The Nuclear Regulatory Commission (search) on Friday approved a private company's plan to build a nuclear waste storage site on the Skull Valley Goshute Indian Reservation (search) in Utah, moving the proposal a crucial step closer to fruition.

Utah Gov. Jon Huntsman immediately vowed to challenge the decision in the courts, and state officials promised to fight the facility using all possible options. The state contends the project would be too dangerous.

Private Fuel Storage (search), a group of utilities, wants to store 44,000 tons of spent nuclear fuel at the site about 50 miles southwest of Salt Lake City.

Utah officials had argued the facility would be too close to a major population center and that the risk of a jet fighter from Hill Air Force Base crashing into the storage casks was too great.

But commissioners dismissed the argument, taking a two-pronged vote. First, they affirmed an earlier ruling that the waste containers wouldn't release an unacceptable amount of radiation if a jet crashed into them. Then they voted 3-1 to authorize the NRC staff to issue a license to construct and operate the storage site.

The license will be ready after paperwork is completed, said NRC spokesman Eliot Brenner.

"I'm very happy," said Paul Gaukler, an attorney who for eight years has represented Private Fuel Storage in its quest to build the waste facility. "People can be assured it's a safe facility."

Huntsman said in a statement that he was "deeply disappointed" in the NRC decision and would continue fighting the storage facility. In addition to a court appeal, another option for the state could be to designate a wilderness area to block construction of a rail spur to the site.

"This is a battle that will take several years to fight to completion, but it is also a battle that I intend to win," Huntsman said.

Sen. Orrin Hatch, R-Utah, said in a statement that the plan was "dead on arrival."

"This is a reckless, dangerous proposal, and I am pulling out all the stops to make sure this waste never makes a home in Utah," Hatch said.

Private Fuel Storage's facility would be a temporary dump pending the opening of a national nuclear waste repository at Nevada's Yucca Mountain.

Sen. Harry Reid, D-Nev., has proposed storing nuclear waste at the facilities where it is produced — an alternative to both the Private Fuel Storage site and Yucca Mountain.

On Friday, Reid, the Senate minority leader, said in a statement that he still believes that is the safest option.

"Thousands of tons of deadly nuclear material will pass homes, schools, businesses and churches in communities all across the country, and there is simply no way to safely do this," Reid said.

An impoverished tribe, the Goshutes had been looking for ways to make money and eventually teamed with Private Fuel Storage to propose the station.

Under their plan, the waste would be kept aboveground in 4,000 steel casks, which can hold up to 10 tons of spent fuel each. The casks would be shielded in an overpack of two steel shells encasing a wall of concrete more than 2 feet thick.

There are still more regulatory hurdles before construction can begin. The earliest the site is expected to be in operation is 2008.