What would that do? Probably it would make things worse. The Ministry of the Environment is one of the least powerful ministries with hardly any knowledge or expertise in nuclear energy or industry.
Goshi Hosono, PM Kan's assistant cum minister in charge of the Fukushima nuclear accident cum paymaster for the nuclear disaster compensation scheme that will help electric power companies who run nuke plants by capping the compensation, thinks that by putting the Nuclear Safety Agency under the Ministry of the Environment, the influence from, and collusion with, the nuclear industry will be lessened. (Hosono himself is a proponent of nuclear power, by the way.)
Well, what about safety? How would that be promoted, by putting the Agency under a ministry that has near-zero expertise and knowledge in nuclear power?
Remember also that it is the Ministry of the Environment who is very eager to raise the radiation limit of radioactive debris from 8,000 becquerels/kg to 100,000 becquerels/kg so that the debris can be burned at any facility anywhere in Japan and buried.
From Mainichi Shinbun (8/11/2011):
It was decided on August 11 that a new agency, Nuclear Safety Agency (temporary name) will be set up under the Ministry of the Environment. For a very long time, the regulatory agency for nuclear power, the Nuclear and Industrial Safety Agency, has been under the Ministry of Economy, Trade and Industry which has promoted nuclear power. That awkward situation of having the regulator and the promoter of nuclear power in the same ministry will be dissolved by moving the agency to the Ministry of the Environment. However, the Ministry of the Environment is one of the smaller ministries, and it is unknown whether the ministry can exert any effective leadership in nuclear regulation.
Upon hearing the decision by the Democratic Party of Japan (the ruling party), officials in the Ministry of the Environment are puzzled - "There are many here who are anti-nuke at heart", "We have hardly any experts in nuclear power". There are 1,258 personnel at the ministry, with the budget of only 200 billion yen [US$2.6 billion]. The Nuclear Safety Agency, which is to be newly created, will be staffed with 500 personnel from the METI's Nuclear and Industrial Safety Agency and the Nuclear Safety Commission under the Cabinet Office. There are those who voice concerns: "The Agency will continue to have the "Nuclear Village" mentality. It may take decades for the two organizations to effectively merge. We are afraid the balance of power within the ministry will be disturbed."
The Ministry of the Environment prides itself in "acting as the opposition within the government" (according to senior officials of the ministry) in dealing with problems like pollution. However, it is not in a strong position within the government in terms of personnel and budget, and has often been forced to compromise in negotiation with the other more powerful ministries.
Also, the ministry has hardly any nuclear expert as of now, and they don't have experience in emergency response during a big accident.
The Mainichi article quotes a Tokyo University professor (in government administration) who says the Ministry of the Environment is not really detached from the nuclear power interest groups, because it has promoted the nuclear power as environmentally friendly, clean energy to counter the "global warming".