke” near a population center may have played an important part in its closure. The dangers of nuclear plants had become apparent from the radioactive leaks at Three Mile Island in Pennsylvania and the disastrous event at Chernobyl in Russia. Wiscasset is about 40 miles northeast of Portland, Maine. Portland is less than 100 miles northeast of Boston. That puts the entire population of Boston at some risk, or perceived risk.

During the period when arguments were held that led to Maine Yankee’s closure, both the Seabrook plant in New Hampshire and the Shoreham plant on Long Island, New York, had recently endured battles for the right to open initially. Both had issues over safety and limited evacuation routes. Eventually Seabrook opened, but Shoreham, though prepared for operation, was disassembled.

A fund of approximately $508 million had been arranged for the decommissioning of Maine Yankee. This included $128 million earmarked for interim spent fuel storage. By January 2004, approximately $100 million of that fund remained. This, with earnings, was expected to be adequate to fund operations related to the ISFSI until the DOE calls for transport of the spent fuel and then to decommission the ISFSI site.

Operations would include a skeleton crew of guards, financial personnel to monitor the decommissioning fund, required engineer(s), and minimal grounds maintenance staff. Other expenses would include insurance and property taxes. Annual costs were estimated at $6.8 million. About 400 acres of the 820-acre site would be sold and 200 acres donated to a charitable organization. This would leave only the ISFSI and minimal land needed for its security. It appears that Maine Yankee will keep 179 acres, including the ISFSI.

The Valuation Issue

During the decommissioning process, the Selectmen of the Town of Wiscasset recognized that the Town was losing what had been by far its largest ad valorem taxpayer. Perhaps alarmed by this realization, the Town engaged a lead attorney (who was also a professor at Harvard Law School) to assist the Town by providing what they perceived would be a fair and acceptable ad valorem tax value for the remaining physical assets. Essentially, only the ISFSI remained.

There were various real and personal properties that could be taxed, including the VCCs and TSCs. Some of the 820 acres enjoyed terrific scenic views and water frontage. The most contentious taxation issue, however, was the ISFSI’s site value. The lead attorney explained to the Town and local newspapers that land on which nuclear waste could be stored was extremely valuable.

Wiscasset’s Experts

The Town hired four parties as experts to work with the lead attorney. A local appraiser was engaged to appraise the 820 acres, but not the ISFSI site.  (We don’t know why he did not appraise the ISFSI site.)

An expert in nuclear power regulation would explain the history and present status of nuclear power generation and waste storage in the United States.

The third expert, an economist with a Ph.D. degree from an Ivy League university, provided a fair market value of the ISFSI site, principally using his concept of “avoided cost,” and his version of highest and best use and of comparable sales.

An expert on public utility ad valorem taxation, who became affiliated with a state-certified real estate appraiser, would later provide a value opinion.

The Town’s Economist

The lead attorney’s brief, the economist, and the utility appraiser focused on defining the highest and best use of the ISFSI site.

The Ivy League Ph.D. economist stated that the 9-acre ISFSI site’s highest and best use was for nuclear waste storage. That’s how the land was being used. It was licensed by the Nuclear Regulatory Commission for that purpose. He stressed that few sites are accorded the privilege of nuclear waste storage, and those that are legally eligible for such use have an extremely high value. Its value should be measured, he stated, by certain comparables and avoided costs.

He provided a set of “comparables” to derive a land value, applying his concepts of “avoided cost” and “comparable sales.” Virtually none of these “avoided costs” or “sales comparables” had become a reality or will or could ever become a reality. Our rebuttal was clear and convincing. We had provided extensive research on each location.

The economist’s comparable sales or avoided costs included proposals to:

  1. Mescalero Apache Tribe in New Mexico
  2. Skull Valley Band of Goshutes, Utah
  3. Mdewakanton Dakota Tribe at Prairie Island, Minnesota
  4. LIPA-PECO sale of fuel core
  5. British National Fuels (BNF) and COGEMA (France)

Mescalero Apache Tribe in New Mexico

Private Fuel Storage (PFS) was a consortium of up to 33 nuclear power generating companies, which reportedly had offered $250 million to the Mescalero Apache Tribe in New Mexico for use of part of their reservation. The offer, for interim spent nuclear fuel storage, was turned down by the Mescaleros.

This expert contended that the Mescaleros’ refusal to sell clearly indicated that the Native Americans’ land (and by extension the ISFSI site at Maine Yankee as well) was worth more than $250 million. He did not scale the amount for size; that is, he did not allow for the huge difference between the amount of space required for the waste produced by Maine Yankee and that required for the waste of 33 atomic power companies. Nor did he consider other regulatory barriers to approval.

Skull Valley Band of Goshutes

The economist stated that, after the Mescalero Apache Tribe refused the $250 million offer, PFS approached the Goshutes in Utah. That transaction would have provided $90–$300 million worth of combined payments to the tribe and to Tooele County, Utah, but did not materialize.

Mdewakanton Dakota Tribe at Prairie Island, Minnesota

A nuclear plant operating in Prairie Island, Minnesota, was reportedly willing to pay as rental for nuclear storage an annual amount having a present value of $135 million. The payments were for the Mdewakanton Dakota Tribe and the Minnesota Renewable Energy Development Fund. We learned, however, that there was more detail to the transaction than the economist disclosed: the Prairie Island plant was threatened with closure if it did not arrange for this fuel storage and consequently was under compulsion in the transaction. The Native Americans would receive a small part of the total payment.

LIPA-PECO Sale of Fuel Core

On disassembly of the Shoreham plant, its owner, Long Island Power Authority (LIPA) had a partially used irradiated fuel core that had to be disposed of. LIPA paid $46 million to Philadelphia Electric Company (PECO) for its removal. PECO estimated the remaining fuel to be worth $70 million. The economist concluded that LIPA essentially paid $116 million ($46 cash plus $70 million worth of unused fuel) to remove its waste. The economist compared the amount of remaining fuel to Maine Yankee’s storage needs. By extrapolation, he concluded that the $116 million was the equivalent of a $335 million value for Maine Yankee’s needs. He did not explain the duress that Shoreham endured for the required disposal.

British National Fuels (BNF) and COGEMA (France)

The economist discussed shipping spent fuel to Britain or France. He concluded that such a transaction would have a present value of $220 million to Maine Yankee. He did not, however, acknowledge that any proposed transaction was illegal. The United States would not allow shipments of nuclear fuel to be reprocessed in foreign countries. Nor would Britain or France accept nuclear fuel as waste.


The economist concluded that “a reasonable estimate of the fair market value of the Maine Yankee site is approximately $135,000,000.” The 8.79-acre site in Wiscasset, Maine, would be worth approximately $350 per square foot.

Utility Appraisers

The utility appraiser who teamed up with a state-certified real estate appraiser provided an extensive appraisal report. It considered the industrial site to be 99 acres. The highest and best use was as an ISFSI, which, they opined, had a site value of $110 million.

That value was largely based on $10 million per year of potential funding for a possible nuclear waste site once held by DOE Nuclear Waste Negotiators. The effort expired without being implemented. The appraisers did not scale the required size of that expired effort to that of Maine Yankee.

These appraisers offered other “comparables” that provided a value in the tens of millions. In our judgment, however, none were suitable to be comparable to Maine Yankee. In addition, the presence of the ISFSI would reduce the desirability of adjacent land for many uses.

Our Analysis

The standard of value to be taxed was central to our analysis. It was also important to distinguish market value from value in use and to fully explain the concept of highest and best use.

Standard of Value to Be Taxed

The standard of value to be taxed is just value. Maine Constitution, Article IX, §8.

There are many different standards or forms of value, for Maine property tax purposes. It is important to apply just value, which is the appropriate standard because it is the standard required by the Maine Constitution. Other standards or forms of value that may not be applied include insurable value, scrap value, salvage value, sentimental value, investment value, and value in use. While these other standards of value have applications in other circumstances, they are not the proper standard for Maine’s property tax law.

In the state of Maine, just value is synonymous with market value. See decision Yusem v. Town of Raymond, 769A. 2d 865 (Me. 2001).

Market value is defined as:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

(1)  buyer and seller are typically motivated;

(2)  both parties are well informed or well advised, and acting in what they consider their own best interests;

(3)  a reasonable time is allowed for exposure in the open market;

(4)  payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

(5)  the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.[i]

Distinguish Market Value from Value in Use

It was Aristotle who originally distinguished between value in use and value in exchange.[ii]Economists have discussed these terms as well, including Adam Smith in The Wealth of Nations, published in 1776. Smith said, “The word value, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called ‘value in use’; the other, ‘value in exchange.’”[iii]

Value in use is defined as value to a specific user, typically in a certain business operation. Determining “value in use” involves consideration of what the owner would pay to avoid losing use of the property. Determining “value in exchange,” on the other hand, involves an opinion of what a buyer and seller would sell and buy the property for in a fair, non-compelled transaction.

Highest and Best Use

Identification of highest and best use is a requisite step to derive market value.


Highest and best use is defined as follows:

The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity.[iv]

This definition includes four key components, as follows:

  1. The use must be probable, which means that it must be likely. It cannot be a speculative or unusual use for the property at that location. It must be based on a real market and cannot be based on necessities peculiar to a particular person.
  2. The use must be legal. If it is not legal, it cannot be considered. Legal factors includes deed restrictions, municipal restrictions such as zoning, permits, license restrictions, and the like.
  3. The use must be physically possible. The parcel of land must be of a size, shape, and physical qualities that can support the proposed improvements.
  4. The use must be financially feasible. The appraiser must consider only those proposed improvements that can offer a reasonable return on and of investment by a prospective purchaser beyond that needed to justify the cost of improvements.

A market value appraisal requires that highest and best use be determined based on value in exchange, not value in use. As Rattermann explains in his Student Handbook:

In many appraisals, the defined value is the crucial issue. For example, special-purpose properties must have a market to have market value. Many appraisers lose sight of this fact when they appraise unusual properties.

Many definitions of market value are in use today, and there are many exceptions and caveats to the definitions in various situations. The common thread in all the definitions is that the value opinion is the amount that the buyer would pay for the property under fair sale conditions.

Use Value

To develop an estimate of use value, an appraiser assumes the use stipulated by the client. In a use value appraisal, the use of the property is usually not the same as the highest and best use in a market value appraisal, and the use value is often much higher than market value would be. For example, assume you own a factory with specialized design and equipment and ask an appraiser to determine what the factory is worth to your corporation, which has use for these special features. The use value estimate could be the same as the market value if there is a resale market for the special features, i.e., other buyers in the market would be willing to pay for the features when they are associated with the subject real estate. The use value estimate will be much higher than market value, however, if there are no buyers who will pay a premium for the features. The most common way to estimate use value is the cost approach, which allows for segregating and deducting physical depreciation.

If there really is no market for a property, the cost approach to value is not going to tell you what the subject would sell for on the open market unless you include a deduction for a change in use. If there are very few buyers available, you must decide who will buy the property and what they will pay.[v]

The ultimate question is: From among the possible uses that pass the above tests, which one is expected to provide the highest return to the land in exchange?

An appraiser may be required to model expected financial results of feasible alternatives to determine which use provides the highest return to the property in exchange.

For example, a farmer must decide whether to plant corn, wheat, or potatoes. The farmer must decide which crop to plant on each parcel. Decision criteria depend on expected crop prices at harvest, cultivation costs (such as labor, fertilizer, pesticides, and equipment needed). The crop that offers the highest return is the highest and best use of the land at that time.

As the suburban fringe of a city reaches a rural area, the possibility of building houses on the farm becomes apparent. The highest and best use may change from a farm to a housing subdivision. In that instance, under a fair market value property tax standard, the farmer would not be able to claim his property should be valued as a farm for property tax purposes because that would not be the highest and best use in exchange.

Other common highest-and-best-use decisions are how many houses per acre to build in a subdivision, or how many stories high to build an office tower.

Based on a Synthesis of Market Participants

The specific needs of one possible user do not determine the highest and best use of land. For example, suppose a shopping center owner is willing to pay a premium to acquire adjacent land for use as a parking lot (or face closure of the center). The peculiar need of the shopping center owner to buy that particular parcel does not make the land’s highest and best use a parking lot. Highest and best use connotes an exchange between willing parties who are not compelled to buy or sell.

Highest and best use is based on a probable use, not on random selection.

  • Example: Utility poles are placed approximately 50 to 60 feet apart alongside a highway. The exact location of a pole does not cause that spot of one square foot to have a highest and best use that is different from that of any other square foot of nearby land.
  • Example: Rancher Roy wants to acquire 1,000 acres for cattle grazing. The land is currently lying fallow, with native grass growing wild. Since ranch land is more profitable than land with wild grass growing on it, the ranch land is a higher and better use. Unless a more intensive and profitable use is probable, ranch land is the highest and best use.
  • Example: An interstate highway traverses farm land in Iowa. There are cornfields on either side. Is a highway the highest and best use of the land under the highway? No, given all the possible paths that a highway may take in Iowa, any single path is not a probable use.

Highest and Best Use of Land as Improved or Unimproved

“Appraisal theory holds that as long as the value of a property as improved is greater than the value of the land as though vacant, the highest and best use is use of the property as improved. ”[vi] Once the value of the vacant land exceeds the value of the improved property, the highest and best use becomes use of the land as though vacant.

“Any building can be demolished; the fact that most buildings in a given area are not does not negate the possibility. Land values are not penalized so long as the existing buildings have economic value. If the buildings no longer have value, demolition is appropriate. For example, consider a valuable commercial site in an excellent location that is currently improved with a service station that is free of any negative environmental features. A purchaser who wants to build a high-rise office building on the site may pay a price for the property that includes no value, or even negative value, for the existing improvements. The potential use, not the existing use, usually governs the price that will be paid for the land if that use is economically feasible.”[vii]

Market Value Considerations

The matter to be addressed is the market value of Maine Yankee’s ISFSI site and ISFSI structure.

This property is used to store nuclear waste that was generated by the Maine Yankee Atomic Power Company while it was generating power. It will store the waste until the Department of Energy (DOE) agrees to accept it.

The question to be answered is how much a willing buyer would pay, and how much a willing seller would accept, for this facility as of April 1, 2003. The transaction must meet the conditions of market value as defined earlier. In this valuation analysis, there are a number of facts that are particularly critical.

Cannot Store Others’ Wastes

Maine Yankee’s license to store spent nuclear fuel rods is limited to Maine Yankee and it is limited to storing waste from its own (now closed) facility. The site cannot be used to store nuclear waste of others or from other sources.


This ISFSI land and ISFSI structure is sized to meet Maine Yankee’s nuclear waste storage needs only; its size is limited to the 64 casks. The entire ISFSI land and structure are dedicated to storing only Maine Yankee’s nuclear waste. It has no space available to accept any other waste. If its size were proposed to be expanded to accept other waste, state and local objections would be lodged citing safety concerns. The NRC would be extremely unlikely to grant such an expansion.

Maine Yankee Is Permanently Shut Down

Because an operating plant would continue to generate nuclear waste in the future, a purchaser of an operating plant would need a storage facility to enable the ongoing income-producing activity of generating and selling electricity, which would give an ISFSI with unfilled capacity some value in exchange in that situation. Maine Yankee, however, has no continued operations and will not generate any further nuclear waste. Further, as noted above, the ISFSI is dedicated and sized to Maine Yankee’s needs and its license does not permit storage of waste other than Maine Yankee’s waste.

Therefore, the only one who can benefit from Maine Yankee’s ISFSI and ISFSI site is Maine Yankee through its use to store its own waste; they cannot generate any income to Maine Yankee or anyone else. The Maine Yankee ISFSI and ISFSI site therefore have no value to any prospective purchaser for use in storing nuclear waste.

ISFSI Is a Cost Center, Not a Revenue Producer

Maine Yankee’s ISFSI is a cost center. It produces no goods or services that can be sold to generate income and it in fact generates no income. It is not a rate base asset upon which either Maine Yankee or anyone else is allowed to earn income. Maine Yankee is reimbursed only for the cost to construct, operate and maintain the ISFSI, but receives no income. In each future year for an anticipated 20-year period, the ISFSI requires an annual maintenance cost of approxi­mately $6.8 million in 2003 dollars. In addition, when the DOE takes the nuclear waste the ISFSI will have to be decommissioned at an estimated cost of $11 million. Because of those high costs, any “buyer” would require a substantial payment from the seller simply to cover the cost of operation and maintenance. This “cost reimbursement” would of course not provide the buyer any income and would not compensate the buyer for the risk of owning a site and facility filled with high level nuclear waste.

There are No Potential Buyers of the ISFSI or
ISFSI Site for Storage of Nuclear Waste

“Market analysis also provides a basis for determining the highest and best use of a property. An existing or proposed improvement under a specified use may be put to the test of maximum productivity only after it has been demonstrated that an appropriate level of market support exists for that use.”[viii] While a use might be permissible, that does not mean it is the highest and best use. For example, “a housing development for the elderly might be a permissible use for a site, but, if most residents of the area are under 40 years old, this use may be illogical and might not meet the criterion of financial feasibility.”[ix]

In order to have a market value, there must be a willing buyer and seller. For the reasons outlined above, there are no potential buyers of Maine Yankee’s ISFSI improvement or the site for storage of nuclear waste. For there to be potential buyers, there would have to be an economic benefit from that purchase to the buyers that would motivate them to pay Maine Yankee for the ISFSI site.

This benefit would have to result from either the storage of waste other than Maine Yankee’s waste or the continued storage of Maine Yankee’s waste. With respect to the former, the storage of waste of others is not permitted for the reasons outlined above. With respect to the latter, the storage of Maine Yankee’s waste generates no income but rather entails significant cost, not to mention the risks associated with storing high level nuclear waste. In sum, any prospective purchaser would see the ISFSI site as a liability rather than an asset. Accordingly, Maine Yankee would have to pay any purchaser to take over this property and its related obligations and risks.[x]

Maine Yankee’s license to store nuclear waste has no value in exchange and as a result provides no enhanced value to the ISFSI site. A prospective purchaser could not realize any benefits from the purchase of the license given the fact that the license does not provide permission to store the waste of others, and the storing of Maine Yankee’s waste entails substantial expense and no income. In addition, the license is an intangible that is not subject to property tax in Maine.


We surveyed the assessors at all other ISFSIs in the United States. Not one used the methodology that experts hired by the Town of Wiscasset attempted to apply. Several assessors informed us that Wiscasset’s lead attorney had inquired about their assessments, and the attorney had expressed surprise that ISFSIs in their jurisdiction were assessed at what he thought were exceptionally low values.


In summary, the ISFSI site is similar to a landfill adjacent to a closed and demolished factory. Its capacity to store waste is fully dedicated to existing waste. It cannot generate income by accepting or storing waste produced by others. And it does not facilitate the generation of any future income.

Fair Market Value of ISFSI Site

The ISFSI land must be valued as if vacant; highest and best use is general commercial and industrial use and not nuclear waste storage.

“Appraisal theory holds that as long as the value of a property as improved is greater than the value of the land as though vacant, the highest and best use is use of the property as improved.”[xi] Once the value of the vacant land exceeds the value of the improved property, the highest and best use becomes use of the land as though vacant. As discussed earlier, highest and best use must be evaluated in terms of value in exchange, and not value to the user.

For the reasons outlined above, the ISFSI structure is a detriment to current realization of the land’s fair market value.[xii] Because it cannot be used to store waste of others and the storage of Maine Yankee’s waste entails large costs and no income, any prospective purchaser of the land would see the ISFSI as a liability rather than an asset benefiting the use of the land. As a result, the ISFSI land is worth more in exchange without the ISFSI than with it; the highest and best use of the ISFSI land is as though vacant.

If the DOE took Maine Yankee’s nuclear waste today, the land would not, and could not because of the license restrictions, continue to be used as an ISFSI land. Instead, it would be used for general commercial and industrial use. This further demonstrates that storage of nuclear waste is not the highest and best use of the land in exchange but is a use peculiar to Maine Yankee by reason of the historical operation as a nuclear plant.

As vacant, the highest and best use is general commercial and industrial use. The market value of the ISFSI land is no greater than any other commercial or industrial land on Bailey Point.

It currently is estimated that the ISFSI will remain for about 20 years, which is several years after the DOE builds a repository to accept the nuclear waste. The ISFSI land thus has value only in the future for general commercial and/or industrial use.

To determine the fair market value of the 8.79-acre ISFSI site, one must determine the value of the land today for use after the ISFSI is removed in about 20 years. The starting point is the market value of the land today for general industrial and commercial use, as if there were no ISFSI located on it. That market value is $140,000.[xiii] That value then must be escalated to a value 20 years from now (since it will not be available for use until then), and then discounted back to today’s dollars. The market value of the ISFSI land is approximated at $100,000, as follows:

Compound forward the $140,000 current value at a maximum appreciation rate of 10% per year for 20 years, to reach $941,850. That is the theoretical land value in 20 years at a 10% annual compounded growth rate.

Discount to the present the $941,850 theoretical land value in 20 years by a 12% rate annually, which is an investor’s minimum required rate of return for this type of investment. The result is a present value of $97,602, rounded to $100,000. This methodology was thought to provide a current value that was an appropriate tax assessment.


The standard definition of market value and highest and best use is appropriate for the valuation of an ISFSI. Those who are unfamiliar with these definitions may misinterpret or distort them to reach an absurd conclusion. If this occurs for highly valued property, it may result in a grossly exaggerated value, which can be corrected in a trial by providing a responsible appraisal, appraisal review, and rebuttal.
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[i].      Federal Register, Vol. 55, No. 163, August 22, 1990, pp. 34228 and 34229; also quoted in the introduction to the Standards of Professional Appraisal Practice of the Appraisal Institute.

[ii].     Martin Fogarty, Senior Sophister, A History of Value Theory, http://econserv2.bess.tcc.ie/SER/1996 /mfogarty.htm. See also John B. O’Donnell, Confessions of a Socialist-Libertarian, Book 1: In Search of Value (1984), http://www.geocities.com/CapitolHill/1067/chap14r.html.

[iii].    Adam Smith, Wealth of Nations (1776), Book 1, Chapter 4: “Of the Origin and Use of Money,” extracted from www.geolib.com.

[iv].    Appraisal Institute, Dictionary of Real Estate Appraisal, 4th ed. (Chicago: Appraisal Institute, 2002), s.v. “highest and best use.”

[v].     Mark R. Rattermann, Student Handbook to The Appraisal of Real Estate (Chicago: Appraisal Institute, 2004), p. 24

[vi].    The Appraisal of Real Estate, 12th ed. (Chicago: Appraisal Institute, 2001), 306.

[vii].   Ibid., 309.

[viii].  Ibid., 270.

[ix].    Ibid., 308.

[x].     The only theoretical, and speculative, buyer would be one who thought it could operate and maintain the ISFSI for less than Maine Yankee’s cost. The ISFSI comes with an operating and maintenance liability of approximately $6.8 million per year in 2003 dollars, estimated through 2023. This liability has been pre-funded in Maine Yankee’s decommissioning fund or will be by 2008. The only possible bidders would be ones who would purchase the ISFSI and the fund and expect to operate the site with the ISFSI for less than the fund amount and to retain the savings. That, however, would be the purchase of an intangible—the fund, which is not subject to property tax. And there is no indication that someone could operate and maintain the ISFSI for less than Maine Yankee anyway, so even under this scenario there is no purchaser or market value for the ISFSI site or improvements.

[xi].    Op. cit., n. 6.

[xii].   In fact, as noted above, the estimated cost to decommission the ISFSI (i.e., dismantle and decontaminate) after the DOE takes the fuel to enable the land to be put to its highest and best use is $11 million, which further shows the ISFSI is a detriment to this land.

[xiii].  Based on a recent appraisal by Amidon Appraisal.

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