Despite the $13.5 billion that has been spent on the project, the Obama administration says it's going in a different direction.
It slashed funding for Yucca Mountain in its recently announced budget.
And on Thursday, Energy Secretary Steven Chu told a Senate hearing that the Yucca Mountain site no longer was viewed as an option for storing reactor waste, brushing aside criticism from several Republican lawmakers.
Instead, Chu said the Obama administration believes the nearly 60,000 tons of used reactor fuel can remain at nuclear power plants while a new, comprehensive plan for waste disposal is developed.
Chu's remarks touched off a sometimes testy exchange with Sen. John McCain, R-Ariz., Obama's rival for the presidency last year, and provided the most definitive signal yet that the government's attempt to address the commercial nuclear waste problem is veering in a dramatically new direction.
At the hearing, McCain and Sen. Lisa Murkowski, R-Alaska, said the decision not to pursue the Yucca Mountain project threatens the expansion of nuclear energy because the government can give no assurance on waste disposal.
"We've spent billions of dollars and many years preparing for Yucca Mountain to be our nation's nuclear waste site," Murkowski said. "Closing Yucca Mountain sends an unmistakable signal to nuclear developers that they might not have a place to store their waste, making them less willing to develop new facilities."
Congress in 1982 declared that the government must assume responsibility for reactor waste from commercial power plants. Courts have upheld what they call a binding contract with the nuclear power industry. With no lawmakers wanting a nuclear waste dump in their state, Congress five years later declared Yucca Mountain in Nevada as the only site to be considered.
Nevada officials openly labeled it the "screw Nevada bill" and the state's political leaders have fought the project ever since, arguing that the Energy Department has not shown it is an ideal - or even safe - site for nuclear storage.
Obama, campaigning last year ahead of the Nevada primary election, said he agreed with the state's assessment and promised to review the Yucca project.
Last year the Bush administration submitted an application for a construction and operating license to the Nuclear Regulatory Commission.
Obama's 2010 budget calls for scrapping all spending on Yucca Mountain except for what is needed to answer questions from the NRC on the license application "while the administration devises a new strategy toward nuclear waste disposal."
That isn't sitting well with some congressional supporters of nuclear energy development.
"What's wrong with Yucca Mountain, Mr. Chu," McCain asked Thursday at a Senate Energy and Natural Resources Committee hearing on support for scientific research.
"I think we can do a better job," the Nobel Prize-winning physicist replied.
McCain asked whether it was true that Obama - as well as Chu - viewed Yucca Mountain as no longer an option.
"That's true," Chu replied.
"Now we're going to have spent fuel sitting around in pools all over America," shot back McCain, who characterized the Obama position on nuclear waste - and its rejection of waste reprocessing - as a reflection of the administration's opposition to nuclear energy.
Chu said there were short-term answers other than Yucca, while a long-term solution to dealing with nuclear waste is developed.
"The interim storage of waste (at reactors), the solidification of waste, is something we can do today. The NRC has said we can do it safely," Chu said.
But killing the Yucca project may not be possible by presidential directive.
The federal government is obligated by law to accept the used reactor fuel from 104 commercial power reactors, but as yet it has no place to put it. The spent fuel, growing at the rate of 2,000 tons a year, is being held in pools and aboveground concrete containers at reactor sites.
There appear to be no immediate plans by the Energy Department to withdraw the Yucca Mountain license application that is pending at the NRC because to do so could trigger lawsuits from the nuclear industry. The NRC has up to four years to consider the application.
A report to Congress in December by the Bush administration, which strongly supported the Yucca Mountain project, dismissed suggestions that reactor waste be kept at temporary storage sites by the government. That would require Congress to change the law that singled out Yucca for nuclear waste.