ML20083K846
| ML20083K846 | |
| Person / Time | |
|---|---|
| Site: | Indian Point  |
| Issue date: | 03/23/2020 |
| From: | Burianek L, Lois James, Tallent J State of NY, Office of the Attorney General |
| To: | NRC/OCM |
| SECY RAS | |
| References | |
| 50-003-LT-3, 50-247-LT-3, 50-286-LT-3, 72-051-LT-2, License Transfer, RAS 55617 | |
| Download: ML20083K846 (31) | |
Text
UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE COMMISSION 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)
REPLY IN SUPPORT OF THE STATE OF NEW YORKS PETITION FOR LEAVE TO INTERVENE AND FOR A HEARING LETITIA JAMES Attorney General State of New York Lisa M. Burianek Deputy Bureau Chief Joshua M. Tallent Channing Wistar-Jones Assistant Attorneys General Office of the Attorney General Environmental Protection Bureau The Capitol Albany, New York 12224 (518) 776-2456 Joshua.Tallent@ag.ny.gov Dated: March 23, 2020 i
TABLE OF CONTENTS TABLE OF AUTHORITIES .......................................................................................... ii INTRODUCTION .......................................................................................................... 1 ARGUMENT .................................................................................................................. 2 I. Contention NY-1 Is Admissible ............................................................... 2 II. Contention NY-2 Is Admissible ............................................................... 5 III. Contention NY-3 Is Admissible ............................................................. 19 CONCLUSION............................................................................................................. 25 CERTIFICATION OF SERVICE ................................................................................ 27 i
TABLE OF AUTHORITIES Page(s)
CASES System Fuels, Inc. v. United States, 818 F.3d 1302 (Fed. Cir. 2016)......................................................................... 17, 18 Williams v. Taylor, 529 U.S. 362 (2000) .................................................................................................. 3 FEDERAL REGULATIONS 10 C.F.R.
§ 2.309(f)(1)(vi) .......................................................................................................... 3
§ 50.33(f) ............................................................................................................. 8, 20
§ 50.33(k)(1) ........................................................................................................ 8, 11
§ 50.40(b)................................................................................................................. 20
§ 50.54(bb)........................................................................................................... 8, 11
§ 50.75 ..................................................................................................................... 21
§ 50.75(b)(1) ........................................................................................................ 8, 11
§ 50.75(c) ............................................................................................................... 4, 6
§ 50.75(e)(1)(i) ..................................................................................................passim
§ 50.75(g) ................................................................................................................. 13
§ 50.80(b)(1)(i) ........................................................................................................... 8
§ 50.82(a)(8)(vi) ..................................................................................................... 8, 9
§ 72.30(b)................................................................................................................... 8 53 Fed. Reg. 24018 (June 27, 1988) ............................................................................ 13 63 Fed. Reg. 66721 (Dec. 3, 1998) ............................................................................... 21 67 Fed. Reg. 78332 (Dec. 24, 2002) ........................................................................... 4, 5 85 Fed. Reg. 3947 (Jan. 23, 2020) ............................................................................... 20 MISCELLANEOUS AUTHORITIES Arizona Pub. Serv. Co. (Palo Verde Nuclear Generating Station, Unit Nos. 1, 2, and 3), 34 N.R.C. 149 (1991) .................................................................. 24 DOE, Report to Congress on the Demonstration of the Interim Storage of Spent Nuclear Fuel (2008), available at https://www.energy.gov/sites/prod/files/edg/media/ES_Interim_Stor age_Report_120108.pdf .......................................................................................... 16 ii
Gulf States Utils. Co. (River Bend Station, Unit 1), 40 N.R.C. 43 (1994) ............... 5, 7 North Atlantic Energy Serv. Corp. (Seabrook Station, Unit 1), 49 N.R.C. 201 (1999) ............................................................................................passim NRC, Generic Environmental Impact for Continued Storage of Spent Nuclear Fuel, NUREG-2157 (Sept. 2014) ............................................................. 17 NRC, Summary of Decommissioning Fund Status Reports, SECY 170 (July 1, 1999) (ML992800091) ........................................................................ 20 Simon Moore, What to Expect from This Bear Market, Forbes (Mar. 14, 2020), available at https://www.forbes.com/sites/simonmoore/2020/03/14/what-to-expect-from-this-bear-market/#67012ecd61ff ....................................................... 11 South Carolina Elec. & Gas Co. (Virgil C. Summer Nuclear Station, Units 2 and 3), 71 N.R.C. 350 (2010) ..................................................................... 12 iii
INTRODUCTION The Applicants 1 propose to shift responsibility for radiological decommission-ing, site restoration, and spent fuel management at historically troubled Indian Point to a group of single-asset limited liability companies with no prior decommissioning experience and no demonstrated ability to absorb cost overruns during the remedia-tion process. In three well-pleaded contentions, the State challenges the Holtec LLCs insufficient showing of financial qualification, decommissioning funding assurance, and the availability of funds for spent fuel management. The Applicants response argues the States contentions are unsupported, speculative, irrelevant, immaterial, beyond the scope of the proceeding, and/or somehow a collateral attack on the Com-missions rules. These criticisms are unfounded.
As the Commission has long recognized, financial qualification and decommis-sioning funding issues lie at the core of the NRCs license transfer inquiry. 2 The States topical contentions directly address the Holtec LLCs lack of financial qualifi-cation to hold the Indian Point licenses and the LLCs failure to establish adequate funding assurance for license termination and spent fuel management activities. The States contentions are well within the scope of these proceedings, identify material disputes of fact and law, and are supported with reference to documentary evidence, NRC regulations, and six detailed declarations from knowledgeable experts. As the 1 Capitalized terms and abbreviations in this brief shall have the meanings ascribed to them in New York States Petition for Leave to Intervene and for a Hearing (Petition) (Feb.
12, 2020) (ML20043E118).
2 North Atlantic Energy Serv. Corp. (Seabrook Station, Unit 1) (Seabrook), 49 N.R.C.
201, 219 (1999).
1
Applicants well know, the State need not prove its case at the contention filing stage; it need only advance reasonable, fact-based claims about the Holtec LLCs inability to meet the NRCs financial qualification, decommissioning funding assurance, and spent fuel management requirements. 3 The States contentions meet that introduc-tory threshold, and the issues raised are ripe for exploration at an adjudicatory hear-ing.
ARGUMENT I. Contention NY-1 Is Admissible In Contention NY-1, the State argues that the Holtec LLCs impermissibly take a two-percent annual earnings credit on the monies in the Indian Point decommis-sioning trusts despite their decision to proceed under a DECON model, in violation of 10 C.F.R. § 50.75(e)(1)(i). 4 In their Answer, the Applicantsignoring the regula-tory requirement that prepaid decommissioning funds be sufficient to pay decom-missioning costs at the time permanent termination of operations is expected 5claim the two-percent earnings credit is available in effect to the owners of all decommis-sioning plants, whether they elect to decommission promptly under a DECON model or delay decommissioning for an extended time period under a SAFSTOR model. 6 3 See Seabrook, 49 N.R.C. at 219-20.
4 See Petition, Contention NY-1, ¶3. As a corollary, because HDIs own cost estimate exceeds the amount of money allegedly existing in the Indian Point trusts as of October 2019, the State further argues that the Applicants fail to establish adequate decommissioning fund-ing assurance and that the license transfer application is unapprovable as submitted.
5 10 C.F.R. § 50.75(e)(1)(i) (emphasis added).
6 See Answer at 19.
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The Applicants argument in opposition misconstrues the applicable regulation and highlights the existence of a material dispute on a question of law.
Under 10 C.F.R. § 50.75(e)(1)(i), [a] licensee that has prepaid funds based on a site-specific estimateas is the case heremay take credit for projected earnings on the prepaid decommissioning trust funds, using up to a [two] percent annual real rate of return from the time of future funds collection through the projected decom-missioning period, provided that the site-specific estimate is based on a period of safe storage that is specifically described in the estimate (emphasis added). In arguing that even rapid decommissioning under DECON includes a period of safe storage however brief, the Applicants argument reads the provided clause out of the rule:
if both DECON and SAFSTOR (and, presumably, even ENTOMB) qualify for the two-percent earnings credit because they include even a de minimis period of safe storage, the provided clause in the rule becomes meaningless. Giving effect, as it must, to every clause of the regulation, 7 the Commission should reject the Applicants pro-posed reading. In any case, the Applicants fail to establish that Contention NY-1 lacks a basis in fact or law, 8 and the State has presented a genuine dispute on a material issue of law appropriate for resolution at a hearing. 9 The States position finds additional support in the preamble to the NRCs 2002 decommissioning rule, where the Commission notes that a [two]-percent credit can 7 See, e.g., Williams v. Taylor, 529 U.S. 362, 364 (2000).
8 See Answer at 18.
9 See 10 C.F.R. § 2.309(f)(1)(vi).
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be used when a site-specific estimate is explicitly based on deferred dismantlement. 10 The Holtec LLCs decommissioning cost estimate is a site-specific estimate, but it surely is not explicitly based on deferred dismantlement. 11 To the contrary, the Applicants describe their approach as desirable and of considerable benefit pre-cisely because it will result in the prompt decommissioning of [Indian Point]. 12 The Holtec LLCs decommissioning approach is based on prompt dismantlement, not de-ferred dismantlement. 13 To the extent the Applicants claimnotwithstanding their focus on rapid de-commissioningthat they are actually putting Indian Point in SAFSTOR for some period of time while HDI moves spent fuel to the ISFISI, 14 this claim is contradicted by the license transfer application itself. For example, HDIs project milestones chart clearly indicates that decommissioning activitiesin the form of reactor inter-nals and pressure vessel segmentation at Unit 3will begin immediately after li-cense transfer. 15 And spent fuel will be removed from the Unit 2 spent fuel pool while that units reactor internals and pressure vessel are being segmented and while Unit 10 67 Fed. Reg. 78332, 78338 (Dec. 24, 2002). The Applicants argue that the preamble to the rule contains no limitation on licensees that use the DECON approach and certify to a site-specific decommissioning cost. See Answer at 20. But the preamble plainly states that a two-percent credit can be taken where the licensee elects SAFSTOR and certifies to a site-specific cost.
11 Id.
12 Letter from A. Christopher Bakken III to NRC Document Control Desk at 3 (Nov.
21, 2019) (ML19326B953) (emphasis added); see LTA at 3.
13 The Applicants observe that a licensee certifying to the generic formula amount in 10 C.F.R. § 50.75(c) can take a pro-rata credit into the dismantlement period. See Answer at
- 20. This observation is irrelevant: the Holtec LLCs are prepaying based on a site-specific estimate, not the generic formula amount.
14 See Answer at 20-21.
15 See LTA, attach. D, at unnumb. p. 14.
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3 is being dismantled. 16 In other words, the license transfer application shows, if anything, that it is not explicitly based on [a period of] deferred dismantlement, and so the Holtec LLCs are not entitled to take a two-percent annual earnings credit on the monies in the decommissioning trusts. 17 And of course the Applicants make no effort to argue that the Holtec LLCs can make the requisite showing of financial qual-ification or provide adequate decommissioning or spent fuel management funding as-surance without the benefit of the two-percent annual creditwhich, with no assets beyond the trusts, they cannot do.
In sum, with respect to Contention NY-1, the State has set forth a legal (and, apparently, factual) issue that is well within the scope of the proceeding and mate-rial to the findings necessary to a grant of the license transfer application. 18 And the Applicants vigorous opposition merely demonstrates the existence of a genuine dispute of both law and fact on this highly relevant issue. At the contention filing stage, nothing more is required. 19 II. Contention NY-2 Is Admissible In Contention NY-2, the State argues that the Holtec LLCs fail to demonstrate adequate decommissioning and spent fuel management funding assurance because HDIs site-specific cost estimate for radiological decommissioning, site restoration, and spent fuel management is plagued by omissions and unreasonable assumptions.
16 See id.
17 67 Fed. Reg. at 78338; see 10 C.F.R. § 50.75(e)(1)(i).
18 Seabrook, 49 N.R.C. at 215.
19 See Gulf States Utils. Co. (River Bend Station, Unit 1) (River Bend), 40 N.R.C. 43, 51 (1994).
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The State particularizes the general argument advanced in Contention NY-2 in nine specific subparts, each in turn supported by reference to documentary and expert ev-idence as required by NRC rule. 20 The Applicants attempt to sidestep the States arguments by erecting an en-tirely unsupported, overly restrictive pleading standard. The Applicants mistakenly rely on the Commissions Seabrook decision to argue that the States petition is gen-erally unsupported, speculative, and immaterial. 21 But in Seabrook, the Commission admitted a contention arguing that a proposed licensee was not financially qualified because it failed to demonstrate adequate funding for plant operations. 22 Noting that the petition reliedas is the case hereon extensive documentary and expert evi-dence, the Commission rejected the applicants claim that the contention was unsup-ported. 23 And noting that [s]peculation of some sort is unavoidable when the issue at stake concerns predictive judgments about an applicants future financial capabil-ities, the Commission rejected the applicants further claim that the contention was 20 For the avoidance of doubt, the State argues in Contention NY-2 that the Holtec LLCs have failed to demonstrate adequate decommissioning and/or spent fuel management funding assurance for each of the reasons set forth in Contention NY-2.A through NY-2.I.
See Petition, Contention NY-2, ¶3. The admissibility of Contention NY-2 does not depend on a finding that all subparts are independently admissible.
21 See, e.g., Answer at 22-23.
22 Seabrook, 49 N.R.C. at 219 (holding that the petitioners petition and reply clearly set out the claim that [the proposed licensee] will lack sufficient financial resources to fulfill its obligations for operating expenses). While the Commission rejected the petitioners de-commissioning funding contention, that holding was based on the proposed licensees compli-ance with 10 C.F.R. § 50.75(c). Here, because the Applicants rely on a site-specific estimate to show decommissioning financial assurance and not on the generic formula amount, Sea-brooks rejection of the decommissioning financial assurance contention is neither relevant nor determinative.
23 See id.
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speculative. 24 Here, the Applicants references to the Commissions comments on the scope of the eventual evidentiary hearing 25 confuse the applicable standard: those comments describe the petitioners burden of proof to prevail on its contention at the hearing, not the proof necessary to support an admissible contention. 26 As the Commission has held, the State need not prove its case at the conten-tion filing stage, and the proof adduced need not be in formal evidentiary form, nor be as strong as that necessary to withstand a summary disposition motion. 27 What is required is a minimal showing that material facts are in dispute, thereby demon-strating that an inquiry in depth is appropriate. 28 And the Seabrook decision stands for the further proposition that a contention addressing financial concerns in a license transfer proceeding may rely on reasonable predictions with regard to future events, so long as those predictions rest . . . on factual assertions. 29 The well-supported allegations in the States petitionviewed, as they must be, in a light most favorable to the State 30satisfy the Commissions contention admissibility standards, and the State is entitled to an adjudicatory hearing to substantiate its concerns. 31 The Applicants further claim that no decommissioning financial assurance-re-lated contention is material unless it defeat[s] all of what they call the Layers of 24 See id. 219-20 (noting that the petitioner rest[ed] its speculation on factual asser-tions.
25 See, e.g., Answer at 22-23.
26 See Seabrook, 49 N.R.C. at 221-22.
27 River Bend, 40 N.R.C. at 51.
28 Id. (internal quotation marks and citation omitted) (emphasis added).
29 Id. at 219.
30 See River Bend, 40 N.R.C. at 53.
31 Seabrook, 49 N.R.C. at 222.
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NDT Protection. 32 This argument should be rejected for several reasons.
First, the Applicants argue (fallaciously) that the NRC reporting rules and the rule requiring a licensee to provide additional financial assurance in the event of a decommissioning cost overrun effectively lessen their burden of proof to show finan-cial qualification and decommissioning funding assurance at the application stage. 33 But the regulations require that any would-be licensee demonstrate adequate decom-missioning and spent fuel management funding assurance as part of the license trans-fer application, 34 and the Applicants never explain how the single-asset entities Hol-tec IP2 and Holtec IP3entities with no source of revenue other than the trusts would provide additional funding assurance if needed. 35 In fact, as the State asserts (with expert support) in Contention NY-3, it is highly unlikely that Holtec IP2 and Holtec IP3 would be able to procure additional financial assurance once it becomes clear that their cleanup liabilities exceed the assets in the trust funds. 36 The mere existence of 10 C.F.R. § 50.82(a)(8)(vi) does not absolve the Applicants of their obliga-tion to show adequate decommissioning funding assurance nowif it did, the multi-tude of regulations requiring such a showing as a condition of license transfer would be meaningless. And if the Applicants suggestion is that parent company Holtec International will intercede to backstop its cash-strapped subsidiaries, the license 32 Answer at 23-24.
33 Id. at 24.
34 See 10 C.F.R. §§ 50.33(f), 50.33(k)(1), 50.54(bb), 50.75(b)(1), 50.80(b)(1)(i), 72.30(b).
35 The Applicants point to language in the HDI cost estimate indicating that an al-ternate funding mechanism . . . will be put in place in the event of a cost overrun (as would be required by NRC rule). But how such additional assurance would be provided, or by whom, this notably passive statement fails to explain.
36 See Petition, Contention NY-3, ¶7; Trabucchi decl. ¶¶28-29; see also Point III infra.
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transfer application and supporting materials conspicuously make no such commit-ment. 37 Next, the Applicants contend the State must overcome the contingency factor included in HDIs cost estimate, which the Applicants assume somehow inoculates them against claims of probable cost overruns. 38 But the States petition, relying on HDIs PSDAR and on the declaration of the States expert decommissioning planning engineer, explains precisely why the contingency factor in the HDI cost estimate is deficient. 39 In an attempt to dispute the States position, the Applicants claimhow-ever implausiblythat a significant increase in the kind or amount of on-site radio-logical contamination would not be outside the current project scope, and would be included in the cost estimates contingency factor as part of its uncertainty allow-ance. 40 This claim is in direct conflict with Entergys own approach to decommission-ing cost estimating. 41 And even assuming the HDI contingency factor includes the risk of additional on-site radiological and non-radiological contamination, the Appli-cants never explain why their contingency factor is virtually identical to the contin-gency factors Entergys consultant employed in the preliminary decommissioning cost 37 The Applicants likewise rely on 10 C.F.R. § 50.82(a)(8)(vi) to support their claim that New York taxpayers will not be left to pay the bill at Indian Point in the event of a Holtec bankruptcy. See Answer at 33. But this argument is circular: the Applicants never address the States allegation that the Holtec LLCs lack the financial wherewithal to provide addi-tional funding assurance as needed. See Point III infra.
38 See Answer at 24, 41-43.
39 See Petition, Contention NY-2, ¶¶ 26-30.
40 See Answer at 42.
41 See, e.g., Preliminary Decommissioning Cost Analysis for the Indian Point Energy Center, Unit 3, at 7 (defining changes in project work scope as including the discovery of unexpected levels of contaminants [and] contamination in places not previously expected).
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estimates for Indian Pointwhich factors expressly excluded out-of-scope risk from unforeseen levels or kinds of on-site contamination. And to the extent HDI plans to fully consume the funds allocated to contingency, 42 the contingency factor cannot pos-sibly take into account truly unforeseen or out-of-scope developments. In sum, the Applicants unsupported position on the question of contingency undermines the rea-sonableness of the cost estimate and underscores the existence of a material dispute of fact to be resolved at a hearing.
The Applicants argument that the State must overcome the Holtec LLCs pro-jected surplus is likewise unconvincing, particularly given the lack of detail in the cost estimate. 43 As discussed at great length and in detail in the States petition, there are myriad ways in which HDIs cost estimate omits key information and/or relies on unsupportable assumptions, all of which undermine the accuracy of the es-timate. Where hard data are available, the State calculates the projected cost of HDIs errors or omissions. For example, the States expert calculates that delay as-sociated with HDIs unreasonable reactor pressure vessel and internals segmentation schedule could cost up to $330 million, far more than the approximately $260 million surplus HDI now projects. 44 And with respect to HDIs unreasonable spent fuel man-agement assumptions, the State contends (with expert support) that management costs, repackaging costs, and/or the obligation to disgorge previously recovered pack-aging costsnone of which is accounted for in HDIs estimatecould total hundreds 42 See PSDAR at 95.
43 See Answer at 23-24.
44 See Petition, Contention NY-2, ¶136; Brewer decl. ¶19.
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of millions of dollars. 45 To the extent the Applicants dispute these calculations, they succeed only in demonstrating the existence of a material issue of fact to be resolved at a hearing. And in any case, even if the State identified no costs flowing from errors or omissions in HDIs cost estimate, recent, staggering market declines have likely significantly reduced (and possibly eliminated) any projected surplus. 46 The Applicants specific arguments against contention admissibility fare no better. Almost without exception, the Applicants claim the States arguments in Con-tention NY-2 are unsupported, speculative, immaterial, irrelevant, outside the scope of the proceeding, and/or somehow a veiled collateral attack on NRC rules. 47 The Applicants are mistaken.
The Holtec LLCs bear the burden of establishing that they possess adequate funding assurance for license termination and spent fuel management. 48 Questions concerning the accuracy of the PSDAR and accompanying cost estimate (and the Hol-tec LLCs ability to absorb likely additional costs) are both relevant and material to 45 See Petition, Contention NY-2, ¶¶86-111.
46 See Simon Moore, What to Expect from This Bear Market, Forbes (Mar. 14, 2020),
available at https://www.forbes.com/sites/simonmoore/2020/03/14/what-to-expect-from-this-bear-market/#67012ecd61ff (noting that bear markets are often typified by high levels of in-dex volatility).
47 With respect to the latter, the State does not collaterally attack duly promulgated regulations, which it agrees is impermissible absent a waiver. The Applicants refrain that any request for information that might exceed minimum filing requirements is a collateral attack on the rules is specious. As the Commission has clearly held, the State is entitled to argue in this proceeding that the Holtec LLCs cost figures are flawed and, thus, that their showing of financial qualification and/or adequate decommissioning funding assurance is in-adequate. See Seabrook, 49 N.R.C. at 220, 222 ([F]unding plans that rely on assumptions seriously at odds with governing realities will not be deemed acceptable simply because their form matches plans described in the regulations). In other words, the State does not attack the regulations merely by arguing that the Holtec LLCs application is deficient.
48 See, e.g., 10 C.F.R. §§ 50.33(k)(1), 50.54(bb), 50.75(b)(1) and (e)(1)(i).
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indeed, go to the very heart ofthe question of adequate funding assurance. 49 And because the Holtec LLCs application is based on the receipt of an exemption to use nuclear decommissioning trust funds for spent fuel management and site restoration purposes, 50 the Holtec LLCs faulty site restoration assumptions are highly relevant to the financial assurance issues at the core of this proceeding.
In Contention NY-2, the State raises a series of deficiencies in the Holtec LLCs cost estimate. The State buttresses its claims with six detailed expert declarations, none of which is speculative or conclusory and all of which contain detail sufficient to allow for the necessary, reflective assessment of the opinion[s] expressed. 51 For instance, in response to Contention NY-2.B, the Applicants accuse the State of failing to support its claim that HDI underestimates likely radiological and non-radiological contamination at Indian Point. 52 But the State in fact supports its claim with decla-rations from two DEC engineers with detailed knowledge of the site, both of whom believe the full extent of on-site contamination has yet to be determined. 53 Contam-ination at the site is likely not limited to the tritium and strontium plumes identified 49 See Seabrook, 49 N.R.C. at 219.
50 See LTA at 17-18; Request for Exemptions from 10 C.F.R. §§ 50.75(h)(1)(iv) and 50.82(a)(8)(i)(A) (Feb. 12, 2020) (ML20043C539).
51 South Carolina Elec. & Gas Co. (Virgil C. Summer Nuclear Station, Units 2 and 3),
71 N.R.C. 350, 360-361 (2010) (internal quotation marks and citations omitted). The Com-mission has repeatedly held that an expert declaration is speculative or conclusory when it baldly asserts that an application is deficient, inadequate, or wrong. Id. at 360. The detailed declarations by the States experts suffer from no such defect.
52 See Answer at 33.
53 See Heitzman decl. ¶¶10, 12, 14-15; Rice decl. ¶¶4, 12, 17, 19, 22, 24. While the Applicants riposte that the site is extremely well characterized, see Answer at 32, they fail to explain, for example, how contractors working at such a well-studied site could have acci-dentally unearthed several large and leaking oil storage tanks while building the plants ISFSI. See Heitzman decl. ¶16.
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in the GZA reports. 54 As noted in the Rice declaration, decades of radioactive releases have contaminated structures and substructures, storm and process drains, sur-rounding soil and fill, preconstruction concrete mud mats and, notably, fractured bed-rock around and beneath the plant. And the Brewer declaration explains how the discovery of additional, unexpected contamination at other power plant sites led to significant cost increases 55increases for which, as discussed above, HDIs contin-gency factor fails to adequately account.
On the question of site characterization, the State allegesagain with expert supportthat HDIs avowed plan to characterize on-site contamination as decommis-sioning progresses only increases the risk that unexpected contamination will in-crease project costs. 56 The Applicants attempt to minimize the risk associated with HDIs failure to fully characterize the site by pointing to HDIs review of a consult-ants report allegedly compiling historic site information. 57 The document the Appli-cants rely on is not a part of or appended to the application or the PSDAR; the State welcomes the opportunity to test its thoroughness at a hearing. 58 54 While the Applicants argue ongoing groundwater monitoring shows the tritium and strontium plumes are slowly shrinking, see Answer at 35-36, the Rice declaration indicates, with reference to the 2008 GZA study, that monitoring results in fact indicate broad disper-sion of radiological contamination across much of the Indian Point site. Rice decl. ¶19.
55 See, e.g., Brewer decl. ¶¶24-26; see also Petition, Contention NY-2, ¶¶50-51 (de-scribing significant cost increases during the Connecticut Yankee decommissioning process due, among other things, to the discovery of unforeseen radiological contamination in bedrock beneath the plant); Rice decl. ¶¶26-27.
56 See Petition, Contention NY-2, ¶25 57 See Answer at 37.
58 To the extent the Applicants historic site assessment is a review of historical docu-ments current and former licensees were required to keep under 10 C.F.R. § 50.75(g), the State notes that the document retention requirement in that rule dates only to 1988. See 53 Fed. Reg. 24018, 24026 (June 27, 1988) (Experience has shown that incomplete knowledge 13
The Applicants fail to engage with the States arguments on the issue of state-law site restoration standards. The State does not, as the Applicants claim, ask[ ]
the NRC to take action on state administrative and regulatory matters. 59 Rather, the State simply points out that the Holtec LLCs have failedadmittedlyto con-sider state-law site restoration obligations, and that such failure materially under-mines the reasonableness of the cost estimate. Because the Holtec LLCs are seeking an exemption to use decommissioning trust monies for site restoration purposes, questions relating to the accuracy of HDIs site restoration cost estimate are well within the scope of this proceeding. The Applicants concede that HDI estimated site restoration costs based on current and/or assumed requirements, and that the Hol-tec LLCs plan to remediate the Indian Point site to the 25-millirem NRC license ter-mination standard only. 60 The State, however, explains in detail how state-law de-commissioning requirements (flowing, among other things, from the New York State Public Service Commission orders approving the circa-2000 Consolidated Edison-to-Entergy license transfer and from DEC radiological remediation guidance) are stricter than the 25-millirem NRC standard. 61 The Applicants claim they have no regulatory obligation to consider the cost impacts associated with stricter state-law of facility design and history can result in significant difficulties and greatly underestimated costs at the time of decommissioning).
59 See Answer at 45, 48.
60 Answer at 45-46 (internal quotation marks and citation omitted).
61 See Petition, Contention NY-2, ¶¶55-66. The Applicants observation that the state 10-millirem remedial standard is plainly inconsistent with the NRCs 25-millirem license termination standard is true, at least insofar as 10 and 25 are different numbers. But as the Applicants well know, site remediation is governed by state law, not by NRC rules.
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site restoration requirements, 62 but this argument misses the point: trust dollars the Holtec LLCs spend on site restoration are dollars that are unavailable to fund license termination or spent fuel management activities. The Holtec LLCs must accurately account for site restoration costs in order to show adequate radiological decommis-sioning and spent fuel management funding assurance. As the State notes, stricter state-law site restoration standards have significantly increased decommissioning costs at other plants. 63 The States argument is thus neither (as the Applicants would have it) immaterial nor an impermissible collateral attack on the regulations. As the Commission has noted in a slightly different context: Always in question . . . is whether the [a]pplicants cost and revenue estimates are reasonable. 64 The Applicants attacks on the States spent fuel management-related claims are likewise unconvincing. In Contention NY-2.E, the State argues that the Holtec LLCs unreasonably assume DOE will begin taking title to Indian Points spent nu-clear fuel by 2030. 65 And in Contention NY-2.F, the State argues that the HDI cost estimate excludes significant costs flowing from the need to either repackage spent fuel for transport by DOE or the converse need to reimburse DOE for packaging costs previously recouped in standard contract litigation. 66 The Holtec LLCs assumptions in these areas are seriously at odds with governing realities and their cost estimate is thus unreasonable. 67 62 See Answer at 46.
63 See Petition, Contention NY-2, ¶69.
64 Seabrook, 49 N.R.C. at 221.
65 See Petition, Contention NY-2, ¶¶86-94.
66 See id. ¶¶95-108.
67 Seabrook, 49 N.R.C. at 222.
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Taking the 2030 DOE recovery date first, the Applicants argue that they are entitled to rely on a 2013 DOE policy document predicting that a federal interim stor-age facility would be available by 2025. 68 The Applicants reliance on this seven-year-old DOE policy document is not reasonable. As the State explained in its petition (and as DOE itself admits), DOE currently lacks legal authority under the Nuclear Waste Policy Act to construct and operate an interim storage facility. 69 The Holtec LLCs may attempt to assume this prohibition away, but no assumption is reasonable when the thing assumed is plainly contrary to law. Rather than dispute the States claim, the Applicants argue that the State has not proved that DOE cannot achieve its policy as a legal or technical matter. 70 Setting aside DOEs own claim to the contrary, 71 it is the Applicants burden to base their cost estimates on reasonable as-sumptions, and an assumption that relies on illegal action by a federal agency is quite literally at odds with governing realities. 72 Just as they are wrong to assume DOE will begin taking title to spent fuel in 2030, the Applicants are wrong that the States claims regarding spent fuel-related cost overruns are speculative. 73 The Brewer declaration explains, using HDIs own cost estimate, that spent fuel management costs across all three units will total 68 See Answer at 61-62.
69 See Petition, Contention NY-2, ¶¶88, 93 70 Answer at 64.
71 See DOE, Report to Congress on the Demonstration of the Interim Storage of Spent Nuclear Fuel at 6-8 (2008), available at https://www.energy.gov/sites/prod/files/edg/me-dia/ES_Interim_Storage_Report_120108.pdf.
72 Seabrook, 49 N.R.C. at 222.
73 See Answer at 64-65.
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approximately $12 million annually beginning in 2034. 74 The Applicants do not meaningfully dispute this estimate. And taking the Applicants at their word that their spent fuel assumptions generally align[ ] with the 60-year storage period the NRC itself has found most likely, 75 spent fuel is likely to remain at Indian Point up to twenty years longer than HDI currently estimates. 76 Based on HDIs own calcula-tions, additional unexpected costs could total some $240 million. In other words, this single faulty assumption could consume nearly the entirety of HDIs projected sur-plus.
Turning to the standard contract issue, the Applicants claim that HDIs cost estimate fully accounts for all relevant costs related to transferring [spent nuclear fuel] to DOE that are consistent with reasonable assumptions regarding future DOE performance. 77 The State disputes that the Applicants assumptions are reasonable.
The Holtec LLCs assume they will be able to transfer Indian Point spent nuclear fuel to DOE as loaded in existing canisters, 78 but this assumption flies in the face of cur-rent DOE regulations. As the Court of Appeals for the Federal Circuit recently noted (in a case in which an Entergy affiliate was a party), under the existing standard contract DOE cannot accept existing canistered fuel as is, and utilities will thus 74 See Brewer decl. ¶32.
75 See Answer at 63; NRC, Generic Environmental Impact for Continued Storage of Spent Nuclear Fuel, NUREG-2157 at xxx (Sept. 2014).
76 Indeed, Entergy claimed in recent standard contract litigation that DOE was likely to begin performance in 2048, nearly twenty years later than the Applicants now claim and in line with what the NRC identified as the most likely scenario in the continued storage rule GEIS. See System Fuels, Inc. v. United States (System Fuels), 818 F.3d 1302, 1304 n.2 (Fed.
Cir. 2016).
77 Answer at 67 (emphasis added).
78 See Answer at 69-70.
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incur costs to unload this fuel from the storage casks and canisters and to reload it into transportation casks if and when the DOE performs. 79 In other words, plant operatorsincluding Entergyhave successfully recovered millions of dollars in con-tract damages from DOE on the theory that they will be forced to remove spent fuel from existing casks and canisters and reload it into new, DOE-approved transporta-tion casks before DOE will take title to the fuel. As discussed above, the Applicants convenient, contrary assumption is seriously at odds with governing reality for the simple reason that it is counter to existing law. 80 And as for cost, the State alleges, with expert and other documentary support, that the need to remove spent fuel from current storage canisters could cost hundreds of millions of dollars. 81 Finally, the Applicants arguments to the contrary notwithstanding, the State raises a genuine dispute of material fact regarding HDIs timeline for reactor pres-sure vessel and internals segmentation. The State alleges that HDIs one-year-per-reactor allotment for segmentation is unreasonably short. 82 The State supports its allegation with expert opinion from a nuclear engineer with extensive decommission-ing experience. 83 The States expert bases his conclusions, among other things, on his personal involvement in the Zion decommissioning project. 84 While the Appli-cants accuse the State of failing to provide specific technical comparisons between 79 System Fuels, 818 F.3d at 1306 (emphasis added).
80 Seabrook, 49 N.R.C. at 222.
81 See Brewer decl. ¶30.
82 See Petition, Contention NY-2, ¶124.
83 See Brewer decl. ¶¶1-2.
84 See id. ¶¶ 21-22.
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Indian Point and other plants, 85 they fail to explain why the twin-PWR Zion plant is not an apt comparison. As the State notes, the Zion segmentation process took over two years per unit, or twice as long as originally anticipated. 86 The States expert also notes that HDI itself recently announced a significant delay in the segmentation process at its recently acquired Pilgrim plant. 87 As for the cost of such delay, the State, through its expert, makes a reasonable showing that delay of the sort likely to accrue at the segmentation phase could have a significant impact on overall project timeline and, therefore, cost. 88 Using the lim-ited scheduling data available in HDIs cost estimate, the States expert concluded that delay at the segmentation phase could increase costs by up to $110 million per year. 89 A multi-year delay of the sort experience at Zion and Connecticut Yankee (and, now, projected for Pilgrim) could thus add hundreds of millions of dollars to the cost to decommission Indian Point. The State having carried its burden, the Appli-cants divergent opinion regarding the reasonableness of HDIs segmentation sched-ule and/or the cost impacts of any delay is now ripe for exploration at a hearing.
III. Contention NY-3 Is Admissible Separately from the decommissioning and spent fuel management funding as-surance questions addressed in Contentions NY-1 and NY-2, the State argues in Con-tention NY-3 that the Holtec LLCs fail to make the foundational showing that they 85 See Answer at 73.
86 See Brewer decl. ¶22.
87 See Petition, Contention NY-2, ¶131; Brewer decl. ¶¶18-19.
88 See Brewer decl. ¶ 89 See id. ¶¶19, 23.
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are financially qualified to hold the Indian Point licenses. 90 Among other things, the Applicants fail to show that the newly formed, single-asset limited liability entities Holtec IP2 and Holtec IP3entities with no revenue stream independent of the de-commissioning trusts themselveswill have the independent financial ability to pro-vide additional financial assurance as necessary (and stave off bankruptcy) in the event of a cost overrun. 91 The Applicants disregard or mischaracterize the States arguments in an at-tempt to deflect attention from the Holtec LLCs obvious lack of financial qualifica-tion. For example, the State never claims that limited liability companies cannot hold NRC licenses, 92 nor does it challenge the adequacy of staffs review of the Indian Point license transfer application (which, as of this writing, is ongoing). 93 The State does challenge the Holtec LLCs inadequate showing of financial qualification, par-ticularly as it relates to their apparent inability to provide additional financial assur-ance. The State grounds its arguments in the detailed declaration of a finance and 90 See, e.g., 10 C.F.R. §§ 50.33(f), 50.40(b).
91 See Petition, Contention NY-3, ¶¶5-7, 11.
92 While LLCs can hold NRC licenses, the NRC has long recognized that decommis-sioning planning for non-rate-regulated licensees require[s] more direct NRC oversight over the decommissioning trust funds. NRC, Summary of Decommissioning Fund Status Re-ports, SECY-99-170 (July 1, 1999) (ML992800091). For this reason, the NRC has signaled its intent to review decommissioning-related issues in the license transfer context on a case-by-case basis, imposing appropriate conditions as necessary. See id. When the Applicants argue that existing NRC rules obviate the need for a rigorous showing of financial qualifica-tion, they are seeking to avoid this case-specific review.
93 See Answer at 84. The Applicants also accuse the State of complaining that pro-prietary material has been withheld. See id. The State notes that it repeatedly requested access to an unredacted copy of the Applicants membership interest sale and purchase agree-ment, as it was required to do under the terms of the NRCs notice of complete application.
See 85 Fed. Reg. 3947, 3950 (Jan. 23, 2020). The Applicants rejected the States proposed non-disclosure agreement and declined to provide access to the requested document.
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economics expert with decades of experience managing environmental risk and de-signing financial assurance frameworks. 94 And the Applicants are simply wrong to claim that the financial qualifications issues raised in Contention NY-3 are beyond the scope of this proceeding: as the Commission has observed, NRC review of license transfer applications consists largely of assuring that the ultimately licensed entity has the capability to meet financial qualification and decommissioning funding as-pects of NRC regulations. 95 Contentions raising questions of financial qualification go to the very heart of the proceeding. 96 The Applicants claim Holtec IP2 and Holtec IP3 are financially qualified be-cause they will have access to the Indian Point decommissioning trust funds (which, they allege, are adequate to the task). The Applicants further claim the State collat-erally attacks the NRCs decommissioning funding assurance rules by seeking finan-cial assurance beyond what is required by the regulations. 97 But the Applicants con-flate the requirement that the Holtec LLCs demonstrate adequate decommissioning funding assurance (by, for example, prepaying their decommissioning obligations un-der 10 C.F.R. § 50.75(e)(1)(i)) and the separate requirement that the LLCs establish their financial qualification to hold the Indian Point licenses. Even assuming the Holtec LLCs have established adequate decommissioning funding assurance (which they have not), the Commission has never held that an adequate showing of decom-missioning funding assurance under 10 C.F.R. § 50.75 demonstrates a would-be 94 See Trabucchi decl. ¶¶ 1-6; exhibit A.
95 Seabrook, 49 N.R.C. at 219, quoting 63 Fed. Reg. 66721, 66724 (Dec. 3, 1998).
96 Id.
97 See Answer at 88.
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licensees financial qualification as a matter of law. 98 Relying solely on the trusts, the Applicants ignore the States argumentsup-ported by its financial expertthat the consolidation of decommissioning-related lia-bilities in one corporate family compounds financial risk. 99 And though the Appli-cants discount the very real possibility of a funding shortfall by arguing that the Hol-tec LLCs would be required under NRC rules to provide additional financial assur-ance, 100 they never engage with the States argumentagain supported by its finan-cial expertthat the trust-dependent Holtec LLCs have no ability to purchase addi-tional financial assurance instruments in the event of a shortfall, or the States fur-ther argument that an eventual Holtec LLC bankruptcy would shift decommissioning and site restoration costs to the State. Nor do the Applicants dispute that the NRC lacks authority to shift Indian Point-related obligations to corporate parents orper-haps most glaringlycommit that Holtec International will backstop any (or even some) cost overruns. Instead, the Applicants point to dicta from the Commissions Seabrook decision for the proposition that they need not provide absolute certainty in their financial projections. 101 But the Applicants never claim that revenueless Holtec IP2 or Holtec IP3 will have access to the funds necessary to comply with the NRCs decommissioning rules in the likely event the Indian Point trusts are 98 That NRC staff approved applications to transfer the Oyster Creek and Pilgrim licenses is irrelevant. The would-be intervenor in the Oyster Creek proceeding did not make the arguments New York makes now, and so the Commissions rejection of that petition is no precedential bar. And the Commission has yet to address the Commonwealths petition to intervene in the Pilgrim proceeding.
99 See Petition, Contention NY-3, ¶¶7, 12-13, 15-16.
100 See Answer at 87.
101 Answer at 86.
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inadequate. To the States point, far from absolute certainty, the Applicants provide no certainty at all.
Rate-regulated utilities that experience decommissioning cost overruns can seek (and have sought) rate increases to cover additional costs. And merchant licen-sees at least have the revenue generated by the sale of electricity to help fund likely decommissioning obligations. But prospective decommissioning-only licensees like Holtec IP2 and Holtec IP3 have neither the ability to seek a rate increase nor the benefit of a reliable revenue stream. Instead, having no assets of their own, they rely solely and exclusively on the ratepayer monies set aside in the plants nuclear decom-missioning trusts. Even if the trust monies are adequate to the taskwhich, with regard to Indian Point, the State strongly disputesdecommissioning licensees like Holtec IP2 and Holtec IP3 must show that they are financially qualified to complete complex and uncertain decommissioning and site restoration processes and safely manage spent nuclear fuel for as long as necessary, even if they encounter unexpected cost overruns. The Holtec LLCs fail to rebut the States well-supported, relevant, and material claim that their financial resources are insufficiently diversified to meet un-expected financial challenges, and this issue should be explored at a hearing.
To the extent the Applicants argue that Holtec IP2 and Holtec IP3s likely DOE recoveries for spent fuel management costs constitute an additional revenue stream and a conservatism in HDIs cost estimate, 102 the State notes that the Holtec LLCs make no commitment to use these future recoveries as a source of financial assurance.
102 See Answer at 88-89.
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Far more likely (and in the absence of a license condition requiring otherwise), the Holtec LLCs will treat these recoveries as corporate profit. Once the recoveries are disbursed to the Holtec LLCs shareholders, they are no longer available to the LLCs and are therefore irrelevant for purposes of financial qualification. If the Holtec LLCs wish to rely on future DOE recoveries as a source of revenue for financial qualification purposes, they should commit to and/or be required to keep those recoveries, at least in part, in a supplemental trust or other instrument designed to ensure their availa-bility if and when additional funds are needed. 103 The Applicants disingenuously rely on staffs safety evaluation report in the Vermont Yankee (VY) license transfer proceeding for the proposition that NRC con-siders DOE recoveries to be a reliable revenue stream. 104 In the VY transaction, the prospective decommissioning licensee sought an exemption (as do the Holtec LLCs here) to use nuclear decommissioning trust monies to fund its spent fuel management obligations. Staff granted that exemption, but only on the conditions that the licensee withdraw limited amounts from the trust (up to $20 million on a revolving basis) and that it reimburse the trust with monies recovered from DOE. 105 Staff found that the DOE recoveries were a reasonable mechanism for reimbursing the trust. Here, to the contrary, the Holtec LLCs make no commitment to reimburse the trust using ex-pected DOE recoveries, and so those recoveries cannot be treated as an additional 103 Even if the Holtec LLCs were to make such a commitment now, it would not defeat admission of the States contention at the filing stage. See Arizona Pub. Serv. Co. (Palo Verde Nuclear Generating Station, Unit Nos. 1, 2, and 3), 34 N.R.C. 149, 156 (1991).
104 See Answer at 89-90.
105 See VY License Transfer SER at 13 (ML18242A639).
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revenue source for financial qualification or decommissioning funding assurance pur-poses. 106 In any event, far from showing Contention NY-3 is inadequately pleaded, the Applicants engagement on the financial qualifications issue demonstrates the existence of factual and legal disputes appropriate for resolution at a hearing.
CONCLUSION For the foregoing reasons, and for the reasons stated in the States petition for leave to intervene, the Commission should grant the States petition and associated request for hearing.
Respectfully submitted, LETITIA JAMES Attorney General State of New York 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 106 The Applicants likewise butcher the States argument about commingling. The State does not argue that the Holtec LLCs will violate NRC rules by seeking to withdraw trust monies at one site for expenses incurred at another site. Rather, the State argues again with expert supportthat reimbursements for legitimate decommissioning expenses at different facilities may be commingled within HDI upon receipt, possibly presenting HDI with an opportunity to use those (legitimately obtained) reimbursements to offset costs at a different facility. Only robust HDI internal controls, not NRC rules, would prevent this even-tuality. The State is not criticizing HDI or impugning its integrity; the State simply observes that the license transfer application fails to satisfactorily address this potential area of finan-cial risk.
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Executed in accord with 10 C.F.R.
§ 2.304(d)
Lisa M. Burianek Deputy Bureau Chief Environmental Protection Bureau The Capitol Albany, NY 12224 (518) 776-2423 Lisa.Burianek@ag.ny.gov Executed in accord with 10 C.F.R.
§ 2.304(d)
Channing Wistar-Jones Assistant Attorney General Environmental Protection Bureau 28 Liberty Street, 19th Floor New York, NY (212) 416-8082 Channing.Jones@ag.ny.gov 26
UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE COMMISSION 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 Reply in Support of the State of New Yorks Petition for Leave to Intervene and for a Hearing in the above-captioned proceeding via the NRCs Electronic Information Exchange on this 23rd day of March, 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 27