ML20118D012
| ML20118D012 | |
| Person / Time | |
|---|---|
| Site: | Indian Point  |
| Issue date: | 04/27/2020 |
| From: | Burianek L, Lois James, Tallent J, Wistar-Jones C State of NY, Office of the Attorney General |
| To: | NRC/OCM |
| SECY RAS | |
| References | |
| 50-003-LT, 50-247-LT, 50-286-LT-3, 72-51-LT-2, License Transfer, RAS 55660 | |
| Download: ML20118D012 (13) | |
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 NEW YORK STATES MOTION FOR LEAVE TO AMEND CONTENTIONS NY-2 AND NY-3 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: April 27, 2020
ii TABLE OF CONTENTS TABLE OF AUTHORITIES......................................................................................... iii INTRODUCTION.......................................................................................................... 1 ARGUMENT.................................................................................................................. 2 The Amended Contentions Are Admissible............................................................. 2 CONCLUSION............................................................................................................... 8 CERTIFICATION OF SERVICE.................................................................................. 9
iii TABLE OF AUTHORITIES Page(s)
CASES Arizona Pub. Serv. Co. (Palo Verde Nuclear Generating Station, Unit Nos. 1, 2, and 3), 34 N.R.C. 149 (1991).................................................................... 3 Baltimore Gas & Elec. Co. (Calvert Cliffs Nuclear Power Plant, Units 1 and 2), CLI-98-25, 48, N.R.C. 325 (1998)................................................................ 7 Detroit Edison Co. (Fermi Nuclear Power Plant, Unit 3), 70 N.R.C. 227 (2009)........................................................................................................................ 5 DTE Elec. Co. (Fermi Nuclear Power Plant, Unit 2), LPB-17-1, 2017 WL 4310358 (N.R.C. Jan. 10, 2017)......................................................................... 7 North Atlantic Energy Serv. Corp. (Seabrook Station, Unit 1)
(Seabrook), 49 N.R.C. 201 (1999)............................................................................. 2 Pacific Gas and Elec. Co. (Diablo Canyon Nuclear Power Plant, Units 1 and 2), CLI-12-13, 75 N.R.C. 681 (2012)................................................................. 6 Pacific Gas and Elec. Co. (Diablo Canyon Nuclear Power Plant, Units 1 and 2), LBP-11-32, 74 N.R.C. 654 (2011)............................................................ 6, 7 Southern Nuclear Operating Co. (Vogtle Electric Generating Plant, Units 3 and 4), 74 N.R.C. 214 (2011)....................................................................... 7 FEDERAL STATUTES 42 U.S.C.
§ 2232(a).................................................................................................................... 4 FEDERAL REGULATIONS 10 C.F.R.
§ 2.309(c)(1)............................................................................................................... 7
§ 2.309(c)(1)(i)........................................................................................................... 7
§ 2.309(c)(1)(ii).......................................................................................................... 7
§ 2.309(c)(1)(iii)......................................................................................................... 7
§ 2.309(f)(1)(iv).......................................................................................................... 3
§ 2.309(f)(1)(vi).......................................................................................................... 3
§ 50.33(f)............................................................................................................... 4, 5
§ 50.33(k)(1).............................................................................................................. 5
§ 50.54(bb)................................................................................................................. 5
iv
§ 50.75(b)(1).............................................................................................................. 5
§ 50.75(e)(1)(i)........................................................................................................... 4
§ 50.80(b)(1)(i)....................................................................................................... 4, 5
§ 50.80(c)................................................................................................................... 4
§ 72.30(b)................................................................................................................... 5
1 INTRODUCTION In their license transfer application, the single-asset Holtec LLCs1 rely solely on the ratepayer-funded nuclear decommissioning trusts to satisfy their substantial license termination, spent fuel management, and site restoration obligations at In-dian Point.2 In its Petition for Leave to Intervene and for a Hearing, the State raised three well-pleaded contentions calling into question the adequacy of the Holtec LLCs showing of decommissioning financial assurancein other words, the adequacy of the trusts to fund all necessary decommissioning and related activitiesand challenging the LLCs independent ability to secure additional funding in the likely event of a cost overrun.
In its subsequent Motion for Leave to Amend Contentions NY-2 and NY-3, the State argues that recent, coronavirus-induced volatility in major securities markets (and the adverse effects of such volatility on the trusts) further undermines the Hol-tec LLCs already-inadequate showings of financial qualification and decommission-ing funding assurance.3 In response, the Applicants argue that NRC staff may ap-prove the license transfer application solely on the basis of the Holtec LLCs promise to prepay their estimated decommissioning obligations, regardless of whether actual 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). The term New Bases shall have the meaning ascribed to it in New York States Motion for Leave to Amend Contentions NY-2 and NY-3 (Mar. 24, 2020)
(ML20084Q191) (Motion to Amend).
2 See License Transfer Application at 17-18 (Nov. 21, 2019) (ML19326B953) (LTA).
3 See Motion to Amend at 1-7.
2 economic conditions have eroded the corpus of the trusts.4 But under NRC rules and Commission precedent, the proposed licensee bears the burden to establish financial qualification and to show adequate decommissioning and spent fuel management funding assurance as a condition of license transfer, not as an afterthought. The Commission should reject the Applicants proffer of what amounts to a financial qual-ification IOU, grant the States well-supported, common-sense motion, and put the Applicants to their proof at a hearing.
ARGUMENT The Amended Contentions Are Admissible As the Commission has long recognized, financial qualification and decommis-sioning funding issues lie at the core of the NRCs license transfer inquiry.5 In its motion to amend Contentions NY-2 and NY-3, the State argues, with expert support, that recent volatility in the U.S. securities market has placed substantial downward pressure on investment returns. Using what it believes to be a conservative analysis based on the somewhat more risk-averse investment parameters in the master trust agreement for Unit 3, the State estimates that coronavirus-related market losses may have cost the Indian Point trusts over $210 million dollars in collective value between October 31, 2019 and March 20, 2020.6 Because the $2.19 billion allegedly in the trusts on October 31, 2019 is unquestionably the sole basis for the Holtec LLCs 4 See Applicants Answer to the State of New Yorks Motion for Leave to Amend Con-tentions NY-2 and NY-3 at 2-3, 16-17 (April 20, 2020) (ML20111A329) (Answer).
5 North Atlantic Energy Serv. Corp. (Seabrook Station, Unit 1) (Seabrook), 49 N.R.C.
201, 219 (1999).
6 See Motion to Amend at 3-4; see also Trabucchi supp. decl. ¶¶9-11, 13-16.
3 showings of financial qualification and decommissioning and spent fuel management funding assurance,7 such a substantial erosion of the trust balances materially un-dermines the adequacy of those required showings.8 In sum, the State has alleged a material reduction in the Holtec LLCs sole source of decommissioning funding; the questions whether and to what extent the trust balances have in fact declined are questions of fact to be resolved at an adjudicatory hearing.9 Relatedly, the State argues in amended Contention NY-3 that the Holtec LLCs sole reliance on the invested decommissioning trusts to show financial qualification is particularly unreasonable in times of extreme market volatility.10 As noted above, recent volatility in the securities markets has placed substantial downward pressure on investment returns; this downward pressure is likely to have substantially eroded the Indian Point trust balances. With no assets other than the trusts, Holtec IP2 and Holtec IP3 are acutely vulnerable to market-driven fluctuations in the trust balances.
Because the Holtec LLCs have failed to demonstrate access to financial resources 7 See LTA at 17-18; id. attach. D at unnumb. 8-13.
8 See 10 C.F.R. § 2.309(f)(1)(iv).
9 See id. § 2.309(f)(1)(vi). Perhaps recognizing that the State has in fact raised a ma-terial factual dispute susceptible of resolution at a hearing, the Applicants relegate to a foot-note their claim that recent market rebounds may have to some extent mitigated the trusts likely losses. See Answer at 2 n.3. But even here the Applicants do not effectively dispute the States allegations. The Applicants claim the collective trust balance as of April 15, 2020 was approximately $2.1 billion. See id. But the States analysis of possible trust losses is predicatedusing the Applicants own figureson a collective starting balance of $2.193 bil-lion. See Trabucchi supp. decl. ¶¶4, 16. In other words, the Applicants appear to concede that the funds have actually lost approximately $90 million in cumulative value. The Appli-cants say nothing about the distribution of those losses between the trusts.
In any case, whether the Applicants alleged mitigation satisfactorily resolves the States amended contention is a matter properly to be addressed after the contention is ad-mitted. See Arizona Pub. Serv. Co. (Palo Verde Nuclear Generating Station, Unit Nos. 1, 2, and 3), 34 N.R.C. 149, 156 (1991).
10 See Motion to Amend at 6-7; Trabucchi supp. decl. ¶20.
4 other than the monies in the decommissioning trusts or that they otherwise possess the independent financial ability to procure additional financial assurance in the event economic conditions severely erode the trust balances, they have not made the necessary showing that they are financially qualified to hold the Indian Point li-censes.11 To the extent the Holtec LLCs claim they can in fact provide additional financial assurance as necessarythough, of course, without explaining how they would be in a position to do sothey succeed only in highlighting the existence of a factual dispute on a material issue to be resolved at a hearing.
In opposition, the Applicants claim that extreme economic volatility and/or sig-nificant declines in the trust balances are irrelevant to NRC staffs review process.12 This claim is misguided. The State agrees with the Applicants that NRC staff must determine whether the funding methods offered by an applicant provide reasonable assurance that funds will be available to underwrite decommissioning and other re-medial costs.13 And of course the State does not dispute the validity of prepayment as an acceptable method for a proposed licensee to meet its decommissioning funding assurance obligations.14 But prepayment is more than an abstract promise to pay, and a proposed licensees claim that it will prepay license termination obligations does not relieve it of the self-evident need to provide actual funds to meet those obli-gations: Under the rules, prepayment is, after all, a deposit... into an account...
of cash or liquid assets in an amount sufficient to pay decommissioning costs at the 11 See 42 U.S.C. § 2232(a); 10 C.F.R. §§ 50.33(f), 50.80(b)(1)(i), (c).
12 See Answer at 2-3, 16-17.
13 See id. at 2 (emphasis omitted).
14 See 10 C.F.R. § 50.75(e)(1)(i).
5 time permanent termination of operations is expected.15 The pillars of the States motion to amend are: (1) that declining securities prices have substantially reduced the funds available in the Indian Point trust accounts such that those funds are no longer sufficient to prepay the Holtec LLCs estimated decommissioning and spent fuel management expenses, and (2) that sustained periods of market volatility under-mine the Holtec LLCs sole reliance on the trusts as proof of financial qualification.
The Holtec LLCs bear the burden of proof to establish financial qualification and de-commissioning and spent fuel management funding assurance.16 The State directly challenges key components of the Holtec LLCs required showing in support of their license transfer application, and that challenge is ripe for resolution at a hearing.
The Applicants further argue that the value of the funds is irrelevant because they may elect to propose different or additional means to meet their decommission-ing obligations.17 But the Applicants already proposed a source of funding when they filed their license transfer application, and that source is the assumed value of the existing decommissioning trust accounts. And in any event, true to form, the Appli-cants fail once more to explain how the single-asset entities Holtec IP2 and Holtec IP3 would independently secure additional funding in the event the trusts prove in-adequate. The Applicants say nothing about the nature of the financial resources available to them, if any, to pay for the carrying costs of different or additional 15 Id.
16 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);
see also Detroit Edison Co. (Fermi Nuclear Power Plant, Unit 3), 70 N.R.C. 227, 290 (2009)
(noting that the ultimate burden of proof remains with the applicant).
17 Answer at 17.
6 financial assurance. As the State argued in its petition to intervene, it is highly un-likely 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 trusts.18 The Applicants reliance on Diablo Canyon is misplaced.19 Cribbing heavily from the ASLBs decision, the Applicants argue that the State impermissibly attacks the NRCs rules by seeking to impose a trust value reporting requirement that does not exist or, alternatively, impermissibly challenges NRC staffs review of the Appli-cants license transfer application (on the theory that only staff may request updated information). Neither characterization is accurate. As discussed above, the States motion to amend simply observes that extreme economic uncertainty and market vol-atility (1) has likely substantially reduced the trust balances, and (2) further high-lights the unreasonableness of the Holtec LLCs sole reliance on the trusts to show financial qualification. In any event, the Applicants fail to note that the Diablo Can-yon ASLB referred the holding on which the Applicants rely to the Commission for review,20 and that the Commission declined the boards referral.21 In refusing to re-view what it characterized as the boards novel analysis, the Commission reiterated that, under the NRCs regulations, the trigger point for the timely submission of new or amended contentions is when new information becomes available, regardless 18 See Petition, Contention NY-3, ¶7; Trabucchi decl. ¶¶28-29.
19 See Answer at 3-4, 9-16.
20 See Pacific Gas and Elec. Co. (Diablo Canyon Nuclear Power Plant, Units 1 and 2),
LBP-11-32, 74 N.R.C. 654, 672 (2011) (Diablo Canyon).
21 See Pacific Gas and Elec. Co. (Diablo Canyon Nuclear Power Plant, Units 1 and 2),
CLI-12-13, 75 N.R.C. 681, 683 (2012).
7 of whether the applicant comes forward with supplemental information.22 And of course, unreviewed board rulings have no precedential value.23 Here, as discussed in detail in the States motion to amend, the proposed New Bases meet the good cause requirements set forth at 10 C.F.R. § 2.309(c)(1).24 The New Bases flow from a precipitous drop in the U.S. securities market thatbecause it occurred after the State filed its petition to intervenecould not have been raised as part of the States initial filings.25 And because the market volatility giving rise to the New Bases likely resulted in significant losses to the trusts (which are, it bears repeating, the Holtec LLCs sole source of funding and the sole basis for their claim of financial qualification), the New Bases present a materially different view of the financial qualification and decommissioning funding assurance claims set forth in the license transfer application.26 Finally, as required by NRC rules and Commission precedent, the State submitted the New Bases within a reasonable time after the information became available.27 22 Id. at 686 (emphasis added).
23 See Baltimore Gas & Elec. Co. (Calvert Cliffs Nuclear Power Plant, Units 1 and 2),
CLI-98-25, 48, N.R.C. 325, 343 n.3 (1998). And even assuming the boards decision did have precedential value, it is distinguishable on the merits. The proposed amended contention in Diablo Canyon concerned the environmental report submitted by the applicant in support of its relicensing application. Because environmental reports are effectively revised when NRC staff issues a draft supplemental environmental impact statement (DSEIS), intervenors may amend or raise new environmental contentions in response to staffs DSEIS. See Diablo Can-yon, 74 N.R.C. at 669. There is no analogous opportunity to submit new or amended conten-tions in a license transfer proceeding.
24 See Motion to Amend at 7-10.
25 See 10 C.F.R. § 2.309(c)(1)(i).
26 See id. § 2.309(c)(1)(ii).
27 See id. § 2.309(c)(1)(iii); Southern Nuclear Operating Co. (Vogtle Electric Generat-ing Plant, Units 3 and 4), 74 N.R.C. 214, 218 n.8 (2011); DTE Elec. Co. (Fermi Nuclear Power Plant, Unit 2), LPB-17-1, 2017 WL 4310358, *3 (N.R.C. Jan. 10, 2017).
8 CONCLUSION For the foregoing reasons, the Commission should grant the States motion for leave to amend Contentions NY-2 and NY-3.
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 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
9 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 New York States Motion for Leave to Amend Contentions NY-2 and NY-3 in the above-captioned proceeding via the NRCs Electronic Information Exchange on this 27th day of April, 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