ML20043E128

Declaration of Chiara Trabucchi in Support of New York Petition

ML20043E128
Person / Time
Site:	Indian Point
Issue date:	02/12/2020
From:	Trabucchi C Industrial Economics
To:	NRC/SECY
SECY RAS
References
50-003-LT-3, 50-247-LT-3, 50-286-LT-3, 72-51-LT-2, License Transfer, RAS 55556
Download: ML20043E128 (39)

Text

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE SECRETARY In the Matter of ENTERGY NUCLEAR OPERATIONS, INC.;

ENTERGY NUCLEAR INDIAN POINT 2, LLC; ENTERGY NUCLEAR INDIAN POINT 3, LLC; HOLTEC INTERNATIONAL; and HOLTEC Docket Nos.:

DECOMMISSIONING INTERNATIONAL, 50-3 LLC; APPLICATION FOR ORDER 50-247 CONSENTING TO TRANSFERS OF 50-286 CONTROL OF LICENSES AND 72-051 APPROVING CONFORMING LICENSE AMENDMENTS (Indian Point Nuclear Generating Station)

DECLARATION OF CHIARA TRABUCCHI I, Chiara Trabucchi, declare and state as follows:

1. I am a Principal with Industrial Economics, Incorporated (IEc), a 110-person financial economics and environmental policy consultancy located in Cam-bridge, Massachusetts. My expertise is in finance and economics, with specific focus on environmental risk management and the design of financial assurance frame-works tailored for the protection of the public trust. I submit this declaration in sup-port of the State of New Yorks petition for leave to intervene and hearing request in the above-captioned matter.

2. I have been employed with IEc since 1995. I was elected to Principal in 2003. I served as Chief Financial Officer of the firm from 2010 to 2014, and as a 1

Director of the firm from 2005 to 2018. Prior to joining IEc, I was employed by the Cadmus Group, Inc. as an Associate. I received a Bachelors degree in Government (Comparative Politics) and a Bachelors degree in Foreign Languages (French) from Clark University (1991). I received a Masters in Business Administration with a focus in corporate finance from the Simmons School of Management (1999).

3. As a Principal with IEc, I provide consulting services and expert support in the assessment of corporate profitability, environmental financial assurance and long-term financial models. My clients include the U.S. Department of Justice, the U.S. Environmental Protection Agency, the U.S. Department of Energy, the U.S. De-partment of the Interior, and various U.S. states, non-governmental organizations, and private entities.

4. I have worked on analyses involving corporate entities of all types. Dur-ing my tenure at IEc, I have analyzed the financial performance of approximately 1,000 corporate entities contributing to approximately $10 billion in financial expo-sure associated with environmental obligations. I have provided expert support on aspects of financial management of public and private resources, including assess-ment of financial assurance trust models ranging in value from less than $10 million to approximately $5 billion. I have published papers on financial assurance and risk management, and have served as a peer reviewer for articles addressing these topics.

5. I have delivered presentations on finance and risk management at var-ious professional conferences. I have testified before the U.S. Senate Committee on Energy and Natural Resources on issues related to financial risk management, and 2

before the U.S. Senate Permanent Subcommittee on Investigations, Committee on Homeland Security & Governmental Affairs on issues related to Wall Street Bank involvement in physical commodities. I have served as a member of the U.S. Envi-ronmental Protection Agencys Environmental Financial Advisory Board. I am a member of the American Institute of Certified Public Accountants member section for Forensic and Valuation Services. I am an Adjunct Professor at the Roger Williams University School of Law. I have been qualified in the Superior Court of the District of Columbia (Civil Division) as an expert in the field of financial management and the implementation of trusts to fund organizations in perpetuity.

6. A partial list of the projects in which I have been involved is included in my Curriculum Vitae (Exhibit A).

7. From September 16, 2019 to present, I have provided expert financial analysis on this case to the State of New York. The opinions contained in this decla-ration are based on my professional knowledge, training, and experience. I am com-petent to testify thereto at any trial or evidentiary hearing in this matter.

8. In forming my opinions, I relied on the following documentation:

a. The financial assurance provisions incorporated in the publicly avail-able version of the Entergy-to-Holtec license transfer application dated November 21, 2019 (ML19326B953) (hereinafter the Applica-tion);

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b. The financial assurance provisions incorporated in the redacted pe-tition Entergy and Holtec filed with the New York State Public Ser-vice Commission on November 21, 2019 in case 19-E-0730 (hereinaf-ter the Petition);

c. The financial assurance provisions incorporated in Holtecs post-shutdown decommissioning activities report submitted in connection with the Indian Point license transfer application (ML19354A698)

(hereinafter the PSDAR);

d. The financial assurance provisions incorporated in the Code of Fed-eral Regulations, title 10, part 50 (Domestic Licensing of Production and Utilization Facilities);

e. The financial assurance provisions incorporated in the Code of Fed-eral Regulations, title 10, part 72 (Licensing Requirements for the Independent Storage of Spent Nuclear Fuel, High-Level Radioactive Waste, and Reactor-Related Greater than Class C Waste);

f. The financial assurance provisions incorporated in the Nuclear Reg-ulatory Commission (NRC) final rule entitled General Require-ments for Decommissioning Nuclear Facilities, published in the Federal Register on June 27, 1988 at page 24,018 (hereinafter the 1988 Rule);

g. The internal revenue statutes set forth at 26 U.S. C. § 468A (Special rules for nuclear decommissioning costs);

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h. NRC Regulatory Guide 1.159: Assuring the Availability of Funds for Decommissioning Nuclear Reactors, rev. 2 (Oct. 2011), (hereinafter, NRC Guidance 1.159);

i. NRC Consolidated Decommissioning Guidance, Financial Assur-ance, Recordkeeping, and Timeliness Final Report, NUREG-1757, vol. 3, rev. 1, (Feb. 2012) (hereinafter, NUREG-1757);

j. The letter submitted by Lisa M. Burianek, Joshua M. Tallent, and Channing Wistar-Jones, Assistant Attorneys General, State of New York to John Tappert, U.S. Nuclear Regulatory Commission, Office of Nuclear Material Safety and Standards (Oct. 16, 2019)

(ML19362A001) (hereinafter, October 2019 Tappert Letter);

k. U.S. General Accountability Office, GAO-12-258: Nuclear Regula-tion: NRCs Oversight of Nuclear Power Reactors Decommissioning Funds Could Be Further Strengthened (April 2012) (hereinafter, GAO Report);

l. The Master Decommissioning Trust Agreement between Entergy Nuclear Indian Point 2, LLC and Mellon Bank, N.A. as Trustee, for Indian Point Nuclear Generating Units 1 and 2, dated August 30, 2001 (hereinafter, NDT IP 1 & 2);

m. The Master Decommissioning Trust Agreement between the Power Authority of the State of New York and the Bank of New York as 5

Trustee for the Indian Point 3 Nuclear Plant and the FitzPatrick Nu-clear Plant, dated July 25, 1990 (hereinafter, NDT IP 3);

n. The letter submitted by John T. Hernon, Senior Vice President and Chief Operating Officer, Entergy Nuclear Operations, Inc., Re: In-dian Point Unit 2 Docket No. 50-247 NL-06-007

Subject:

Provisional Trust for Decommissioning Fund Assurance, dated January 11, 2006;

o. First Amendment to the Master Decommissioning Trust Agreement between Entergy Nuclear Indian Point 2, LLC and Mellon Bank, N.A. as Trustee, for Indian Point Nuclear Generating Units 1 and 2, dated September 4, 2001;

p. First Amendment to the Master Decommissioning Trust Agreement between the Power Authority of the State of New York and The Bank of New York, as Trustee, for the Indian Point 3 Nuclear Plant and the James A. FitzPatrick Nuclear Plant, dated November 21, 2001;

q. Second Amendment to the Master Decommissioning Trust Agree-ment between the Power Authority of the State of New York and The Bank of New York Mellon, as Trustee, for the Indian Point 3 Nuclear Plant and the James A. FitzPatrick Nuclear Plant, dated January 30, 2017;

r. Third Amendment to the Master Decommissioning Trust Agreement between Entergy Nuclear Operations, Inc. and The Bank of New 6

York Mellon, as Trustee, for the Indian Point 3 Nuclear Plant and the James A. FitzPatrick Nuclear Plant, dated March 10, 2017;

s. Fourth Amendment to the Master Decommissioning Trust Agree-ment between Entergy Nuclear Operations, Inc. and The Bank of New York Mellon, as Trustee, for the Indian Point 3 Nuclear Plant and the James A. FitzPatrick Nuclear Plant, dated August 15, 2018; and

t. Fifth Amendment to the Master Decommissioning Trust Agreement between Entergy Nuclear Operations, Inc. and The Bank of New York Mellon, as Trustee, for the Indian Point 3 Nuclear Plant and the James A. FitzPatrick Nuclear Plant, dated September 27, 2018.

Financial Due Diligence is Required by Rule

9. The U.S. has a history of legislating liability and financial risk manage-ment regimes.1 These regimes require that businesses remain financially responsible for consequences arising at their facilities, including decommissioning and long-term stewardship consistent with their permit(s) and/or licenses(s). To that end, busi-nesses are obligated to demonstrate the ability to manage such risks, both technically and financially.

1 See, e.g., Oil Pollution Act § 1001(11), 33 U.S.C. § 2701(11); Oil Spill Liability Trust Fund, 26 U.S.C. § 9509; Atomic Energy Act (including Price-Anderson Nuclear Industries Indem-nity Act), 42 U.S.C. § 2210; Comprehensive Environmental Response, Compensation, and Liability Act § 221, 42 U.S.C. § 9631; Superfund Amendments and Reauthorization Act § 517, 42 U.S.C. § 9601(11); Hazardous Substance Superfund, 26 U.S.C. § 9507.

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10. Prudent risk management dictates consideration of who will finance the obligations arising from industrial activities before such risks result in injury to pri-vate and public sector interests. Traditional financial assurance models presume that the owners, operators, or licensees of industrial facilities are active business en-tities capable of setting aside the funds today to pay for future obligations.

11. The prescriptive financial assurance requirements that underpin U.S.

environmental regulation, including those associated with the domestic licensing of production and utilization facilities, see 10 C.F.R. part 50, and those associated with the licensing requirements for the independent storage of spent nuclear fuel, high-level radioactive waste, and reactor-related greater-than-Class-C waste, see 10 C.F.R.

part 72, necessitate a risk-informed approach. Consistent with NUREG-1757, a risk-informed approach is one in which regulatory decisionmakers consider insight about potential risks across an array of factors to better focus licensee and regulatory at-tention on issues commensurate with their importance to public health and safety.2

12. In my view, as the U.S. Nuclear Regulatory Commission (the Commis-sion) considers the application to transfer: (i) control of licenses for Indian Point Unit 1 (IP1), Indian Point Unit 2 (IP2), and Indian Point Unit 3 (IP3) from Entergy Nuclear Operations, Inc. (Entergy) to Holtec Indian Point 2, LLC (Holtec IP2) and Holtec In-dian Point, 3 LLC (Holtec IP3); and (ii) operating authority to conduct licensed activ-ities from Entergy to Holtec Decommissioning International, LLC (HDI), robust fi-2 NRC, Consolidated Decommissioning Guidance: Financial Assurance, Recordkeeping, and Timeliness, NUREG-1757 at 31 (Feb. 2012).

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nancial due diligence is required. The Commission should adopt its own stated phi-losophy and exercise a risk-informed approach when deciding whether Holtec Inter-national and its subsidiaries demonstrate the financial qualifications necessary to ensure adequate protection of public health and safety.

13. As the Commission recognized in the preamble to the 1988 Rule, firms are more likely to undertake operating and decommissioning decisions that minimize adverse impacts to public health and safety if they are held financially accountable and are not insulated from the consequences of their actions. Specifically, the Com-mission wrote: Inadequate or untimely consideration of decommissioning, specifi-cally in the areas of planning and financial assurance, could result in significant ad-verse health, safety, and environmental impacts.3 In my experience, risk mitigation strategies that presume a limit of liability, whereby firms may be financially respon-sible but only for a discount on the dollar, contribute to moral hazard.4 If a firm believes itself insulated from risk, it may act less prudently with respect to the nature and scope of its involvement in physical commodity related activities, such as nuclear decommissioning. In some cases, financial impacts can exceed the available capital 3 53 Fed. Reg. 24018, 24019 (June 27, 1988) (emphasis added).

4 Moral hazard refers to the specific situation where the risks of an unplanned event increase, because the responsible party is (partially) insulated from being held fully liable for resulting harm. If facilities are not held completely responsible for the consequences of their actions, arguably they will be less careful in their operating decisions, engaging in a less safe and less environmentally sound manner. Thus, the potential for environmental risk increases, be-cause the chance of an unpredictable event occurring due to poor operating decisions in-creases.

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and limited financial assurances of the businesses involved, resulting in bankruptcy.5

14. Firms that fail to maintain adequate financial wherewithal are less likely to be able to respond suitably to long-tailed responsibilities, such as those as-sociated with radiological decommissioning, spent fuel management, and site resto-ration.6 In such cases the risk of corporate default increases, and the financial burden of satisfying the long-tailed responsibility may be left for the taxpayers to absorb.

15. I believe the Application, the Petition and the PSDAR fail to provide the necessary assurances to the Commission, and to the State of New York, that New York taxpayers will not be left with the burden to pay for decommissioning activities should Holtec International or its subsidiaries default on their obligations at the In-dian Point Energy Center (Indian Point). My belief is predicated on: (i) the lack of transparency with respect to the financial qualifications of Holtec International and its subsidiaries, including but not limited to Nuclear Asset Management Company, LLC; Holtec IP2; Holtec IP3; and HDI; (ii) the use of corporate veils by Holtec Inter-national to mitigate financial risk and limit legal responsibility; (iii) the substantial concentration of portfolio risk associated with the fleet of nuclear-related acquisitions recently made by Holtec International and its subsidiaries; (iv) financial inconsisten-cies between the Application and the PSDAR, including the apparent co-mingling of financial assurance instruments associated with the radiological decommissioning of 5 See, e.g., In re Tronox Inc., 429 B.R. 73 (Bankr. S.D. N.Y 2010); In re Asarco LLC, Nos. 09-cv-177, 05-21207 (Bankr. S.D. Tex. Dec. 10, 2009); In re Kaiser Aluminum Corp., No. 02-10429 (Bankr. D. Del. Aug. 22, 2003).

6 A long-tailed responsibility is a liability or obligation that materializes over a long period of time, and as such specific losses or expenditures arising from the responsibility may not be fully realized for some time into the future.

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IP1, IP2, and IP3, and the decommissioning of the independent spent fuel storage installation (ISFSI); (v) the failure to use the actual compound annual growth rate realized on the existing nuclear decommissioning trusts (NDTs) to forecast future fund performance in the cash flow analyses; and finally, (vi) the stated intention to seek an exemption to allow the use of NDT funds for activities outside the stated scope of the NDTs, e.g., broadly-stated site restoration activities.

Holtec International and its Subsidiaries Fail to Evince Adequate Financial Qualification

16. Businesses involved with production and utilization facilities face spe-cialty or nonstandard risks.7 Prudent risk management dictates that firms operating in this space demonstrate the ability to assume and manage risks inherent to their industry - for example, NRC regulations require licensees to proffer information suf-ficient to demonstrate to the Commission the financial qualification of the applicant to carry out . . . the activities for which the permit or license is sought. 10 C.F.R.

§ 50.33(f) (emphasis added). The licensee must evince that it possesses or has rea-sonable assurance of obtaining the funds necessary to cover estimated operation costs for the period of the license, id. § 50.33(f)(2), and demonstrate reasonable assurance 7 In general, a specialty or nonstandard risk is characterized by a premium size, unique ex-posure, and/or unusual circumstance. Such risks are not common or normal, and often ne-cessitate specialized expertise to resolve. If realized, nonstandard risks tend to result in greater financial consequences than standard risks. Incidents documented in the public rec-ord evince that activities involving physical commodity activities, such as the extraction, stor-age, transport, or refining of non-renewable energy sources, can cause several types of injury including, for example, human health effects, fatality, ecological damage, property damage, business interruption, and/or surface/subsurface trespass. The means by which injury occurs often vary by commodity type; however, common pathways include pipeline rupture or explo-sion, impoundment failure, mine collapse, contaminant release, industrial accident, mechan-ical failure, transport accident, or explosive decomposition.

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that funds will be available to decommission the facility.8 Id. § 50.33(k)(1).

17. Evincing financial qualification is in addition to demonstrating reason-able financial assurance that funds will be available for the decommissioning process.

One is not a sufficient substitute for the other, as the Application seems to suggest.

18. For example, sole reliance on the proceeds of the NDTs for purposes of demonstrating Holtec IP2 and Holtec IP3 are financially qualified to hold the respec-tive owner licenses for IP1, IP2, and IP3 fails to meet the intent of the regulations at 10 C.F.R. § 50.33, and conflates the section 50.33(f) requirement with the require-ments at 10 C.F.R. § 50.75. The Application states that each company will maintain the trust funds segregated from their other assets and outside their administrative control.9 The question that presents itself to the Commission is whether other assets exist for Holtec IP2 and Holtec IP3 to cover their day-to-day operating expenses.

19. The Applications representation that Holtec IP2 and Holtec IP3 will be required to pay for HDIs costs of operation, including all decommissioning costs at Indian Point, using funds from each units NDT, is insufficient demonstration that HDI, in and of itself, is financially qualified to be a decommissioning licensed opera-tor.10 The Applications premise that the financial qualification provisions apply only to Holtec IP2 and Holtec IP3 because HDI will not be authorized under the facility licenses to operate or load fuel in the reactor is false.11 The transfer of Entergys 8 Comparable requirements exist for the licensing of independent storage of nuclear fuel, high-level radioactive waste, and reactor-related greater-than-Class-C waste. See 10 C.F.R.

§ 72.22(e).

9 See Application at 17.

10 See id. at 18.

11 See id. at 17.

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operating authority to HDI to conduct licensed activities at Indian Point, including radiological decommissioning of the site, clearly falls within the common standard set forth in 10 C.F.R. § 50.40(b), which necessitates that the applicant be technically and financially qualified to engage in the proposed activities. In this instance, the proposed activities for which HDI will be responsible are: possession of radioactive material in connection with maintaining the safe condition of the plants, decommis-sioning of the [Indian Point] site (including the ISFSI), and maintaining the ISFSI until it can be decommissioned.12 Protection of public health and safety warrants representation that the entity responsible for these activities has the independent financial wherewithal to satisfy its obligations.

20. Further, HDIs stated intention to seek an exemption from the Commis-sion to use NDT funds to finance activities related to spent fuel management and site restoration activities, both of which are beyond the scope of the stated purpose of each master trust,13 presents the question as to what HDI assets exist to finance such activities if the Commission denies the exemption. The documentation available for public review provides no answer.

12 See id.

13 The exclusive purpose of this Master Trust is to accumulate and hold funds for the con-templated Decommissioning of the Units and to expend funds for that purpose (NDT IP3,Section II, 2.01 Master Trust Purpose); and NDT IP 1&2 states: The exclusive purposes of this Master Trust is to accumulate and hold funds for the contemplated Decommissioning of the Units and to use such funds, in the first instance, for expenses related to the Decommis-sioning of the Units (NDT IP1&IP2,Section II, 2.01 Master Trust Purpose).

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21. In my experience, information to demonstrate financial qualification in-cludes, at a minimum, complete, audited fiscal-year end financial statements, includ-ing audit opinion, balance sheet, income statement, statement of cash flows, consoli-dating schedules, accompanying notes, and attachments for the most recent three fiscal years, or since inception, if incorporated within the last three fiscal years.

22. As part of its due diligence, and to ensure that the transfer of licenses and operating authority at Indian Point are not inimical to the health and safety of the public,14 the Commission should request and review such statements, including all consolidating schedules, for: Holtec International; Holtec Power, Inc.; Nuclear Asset Management Company, LLC; Holtec Decommissioning International, LLC; Holtec Indian Point 2, LLC; Holtec Indian Point 3, LLC; and Comprehensive Decom-missioning International, LLC.15 Attachment B lists the information that, in my view, the NRC should review to inform their assessment of financial qualification and adequacy of financial assurance.

23. Upon receipt of such documentation, the Commission should assess the solvency of each entity (i.e., the comparative strength of its assets to satisfy its debts),

the profitability of each entity (i.e., the comparative strength of its revenues to cover its cost structure), and the liquidity of each entity (i.e., its ability to convert assets into cash to pay for expenses as and when they become due). On the basis of these 14 See 10 C.F.R. § 50.40(c).

15 As set forth in 10 C.F.R. § 50.33(f)(3)(iii), the Commission has the authority to request any other information [it] consider[s] necessary . . . to enable it to determine the applicants fi-nancial qualification.

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assessments, the Commission can make an informed judgment as to financial quali-fication, consistent with a risk-informed approach. In my view, it is insufficient to rely solely on the cumulative value of the NDTs as proof of financial solvency, just as it is equally insufficient to ignore the independent profitability and liquidityor lack thereofof Holtec IP2, Holtec IP3, and HDI.

24. Unlike Entergy, for which audited financial statements are readily available via the Securities and Exchange Commission, the members of the Holtec corporate family are closely held. There is a notable dearth of financial information about the Holtec family; my research did not reveal the data necessary to ascertain the solvency, profitability, and/or liquidity of any member of the Holtec family. Fur-ther, any information contained in the Application and the Petition that might inform an understanding the Holtec corporate familys financial qualifications has been re-dacted.

25. The lack of publicly available financial information places the taxpayer and the Commission at extraordinary disadvantage. The taxpayer is forced to rely solely on the limited representations of the company, and the thorough review thereof by the Commission. For these reasons, the importance of the aforementioned reviews for purposes of affirming financial qualification cannot be overstated.

Pervasive Use of Corporate Veils Contributes to a Lack of Financial Accountability

26. Firms with business ventures involving specialty or nonstandard risks often employ risk mitigating strategies to avoid the need for, or minimize the amount 15

of, third-party financial assurances or committed capital. One strategy involves reli-ance on the corporate veil as a legal shield.

27. This strategy often involves spinning off the liabilities of a specialty or nonstandard business into a shell corporation to shield assets from financial expo-sure. The top-tier parent company believes itself shielded from the actions of its lower level subsidiary by virtue of successive layers of corporate veils. In so doing, the par-ent company attempts to insulate itself from financial exposure. In the event a lower level subsidiary faces financial distress, it can be surgically excised from the corpo-rate family (through Chapter 7 or Chapter 11 bankruptcy protection) in an attempt to limit adverse impact to its parent(s).16

28. In its Application, Holtec International affirms the use of corporate veils by recognizing its use of special purpose entities, limited liability companies, and indirect wholly-owned subsidiaries. The net effect of these corporate forms is to cre-ate a corporate structure that insulates the higher-tiered parents from the liability, and attendant financial risks, of its subsidiaries. The fact that all of these entities are closely held, and therefore financial information is not publicly available, places an even greater burden on the Commission to conduct a targeted and thorough review 16 A timely example involves Kerr-McGees separation of its chemical business (and legacy environmental liabilities) from its oil and gas business. Through a series of corporate trans-actions, Kerr-McGee restructured its operations such that the chemical business with its at-tendant legacy liabilities were aggregated in an undercapitalized shell company: Tronox In-corporated. Incapable of satisfying the environmental obligations associated with Kerr-McGees discontinued legacy businesses, Tronox filed for Chapter 11 bankruptcy protection in January 2009. See In re Tronox Inc., 429 B.R. 73 (Bankr. S.D. N.Y 2010).

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of the financial qualifications of Holtec International and its subsidiaries both on a consolidated and on an unconsolidated basis.

29. It is not self-evident that the special purpose limited liability companies formed by Holtec International have the financial wherewithal to independently meet the NRC financial assurance requirements in the event the NDT balances do not ac-crue as the Application and the Petition suggest. It also is not self-evident that the special purpose limited liability companies have the financial wherewithal to procure a surety bond, insurance or other third-party financial instrument (e.g., letter of credit) to guarantee that decommissioning costs will be paid in the timing and amounts required, particularly if decommissioning costs exceed those estimated in the PSDAR.17

30. Firms relying on the corporate veil as a risk mitigation strategy to avoid liability arising from nonstandard or specialty risks, as it would appear Holtec Inter-national and its subsidiaries are doing, adversely impact the public in several ways.

First, the assignment of liability as it relates to specialty event risks informs the risk premium applied by firms when assessing whether a decision represents a reasonable course of action. Generally, the greater the belief in ones legal shield, and attendant insulation from financial exposure, the lower the risk premium that is attached to the decision and the greater the likelihood that unreasonable (or risky) courses of 17 It also is not self-evident that Holtec International itself has the independent financial wherewithal to meet the requirements of financial assurance, i.e., to procure a surety bond, insurance or other third-party financial instrument (e.g., a letter of credit) that guarantees payment of decommissioning costs in the timing and amounts required, if its subsidiaries or the NDTs fall short of the funding necessary.

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action will be selected.

31. Second, firms may limit disclosure of the contingent liability associated with a specialty or nonstandard risk, if they assume that they are legally shielded from the attendant financial consequences. As a result, in the case of the decommis-sioning of a nuclear power reactor, the Commission (and the public) may be deprived of important information regarding the ability of the company to meet its financial responsibilities in the timing and amounts forecasted. The degree to which such in-formation is omitted from the companies financial statements will impact the finan-cial qualifications of the firm.

32. Third, by relying on the strength of its legal shield, the firm also may believe that it can act with impunity, avoiding or delaying necessary expenditures and maintaining insufficient financial assurance to adequately protect the health and safety of the public. As I stated previously, if a firm believes itself insulated from risk, it may act less prudently with respect to its environmental obligations. In so doing, the financial consequences of its actions can exceed the available capital and limited financial assurances of the business involved, resulting in bankruptcy.18

33. For these reasons, consistent with the Appendix attached to the October 2019 Tappert Letter, I believe the Commission should request and review all docu-ments itemized therein to inform its understanding of the financial qualifications and financial wherewithal of the Holtec corporate family collectively, and the special pur-pose, limited liability companies individually. In the context of the Application, such 18 See supra ¶ 13.

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review is necessary for the Commission to conduct appropriate due diligence, meet its fiduciary responsibility to the public, and render a decision consistent with its oversight authority.

Substantial Concentration of Position Contributes to Taxpayer Risk

34. When considering whether or not to invest in a business venture, finan-ciers seek value creation. Returns on investment in physical-commodity ventures will reflect the cash flows generated by the project, attendant legacy environmental liabilities, and the terminal value of the assets comprising the project, i.e., either sal-vage, or sale. Investments with positive cash flows, minimal costs, and high terminal values represent attractive value propositions.

35. When considering the Application and the Petition in connection with Indian Point, the value proposition to Holtec International and its subsidiaries ap-pears to be access to the $2.1 billion held in trust for the radiological decommissioning of IP1, IP2, and IP3. These funds were financed in large measure by New York rate-payers. The ratepayers should be afforded assurances that these funds will be used for their intended purpose and not for the profit maximization of closely-held, special purpose, limited liability companies.

36. To that end, traditional financial assurance models require that risks be bounded, quantified, and accounted for either directly as an expense or indirectly through third-party financial instruments (such as letters of credit, surety bonds, or insurance, to name a few). The financial assurance models at 10 C.F.R. § 50.75 and 10 C.F.R. § 72.30 are consistent with these standards. Many third-party financial 19

assurance instruments establish limits of liability and, in some cases, exclusions for certain types of cost reimbursement. These exclusions are designed to ensure that financial assurance monies are available in the timing and amounts needed, con-sistent with their intended purpose.

37. The substantial concentration of portfolio risk associated with the fleet of nuclear-related acquisitions recently made by Holtec International and its subsid-iaries poses particular concern. In the Application, Holtec International represents that its subsidiaries are financially qualified and maintain sufficient financial assur-ances to simultaneously decommission six power reactors at four separate sites.

38. With regard to Indian Point, this representation rests on the design and execution of a financial structure wherein Holtec IP2 will hold the owner licenses for IP1 and IP2, and Holtec IP3 will hold the owner license for IP3. In addition, these LLCs will own each units corresponding NDT, the cumulative value of which is represented to be $2.1 billion.19

39. Holtec IP2 and Holtec IP3 will enter into a Decommissioning Operator Services Agreement with their affiliate, HDI, which will act as their agent. Using funds from the NDTs, Holtec IP2 and Holtec IP3 will pay HDI for costs associated with post-shutdown operations, including decommissioning costs and spent fuel management costs.20 19 See Application at 17. Corroborating valuation statements from each NDTs Trustee do not appear to have been included in the Application. Or, if they are included, they have been redacted. Therefore, independent corroboration of the precise valuation of each NDT is not possible.

20 See id., cover letter at 2.

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40. The simultaneous decommissioning, spent fuel management, and site restoration of six power reactors at four separate sites constitutes a substantial de-gree of concentrated portfolio risk. Success presumes that HDI is able to consistently manage its concentrated position over an approximate forty-year time horizon, gen-erating sufficient reimbursements from its affiliates for each reactor at each site, in-dependent of the others. To do otherwise suggests a pyramid scheme wherein the first site may achieve success, but the last site may be left short to the degree NDT reimbursements are comingled as one revenue stream within HDI and cash outflows exceed cash inflows over time.

41. The Application states that HDIs funding plan for spent fuel manage-ment and site restoration relies on the use of NDT funds.21 Such activities fall out-side the stated purpose of the NDTs, and therefore HDI requires an exemption from the Commission to use a portion of the NDT funds accordingly.

42. Given the redactions in the Application and the Petition, the State and its taxpayers are left to rely on the Commission: (i) to conduct a robust review of the financial qualifications of HDI, it subsidiaries, and its affiliates; (ii) to understand the anticipated expenditure stream across the six power reactors over time; and (iii) to weigh whether adequate financial assurances exist to offset the degree of concen-trated specialty risk facing the Holtec corporate family and, by extension (or by de-fault), the taxpayer.

21 Application at 18.

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43. Granting HDI an exemption to use NDT funds for any activity other than the stated original purposes of the Indian Point master trust(s) without conduct-ing the aforementioned reviews is not in the public interest. The result of doing so may be an inappropriate risk transfer to the public in the event Holtec International and its subsidiaries are unable to meet their financial obligations.

Holtecs Promise to Pay Does Not Satisfy the Prepayment Method of Financial Assurance

44. The Application affirms that Holtec International and its subsidiaries will rely on the prepayment method to demonstrate financial assurance pursuant to 10 C.F.R. §§ 50.75 and 72.30.22

45. The regulations at 10 C.F.R. § 50.75 address the financial assurance re-quirements associated with radiological decommissioning at production and utiliza-tion facilities. The regulations at 10 C.F.R. § 72.30 address the financial assurance requirements associated with the storage of spent nuclear fuel and waste. Although the requirements at each section are similar, they are not identical. Each section warrants separate and distinct demonstration of financial assurance.

46. The financial representations in the Application do not acknowledge such distinction. Rather, the Application conflates the separate requirements for fi-nancial assurance under the precept that HDIs financial projections indicate that the balance of funds in the NDTs projected at the time of transfer will be adequate 22 See id. at 17-18.

22

to fund the costs of decommissioning IPEC, spent fuel management, and site restora-tion including the eventual costs for decommissioning the ISFSI.23 Based solely on these financial projections, the Application asserts that Holtec International and its subsidiaries satisfy all requirements for financial assurance.24

47. In my view, Holtecs representation of a promise-to-pay does not comport with the financial assurance requirements set forth at 10 C.F.R. § 50.75(e)(1)(i), in-sofar as the regulations state: Prepayment is the deposit made preceding the start of operations into an account segregated from licensee assets such that the amount of funds would be sufficient to pay decommissioning costs at the time termination of op-eration is expected (emphasis added). Because operations will have been terminated at IP2 and IP3 at the time the licenses transfer and there are immediate plans to decommission the site, the NDTs must be fully funded to satisfy the requirements of prepayment as an acceptable means of demonstrating financial assurance. Holtecs representation of adequate financial assurance is predicated on the accretion of a two percent annual real rate of return, such that the NDTs will grow over timebeyond the point in time that operations have terminatedto meet the total cost of decom-missioning, spent fuel management, and site restoration. By virtue of this represen-tation, Holtec acknowledges that it does not meet the requisite prepayment require-ments established by rule.

23 See id. at 18; see also id., attach. D.

24 See id. at 18.

23

Relying on a Two Percent Real Rate of Return Contributes to Taxpayer Risk

48. Notwithstanding the stated ability of a licensee to take credit for pro-jected earnings consistent with a two percent annual real rate of return under cer-tain circumstances, the regulations also state that actual earnings on existing funds may be used to calculate future fund needs. 10 C.F.R. § 50.75(e)(1)(i). As such, re-gardless of the fact that Holtec (albeit incorrectly) relies on the two-percent credit to satisfy the prepayment method, the Commission retains the right to ensure a licen-sees adequate accumulation of decommissioning funds, including as necessary, re-view of the rate of accumulation of funds, pursuant to 10 C.F.R. § 50.75(e)(2).

49. A financial practitioner reviewing the strength of Holtecs financial pro-jections and cash flow analyses against the projected growth of the NDTs would as-sess the compound annual growth rate (CAGR) actually realized by each NDT from fund inception to present day.25 The CAGR provides insight into the past earnings growth of each NDT, and informs whether such growth is commensurate with the funds needed to meet the future anticipated expenditures associated with IP1, IP2, and IP3.

50. In my view as a financial practitioner, the Commission should review the CAGR of each NDT. Doing so will allow the Commission to benchmark the actual earnings growth of each NDT as compared to the theoretical application of a two per-cent real rate of return. This exercise also will bring transparency to the assumptions 25 Compound annual growth rate (CAGR) is the rate of return required for an investment to grow from its beginning balance to its ending balance, assuming earnings are reinvested at the end of each year during the life of the fund.

24

underpinning the Applications representation of funds sufficiency in each NDT. To that end, the Commission should request copies of all fund valuation statements for each NDT, ideally since inception, but in the absence thereof consistent with the re-porting requirements of the master trust agreements and the regulations at 10 C.F.R.

part 50.

51. The Commission should be mindful of the fact that the two percent real rate of return is presumed to be net of inflation and net of taxes. In fact, to account for sufficient earnings to pay all taxes imposed pursuant to 26 U.S.C. § 468A, and offset inflationary pressure consistent with the adjustment factors set forth at 10 C.F.R. § 50.75(c), each NDT will need to earn a CAGR in excess of the stated real return of two percent. The precise rate depends on the degree to which the NDT continues to satisfy the statutory and regulatory qualifications for tax abatement, given the stated intention to seek an exemption to use NDT funds for non-decommis-sioning activities. As such, the Commission should review all IRS private letter rul-ings obtained by the parties as relevant to the transfer of the Indian Point NDTs. On the basis of such review, the Commission should assess whether the projected growth of the NDTs, consistent with actual past earnings performance, is commensurate with the glide path proposed for anticipated expenditures and associated fund with-drawals for cost reimbursement. Importantly, the Commission should retain author-ity to approve all requests for reimbursement of expenditures that will be financed with NDT funds, prior to the drawdown of such monies from the NDTs.

25

52. In my experience, any assurance afforded by the prudent investor rule exists only insofar as the underlying investment guidelines informing the actions of the Trustee are tailored to the risk tolerance of the beneficiaries. The Trustee is obligated to manage its investment activities according to the guidelines established under the Trust. In general, the more broad the investment guidelines the greater the risk tolerance of the beneficiarythat is, the greater the willingness of the bene-ficiary to tolerate greater market volatility in return for greater rewards. Although greater market volatility can yield higher highs in terms of investment returns, it also can result in lower lows. In the case of long-tailed NDTs, such lows could com-promise the availability of NDT funds.26

53. For this reason, before approving any exemption with regard to the use of NDT monies or accepting at face value the cash flow projections proffered in the Application, the Commission should review the investment guidelines of each NDT.

In so doing, the Commission should understand: (i) the breadth of investment flexi-bility afforded to the Trustee; (ii) whether such flexibility meets the objectives of the beneficiary; and (iii) whether such objectives are reasonably suited to the purpose of the NDT. Importantly, the Commission should retain authority to approve any changes to the NDT investment guidelines, as well as exercise its oversight authority 26 See GAO Report, 17-18 NRC officials told us [GAO] that their staff resources are limited and that they lack the financial expertise to evaluate compliance with investment re-strictions. . . . Without awareness of the nature of licensees investments, NRC cannot deter-mine whether it needs to take action to enforce the standards.

26

to actively and regularly review licensees compliance with stated investment guide-lines.27

54. The Indian Point master trust agreements, and specifically the trusts Exhibit A, Permitted Investments, are different. Specifically, review of these docu-ments suggests that the permitted investments for NDT IP3 apply a lower risk pre-mium, contributing to a risk-weighted investment mix that maps closer to a risk-free rate, than the permitted investments associated with NDT IP1 & IP2.28 In other words, the investment portfolio of NDT IP3 appears to be weighted in favor of less risky investments than the NDT IP1 & IP2 portfolio. Without copies of the NDTs respective valuation statements, it is difficult to assess the financial impact of these differences. The Commission should undertake the necessary review to determine whether these differences are material to the CAGR of each fund. The financial im-plications of failing to do so are significant, particularly if the corpus of the NDTs is allowed to erode due to risky investment and consequentially the costs of decommis-sioning exceed the amount of NDT funds available.

Conclusion

55. The very long time horizon associated with nuclear decommissioning one which may extend beyond the natural life of the corporate entity undertaking the decommissioningdemands a financial assurance structure that ensures funds are 27 See id. at 17.

28 A risk premium is the return in excess of the risk-free rate of return an investment is expected to yield. A risk-free rate is the theoretical return of an investment with zero risk; generally calculated as the yield associated with U.S. Treasury instruments matching the duration of the investment.

27

readily accessible and adequate when needed. NUREG-1757 defines financial assur-ance as: A guarantee, or other financial arrangement, provided by a licensee that funds for decommissioning will be available when needed. This is in addition to the licensees regulatory obligation to decommission its facilities.29 NRC Guidance 1.159 affirms: Estimating the minimum amount of funds needed for decommissioning is important to prevent funding shortfalls that could adversely affect public health and safety.30

56. If accelerated withdrawals by Holtec IP2 and Holtec IP3 erode the cor-pus of the NDTs such that they are unable to generate sufficient earnings to meet the approximate forty-year financial responsibilities attendant with decommissioning the nuclear power reactors at the Indian Point Energy Center, then some or all of the burden for completing the work may ultimately rest with the New York taxpayers.

Further, to the degree the Holtec subsidiary facilities are insufficiently capitalized to meet their day-to-day financial responsibilities, then New York taxpayers may be re-quired to bear the financial burden associated with unfunded portions of the residual long-tailed liability at IP1, IP2, and IP3.

57. Simply stated, the failure to recognize the breadth of potential exposure arising from Holtec International and its subsidiaries involvement in nuclear decom-missioning activities at multiple sites, coupled with the failure to maintain sufficient financial assurances to adequately hedge such exposure, compromises the financial soundness of Holtec International and its subsidiaries. The consequential impact 29 NUREG-1757 at 27 (emphasis added).

30 NRC Guidance 1.159 at 5.

28

may be an inappropriate risk transfer to the public in the event Holtec International and its subsidiaries are unable to meet their financial obligations. This risk is com-pounded if the Commission: (i) fails to exercise appropriate financial due diligence during the Application phase; (ii) fails to ensure that all financial assurance repre-sentations reflect on-the-ground conditions at Indian Point; and (iii) fails to act in a timely fashion with respect to notices provided by the Trustee regarding funds with-drawal and/or funds valuation. Failure in any of these instances increases the prob-ability of an inappropriate transfer of financial risk to the public.

58. I, Chiara Trabucchi, have read the above declaration, consisting of 29 pages, and certify under penalty of perjury that the foregoing is true and correct to the best of my knowledge. Executed this 7th day of February, 2020.

CHIARA\ RA TRABUCCHI

'l'RA RTJ(;(;l 29

DECLARATION OF CHIARA TRABUCCHI LIST OF EXHIBITS Exhibit A Curriculum Vitae for Chiara Trabucchi Exhibit B Information Necessary to Affirm Financial Qualification and Adequate Financial Assurance 30

Exhibit A Curriculum Vitae for Chiara Trabucchi CHIARA TRABUCCHI PRINCIPAL Ms. Trabucchi's areas of expertise are corporate finance and economics. As a Principal with Industrial Eco nomics, Incorporated, Ms. Trabucchi is a nationally recognized expert in financial risk management and the design of financial settlement frameworks tailored for the protection of the public trust.

She is an expert in evaluating the financial integrity of business, nonprofit and governmental organizations, including financial damages associated with lost profits, property diminution, economic benefit of noncompli ance, fraudulent conveyance, and natural resource damages. She often is asked to apply her expertise in the context of rigorous verification and auditing standards. She regularly consults to public and privatesector clients, assisting in the design and implementation of financial frameworks to hedge market and catastrophic risk.

Congressional Testimony & Hearings U.S. SENATE PERMANENT SUBCOMMITTEE ON INVESTIGATIONS, COMMITTEE ON HOMELAND SECURITY & GOVERNMENTAL AFFAIRS. Wall Street Bank Involvement with Physical Commodities. November 2014.

U.S. SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES. SENATE BILL 699, Department of Energy Carbon Capture and Sequestration Program Amendments Act of 2011. May 2011.

U.S. SENATE COMMITTEE ON ENERGY AND NATURAL RESOURCES. SENATE BILL 1013, Department of Energy Carbon Capture and Sequestration Program Amendments Act of 2009. May 2009.

Hearings before the U.S. FEDERAL INTERAGENCY TASK FORCE ON CARBON CAPTURE AND STORAGE established by President Obama on issues related to financial investment, indemnification, and financial responsibility. May 2010.

Invited expert on financial risk management related to the deployment of climate mitigation technologies be fore the US SENATE ENERGY & NATURAL RESOURCES COMMITTEE and the US SENATE COMMERCE, SCIENCE, AND TRANSPORTATION COMMITTEE. June 2010.

Expert Witness Support United States / New Mexico Environment Department v. Chevron Mining, Inc., D.N.M., Civ. No. 1:16cv00904 WPL. 2017.

Environmental & Recycling Services, Inc. v. Commonwealth of Pennsylvania, Department of Environmental Protection No. 350 M.D. 2005. Settlement lodged 2016.

Arbona et al. v. Trustees of the Corcoran Gallery of Art CA 0003745B. 2014.

Marilley, Kevin, et al. v. Fish & Game, CA Dept., John McCamman, et al. No. 43151 420 SF2011201820. 2013.

Hackensack Riverkeeper, Inc. v. Honeywell International Inc., D.N.J., Civ. No. 06cv0022. 2010.

United States / Philadelphia Housing Authority v. Sun Refining, Atlantic Richfield Refining Company, et al. No.

061635. 2010.

31

Selected Engagements Providing expert financial analysis to support the design of a banking framework for Natural Re source Damage Restoration in the Gulf Coast region. Analyses involve assessment of financial assur ance provisions, design of financial instruments to hedge the risk of nonperformance, and review of banking prospectus.

Providing expert financial analysis in a private litigation involving lost revenues associated with higher incidence of natural disasters in the Gulf Coast region. Analyses involve design of settlement frameworks that leverage privatepublic financing models, including the use of compensatory mitiga tion credits, and consideration of federal and state appropriations law.

Providing expert financial analysis to a team of federal attorneys in a litigation matter associated with unjust enrichment and illegal competitive advantage associated with the sale of aftermarket devices in violation of the Clean Air Act. Analyses involve assessment of economic benefit of non compliance, unjust enrichment, and restitution by disgorgement of excess profits.

Providing financial settlement support to a financial institution serving as Trustee. Support involves design of allocation algorithms to inform trust payments associated with an environmental mitiga tion trust. Financial exposure and mitigation actions at issue span 568 federallyrecognized Indian Tribes with total funds in excess of $50 million.

Provided financial settlement support expert economic and financial analysis in support of settle ment negotiations for the State of New York Office of the Attorney General and by extension the Na tional Association of Attorneys General. Support involves design of allocation algorithms to inform trust payments associated with a companion environmental mitigation trust. Financial exposure and mitigation actions at issue span more than 40 states with total funds in excess of $2.5 billion.

Provided expert economic and financial analysis, including the design of a longterm environmental trust, in support of settlement negotiations involving the phosphate and nitrogen fertilizer industries for the U.S. Department of Justice and the U.S. EPA. Financial exposure and environmental obliga tions at issue span properties in Florida, Mississippi, Louisiana, and Texas, with total exposure in ex cess of $2 billion.

Provided expert support associated with the design of a longterm indemnity model of a phosphate fertilizer company in Chapter 11 bankruptcy for the U.S. Department of Justice and the U.S. EPA. Fi nancial exposure and environmental obligations total in excess of $100 million.

Provided expert support in a private litigation associated with the lost profit damages realized by claimants arising from damages in the Gulf Coast region.

Provided expert analysis to the State of California in a litigation case involving the assessment of dif ferential fees and tax expenditures charged to nonresidents for four California fishing permits, li censes and registrations.

Provided expert analysis in a private, civil litigation case involving alleged environmental contamina tion in connection with the redevelopment and reuse of waterfront property. Designed a financial indemnity framework to address near, medium and long investigation, remediation and longterm care of property parcels.

Provided expert analysis in a private, civil litigation case involving alleged property damages in ex cess of $50 million. Derived estimates of economic damages associated with lost profits, property 32

diminution and natural resource damages. Designed companion financial assurance framework, in cluding a longterm environmental trust.

Provided expert financial analysis in the context of the Water Infrastructure Improvement for the Nations Act of 2018 (WRDA). Analyses involve assessing the potential market size for WRDA envi ronmental banks, including the market for coastal Louisiana wetland and stream mitigation, and the demand for coastal Louisiana conservation bank credits.

Directed a team supporting federal efforts to design financial instruments, including analysis of asso ciated macro and microeconomic impacts of various expenditure options. Efforts include designing a suite of financial mechanisms applicable to the mining, oil and gas and electric power generation sectors, including analysis of economic impacts to the hard rock mining and electric power sectors.

For myriad public and privatesector clients directed the review of approximately 1,500 financial instruments. Reviews spanned 40 states, myriad federal agencies, and approximately 1,000 corpo rate entities for an estimated total face value of $6.2 billion in financial exposure. Reviews spanned a range of industry sectors, including chemical manufacturing, waste management, energy and utility, air travel, auto manufacturing, oil and gas, pulp and paper, pharmaceutical, mining, lumber and wood products, agricultural, and metals mining. Reviews address myriad statutory requirements and legis lative proposals.

Directed a compliance and improper payments audit related to funds appropriated under the Ameri can Recovery and Reinvestment Act. Efforts involved designing and implementing a compliance audit framework to validate and verify management integrity and fiscal accountability associated with

$7.18 billion in activities funded under ARRA. Structured audit verification protocols to align with established GAO Internal Control Standards and OMB ARRA accountability criteria. Audit objectives focused on identifying areas of fraud, waste and abuse with respect to appropriated funds across fed erally funded programs, including U.S.EPAs multibillion State Revolving Funds.

Directed an assessment of the economic impacts associated with the Securities and Exchange Com missions proposed proxy access rule for the CFA Institute. Analyzed the degree to which proxy ac cess reform would be beneficial to market performance, stock performance and board performance.

Provided expert analysis to the U.S. Department of Energy in support of the financial responsibility provisions established under the Class VI financial responsibility regulations at 40 CFR 146.85.

For DOEs NETL, supported efforts to develop a financial assurance module aligned to its FE/NETL CO2 Saline Storage Cost Model. Efforts included completion of a financial responsibility pricing foun dations white paper.

For University of Illinois, CarbonSAFE Illinois, providing expert economic and financial analysis in service of business and financial case studies related to the East Basin and Macon County sites. Ef forts include assessment of carbon storage incentives, including 26 USC 45Q tax incentives.

Directed a team to design, develop and implement a riskbased probabilistic model (CCSvt) to evalu ate the potential financial consequences of CO2 migration at three candidate carbon capture and storage sites involving coalfired power plants. Clients include a consortium of funding sponsors from firms in the electric power generation and oil and gas sectors, nongovernmental organizations, the Government of Alberta, and the Global CCS Institute.

33

Professional Societies/Affiliations Adjunct Professor, ROGER WILLIAMS UNIVERSITY, SCHOOL OF LAW Member, AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, Forensic and Valuation Services Advisory Member, U.S. DOES NATIONAL RISK ASSESSMENT PARTNERSHIP (NRAP)

Advisory Member, INTERNATIONAL ENERGY AGENCY (IEA)/GREENHOUSE GAS R&D PROGRAMME Peer Reviewer, International Journal of Greenhouse Gas Control Director, MASSACHUSETTS COLLEGE OF ART AND DESIGN, Foundation Board Retired Member, U.S. EPAS ENVIRONMENTAL FINANCIAL ADVISORY BOARD (EFAB) Retired Selected Publications Trabucchi, Chiara, Michael Donlan, Vadim Spirt, Scott Friedman and Richard Esposito. Application of a Risk Based Probabilistic Model (CCSvt Model) to Value Potential Risks from Carbon Capture and Storage, Energy Procedia, Volume 63, 12th International Conference on Greenhouse Gas Control Technologies, GHGT12 (2014) Pages 76087618, doi:10.1016/j.egypro.2014.11.795.

Trabucchi, Chiara, Ellen Fitzgerald, Matthew Orsagh, Robert W. Dannhauser, James Allen. Proxy Access in the United States: Revisiting the Proposed SEC Rule. CFA Institute. Vol. 2014. No. 9. August 2014.

More, Jeffery, The Honorable Sherwood Boehlert, Ben Harper, Lindene Patton and Chiara Trabucchi. 2012.

Commercialization of Carbon Sequestration Projects; Scaling from Research to Reality. 2012 International Pittsburgh Coal Conference.

Trabucchi, Chiara, Michael Donlan, Michael Huguenin, Matthew Konopka and Sarah Bolthrunis. Valuation of Potential Risks Arising from a Model, CommercialScale CCS Project Site. Global CCS Institute. June 2012.

Donlan, Michael and Chiara Trabucchi, Valuation of Consequences Arising from CO2 Migration at Candidate CCS Sites in the U.S., Energy Procedia, Volume 4, Proceedings of the 10th International Conference on Green house Gas Control Technologies (GHGT10) (2011) Pages 22222229.

Dooley JJ, C Trabucchi, and L Patton. 2010. "Design Considerations for Financing a National Trust to Advance the Deployment of Geologic CO2 Storage and Motivate Best Practices." International Journal of Greenhouse Gas Control 4(2):381387. doi:10.1016/j.ijggc.2009.09.009.

Trabucchi C, M Donlan, and S Wade. 2010. A MultiDisciplinary Framework to Monetize Financial Conse quences Arising from CCS Projects and Motivate Effective Financial Responsibility. International Journal of Greenhouse Gas Control 4(2):388395. doi:10.1016/j.ijggc.2009.10.001.

Trabucchi, C., and L.E. Patton. 2008. Storing Carbon: Options for Liability Risk Management, Financial Re sponsibility. World Climate Change Report The Bureau of National Affairs.

Selected Presentations Invited Presenter at Greenhouse Gas Control Technologies (GHGt12) Conference. Application of a RiskBased Probabilistic Model (CCSvt Model) to Value Potential Risks from Carbon Capture and Storage. October 710, 2014.

34

Invited Speaker at Hydraulic Fracturing Disclosure Laws: Are We Getting the Information We Really Need?

Sponsored by Harvard Law School, Environmental Law Program. 20132014 Environmental Policy Speaker Series.

Invited Speaker at Platts 7th Annual European Carbon Capture & Storage Conference. January 31February 1, 2013.

Invited Speaker at Global CCS Institute International Members Meeting. October 2012 Invited Speaker at Emerging Technologies Committee sponsored by the U.S. Chamber of Commerce. October 2010.

Invited Presenter at GHGt10. Valuation of Environmental, Human Health and Financial Consequences Arising from CO2 Migration at a Candidate CCS Site to Motivate Sound Public Policy and Financial Investment. Septem ber 1923, 2010.

Invited Expert at Carbon Capture and Sequestration (CCS) Liability Workshop. U.S. Senate Energy & Natural Resources Committee & U.S. Senate Commerce, Science and Transportation Committee. June 18, 2010.

Invited Panelist at American Bar Association Section of Environment, Energy and Resources Environmental Is sues. June 1415, 2010.

Invited Expert at U.S. Federal Interagency Task Force on Carbon Capture and Storages Working Group on Le gal and Regulatory Issues. Design Considerations for Liability Management Related to the Deployment of Car bon Capture and Storage Technologies. April 2010 (closed hearing), May 2010 (public hearing).

Invited Panelist at Carbon Capture and Storage: Bridging the Commercial Gap, sponsored by the International Energy Agency (IEA), the Coal Industry Advisory Board (CIAB), the Carbon Sequestration Leadership Forum (CSLF) and the Global Carbon Capture and Storage Institute (GCCSI). September 2009.

Invited Speaker at The George Washington University. GHG Technology, Public Policy and the Law, April 2009.

Invited Panelist at Harvard Law School Environmental Law & Policy Clinic. Overcoming Legal and Financial Obstacles to CCS, March 2009.

Invited Speaker at International Energy Agency (IEA) CCS Regulators Network. CCS: Regulatory Approaches to Address Liability, January 2009.

Professional Experience Industrial Economics, Incorporated, 1995Present Principal, 2003Present Director, 20052018 Chief Financial Officer, 20102014 The Cadmus Group, 19911995 Education Masters Business Administration with Honors, Simmons University, 1999 Bachelor of Arts, Cum Laude, Clark University, 1991 35

Exhibit B Information Necessary to Affirm Financial Qualification and Adequate Financial Assurance

1. A current corporate map, including names and addresses, of Holtec Interna-tional, including its immediate corporate family, all subsidiaries, all affili-ates, all related parties, all predecessors, all successors, all entities in which Holtec International or its subsidiary, affiliate, or related party maintains a controlling interest, all entities in which Holtec International or its subsidi-ary, affiliate, or related party is a principal owner, all entities over which Holtec International or its subsidiary, affiliate, or related party has the abil-ity to exercise significant influence (or control) over the operating or financial policies, and all entities with which Holtec International or its subsidiary, af-filiate, or related party has a substantial business relationship, as these terms are defined above. Hereinafter, unless otherwise specified, the term Holtec shall mean the above-listed entities.

2. A list of Holtec shareholders, including shareholder name, company affilia-tion(s), and percentage equity interest by company.

3. Holtec Internationals complete, audited fiscal year-end financial statements, including audit opinion, balance sheet, income statement, statement of cash flows, consolidating schedules, accompanying notes, and attachments. If Hol-tec International does not have audited financial statements, reviewed state-ments, including all accompanying notes, attachments, and consolidating schedules are acceptable.

4. Holtec Decommissioning Internationals complete, audited fiscal year-end fi-nancial statements, including audit opinion, balance sheet, income state-ment, statement of cash flows, consolidating schedules, accompanying notes, and attachments for most recent three fiscal years. If Holtec Decommission-ing International does not have audited financial statements, reviewed state-ments, including all accompanying notes, attachments, and consolidating schedules are acceptable.

5. All documents concerning estimation of asset retirement obligations or loss contingencies associated with Holtecs nuclear plant operations, including but not limited to its radiological decommissioning activities; such documentation shall be organized by nuclear plant and include the nature of the loss contin-gency or asset retirement obligation, potential magnitude of loss or retire-ment obligation, potential timing of loss or retirement obligation, maximum exposure to loss or maximum estimable retirement obligation, and the person within Holtec responsible for satisfying the loss contingency or asset retire-ment obligation.

36

a. To the extent the asset retirement obligation or loss contingency is off-set by assets held within one or more decommissioning trust funds, identify the value of the offset, the trust fund used to finance the offset, and the contractual or legal basis for the right of setoff.

6. All documents concerning financial assurance(s) associated with Holtecs as-set retirement obligations, including but necessarily limited to the following fleet of nuclear plants:

a. Oyster Creek (New Jersey)

b. Pilgrim Nuclear Power Station (Massachusetts)

c. Palisades Nuclear Generating Station (Michigan)

d. Big Rock Point Independent Spent Fuel Storage (Michigan)

7. All documents sufficient to show any transfer of money, assets, real property, or any other consideration from the decommissioning trust fund(s) of any nu-clear power plant wherein Holtec is the licensee, including but not limited to:

a. Oyster Creek (New Jersey)

b. Pilgrim Nuclear Power Station (Massachusetts)

c. Palisades Nuclear Generating Station (Michigan)

d. Big Rock Point Independent Spent Fuel Storage (Michigan)

8. All documents concerning estimation of loss contingencies associated with po-tential litigation to which Holtec is a party, including the nature of the loss contingency, potential magnitude of loss, potential timing of loss, the entitys maximum exposure to loss, and a table with an accounting of all litigation to which Holtec is a party, inclusive of the Court in which the complaint is filed, Case Number, and plaintiffs.

9. All documents and communications concerning any dividends or return to capital paid from Holtec to Holtec shareholders.

10. Complete, audited fiscal year-end financial statements, including audit opin-ion, balance sheet, income statement, statement of cash flows, consolidating schedules, accompanying notes, and attachments for the most recent three fiscal years for the person that will serve as licensee of the Indian Point En-ergy Center. If this person does not have audited financial statements, re-viewed statements, including all accompanying notes, attachments, and con-solidating schedules are acceptable.

37

11. All documents that have been provided, or will be provided, to evince finan-cial protection, including demonstration of financial qualification or proof of adequate financial resources, in support of Holtecs application for license transfer of the Indian Point Energy Center.

12. All documents that have been provided, or will be provided, to evince finan-cial protection, including demonstration of financial qualification or proof of adequate financial resources, in support of Holtecs request for exemption to access the Indian Point decommissioning trust fund.

13. Unredacted versions of the Equity Purchas and Sale Agreement or similar agreements between Holtec and Entergy, as such documents relate to the In-dian Point Energy Center.

a. All documents regarding Holtecs assumption of liabilities pursuant to any of the aforementioned agreements.

b. All documents relating to or reflecting the estimation of potential lia-bilities associated with Holtecs acquisition of the Indian Point Energy Center.

c. Any communications or agreements with any financial institutions, state or federal regulatory agencies, or any other third parties regard-ing potential liabilities, including but not limited to asset retirement obligations, associated with the Indian Point Energy Center.

14. An unredacted copy of any IRS private letter ruling(s) obtained by any party relevant to the transfer of the Indian Point decommissioning trust fund(s) from Entergy and/or its subsidiaries to Holtec and/or its subsidiaries.

15. Unredacted copies of all fund valuation statements for each NDT, ideally since inception, but in the absence thereof consistent with the reporting re-quirements of the master trust agreements and the regulations at 10 C.F.R.

part 50.

38

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE SECRETARY In the Matter of ENTERGY NUCLEAR OPERATIONS, INC.;

ENTERGY NUCLEAR INDIAN POINT 2, LLC; ENTERGY NUCLEAR INDIAN POINT 3, LLC; HOLTEC INTERNATIONAL; and HOLTEC Docket Nos.:

DECOMMISSIONING INTERNATIONAL, 50-3 LLC; APPLICATION FOR ORDER 50-247 CONSENTING TO TRANSFERS OF 50-286 CONTROL OF LICENSES AND 72-051 APPROVING CONFORMING LICENSE AMENDMENTS (Indian Point Nuclear Generating Station)

CERTIFICATION OF SERVICE Pursuant to 10 C.F.R. § 2.305, I certify that I served the foregoing Declaration of Chiara Trabucchi via the NRCs Electronic Information Exchange on this 12th day of February, 2020.

Signed (electronically) by Joshua M. Tallent Assistant Attorney General Environmental Protection Bureau The Capitol Albany, NY 12224 (518) 776-2456 Joshua.Tallent@ag.ny.gov