The agency said Tuesday that it doesn't intend to continue supporting the Deep Borehole Field Test because of changes in budget priorities.
It was meant to assess whether nuclear waste could be stored in approximately 3-mile-deep holes. Officials had stressed it wouldn't involve the use of actual nuclear waste.
Energy officials said in December that companies were exploring potential sites in South Dakota, Texas and New Mexico. Local officials in North Dakota and South Dakota had previously rebuffed test organizers.
South Dakota U.S. Rep. Kristi Noem applauded the Energy Department's move, saying that she was deeply concerned about testing in "our backyard" to see whether boreholes could store nuclear waste.
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The U.S. Department of Energy says it's abandoning a test to determine whether nuclear waste can be buried far underground.