ML13037A380

Attachment 1b, 2012 Annual Report of the Ceng Independent Nuclear Advisory Committee

ML13037A380
Person / Time
Site:	Calvert Cliffs, Nine Mile Point, Ginna
Issue date:	12/17/2012
From:	Constellation Energy Nuclear Group, EDF Group
To:	Office of Nuclear Reactor Regulation
References
TAC ME6234, TAC ME6235, TAC ME6236, TAC ME6237, TAC ME6238
Download: ML13037A380 (29)

Text

ATTACHMENT lb 2012 REPORT OF THE NUCLEAR ADVISORY COMMITTEE TO THE CENG BOARD OF DIRECTORS (REDACTED)

Constellation Energy Nuclear Group, LLC January 30, 2013

The 2012 Annual Report of the CENG Independent Nuclear Advisory Committee December 17, 2012 MEMBERS OF THE 2012 NUCLEAR ADVISORY COMMITTEE John Gordon, Chairman James Asselstine John Hamre Robert Hanfling Richard Meserve Prepared at the Request of Counsel

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 Table of Contents I. Executive Summary .......................................................... 3 II. Introduction and Scope of the Report ................................. 5 III. The CENG Nuclear Advisory Committee Charter .................... 7 IV. The Foundation for the CENG Nuclear Advisory Committee's Observations and Conclusions .......................................... 8 V. Specific Issues Reviewed by the CENG Nuclear Advisory Committee .................................................................. 12 VI. Conclusions and Observations ........................................ 16 VII. Exhibit I - The NAC Charter ............................................. 19 Prepared at the Request of Counsel 2

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 I. Executive Summary The Independent Nuclear Advisory Committee (the "NAC") was originally established through the execution of the Constellation Energy Nuclear Group, LLC

("CENG" or the "Company") ' Second Amended and Restated Operating Agreement (the "Agreement") dated November 6, 2009. Section 7.5 of the Agreement generally set forth the roles and responsibilities of the NAC, including the responsibility for the NAC to prepare a report, at least annually, to the CENG Board of Directors (the "Board") to advise the Company as to whether additional measures should be taken to ensure that the Company is in compliance with U.S. laws and regulations regarding foreign domination or control of nuclear operations and that a decision of a foreign government could not adversely affect or interfere with the reliable and safe operation of any nuclear assets of the Company, its Subsidiaries or Affiliates. In accordance with the Agreement, the NAC issued two reports to the Board on December 15, 2010 and December 14, 2011.

The CENG Third Amended and Restated Operating Agreement dated March 12, 2012 (the "Amended Agreement"), continued the roles and responsibilities of the NAC to the Board as presented above, but also extended the NAC's reporting responsibilities The reference to CENG throughout this report is intended to include Constellation Energy Nuclear Group LLC, its Subsidiaries and Affiliates.

Prepared at the Request of Counsel 3

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 to deliver the annual report to the Nuclear Regulatory Commission (the "NRC").

Section 7.5 of the Amended Agreement generally describes the updated responsibilities 2

of the NAC.

Based on the activities of the NAC during 2012 (through the date of this report),

the NAC advises the Board and the NRC that nothing came to the NAC's attention that would cause the NAC to advise the Board or the NRC that either:

1. Additional measures should be taken to ensure that the Company is in compliance with U.S. laws and regulations regarding foreign domination or control of nuclear operations, or to ensure that a decision of a foreign government could not adversely affect or interfere with the reliable and safe operations of any nuclear assets of the Company; or,

2. Additional policies should be implemented to prudently assure the Company's continued compliance with provisions of U.S. law and regulations regarding (i) nuclear security plans, including physical security and cyber security; (ii) screening of nuclear personnel; (iii) protection of critical nuclear infrastructures; and (iv) U.S. export regulations.

In addition the NAC did not identify any significant foreign ownership, control or domination matters that may have necessitated the NAC to report such matters directly to the NRC or other governmental agency.

2 The roles and responsibilities of the NAC, as well as the procedures of conduct of the NAC are stated more specifically in the NAC Charter which was updated to reflect the revised NAC responsibilities set forth in the Amended Agreement (see Section III of this report for further discussion of the Charter). A similar Charter was previously in place under the Agreement.

Prepared at the Request of Counsel 4

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 Finally, the NAC's review of the records of all of the Board votes during 2012 did not identify any actions where foreign interests exercised foreign ownership, control, or domination over the licensed activities of the Company's licensed entities, and that no action taken by a foreign interest involved with licensed activities was inimical to the 3

common defense and security (of those licensed entities).

II. Introduction and Scope of the Report Section 7.5 of the Amended Agreement describes the purpose and responsibilities of the NAC. Specifically, the Amended Agreement calls for:

"At least annually, the NAC shall prepare a report and supporting documentation to be delivered to the Board of Directors, which report shall advise the Company as to whether additional measures should be taken to ensure that the Company is in compliance with U.S. laws and regulations regarding foreign domination or control of nuclear operations and that a decision of a foreign government could not adversely affect or interfere with the reliable and safe operation of any nuclear assets of the Company, its Subsidiaries or 4

Affiliates;"

"The NAC shall prepare an Annual Report regarding the status of foreign ownership, control, or domination of the licensed activities of power reactors under the control, in whole or part, of the Company. The Report shall be submitted to the NRC within 30 days after completion of the Report, or by 5

January 31 of each year (whichever occurs first)."

3 During 2012, all Board Resolutions (votes) were unanimously approved, negating the need for the Board Chairman's casting vote.

4 The Constellation Energy Nuclear Group, LLC, Third Amended and Restated Operating Agreement, dated as of March 12, 2012, at p. 42.

5 Amended Agreement, at p.42.

Prepared at the Request of Counsel 5

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 "Records of all votes by EDF 6, or its representatives, on the Company's Board of Directors and the use of the Chairman's casting vote will be sent to the NAC and shall be reviewed by the NAC to ensure that no foreign interests have exercised foreign ownership, control, or domination over the licensed activities of the Company's licensed entities, and that no action taken by a foreign interest involved with licensed activities is inimical to the common defense and security. 7; and, "The NAC will advise on and recommend appropriate additional policies to prudently assure the Company's continued compliance with provisions of U.S.

law and regulations regarding (i) nuclear security plans, including physical security and cyber security; (ii) screening of nuclear personnel; (iii) protection of critical nuclear infrastructures; and (iv) U.S. export regulations."8 This report to the Board and the NRC (the "report") provides an overview of the activities of the NAC during 2012 (through the date of this report), as well as the observations of the NAC regarding any foreign ownership, control or domination

("FOCD") issues and the status of the Company's ability to respond to such issues.

The members of the NAC during 2012 were John Gordon (Chairman), James Asselstine, John Hamre, Robert Hanfling and Richard Meserve. 9 The NAC has 6 The reference to EDF throughout the report refers to EDF Inc., (a wholly owned subsidiary of Electricitie' de France S.A.), one of the two CENG joint venture partners along with CE Nuclear, LLC (a wholly owned subsidiary of Exelon Generation Company, LLC).

7Amended Agreement at p.42.

8 Amended Agreement at p.42.

9All five members of the NAC are U.S. citizens who are not officers, directors or employees of the Company, EDF Inc., Constellation Nuclear, LLC or CE Nuclear, LLC.

Prepared at the Request of Counsel 6

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 conducted the majority of its work through its five 2012 meetings. 10 During each of the NAC meetings, CENG management has candidly and openly presented the status of the topics of interest identified for discussion by the members of the NAC and/or CENG management.

III. The CENG Nuclear Advisory Committee Charter Based on Section 7.5 of the Amended Agreement, the NAC updated the existing NAC Charter (the "Charter") to amend the NAC's Operating Principles to reflect certain changes to the NAC's roles and responsibilities consistent with the Amended Agreement. The updated NAC Charter was approved by the NAC and the Board.

Many of the Charter's key Operating Principles contain the same or very similar language as the Amended Agreement (as quoted above in Section II of this report).

Therefore, those similar NAC Charter provisions are not duplicated here. However, different from the Amended Agreement, the Charter does provide the NAC the authority to report directly to the NRC, or other governmental agency, significant unresolved FOCD matters that may come to the NAC's attention. Specifically, the Charter states:

10NAC meetings were held in 2012 on March 5th, May 4th, July 9th, October 15 th and December 7th. Additional activities of the NAC and the NAC advisors that assisted the NAC in developing the observations and conclusions presented herein are described in Section IV of this report.

Prepared at the Request of Counsel 7

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 "If, in the course of executing its responsibilities, the Advisory Committee learns of unresolved significant matters resulting or that could result from, FOCD, and which are or could be at variance with U.S. law or regulation, or discovers unresolved significant matters that interfere or could interfere with the safe, secure and reliable operations of the nuclear assets of the company, its subsidiaries, or its affiliates, the Advisory Committee is authorized to report these matters directly to the NRC or other appropriate U.S. governmental agency without first seeking authorization from the Company to do so.""

The 2012 NAC Charter is attached to this Report as Exhibit 1.

IV. The Foundation for the CENG Nuclear Advisory Committee's Observations and Conclusions The observations and conclusions of the NAC contained in this report are primarily formulated from the information and analyses obtained from the following four sources. First, at each NAC meeting the NAC received an update from CENG management regarding the principal activities of the Company in the functional areas of operations, regulatory, legal, procurement and finance.12 Also at each meeting, the CENG President and CEO, and the General Counsel and Chief Compliance Officer summarized the activities of the Board and Board Committees, and the topics and issues considered by the Board during each 2012 Board meeting. During this 1 NAC Charter at pp. 2 and 3.

12 CENG leadership from whom the NAC received regular briefings included Brew Barron, Maria Korsnick, Steven Miller, and Gene Van Slyke. As requested, other members of the CENG management team provided presentations, related to their specific areas of responsibility and expertise. The topics of physical and cyber security, screening of nuclear personnel, the protection of critical nuclear infrastructures and the necessity of the Company's compliance with U.S. export regulations were discussed as appropriate during each 2012 NAC meeting.

Prepared at the Request of Counsel 8

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 discussion, the NAC was briefed on the activities of the Board's Nuclear Safety and Operations Committee. As a result of these discussions, the NAC asked the Company to either immediately respond to questions posed by the NAC during the meetings or provide additional information or analysis to the NAC for its continued consideration at future meetings. Examples of the issues reviewed and/or discussed during the 2012 NAC meetings included:

" the current legal and regulatory FOCD requirements and related guidance, including CFIUS,13 and the NRC and Department of Energy pronouncements, as well as U.S. export regulations;

" the Exelon Corporation ("Exelon") and Constellation Energy Group Inc.,

("Constellation") merger, focusing on; EDF's interactions with CENG, potential changes to the existing CENG organization, merger transition issues, the maintenance of shared services agreements, the NRC license transfer process, maintenance of IT and other systems controlling nuclear safety and security/nuclear oversight/nuclear operations/radiological protection and other industrial safety reporting/site access, potential CENG governance changes, the staffing of key leadership positions, Board and management reporting processes, the introduction of Exelon enterprise-wide applications, the operations of the CENG nuclear fleet (including major maintenance activities, outage activity, and productivity improvement programs), budgeting and financial performance matters;

" the NRC investigation of the indirect license transfer of the CENG generating assets during the corporate restructuring of Constellation and EDF in 2009, 13 CFIUS is the abbreviation for the Committee on Foreign Investment in the United States that is composed of various Executive Branch agencies. The Committee is responsible for maintaining the process and for reviewing proposed direct foreign investment in the United States for any national security concerns.

Prepared at the Request of Counsel 9

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 including the 2012 NRC communications to CENG dated January 27th and April 3rd;

" the CENG training and compliance programs in place to identify, report and respond to potential FOCD related issues, including the annual Principles of Business Integrity and Foreign Corrupt Practices Act Policy training for all CENG personnel;

• the CENG/EDF Cooperation Agreement governing the exchange or sharing of operating and design experiences within export control and other U.S.

regulations;

" the CENG nuclear fuel procurement function and the fuel procurement practices that consider the necessary confidentiality, export control, anti-trust and other legal and regulatory requirements of handling such information;

• the industry's, EDF's and CENG's responses to the Fukushima event;

" the CENG programs for managing access to Safeguards Information including special nuclear material and critical plant safety equipment; and,

• the Constellation/CENG Shared Services Agreement for the delivery of certain support services as well as the enhanced CENG Strategic Sourcing practices for the procurement of nuclear services and equipment.

The second source of information that the NAC has considered in 2012 is the information that each NAC member obtained when attending and observing the 2012 Board meetings. In addition to providing relevant insights to the Board during those meetings, the NAC members reported their observations, conclusions and perceptions to the NAC at each subsequent NAC meeting. The knowledge gained at the Board Prepared at the Request of Counsel 10

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 meetings in turn enhanced the NAC's insight into important Company issues, the working relationships between Board members, and the working relationships between the Board and CENG management personnel.

The third source of information that the NAC has considered in formulating the observations and conclusions in this report are the legal and regulatory analyses, provided to the NAC by CENG and by Arnold & Porter, a Washington D.C. law firm.

An Arnold & Porter partner regularly attended the NAC meetings as counsel to the NAC and provided timely insight and consultation as necessary. At each NAC meeting the CENG General Counsel provided the NAC with a legal analysis and insight into any potential FOCD issues, domestic import and export regulation matters, and the impact of other applicable laws and regulations on the activities of CENG. The CENG General Counsel also discussed any changes in certain FOCD related laws and regulations that occurred throughout 2012 that the NAC considered during the completion of their 2012 activities.

The final primary source of information that the NAC has considered in formulating the conclusions presented herein is a limited review performed by Prepared at the Request of Counsel 11

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 Navigant Consulting Inc. ("NCI") 14 on behalf of the NAC concerning CENG's current ability to identify, evaluate and respond to potential FOCD related events. The NCI review was performed primarily through discussions/interviews with twelve CENG management personnel on matters such as CENG operations, changes in operating practices and procedures, the potential for FOCD to occur, the impact of the Exelon/Constellation merger on CENG operations, and other relevant topics.

Additionally, NCI reviewed the Board Meeting Minutes and various other relevant documents provided by CENG. NCI discussed the results of its review with the members of the NAC.

V. Specific Issues Reviewed by the CENG Nuclear Advisory Committee The NAC has completed its 2012 review of CENG management's activities, including management's continued operation of three nuclear powered generating stations. As a result of the briefings the NAC received throughout the year and the other sources of information obtained by the NAC as described above, the NAC requested more detailed discussions of certain CENG practices and procedures that in its view may be subject to greater FOCD or legal and regulatory risk. The following are 14 Navigant Consulting Inc. is an international consulting firm. Senior members of this firm with significant nuclear power experience provided assistance to the NAC during 2012.

Prepared at the Request of Counsel 12

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 summaries of the information discussed with the NAC during these more detailed reviews.

Prepared at the Request of Counsel 13

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 Prepared at the Request of Counsel 14

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 Prepared at the Request of Counsel 15

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 VI. Conclusions and Observations The NAC has completed its responsibilities to the CENG Board under the Agreement and the NAC Charter for 2012. Those responsibilities generally include determining whether additional measures need to be undertaken by CENG to: 1) ensure the Company's compliance with U.S. laws and regulations regarding FOCD over the nuclear assets of the Company 20 , and, 2) ensure that action by a foreign government would not adversely impact the reliable and safe operation of the Company's nuclear assets. Based on the work undertaken by the NAC during 2012 the NAC reports to the Board and the NRC that nothing has come to the attention of the NAC that would require the Company to take additional measures to ensure compliance with U.S. laws and regulations regarding FOCD over the CENG nuclear assets or the reliable and safe operation of those assets. Also, the NAC has not identified any significant matter or 20 The NAC conclusions and observations also specifically apply to the U.S. laws and regulations regarding nuclear security plans, screening of nuclear personnel, the protection of critical nuclear infrastructure and U.S. export regulations.

Prepared at the Request of Counsel 16

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 matters that could potentially affect the safe, secure, or reliable operation of the Company's nuclear assets that would require an independent reporting to the NRC or 21 other U.S. governmental agency.

Finally, the NAC reviewed the records of all 2012 CENG Board votes and did not identify any actions where foreign interests exercised foreign ownership, control or domination over the licensed activities of the Company's licensed entities, and that no action taken by a foreign interest involved with licensed activities was inimical to the 22 common defense and security (of the licensed entities).

As noted above, the management of CENG has actively brought significant or material issues related to the NAC's Charter to the NAC for its review, consideration, and insight. The NAC urges management to continue to be sensitive to the issues of interest to the NAC and to continue to bring potentially relevant issues to the NAC's attention as the NAC continues to execute its FOCD oversight responsibilities to the Board and the NRC. The NAC also encourages CENG management to consider additional ways to enhance the role of the NAC during the coming year. The NAC is 21 It should be noted that the determination of the significance of a potential FOCD matter remains with the experience and judgment of the NAC and its evaluation of the matter. The facts, circumstances, risks, and numerous other issues associated with such a matter would need to be fully reviewed by the NAC to determine the level of significance and need for reporting to the NRC.

22 During 2012, all Board Resolutions (votes) were unanimously approved, negating the need for the Board Chairman's casting vote.

Prepared at the Request of Counsel 17

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 pleased with both the responsiveness of management to the NAC's issues of interest and the full and constructive support that CENG management has provided to the NAC throughout the year.

Prepared at the Request of Counsel 18

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 EXHIBIT I THE NAC CHARTER Prepared at the Request of Counsel 19

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 Charter Independent Nuclear Advisory Committee Constellation Energy Nuclear Group, LLC As provided for in the Third Amended and Restated Operating Agreement of Constellation Energy Nuclear Group, LLC, a Maryland limited liability company ("Operating Agreement")

(Constellation Energy Nuclear Group, LLC, the "Company"), the Company has established an independent Advisory Committee ("Advisory Committee"). The principal purposes of the Advisory Committee are to:

• Provide transparency to the U.S. Nuclear Regulatory Commission ("NRC") and other U.S. government authorities regarding issues related to foreign ownership, control or influence ("FOCI") over nuclear operations planned and conducted by the Company.

" Advise and make recommendations to the Company's Board of Directors ("Board of Directors") whether measures additional to those already in place should be taken to ensure that i) the Company is in compliance with U.S. laws and regulations regarding FOCI including those related to non-proliferation and fuel cycle matters, and ii) action by a foreign government or foreign corporation could not adversely affect or interfere with the reliable and safe operations of the nuclear assets of the Company its subsidiaries and affiliates (i and ii, collectively, the "Foreign Control Compliance Matters"), and to provide reports and supporting documentation to the Board of Directors and the Nuclear Regulatory Commission relating to such Foreign Control Compliance Matters on at least an annual basis.

Operating Principles The Advisory Committee is non-voting and strictly advisory in nature. Responsibility for the management of the Company's business and affairs rests solely with the Board of Directors, to whom the Advisory Committee reports.

The Advisory Committee shall deliver an annual---or more frequent if deemed necessary by either the Advisory Committee or Board of Directors-report and supporting documentation to the Board of Directors regarding Foreign Control Compliance Matters that advises the Company whether additional measures should be taken to ensure:

The adequacy of measures taken by the Company to continue to comply with U.S.

laws and regulations regarding FOCI of the Company, and over the nuclear assets of the Company, its subsidiaries and affiliates, focusing on i) nuclear security plans, Prepared at the Request of Counsel 20

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 including physical security and cyber security; ii) screening of nuclear personnel; iii) protection of critical nuclear infrastructure; and iv) U.S. export regulations; and The adequacy of measures taken by the Company to ensure that a decision by a foreign government or foreign corporation could not adversely affect or interfere with the reliable and safe operations of the nuclear assets of the Company, its subsidiaries, or its affiliates; In evaluating the above Foreign Control Compliance Matters, the Advisory Committee will consider, inter alia,the following:

" All U.S. laws and regulations relating to U.S. control of nuclear facilities owned and operated by the Company;

• All aspects of FOCI that could adversely affect the safe or reliable operation of a nuclear facility including, but not limited to:

o Implementation or compliance with any NRC generic letter, bulletin, order, confirmatory order, or similar requirement issued by the NRC; o Prevention or mitigation of a nuclear event or incident or the unauthorized release of radioactive material; o Placement of a plant in a safe condition following any nuclear event or incident; o Compliance with the Atomic Energy Act, the Energy Reorganization Act, or any NRC rule; o The obtaining of or compliance with a specific license issued by the NRC and its technical specifications; and o Compliance with a specific Final Safety Analysis Report, or other licensing basis document.

• All aspects of FOCI that could adversely affect the security of a nuclear facility including, but not limited to, those aspects under the jurisdiction of the U.S. Department of Homeland Security, U.S. Department of Justice, and the NRC.

" Records of all votes by EDF Inc., or its representatives, on the Constellation Energy Nuclear Group, LLC, Board of Directors and the use of the Chairman's casting vote to ensure that no foreign interests have exercised foreign ownership, control, or domination over the activities of the Company's NRC-licensed facilities, and that no action taken by a foreign interest involved with the licensed activities is inimical to the common defense and security of the United States.

Prepared at the Request of Counsel 21

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 If, in the course of executing its responsibilities, the Advisory Committee learns of unresolved significant matters resulting or that could result from, FOCI, and which are or could be at variance with U.S. law or regulation, or discovers unresolved significant matters that interfere or could interfere with the safe, secure and reliable operations of the nuclear assets of the company, its subsidiaries, or its affiliates, the Advisory Committee is authorized to report these matters directly to the NRC or other appropriate U.S. governmental agency without first seeking authorization from the Company to do so. Prior to such reporting, if deemed reasonably feasible and appropriate by the Advisory Committee, the Advisory Committee shall notify the Board of Directors so as to ensure that i) the Board of Directors is aware of the unresolved significant matter and Advisory Committee's intent to report, and ii) the Company has not in fact resolved such significant matter.

The Advisory Committee may, after notifying the Board of Directors, meet with the NRC or other U.S. government agencies to explain its authority, the terms of this Charter, and the Company's Operating Agreement and any additional responsibilities it has undertaken in the role it has been assigned. The Advisory Committee shall not, however, make any representations or statements on behalf of the Company, its parents, affiliates and subsidiaries - whether for public relations purposes or otherwise - without first securing written permission from the Company or appropriate parent, affiliate or subsidiary.

To execute its responsibilities, the Advisory Committee will have the power and authority, at the Company's reasonable expense, to retain outside consultants, lawyers, and accountants, delegate matters to Company personnel and other wise do such other acts as are reasonably necessary or advisable to carry out such responsibilities. The Advisory Committee will, when reasonably requested by the Board of Directors, provide justification of the need for the services of and the expenses for such consultants, lawyers, and accountants in carrying out the Advisory Committee's responsibilities. The Secretary to the Advisory Committee will be the interface with the Company for the contracting and payment for these services.

To help ensure the successful execution of the Advisory Committee's responsibilities, the Company will provide full and prompt access to the Advisory Committee's requests for relevant data, information, policies and access to Company employees. Such access also will be given to duly authorized and contracted consultants, lawyers and accountants assisting the Advisory Committee.

The Advisory Committee will prepare and provide annual reports to the Board of Directors no later than the end of December of each year, or more frequently, if the Advisory Committee deems appropriate. The annual reports shall include summarized results of the Advisory Committee's review of records of all EDF votes on the Company's Board of Directors; including discussions of any use of the Chairman's casting vote, determinations whether an exercise of foreign ownership, control, domination has occurred, or that foreign involvement with licensed Prepared at the Request of Counsel 22

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 activities was inimical to the common defense and security. The Advisory Committee acknowledges that the Company is required to and shall submit these reports to the Nuclear Regulatory Commission within 30 days of the reports' completion, or by January 31 of each year (whichever occurs first). The reports shall be made available to the public, with the potential exception of information that meets the requirements for withholding such information from public disclosure under the regulations of 10 CFR 2.390, "Public Inspections, Exemptions, Requests for Withholding".

Membership The Advisory Committee initially will be composed of five members, all of whom will be U.S.

citizens, and will be appointed by the Board of Directors in accordance with Section 7.5 of the Operating Agreement. Additional members of the Advisory Committee may be appointed by the Board of Directors, as warranted. One member of the Advisory Committee will be appointed by the Board of Directors of the Company as Chairman of the Advisory Committee.

The term of office for Advisory Committee members will be one year. By mutual agreement, the Board of Directors may offer, and an Advisory Committee member may accept, additional one-year appointments. Notwithstanding the foregoing, all Advisory Committee members will serve at the discretion of the Board of Directors, and any change in the composition of the Advisory Committee shall be approved by the Board of Directors in accordance with Section 7.3 (c)(ii)(iv) and 7.5 of the Operating Agreement.

Membership in the Advisory Committee should include individuals with prior experience or service in one or more of the following disciplines: nuclear power; government; regulatory agencies and processes; international business, banking and finance; law; and nuclear academia.

There should be particular emphasis on experience on the Advisory Committee related to foreign investment in the U.S. (specific to nuclear generating facilities, if possible), and in nuclear power risk, safety, and security.

The Advisory Committee may retain independent counsel to enable the Advisory Committee to perform its obligations hereunder.

The Company will provide a Secretary to the Advisory Committee who will, among other duties, be responsible for scheduling and providing notice of meetings, communicating with advisors to the Advisory Committee, preparing meeting minutes, arranging for Advisory Committee requested information or meetings with Company officials needed to fulfill the Advisory Committee's responsibilities, managing the administrative processes for retaining outside consultants, lawyers, or accountants, as required by the Advisory Committee, and assisting in preparing the annual report of the Advisory Committee.

Prepared at the Request of Counsel 23

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 Meetings of the Advisory Committee The Advisory Committee will meet at regularly scheduled times, or at the call of the Chairman, not less than once per quarter, either in person or by telephone during which call all participants may hear the others. Additional meetings may be called by the Chairman at his discretion.

Meetings will be held at the CEG offices in Baltimore, or at locations designated by the Chairman. A quorum for the conduct of Advisory Committee business shall consist of a majority of the Advisory Committee members.

When practical, Advisory Committee meetings shall be scheduled or called well in advance of the meetings.

Compensation Members of the Advisory Committee will be compensated in accordance with a schedule determined in accordance with Section 7.3(c)(ii)(iv) of the Operating Agreement. Compensation will include an annual retainer and reasonable travel expenses for attending meetings, as well as any pre-approved orientation or investigatory visits.

Indemnification/Liability/Insurance As provided for in the Operating Agreement, the Company shall indemnify members of the Advisory Committee, while serving the Company or at the Company's request any other entity, to the full extent required or permitted by the laws of the State of Maryland, now or hereafter in force, including the advance of expenses, under the procedures and to the full extent permitted by law.

To the fullest extent permitted by Maryland statutory or decisional law, as amended or interpreted, no member of the Advisory Committee shall be personally liable to the Company or its Members for money damages.

The Company will, in ensuring this indemnification, provide appropriate D&O insurance coverage for the Advisory Committee members.

Conflict of Interest/Non-Disclosure Agreement Each Advisory Committee member, prior to assuming their position on the Advisory Committee, shall execute a non-disclosure agreement ("NDA") in favor of the Company. Such NDA will prohibit disclosure of confidential Company information to anyone outside of the Company, other than to appropriate U.S. government agencies and authorities in the performance of the Prepared at the Request of Counsel 24

The CENG Independent Nuclear Advisory Committee 2012 Annual Report December 17, 2012 Advisory Committee's duties and, as necessary, to the Advisory Committee's consultants, lawyers, and accountants in carrying out the Advisory Committee's responsibilities.

During each Advisory Committee member's term of service, such member shall refrain from engaging in activities that would create a conflict of interest for such member when performing Advisory Committee duties. Any existing or potential conflict of interest must, upon knowledge of such conflict or potential conflict, be disclosed to the Chairman of the Advisory Committee and the Board of Directors. An Advisory Committee member with a potential or existing conflict of interest shall recuse himself or herself from any matter to which the conflict could affect the Advisory Committee member's ability to impartially and independently provide advice. Should the conflict be such that the Advisory Committee member's ability to serve in an independent capacity is materially affected, the Advisory Committee member shall tender his or her resignation or, alternatively, be removed by the Board of Directors.

Annual Review by Board of Directors The Board of Directors shall review the Advisory Committee's scope of responsibilities, compensation and membership, annually.

Amendment of the Charter The Advisory Committee shall review and reassess the adequacy of this Charter at least annually, and recommend any proposed changes to the Board of Directors. This Charter may be amended only by a vote of the Board of Directors in accordance with Section 7.3(c)(iv) of the Operating Agreement.

Prepared at the Request of Counsel 25

ATTACHMENT 2 I I I 10 CFR 2.390 AFFIDAVIT OF STEVEN L. MILLER Constellation Energy Nuclear Group, LLC January 30, 2013

ATTACHMENT 2 10 CFR 2.390 AFFIDAVIT OF STEVEN L. MILLER UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION In the Matter of )

)

Constellation Energy Nuclear Group, LLC, et al. )

AFFIDAVIT I, Steven L. Miller, Senior Vice President General Counsel and Secretary of Constellation Energy Nuclear Group, LLC (CENG), do hereby affirm and state:

I1. I am authorized to execute this affidavit on behalf of CENG and its affiliates.

2. Constellation Energy Nuclear Group, LLC is providing information in support of the application dated May 12, 2011 for an Order approving license transfers. The document being provided in Attachment lb contains confidential and proprietary information related to a report generated by the Nuclear Advisory Committee (NAC) for the CENG board of directors, information on proprietary decommissioning cost estimates, and confidential information provided to the Committee on Foreign Investment in the United States. This information constitutes proprietary information that should be held in confidence by the NRC pursuant to the policy reflected in 10 CFR 2.390(a)(4) and 9.17(a)(4), because:

i. This information is and has been held in confidence by CENG.

ii. This information is of a type that is customarily held in confidence by CENG, and there is a rational basis for doing so because the information contains sensitive business information.

In particular, the NAC report discusses proprietary internal discussions and activities by and between CENG management and the NAC, as well as legal and regulatory analysis prepared by internal and external legal counsel for the benefit of CENG and the NAC.

iii. This information is being transmitted to the NRC voluntarily and in confidence.

iv. This information is not available in public sources and could not be gathered readily from other publicly available information.

v. Public disclosure of this information would create substantial harm to the competitive position of CENG by disclosing confidential commercial information, including internal business discussions and activities as well as the legal and regulatory advice prepared by counsel at the request and for the benefit of CENG management or the NAC that is intended solely for internal use.

1

ATTACHMENT 2 10 CFR 2.390 AFFIDAVIT OF STEVEN L. MILLER

3. Accordingly, we request that Attachment lb be withheld from public disclosure pursuant to the policy reflected in 10 CFR §§ 2.390(a)(4) and 9.17(a)(4).

Steven L.iller /

Subscri1ed and sworn before me, a Notary Public, in and for the State of Maryland and City of Baltimore, this..,*ay of 2013.

WITNESS my hand and Notarial Seal:

NotkyPubli My Commission Expires: 111-7116-Date 2