Washington - A federal appeals court on Friday threw out a rule that allows nuclear power plants to store radioactive waste at reactor sites for up to 60 years after a plant shuts down.

In a unanimous ruling, a three-judge panel of the U.S. Court of Appeals for the District of Columbia said the Nuclear Regulatory Commission did not fully evaluate the risks associated with long-term storage of nuclear waste. The court said on-site storage has been "optimistically labeled" as temporary, but has stretched on for decades.

The decision puts the Obama administration in a bind, since the White House directed the Energy Department to rescind its application to build a final resting place for the nation's nuclear waste at Nevada's Yucca Mountain and cut off funding two years ago. An alternative site has not yet been identified.

The ruling also adds a new wrinkle to an ongoing dispute that has confounded federal officials for more than 30 years: What to do with the radioactive waste produced by nuclear power plants?

Congress designated Yucca Mountain for a nuclear waste dump, but the plan has been opposed by Nevada elected officials, most notably Senate Majority Leader Harry Reid, D-Nev.

In the meantime, the waste - actually spent nuclear fuel - is stored on site at the nation's 104 nuclear reactors in pools or in dry casks.

The appeals court said the NRC should complete a detailed environmental review of on-site storage or explain why one is not needed.

The search for a solution to the country's nuclear waste problem took on a new urgency after the March 2011 disaster at the Fukushima Dai-ichi nuclear station in Japan. Three-quarters of the 72,000 tons of spent nuclear fuel scattered across 35 U.S. states is packed into spent fuel pools similar to the ones thought to have overheated and released radioactive material into the air and water around the stricken Japanese reactors.

A presidential commission recommended in January that the U.S. immediately start looking for an alternative to the failed Yucca Mountain site, which cost an estimated $15 billion but was never completed. The panel recommended a "consent-based" approach to siting future nuclear waste facilities, noting that attempts to force such facilities on unwilling states, tribes and communities have failed spectacularly.

New York Attorney General Eric Schneiderman called Friday's ruling a landmark victory for New Yorkers and people across the country who live near nuclear power plants. New York and three other Northeastern states - New Jersey, Connecticut and Vermont - sued the NRC last year, claiming that the agency had not shown that on-site storage was safe.

"The NRC cannot turn its back on federal law and ignore its obligation to thoroughly review the environmental, public health and safety risks related to the creation of long-term nuclear waste storage sites within our communities," Schneiderman said. "The security of our residents who live in the areas that surround these facilities is paramount."

Schneiderman said the ruling means the NRC cannot license or re-license any nuclear plant, including the Indian Point nuclear plant near New York City, until it reviews the risks of on-site storage.

A spokesman for the NRC said the agency was reviewing the ruling and had no immediate comment.

Geoffrey Fettus, a lawyer for the Natural Resources Defense Council, an environmental group that joined the state lawsuit, said the NRC would now be forced to do an environmental review of on-site storage that it has long resisted.

"This is an important step in recognizing the long-term environmental impacts of nuclear waste," Fettus said.

The appeals court ruling was written by Chief Judge David Sentelle and supported by Judges Thomas Griffith and David Tatel. Sentelle and Griffith were appointed by Republican presidents, while Tatel is a Democratic appointee.