ML23004A083

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Applicants Redacted Response to Michigan Attorney Generals Initial Statement of Position and Written Testimony
ML23004A083
Person / Time
Site: Palisades, Big Rock Point  File:Consumers Energy icon.png
Issue date: 12/16/2022
From: Day J, Leidich A, Doris Lewis, Lovett A, Tompkins J
Balch & Bingham, LLP, Entergy Nuclear Operations, Entergy Nuclear Palisades, Entergy Services, Holtec Decommissioning International, Holtec, Pillsbury, Winthrop, Shaw, Pittman, LLP
To:
Atomic Safety and Licensing Board Panel
SECY RAS
References
License Transfer, RAS 56586, 50-255-LT-2, 50-155-LT-2, 72-007-LT, 72-043-LT-2, ASLBP 22-974-01-LT-BD01
Download: ML23004A083 (38)
v • d • e


Text

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 18834883.2 December 16, 2022 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Board APPLICANTS RESPONSE TO MICHIGAN ATTORNEY GENERALS INITIAL STATEMENT OF POSITION AND WRITTEN TESTIMONY In the Matter of ENTERGY NUCLEAR OPERATIONS, INC., ENTERGY NUCLEAR PALISADES, LLC, HOLTEC INTERNATIONAL, and HOLTEC DECOMMISSIONING INTERNATIONAL, LLC (Palisades Nuclear Plant and Big Rock Point Site)

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Docket Nos.

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ASLBP No.

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50-255-LT-2 50-155-LT-2 72-007-LT 72-043-LT-2 22-974-01-LT-BD01

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 i

18834883.2 TABLE OF CONTENTS I.

INTRODUCTION......................................................................................................... 1 II.

APPLICANTS EXPERT WITNESSES...................................................................... 3 III.

APPLICANTS RESPONSE TO THE ATTORNEY GENERALS INITIAL STATEMENT................................................................................................................ 3 A.

Mr. Capiks opinions that the last fuel discharged by Palisades would not be accepted until 2064 are unsupported and illogical....................................... 3 B.

The Attorney General offers no supportable reason that HDIs site specific cost estimate must exceed the NRC generic formula, instead relying upon ipse dixit and invalid comparisons............................................. 11 C.

Mr. Capiks criticisms of the 12% contingency HDI used in the Palisades DCE are meritless and based on an inapplicable guideline............................ 16 1.

Mr. Capiks claim that the DCE fails to account for scope changes and escalation is simply wrong...................................................................... 17 2.

Mr. Capik relies on inapplicable industry guidelines that actually support HDIs contingency calculation................................................... 19 3.

Mr. Capiks reliance on the 25% contingency factor that applies to ISFSI decommissioning is incorrect and has already been rejected by the Commission...................................................................................... 23 4.

Mr. Capiks claims that HDIs work on other projects and existing contractual arrangements do not reduce estimation uncertainty are not credible nor does he connect them to the issues set for hearing............... 24 D.

Holtec Palisades has multiple avenues for ensuring there will be sufficient funds available to make any needed adjustments over the dormancy period, and the Attorney General offers no evidence that those avenues are not plausible............................................................................................... 29 1.

Testimony from the Attorney Generals own expert corroborates that adjusting the decommissioning schedule to maximize the funds in the NDT is a further means of adjusting funding.......................................... 29 2.

Recoveries of SNF management costs provide further means of adjusting funding if necessary, and the Attorney General offers no evidence to contradict that those funds will be available if needed.......... 31 3.

The Attorney General offers no basis to impose a license condition regarding additional financial assurance................................................. 33 IV.

CONCLUSION............................................................................................................ 35

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18834883.2 APPLICANTS RESPONSE TO THE MICHIGAN ATTORNEY GENERALS INITIAL STATEMENT OF POSITION AND WRITTEN TESTIMONY Pursuant to 10 C.F.R. § 2.1322(a)(1) and the Atomic Safety and Licensing Boards (Board) August 31, 2022 Memorandum and Order setting the schedule for submissions, 1 Entergy Nuclear Operations, Inc. (ENOI), Entergy Nuclear Palisades, LLC (ENP) (ENOI and ENP, collectively Entergy), Holtec International (Holtec), and Holtec Decommissioning International, LLC (HDI) (Entergy, Holtec, and HDI, collectively, Applicants) submit this Response to the Michigan Attorney Generals Initial Statement of Position (Response) on the portions of Contention MI-1 admitted for hearing by Commission Order CLI-22-08 (Order).2 This Response is supported by the rebuttal testimony of Applicants witnesses Frank C. Graves, Christopher F. Tierney, James B. Buckley, Jr., and Allen Goulette, as well as other exhibits, which are being filed contemporaneously with this Response.

I.

INTRODUCTION The Attorney Generals Initial Statement and pre-filed testimony from Mr. Nicholas Capik do not demonstrate that Contention MI-1, and its various subparts, should succeed. In fact, Mr.

Capiks testimony is largely a regurgitation of his initial declaration in this proceeding, with no additional material evidence. That is not why the Commission directed the parties to conduct an evidentiary hearing on the Attorney Generals claims. The Commission found Mr. Capiks prior declarations sufficient, in certain respects, to warrant a hearing at which the Attorney General is required to offer evidence and analysis to support its challenges to the Palisades license transfer.

Yet, Mr. Capiks testimony offers no analysis, is supported by no workpapers or relevant exhibits, 1 Memorandum and Order (Scheduling and Case Management Order) (Aug. 31, 2022) (ADAMS Accession No. ML22243A168).

2 Entergy Nuclear Operations, Inc. (Palisades Nuclear Plant and Big Rock Point Site), Memorandum and Order, CLI-22-08, __ N.R.C. __, slip op. (July 15, 2022).

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18834883.2 makes anecdotal critiques of the Palisades Decommissioning Cost Estimate (DCE) without explaining how they affect the specific matters admitted for hearing, and does not address the crux of the contested issues discussed in the Order that granted the Attorney Generals request for this hearing. It is rote law that an expert opinion that merely states a conclusion... without providing a reasoned basis or explanation for that conclusion is inadequate.3 As to Contention MI-1(a), the Attorney Generals expert offers only pre-breach expectations and nebulous political concerns in response to the multiple acceptance scenarios Applicants identify that would result in an eleven-year pickup window. Contention MI-1(b) also fails, as the Attorney General offers no legal argument that the minimum formula amount should substitute for the site-specific cost estimate at the time of decommissioning and no analysis comparing the DCE to the NRC formula. The Attorney General likewise offers no evidence to question the detailed basis for HDIs contingency factor or explain why it is insufficient to address the types of risks discussed in the Order, nor did the Attorney General offer its own quantification of contingency, as would be required to prevail on Contention MI-1(c). Finally, Contention MI-1(d)a challenge to HDIs ability to provide additional financial assurance as a means to adjust fundingfails because HDI has multiple avenues for ensuring there will be sufficient funds available to make any needed adjustments over the dormancy period, and the Attorney General offers no credible evidence to the contrary. Contention MI-1 is without merit and the Commission should deny the Attorney Generals challenge and grant Applicants license transfer application (Application) without further financial conditions.

3 USEC, Inc. (Am. Centrifuge Plant), CLI-06-10, 63 N.R.C. 451, 472 (2006) (quoting Private Fuel Storage, LLC (Indep. Spent Fuel Storage Installation), LBP-98-7, 47 N.R.C. 142, 181 (1998)).

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18834883.2 II.

APPLICANTS EXPERT WITNESSES In addition to the rebuttal testimony of Applicants fact witnessesJames B. Buckley, Jr.,

and Allen Gouletteand Applicants exhibits, Applicants also offer rebuttal testimony from the two expert witnesses Applicants identified in their Initial StatementFrank C. Graves of the Brattle Group and Christopher F. Tierney of HKA. Their backgrounds and qualifications are set forth in Applicants Initial Statement.4 III.

APPLICANTS RESPONSE TO THE ATTORNEY GENERALS INITIAL STATEMENT A.

Mr. Capiks opinions that the last fuel discharged by Palisades would not be accepted until 2064 are unsupported and illogical.

As the Commission noted in the Order, the only question regarding HDIs assumed spent nuclear fuel (SNF) transfer timeline that is at issue in this proceeding is whether an eleven-year transfer window is plausible.5 According to the Attorney General and Mr. Capik, the only way the 2040 date can be realized with a 2030 DOE acceptance start date is if the DOE accepts about 8,363 MTU of spent fuel each year during the first 11-years of acceptance, which he views as not plausible.6 However, in reaching those conclusions, Mr. Capik myopically focuses on the application of a strict plant-by-4 Applicants Initial Statement of Position on Michigan Attorney General Contentions at 9-11 (Nov. 18, 2022) (ADAMS Accession No. ML22322A324) (hereinafter Applicants Initial Statement) 5 Mem. And Order, CLI-22-08 slip op., at 27.

6 Michigan Attorney Generals Initial Written Statements of Position and Written Testimony With Supporting Affidavit at 7 (Nov. 18, 2022) (ADAMS Accession No. ML22322A200) (hereinafter AG Initial Statement); MICH001, Pre-filed Direct Testimony of Nicholas J. Capik (hereinafter Capik Test.), at 5-6.

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18834883.2 plant oldest-fuel-first (OFF) acceptance ranking. Under that approach, he argues that the last fuel discharged by Palisades would not be accepted until 2064 using OFF.7 In doing so, he cites nothing but his own unfounded speculation. In that regard, Mr. Capiks testimony does little more than repeat the same general claim that accompanied the Attorney Generals initial petitionthat the SNF at Palisades wont be gone until 2064without offering any analysis or workpapers to even support that claim, much less engage with the points the Commission directed the parties to address at this hearing.9 Applicants do not disagree with Mr. Capik that OFF is the relevant starting point.10 Indeed, it is the initial acceptance priority ranking specified in the Standard Contract.11 But that is where the agreement ends. As Frank GravesApplicants expert on SNF management modelingpoints 7 MICH001, Capik Test., at 5.

8 Id. Mr. Capik suggests in several places that HDI assumed straight application of OFF in determining the DOE pickup schedule in the original DCE. See Id. at 5-6. The DCE says it was based on OFF priority ranking and the expect[ation] that Holtec Palisades will seek the most expeditious means of removing fuel from the site, based on shutdown reactor priority and other contract provisions. Palisades Nuclear Plant Site-Specific Decommissioning Cost Estimate, attached to Letter from Holtec to NRC, Post Shutdown Decommissioning Activities Report Including Site-Specific Decommissioning Cost Estimate for Palisades Nuclear Plant, dated Dec. 23, 2020, at 46 (ADAMS Accession No. ML20358A232) (hereinafter DCE). Applicants pointed that out in their answer to the Attorney Generals petition to intervene. See Answer Opposing the Michigan Attorney Generals Petition for Leave to Intervene and Request for a Hearing, at 26 (Mar. 22, 2021) (ADAMS Accession No. ML21081A308). And in the Order admitting the Attorney Generals contention on this issue, the Commission acknowledged that HDI intended to utilize shutdown reactor priority and other contract provisions to seek the most expeditious means of removing fuel.

Mem. And Order, CLI-22-08 slip op., at 28.

9 See Mem. and Order, CLI-22-08, slip op., at 30-34.

10 See HOL030, Pre-filed Rebuttal Testimony of Frank C. Graves (hereinafter Graves Rebuttal Test.), at

2.

11 See Id.; HOL007, Palisades Standard Contract, at art. VI(B)(1)(a); 10 C.F.R. § 961.11 art. VI(B)(1)(a).

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18834883.2 out in his rebuttal testimony, Mr. Capik pays lip service to those considerations, stating that [a]ny number of projections can be made about future DOE performance, including whether priority is given to any individual purchasers, or an acceptance queue other than OFF is used.17 However, he does not analyze the 17 MICH001, Capik Test., at 5.

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18834883.2 plausibility or effect of any of those considerations, ignoring the Commissions prompts in the Order granting the Attorney Generals request for an evidentiary hearing on this issue (in support of which, the Attorney Generals expert is expected to offer evidence). Instead, he simply dismisses the factors the Commission directed the parties to flesh out with the platitude that given the political concerns associated with spent fuel,... each state would desire that the spent fuel stored in its state be transferred to DOE as soon as possible.18 18 Id. Mr. Capik also suggests that DOE might not start by 2030; however, this assertion is clearly barred by the Commissions order. Mem. and Order, CLI-22-08, slip op., at 27.

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18834883.2

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18834883.2

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18834883.2 Finally, Mr. Capik also dismisses the idea that after three decades of delay, the DOE may implement a faster acceptance rate when it begins performing in 2030. According to him, the only way the 2040 date can be realized with a 2030 DOE acceptance start date is if DOE accepts about 8,363 MTU of spent fuel each year during the first 11 years of acceptance.34 This is nothing more than a straw man.

34 MICH001, Capik Test., at 6.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 10 18834883.2 Thus, a faster-paced program would result in even earlier SNF removal and even lower at-reactor storage costs for Palisades and other commercial nuclear power plants. And while Mr. Capik properly observes that a faster-paced program may increase direct program costs, the DOE will nevertheless have an incentive to increase its acceptance rate in order to reduce onsite storage costs, which the government must ultimately pay as damages in ongoing SNF litigation.36 Ultimately, Mr. Capik bases his objection to Applicants assumed eleven-year acceptance window only on nebulous political concerns. However, as demonstrated above, whatever political concerns may exist weigh against application of the strict OFF priority upon which Mr.

Capik bases his conclusions.

And an acceptance rate faster than the non-breach rate, which would result in removal of all of Palisadess SNF even earlier, is plausible given the long delay in program 35 Id. at 10; Applicants Initial Statement, at 24-27.

36 HOL030, Graves Rebuttal Test., at 9. Mr. Capik also seems to suggest that the design of the Yucca Mountain repository may dictate that the DOE adhere to the strict OFF acceptance priority upon which he relies, as if only the oldest fuel would be cool enough for the repositorys design. See MICH001, Capik Test., at 6. Not so. First, a 32 year program delay would mean that the SNF being accepted would be much older and cooler, at least on average, than it would have been with a 1998 program start. Second, extensive quantities of SNF that is only a couple of years old have already been successfully handled, packaged and loaded onto at-reactor ISFSIs in the absence of a DOE program. And finally, the Standard Contract clearly gives utilities the right to determine which SNF and/or HLW is delivered to DOE as long as the utilities comply with the requirements of the Standard Contract. See HOL030, Graves Rebuttal Test., at 10, n. 15; HOL007, Palisades Standard Contract at art. V(E); 10 C.F.R. § 961.11 art. V(E).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 11 18834883.2 start. Therefore, HDIs submission of an eleven-year window for its SNF removal is plausible, and the Attorney General has not offered any evidence or analysis to the contrary.

B.

The Attorney General offers no supportable reason that HDIs site specific cost estimate must exceed the NRC generic formula, instead relying upon ipse dixit and invalid comparisons.

The Commission admitted the portions of the Attorney Generals Contention MI-1 asserting that HDIs cost estimate is unreasonable because it falls below the generic formula codified at 10 C.F.R. § 50.75(c). Specifically, the Commission directed Applicants to provide a detailed explanation of the primary reasons that the cost estimate falls significantly below the minimum formula amount, and directed the Parties and NRC staff to address whether the minimum formula regulation in section 50.75(b) applies to this application.37 The Attorney Generals Initial Statement and supporting testimony do not address that threshold legal question at all. Instead, the Attorney General simply asks the Commissioners to apply the regulatory formula to the DCE as a way to increase financial protection.38 And, rather than engage with HDIs site specific DCE directly to provide any comparative analysis to the NRC formula, the Attorney General and Mr. Capik raise red herrings and misapply the Commissions regulations in an attempt to muddy the watersagain, largely just repeating arguments from the Attorney Generals prior 37 Mem. and Order, CLI-22-08, slip op., at 134.

38 AG Initial Statement, at 11. It is not surprising that the Attorney General did not address the legal question, given that the Attorney General never made that argument in the first place; rather, the Commission sua sponte directed the parties to brief the issue. Mem. and Order, CLI-22-08, slip op., at 42. Both NRC staff and the Applicants have explained that the formula clearly does not apply to plants, like Palisades, that are in decommissioning. See Applicants Initial Statement, at Section IV.B.1; NRC Staff Position on the Applicability of the 10 C.F.R. § 50.75 Minimum Funding Requirement to the License Transfer Application (Nov. 18, 2022) (ADAMS Accession No. ML22322A159).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 12 18834883.2 pleadings without offering any relevant evidence or analysis that this hearing process was designed to elicit.39 Mr. Capiks first argument is nothing more than an attempt to get through the backdoor what the Commission has already denied through the front. Specifically, Mr. Capik cites to a Government Accountability Office (GAO) report comparing DCEs for twelve reactors to the NRC generic cost formula and notes that the formula amount constitutes 57% to 91% of the majority of those DCE estimates.40 In other words, Mr. Capiks testimony is just an indirect comparison of HDIs DCEs to other licensees DCEs, which the Commission has already rejected:

[T]he pertinent question ultimately is not why HDIs cost estimate is less [than some other study]

but whether the estimate is reasonable. The Attorney Generals comparison of the two studies respective overall cost conclusions does not, without more, raise a supported, genuine material dispute with the Palisades application.41 Regardless, the GAO report offers no guidance on the ultimate question of whether HDIs DCE is reasonable. The site specific DCEs for the twelve reactors in that study were prepared well in advance of planned decommissioning and for the purpose of establishing funding targets to build up the NDTs.42 In stark contrast, HDI prepared the Palisades DCE within about 32 months 39 Mr. Capik states that [t]he lack of detail in the DCE makes substantive comparison of DCE costs to the NRC formula difficult. MICH001, Capik Test., at 8. Applicants agree that, given the nature of the NRC formula, comparisons to any site specific cost estimate are difficult. PNL itself found detailed comparisons not possible.

PNL, Assessment of the Adequacy of the 10 C.F.R. § 50.75(c) Minimum Decommissioning Fund Formula (Draft Report), at 3-1, 4-27, 4-87 (Nov. 2011) (ADAMS Accession No. ML13063A190). But that is the task the Commission has set for the Parties in this hearing, and there has been no contention that the extensive workpapers Applicants produced in their mandatory disclosures did not provide to the Attorney General all of the information required by NRC regulations. See, e.g., HOL017, HOL022, HOL023, HOL024, HOL025, HOL026, HOL027, HOL028, HOL029.

40 MICH001, Capik Test., at 7.

41 Mem. and Order, CLI-22-08, slip op., at 24.

42 HOL031, Pre-Filed Rebuttal Testimony of Christopher F. Tierney (hereinafter Tierney Rebuttal Test.),

at 2-3.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 13 18834883.2 of planned shutdown.43 And its purpose was not to set a target for the NDT for some time in the future, but rather to determine a realistic cost estimate that could be used to plan and monitor project performance that would begin imminently.44 Second, in order to artificially inflate the difference between HDIs DCE and the minimum formula amount, Mr. Capik testifies that a valid comparison should exclude from the DCE the expenses incurred during the ten-year dormancy period.45 But that is not a valid comparison at all because the generic formula of 50.75(c) was codified to estimate the cost of carrying out activities related to the definition of Decommission in § 50.2, which indisputably includes dormancy costs. 46 The Attorney General has offered no regulatory basis for parsing HDIs § 50.2 decommissioning costs to only compare some of them to the formula amount that, according to the regulation itself, is meant to account for activities related to the definition of Decommission in § 50.2.47 Moreover, the formula was based upon the most expensive decommissioning option:

immediate dismantlement.48 As stated in NUREG/CR-0130, Addendum 4, [s]ince immediate dismantlement (DECON) is generally the more expensive of the acceptable decommissioning possibilities, if funds for DECON are available, the other possibilities are also covered.49 Thus, 43 Id. at 3.

44 Id.

45 MICH001, Capik Test., at 7-8.

46 10 C.F.R. § 50.75(c), n. 1; Final Generic Environmental Impact Statement on Decommissioning of Nuclear Facilities, NUREG-0586, Section 2.4.3 (Aug. 1988) (ADAMS Accession No. ML023470304).

47 10 C.F.R. § 50.75(c), n.1.

48 HOL031, Tierney Rebuttal Test., at 3-4.

49 Id. (quoting Technology, Safety and Costs of Decommissioning a Reference Pressurized Water Reactor Power Station, NUREG/CR-0130, Add. 4, at 2.8 (July 1988) (ADAMS Accession No. ML20151R145)).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 14 18834883.2 the regulation and underlying technical basis plainly contemplated the cost implications of alternative decommissioning methods, yet chose the most conservative (and costly) for bounding all decommissioning scenarios. 50 It would be nonsensical to remove radiological decommissioning costs associated with one of those bounded alternatives (i.e., 10-year SAFSTOR).51 If Mr. Capik were trying to establish a truly valid comparison between the Palisades DCE and the 1978 Trojan DECON estimate from which the generic formula was derived (after many adjustments and added conservatism, as explained in Applicants Initial Statement), he would, at a minimum, have to add the $13.3 million projected to be spent prior to license transfer and reduce the formula amount to remove third-party decommissioning general contractor costs.52 While Mr. Capiks starting premise is wrong (that only some of HDIs estimated radiological decommissioning costs should be compared to the formula), it is telling that Mr. Capik only makes an adjustment that inflates the delta between HDIs DCE and the generic formula without also making adjustments the other direction in a consistent manner.53 Finally, Mr. Capik contends that the lessons learned and experience gained through decommissioning other Holtec projects will not reduce costs for Palisades because of the ten-year dormancy period. Putting aside that Mr. Capik does not connect that idea to any portion of the Palisades DCE or the issues admitted for hearing, the concept itself is belied by both history and 50 Id.

51 Id. at 4.

52 HOL031, Tierney Rebuttal Test., at 4-5.

53 As discussed in Applicants Initial Statement, the $60 million delta identified in the Order was inflated because it did not take account of pre-transfer costs and also compared different years dollar amounts for the DCE (2020$) and the generic formula (2021$). See Applicants Initial Statement, at 47-52. Mr. Capik agrees that the relevant comparison is in 2020 dollars. MICH001, Capik Test., at 8.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 15 18834883.2 common sense. As discussed in more detail in Applicants Initial Statement, nuclear industry practices and technology have advanced significantly since the generic formula was developed in the 1970s, yet the generic formula has not been revised.54 In one of many NRC-commissioned studies, PNL examined the efficiencies expected to be gained by decommissioning multiple reactors.55 Quantification of those efficiencies is unnecessary here though because Mr. Capik makes no attempt to tie his anecdotal point to any analytical comparison between the Palisades DCE and the NRC formula.

In fact, the asset-transfer business model did not even exist when the generic formula was developed.56 HDI specializes in the decommissioning of nuclear power plants in a way that PNL did not consider when developing the generic formula. 57 Even so, PNL expected that the efficiency of decommissioning the reactors at a multiple-reactor station will improve after the first reactor is decommissioned due to the learning process.58 It is incredible to suggest that HDI will not benefit from decommissioning experience because it has more time to get that experience before beginning decommissioning at Palisades. For example, the latest schedules for Indian Point show that active decommissioning will be completed in 2033during the dormancy period for Palisades and just three years before active decommissioning commences there.59 Indeed, by that 54 Applicants Initial Statement, at 42-47.

55 HOL002, Pre-filed Direct Testimony of Christopher F. Tierney (hereinafter Tierney Test.), at 14 (citing Technology, Safety and Costs of Decommissioning Nuclear Reactors at Multiple-Reactor Stations, NUREG/CR-1755, at 8-19 (Jan. 1982) at (ADAMS Accession No. ML20086J438)).

56 HOL002, Tierney Test., at 36.

57 Id.

58 Technology, Safety and Costs of Decommissioning Nuclear Reactors at Multiple-Reactor Stations, NUREG/CR-1755, at 8-19 (Jan. 1982) (ADAMS Accession No. ML20086J438); HOL002, Tierney Test., at 14.

59 HOL031, Tierney Rebuttal Test., at 6.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 16 18834883.2 point, HDI will have decommissioned five nuclear reactors.60 It defies common sense to think that HDI will gain no useful knowledge, retain no experienced personnel, and achieve no fleet-wide efficiencies from those projects.61 To the contrary, it is reasonable to assume that HDI will document lessons learned on the earlier projects in writing and that HDI will utilize some of the same key personnel at Palisades.62 Regardless, Mr. Capik makes no attempt to explain why this anecdotal point matters or how it contributes to the hearing the Attorney General was granted to present evidence and a comparative analysis of the Palisades DCE relative to the NRC regulatory formula.

C.

Mr. Capiks criticisms of the 12% contingency HDI used in the Palisades DCE are meritless and based on an inapplicable guideline.

According to the Attorney General and Mr. Capik, the 12% contingency that HDI included in its DCE fails to account for scope changes, general inflation, or cost escalation over the course of the project.63 They also say that HDIs contingency is inconsistent with applicable industry norms and is inexplicably lower that the contingencies HDI used in the DCEs for the other nuclear plants it owns. 64 However, as explained below, each of these criticisms is misplaced and unsupported. More importantly, Mr. Capik offers no independent quantification of contingency to support the Attorney Generals requested remedy in this hearing, which is a Commission finding, supported by evidence, that HDIs contingency is materially deficient and warrants a license condition imposing specific financial commitments to remedy that deficiency. While Mr. Capiks 60 Id.

61 Id.

62 Id. at 7.

63 AG Initial Statement, at 12.

64 See Id. at 13.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 17 18834883.2 conclusion is that a 12 percent contingency is not reasonable,65 he does nothing to prove that is true. He does not acknowledge how HDI calculated the Palisades contingency nor does he claim that HDIs contingency fails to address the types of inevitable risks that the Commission determined must be covered by the DCE at this stage of the project.66 Mr. Capik simply cites contingency amounts used in other scenarios, without offering any analysis explaining why those other amounts are relevant to the Palisades DCE, and without advancing the Attorney Generals evidentiary case or providing an alternative quantification of contingency for the Commission to adopt.

1.

Mr. Capiks claim that the DCE fails to account for scope changes and escalation is simply wrong.

First, Mr. Capiks claim that scope changes, general inflation, and cost escalation are not accounted for is factually inaccurate.

65 MICH001, Capik Test., at 12.

66 See, e.g., Mem. and Order, CLI-22-08, slip op., at 49-51.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 18 18834883.2 Thus, Mr. Capiks statement that [p]otential changes in scope are not addressed71 is simply wrong as a matter of fact.

Furthermore, Mr. Capiks claim that HDIs DCE fails to account for... general inflation[]

or cost escalation over the course of the project72 is also incorrect. Indeed, Mr. Capik even recognizes that [t]he Holtec cashflow assumes that nuclear decommissioning trust (NDT) fund earnings after taxes and fees will exceed inflation by two percent.73 As Mr. Goulette points out in his rebuttal testimony, HDI will update the DCE each year to reflect actual escalation, and for future years, the DCE follows NRC regulations and guidance by assuming that costs will escalate at rate that is 2% less than growth of NDT funds.74 Mr. Capiks criticism is that this 2% real rate of return could turn out to be incorrect, and thus funding could ultimately prove to be insufficient.75 However, as Mr. Goulette points out in his rebuttal testimony, the DCE cash flow table simply applies NRC regulations and follows the methodology used by NRC staff to evaluate [HDIs]

ongoing funding adequacy.76 More importantly, the Commission already rejected the Attorney Generals challenge to NRC regulations, which allow licensees to assume a 2% real rate of return 71 MICH001, Capik Test., at 9.

72 AG Initial Statement, at 12.

73 MICH001, Capik Test., at 9.

74 HOL033, Goulette Rebuttal Test., at 2-3; DCE, at 46.

75 See MICH001, Capik Test., at 9.

76 HOL033, Goulette Rebuttal Test., at 3.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 19 18834883.2 during decommissioning.77 Mr. Capiks testimony in this regard thus provides no basis to question HDIs contingency, even if he had attempted to quantify the risk and demonstrate that HDIs DCE is materially deficient as a result of failing to account for that risk (which he did not).

2.

Mr. Capik relies on inapplicable industry guidelines that actually support HDIs contingency calculation.

Next, the Attorney General and Mr. Capik rely on Association for the Advancement of Cost Engineering (AACE) International Recommended Practice No. 18R-97 in support of their claim that HDIs 12% contingency is inconsistent with industry norms, practices, and standards.78 According to Mr. Capik, AACE International Recommended Practice No. 18R-97 provides guidelines for identifying proper contingency for various phases of project estimation.79 But here, Mr. Capik gets it wrong. The document he cites sets guidelines for new construction in the process industry, meaning firms involved with the manufacturing and production of chemicals, petrochemicals, and hydrocarbon processing, and it does not provide any detailed guidance for how to quantify an appropriate contingency factor.80 In other words, the document has nothing to do with the matters admitted for hearing.81 77 Mem. and Order, CLI-22-08, slip op., at 74.

78 AG Initial Statement, at 13; MICH001, Capik Test., at 9-10. The Attorney General did not submit AACE International Recommended Practice 18R-97 as an exhibit or otherwise disclose it in its mandatory disclosures. Mr.

Capik also did not indicate which version of the document he relied on in preparing his direct testimony. The version Mr. Tierney reviewed in preparing his rebuttal testimony was retrieved from AACE Internationals website and is the August 2020 version. It is included with Mr. Tierneys testimony as exhibit HOL035. See HOL035, AACE International Recommended Practice No. 18R-97: Cost Estimate Classification System - As Applied in Engineering, Procurement, and Construction for the Process Industries (rev. Aug. 7, 2020) (hereinafter AACE International Recommended Practice 18R-97).

79 MICH001, Capik Test., at 9-10.

80 HOL031, Tierney Rebuttal Test., at 8 (quoting HOL035, AACE International Recommended Practice No.

18R-97 at 1).

81 HOL031, Tierney Rebuttal Test., at 8.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 20 18834883.2 Mr. Capik says that the recommended practice provides guidelines for identifying proper contingency for various phases of project estimation,82 but that is incorrect. As Mr. Tierney points out, the uncertainty ranges that Mr. Capik picks from Table 1 of the recommended practice are all post-contingency and have nothing to do with determining contingency.83 The Expected Accuracy Range Mr. Capik cites refers to the expected accuracy of a cost estimate that already includes a contingency.84 The document itself specifically states that [t]he +/- value represents typical percentage variation at an 80% confidence interval of actual costs from the cost estimate after application of appropriate contingency. 85 It continues, clarifying that the level of contingency required for an estimate is not the same as the upper limits of estimate accuracy (as determined by a risk analysis).86 Indeed, the uncertainty ranges Mr. Capik cites from Table 1 of the 18R-97 guideline primarily correlate to the maturity of engineering and design deliverables for a new build chemical or hydrocarbon facility (e.g., design specs, procurement plans, piping and instrumentation diagrams, electrical drawings, etc.).87 Mr. Capik makes no attempt to analogize any of this to nuclear decommissioning or to explain how it relates to the Palisades contingency amount.

82 MICH001, Capik Test., at 9-10.

83 HOL031, Tierney Rebuttal Test., at 8.

84 Id.

85 HOL035, AACE International Recommended Practice 18R-97, at 3. See also HOL031, Tierney Rebuttal Test., at 8.

86 HOL035, AACE International Recommended Practice 18R-97, at 19. See also HOL031, Tierney Rebuttal Test., at 8.

87 HOL035, AACE International Recommended Practice 18R-97, at 3, 12-14.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 21 18834883.2 Finally, Mr. Capiks statement that AACE concludes that a Class 2 estimate has an 80 percent probability of being within minus 15 percent to plus 20 percent of the actual costs88 also mischaracterizes what the recommended practice actually says (even if those ranges were relevant to the matters admitted for hearing, which they are not). As Mr. Tierney points out in his rebuttal testimony, the recommended practice actually includes both a low range (-15% to -5%) and a high range (+5% to +20%) at the 80% confidence interval. 89 Moreover, the recommended practice also specifically provides that the expected accuracy ranges include appropriate contingency (typically to achieve a 50% probability of project cost overrun versus underrun).90 88 MICH001, Capik Test., at 10.

89 HOL031, Tierney Rebuttal Test., at 9 (citing HOL035, AACE International Recommended Practice 18R-97, at 3). Even accepting Mr. Capiks unexplained assertion that the DCE is equivalent to a Class 2 estimate for engineering, procurement, and construction of a new-build hydrocarbon or chemical plant, 90 HOL035, AACE International Recommended Practice 18R-97, at 3; see also HOL031, Tierney Rebuttal Test., at 9.

91 HOL031, Tierney Rebuttal Test., at 9.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 22 18834883.2 While AACE guidelines were not discussed in the Orders definition of risks that must be addressed by contingency at this stage of the project, if the Commission were to look to the AACE for general industry guidance on contingency, the more appropriate recommended practice would be AACE International Recommended Practice 40R-08, which is titled Contingency Estimating -

General Principles.93 As the title suggests, that recommended practice provides general guidance for estimating the level of contingencies to be included in project estimates and is not specific to any one industry.94 So even if the Commission finds Mr. Capiks invocation of AACE guidelines informative in its assessment of HDIs DCE, the general contingency guidelines support the approach HDI took, and Applicants Initial Statement and direct testimony explain how HDIs contingency accounted for the various inevitable risks that the Commission determined must be addressed at this stage of the project.

92 Id. See also HOL004, Goulette Test., at 9.

93 HOL031, Tierney Rebuttal Test., at 9 (citing AACE International Recommended Practice 40R-08:

Contingency Estimating - General Principles TCM Framework 7.6 - Risk Management (rev. June 25, 2008)

(hereinafter AACE International Recommended Practice 40R-08)). AACE International Recommended Practice 40R-08 is attached to Mr. Tierneys rebuttal testimony as exhibit HOL036.

94 See Id.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 23 18834883.2 3.

Mr. Capiks reliance on the 25% contingency factor that applies to ISFSI decommissioning is incorrect and has already been rejected by the Commission.

Mr. Capiks claim that HDI should have used a 25% contingency factor fares little better.96 He bases his conclusion on NRC guidance in NUREG-1757.97 However, the Commissions Order already recognized that, while NUREG-1757 establishes the 25% guideline for ISFSI decommissioning, it is inapplicable to reactor decommissioning.98 And, as Applicants explained in their Initial Statement, apart from some high-level principles, NRCs use of a generic 25%

factor does not provide guidance for how licensees should calculate contingency in a contemporaneous cost estimate based on real-time, site-specific information.99 Indeed, [b]eyond these high-level requirements in staff guidance, there are no NRC guidelines for the methodology licensees should use to establish contingency nor does the NRC impose a minimum amount of contingency that must be included in a § 50.82 SSCE.100 HDI determined that a 12% contingency was appropriate for its DCE [b]ased on an evaluation of estimate uncertainty and discrete risk events, combined with experience gained through decommissioning efforts at Oyster Creek and Pilgrim, newly formed waste contracts, and contingency allowances used for other decommissioning projects.101 Mr. Capik does not offer any analysis to the contrary.

96 See MICH001, Capik Test., at 10-11.

97 See Id.

98 Mem. and Order, CLI-22-08, slip op., at 45.

99 Applicants Initial Statement, at 67.

100 Id., at 66.

101 DCE, at 41.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 24 18834883.2 4.

Mr. Capiks claims that HDIs work on other projects and existing contractual arrangements do not reduce estimation uncertainty are not credible nor does he connect them to the issues set for hearing.

According to Mr. Capik, the 12% contingency factor for Palisades is inexplicably lower than the contingencies for other Holtec decommissioning projects. Mr. Capik also says that, at the time the DCE was submitted, sufficient progress had not been made on decommissioning those other plants to provide HDI with a basis for more accurate estimating.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 25 18834883.2 Mr. Capik fails to address any of these points and fails to explain how his claims translate to more contingency (indeed, he does not engage with HDIs contingency methodology or workpapers at all). His assertion that HDI learned nothing in the process of estimating and executing three other projects defies common sense. But more importantly, Mr. Capik does not explain why his argument matters under the contingency standard set out in the Commissions Order. The Order clearly states that simply comparing HDIs DCE to other estimates is not enough:

the pertinent question ultimately is not why HDIs cost estimate is less [than another estimate]

but whether the [Palisades] estimate is reasonable.106 And the Order explained that annual DCE updates are sufficient to address adjustments to cost judgments that may have been reasonable earlier [which] may need to be readjusted later with real-time information.107 So, even if Mr.

Capik is right, which he is not, and HDI should not have had more confidence in the Palisades estimation relative to other Holtec projects, Mr. Capik has not provided any evidence to show that the Palisades DCE is unreasonable or implausible. It is acceptable that things will turn out less favorably than expected.108 HDIs obligation is to put together a plausible estimate. It has done 106 Mem. and Order, CLI-22-08, slip op., at 24.

107 Id., at 78.

108 Id., at 17 (quotations omitted).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 26 18834883.2 so. In response, Mr. Capik offers a generic claim that HDI should have assumed more uncertainty, without addressing the uncertainty analysis HDI actually performed, why HDI was required to assume higher uncertainty than it did, how an unspecified amount of additional uncertainty translates into additional contingency dollars, and why the supposed missing contingency dollars have a material effect on the plausibility of the overall DCE. That is not enough.109 That suggestion is barely credible and reveals either an unrealistic view as to how contracting works on large projects or a mistaken belief that HDI is required to obtain cost certainty in its original estimate (assuming for sake of argument that fixed price agreements would provide that). There is no NRC requirement or industry standard that requires executed contracts years before work is to be performed (and 109 Entergy Nuclear Operations, Inc. (Pilgrim Nuclear Power Stations), CLI-20-12, 92 N.R.C. 351, 368 (2020) (emphasizing that the mere casting of doubt on some aspects of proposed funding plans is not by itself sufficient to defeat a finding of reasonable assurance (quoting North Atlantic Energy Service Corp. (Seabrook Station, Unit 1), CLI-99-06, 49 N.R.C. 201, 222 (1999))).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 27 18834883.2 before Holtec even owned the plant). The Commission has accepted as plausible many aspects of cost estimates that rely on reasonable assumptions about future activities (after all, it is an estimate), including reasonable assumptions about future subcontracting and subcontract prices.112 And again, Mr. Capik does not quantify the impact his generic criticisms have on HDIs contingency analysis or explain why those critiques make the DCE materially deficient.

112 See, e.g., Pilgrim, CLI-20-12, 92 N.R.C. at 375 (finding no basis to view as implausible Holtecs [waste disposal] assumption where Holtec had an existing contract and there was no evidence that licensees could not obtain state approvals for import to waste disposal facility); Entergy Nuclear Operations, Inc. (Indian Point Nuclear Generating Station, Units 1, 2, & 3 and ISFSI), CLI-21-1, 93 N.R.C. 1, 24-25, 34-35 (2021) (rejecting various challenges to a DCE based on the possibility of future cost or schedule impacts or additional costs of subcontracted scope); Id. at 9 (We accept financial assurance based on plausible assumptions and forecasts because, particularly at the early stages of a decommissioning project, cost estimates are necessarily uncertain.).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 28 18834883.2

. [A]n applicants financial assurance estimates will be acceptable if they are grounded in assumptions and forecasts that were plausible when the estimates were submitted.117 For the reasons stated above, in Applicants Initial Statement, and in its witnesses accompanying initial and rebuttal testimony, the conclusion in the DCE that a Contingency Allowance of 12 percent... reasonably bound[s] the universe of risks that are appropriate to be taken into account at the estimate phase119 is reasonable.

116 117 Indian Point, CLI-21-1, 93 N.R.C. at 36.

119 DCE, at 41.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 29 18834883.2 D.

Holtec Palisades has multiple avenues for ensuring there will be sufficient funds available to make any needed adjustments over the dormancy period, and the Attorney General offers no evidence that those avenues are not plausible.

The final issue the Commission admitted for hearing is whether Holtec Palisades120 has the ability to provide additional financial assurance as a means to adjust funding during the 10-year dormancy period proposed in the Application. As set forth in Applicants Initial Statement, Holtec Palisades has multiple avenues for ensuring there will be sufficient funds available to make any needed adjustments over the dormancy period: the cushion in the NDT itself (bolstered by conservatisms in the DCE); extending the decommissioning schedule; and recoveries of SNF management costs from DOE. The Attorney Generals Initial Statement and testimony do not demonstrate that theses avenues are not plausible.

1.

Testimony from the Attorney Generals own expert corroborates that adjusting the decommissioning schedule to maximize the funds in the NDT is a further means of adjusting funding.

While the contingency and $19 million cushion alone provide adequate assurance that Holtec Palisades has the means to adjust funding levels as necessary, Holtec Palisades and HDI also have the ability to enlarge that cushion by extending the dormancy period up to 30 years or more.121 The Attorney General argues that under the assumed two percent real rate of return, growth of the NDT will be barely enough to cover O&M costs.122 But that simply is not accurate.

The Attorney Generals own expert witness calculates that $1.9 million in additional funding will be available each year of dormancy after all O&M costs are paid.123 Over a 35-year extension of 120 While HDI is the licensed operator, Holtec Palisades is the owner with ultimate payment obligations, the beneficiary of the trust fund, and the party to the DOE Standard Contract.

121 HOL004, Goulette Test., at Table 10.

122 Attorney Generals Initial Statement, at 16.

123 MICH001, Capik Test., at 13.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 30 18834883.2 the dormancy period, that amounts to more than $66 million of additional funds, and more than

$85 million when added to the pre-existing surplus in the NDT.

HDIs projection was even more conservative, and yet it still provides a substantial amount of additional funding. As set forth in Mr. Goulettes initial testimony, adjustment of the decommissioning schedule would be expected to produce more than $40 million in additional funds, with a $70 million surplus at the end of decommissioning.124 And that projection only accounts for the regulatory 2% real rate of return.125 As the Commission has recognized in the past, actual rates of return may differ from the regulatory baseline over the long run.126 It is entirely likely that the NDT here, under professional fund management, may outperform the estimate and result in even larger growth over the storage period. 127 The significant malleability of the decommissioning schedule, which amounts to an additional source of funding, will thus allow Holtec Palisades to adjust over the dormancy period if necessary.

124 Id.

125 See 10 C.F.R. § 50.75(e)(1)(i). Mr. Capik cites the risk that NDT earnings do not meet the NRC-defined 2% real rate of return as a basis for challenging HDIs DCE. MICH001, Capik Test., at 9, 13. The Commission has already rejected the Attorney Generals impermissible challenge to NRC regulations in this proceeding and accepted that portion of HDIs DCE as reasonable and consistent with NRC regulations. Mem. and Order, CLI-22-08, slip op.,

at 74.

126 Pilgrim, CLI-20-12. 92 N.R.C. at 367.

127 It is also possible that the NDT could experience less than 2% growth during an extended dormancy period, but that does not render this aspect of Applicants proposal invalid. See Id. at 368 (noting financial assurance is acceptable if it is based on plausible assumptions and forecasts, even if the possibility is not insignificant that things will turn out less favorably than expected and the mere casting of doubt on some aspects of proposed funding plans is not by itself sufficient to defeat a finding of reasonable assurance (quoting North Atlantic Energy Serv. Corp. (Seabrook Station, Unit 1), CLI-99-6, 49 N.R.C. 201, 221-22 (1999))).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 31 18834883.2 2.

Recoveries of SNF management costs provide further means of adjusting funding if necessary, and the Attorney General offers no evidence to contradict that those funds will be available if needed.

A further means by which Holtec Palisades proposes it could provide additional funding assurance during the dormancy period is through recoveries of SNF management costs from DOE.

The Attorney General makes just two arguments on this issue:

(1) any recovery on a Holtec claim for ISFSI construction costs and cask loading (the largest portion of spent fuel management costs) would be paid many years before decommissioning activities;128 and (2) a sizeable portion of the projected spent fuel management costs (specifically related to the transfer of spent fuel to DOE) may not be recovered from DOE or could be subject to an offset that significantly reduces recovery.129 Neither the Attorney General nor Mr. Capik offer any basis for their argument that DOE recoveries will be paid many years before decommissioning activities.

128 AG Initial Statement, at 16.

129 Id. (quoting MICH001, Capik Test., at 13).

131 Like most utilities, Entergy routinely filed its Palisades claims on a 6-year claim schedule.

132 The first round case regarding Palisades lasted just shy of nine years. See Consumers Energy Co. v.

United States, 1:02-cv-1894-NBF. Its second round case took over four years. See Entergy Nuclear Palisades LLC v.

United States, 1:12-cv-641-NBF. The third round case concluded in just under two years, but only because the Government made an acceptable offer of judgment. See Entergy Nuclear Palisades LLC v. United States, 1:19-cv-484-NBF. Other utilities recent suits corroborate that they are generally several years in length. See., e.g., Ala. Power Co. v. United States, 1:14-cv-168-PEC (pending for more than eight years with no final judgment yet).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 32 18834883.2 At that point, decommissioning will be close on the horizon, and HDI will have decommissioned five other reactors.133 Thus, actual decommissioning costs... will be known relatively soon.134 If an updated cost estimate shows that additional funding is needed for active decommissioning, there is no reason to think that those funds would not remain available to cover the shortfall.

As for the Attorney Generals second argument, the recoverability of Holtec Palisadess spent fuel management costs was not the contention admitted for hearing. As the Commission pointed out, [t]he Attorney General does not question that Holtec will be able to recover from the DOE the bulk of the spent fuel management costs incurred.135 The core concern... relates to timing, not recoverability, and that is what the Commission directed the parties to address.136 That said, even if Mr. Capik were correct that costs related to transfer of spent fuel to DOE...

may not be recovered,137 it is immaterial to Holtec Palisadess ability to adjust funding. As explained in Applicants Initial Statement, the funding adjustment regulation applies only during the dormancy period.138 133 Partial site release (the point at which all portions of the site have been decommissioned except the ISFSI, which remains pending DOE fuel pickup) for Oyster Creek is scheduled in 2025, Pilgrim in 2027, and Indian Point in 2033. Letter from Holtec to NRC, Report on Status of Decommissioning Funding for Reactors and Independent Spent Fuel Storage Installations, Encl. 5, dated Mar. 25, 2022 (ADAMS Accession No. ML22084A059).

134 Mem. and Order, CLI-22-08, slip op., at 79.

135 Id. at 76-77.

136 Mem. and Order, CLI-22-08, slip op., at 78.

137 MICH001, Capik Test., at 14.

138 The Attorney General asserts that HDI has an obligation to provide a means of adjusting funding beyond the dormancy period. AG Initial Statement, at 15. As Applicants pointed out in their Initial Statement, the unambiguous regulatory language requires that the licensee shall provide a means of adjusting cost estimates and associated funding levels over the storage and surveillance period. 10 C.F.R. § 50.82(a)(8)(iv) (emphasis added).

Regardless, each of the means of adjusting funding addressed in Applicants Initial Statement would be available during active decommissioning as well as during the storage and surveillance period.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 33 18834883.2 Thus, even if they are not ultimately awarded to Holtec Palisades, that will not be known until after active decommissioning begins, when 10 C.F.R. § 50.82(a)(8)(iv) no longer applies.139 3.

The Attorney General offers no basis to impose a license condition regarding additional financial assurance.

Finally, a license condition requiring Holtec Palisades to deposit DOE recoveries into the NDT or to otherwise escrow the funds is not necessary. In his testimony Mr. Capik does not suggest any specific means of financial assurance here; instead, he simply identifies certain measures used for other nuclear plants, including two owned by Holtec. Putting aside that every plant is unique and that the DCE at issue here is site-specific, the additional financial commitments by Holtec in those cases were not mandated by the Commission and are not included as NRC license conditions for those facilities. They were commitments that Holtec negotiated with stakeholders given the circumstances and state jurisdictional requirements at those specific plants.

NRC was not a party to those agreements, and they addressed matters far beyond NRCs jurisdiction.140 More importantly, NRC approved the Indian Point and Pilgrim license transfers 139 Moreover, even accepting for the sake of argument the Attorney Generals new assertion that Holtec Palisades might not recover all or substantially all of its projected spent fuel management costs, the Attorney General did not present any evidence or even claim that Holtec Palisadess recoveries would be so anemic as to deprive Holtec Palisades of the ability to supplement NDT funds with other financial mechanisms, which are not limited to deposit of money into the NDT and can also include surety bonds, insurance, or a letter of credit. 10 C.F.R. § 50.75(e)(1)(i)-

(iii); Indian Point, CLI-21-1, 93 NRC at 38 n.215.

140 See, e.g., New York Public Service Commission, Order Asserting Jurisdiction and Approving and Adopting Joint Proposal, Case No. 19-E-0730, (May 19, 2021) (approving the sale of Indian Point from Entergy affiliates to Holtec affiliates and adopting a negotiated settlement among Entergy affiliates, Holtec affiliates, four New York regulatory agencies, the New York Attorney General, local stakeholders, and an environmental group), available at https://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={58BE78ED-9EC8-413E-99F1-0879B9099650}; Settlement Agreement between the Commonwealth of Massachusetts and Holtec Pilgrim, LLC and Holtec Decommissioning International, LLC regarding the Pilgrim Nuclear Power Station, Plymouth, Massachusetts (June 16, 2020) (ADAMS Accession No. ML21096A083) (establishing various financial, insurance, reporting, environmental cleanup standards, and regulatory fees with various Massachusetts entities and obtaining the

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 34 18834883.2 (and associated site specific cost estimates submitted by HDI) without any reliance on the commitments Holtec agreed to in those non-NRC-jurisdictional agreements.141 As for Vermont Yankee, Northstar negotiated a settlement agreement with various stakeholders in connection with the state utilities commissions approval of the sale, and only relied on certain specific commitments in that agreement to meet NRC funding obligations that Northstar otherwise could not meet.142 That is not the case here. Mr. Capik simply jumps to his preferred solution without offering any evidence or analysis to prove that there is a problem within NRCs jurisdiction that needs solving.

Here, like Indian Point and Pilgrim, NRC regulations provide more than an adequate means to address funding issues without any license conditions. The Commissions present review of Holtec Palisadess financial qualifications will not be the only examination of [its] ability to pay Massachusetts Attorney Generals withdrawal of its D.C. Circuit appeal from the NRCs rejection of its contentions on the Pilgrim license transfer application).

141 Safety Evaluation Report, Indirect Transfers of Control of Renewed Facility Operating License No.

DPR-35 and the General License for the Independent Spent Fuel Storage Installation from Entergy Nuclear Generation Company and Entergy Nuclear Operations, Inc. to Holtec Pilgrim, LLC and Holtec Decommissioning International, LLC, Docket Nos. 50-293 and 72-1044, Sections 3.1 to 3.5 (Aug. 22, 2019) (ADAMS Accession No. ML19170A250); Safety Evaluation Report, Transfer of Control of Provisional Operating License No. DPR-26 and DPR-64, and the General License for the Independent Spent Fuel Storage Installation from Entergy Nuclear Operations, Inc., Entergy Nuclear Indian Point 2, LLC, and Entergy Nuclear Indian Point 3, LLC to Holtec International and Holtec Decommissioning International, LLC, Docket Nos.50-003, 50-247, 50-286, and 72-051, Sections 3.1 to 3.3 (Nov. 23, 2020) (ADAMS Accession No. ML20297A333).

142 See Response to Request for Additional Information Regarding Request for Direct and Indirect License Transfers from Entergy to Northstar, Docket Nos. 50-271 and 72-59, Att. 2, pp. 12-14 (May 21, 2018) (ADAMS Accession No. ML18143B484); Safety Evaluation Report, Direct and Indirect Transfers of Control of Renewed Facility Operating License No. DPR-28 and the General License for the Independent Spent Fuel Storage Installation from Entergy Nuclear Operations, Inc. and Entergy Nuclear Vermont Yankee, LLC to Northstar Vermont Yankee, LLC and Northstar Nuclear Decommissioning Company, LLC, Docket Nos. 50-271 and 72-59, Section 4.2 (Oct. 11, 2018) (ADAMS Accession No. ML18242A639); Settlement Agreement between Entergy affiliates, Northstar affiliates, Vermont Department of Public Service, Vermont Agency of Natural Resources, Vermont Department of Health, Elnu Abenaki Tribe, Abenaki Nation of Missisquoi, Windham Regional Commission, New England Coalition on Nuclear Pollution, Inc., the Town of Vernon Planning and Economic Development Commission, and the Vermont Attorney Generals Office (Mar. 2, 2018) (ADAMS Accession No. ML18066A735).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 35 18834883.2 for decommissioning and spent fuel management.143 Rather, Holtec Palisades must continue, until the license is terminated to demonstrate annually that funding for both decommissioning and spent fuel management remains adequate.144 Should a major funding adjustment prove necessary at any point, this continual reporting will cause it to be identified and addressed on a regular basis.145 IV.

CONCLUSION For the reasons stated in the Application, in Applicants Initial Statement, and above, the Commission should reject the Attorney Generals contentions and grant the Application without further condition or limitation.

143 See Pilgrim, CLI-20-12, 92 N.R.C. at 361.

144 Id. at 360. See also 10 C.F.R. § 50.82(a)(8)(v) (requiring an annual financial assurance report); Pilgrim, CLI-20-12, 92 N.R.C. at 367 ([T]he NRC will... continuously oversee the adequacy of the decommissioning and spent fuel management funding until the license is terminated.).

145 Pilgrim, CLI-20-12, 92 N.R.C. at 376.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 36 18834883.2 Respectfully submitted,

/Executed in Accord with 10 C.F.R. § 2.304(d)/

Anne R. Leidich David R. Lewis PILLSBURY WINTHROP SHAW PITTMAN LLP 1200 Seventeenth Street, NW Washington, DC 20036 Telephone: 202-663-8707 Facsimile: 202-663-8007 anne.leidich@pillsburylaw.com david.lewis@pillsburylaw.com

/Executed in Accord with 10 C.F.R. § 2.304(d)/

Susan H. Raimo ENTERGY SERVICES, LLC 101 Constitution Avenue, N.W.

Counsel for Entergy Nuclear Washington, D.C. 20001 Operations, Inc.

(202) 530-7330 and Entergy Nuclear Palisades, LLC sraimo@entergy.com

/Signed electronically by Jason B. Tompkins/

Jason B. Tompkins Alan D. Lovett BALCH &BINGHAM LLP 1710 Sixth Avenue North Birmingham, AL 35203-2015 (205) 226-8743 (205) 226-8769 jtompkins@balch.com alovett@balch.com

/Executed in Accord with 10 C.F.R. § 2.304(d)/

Jason Day General Counsel HDI 1 Holtec Boulevard Counsel for Holtec International Camden, NJ 08104 and Holtec Decommissioning (856) 797-0900 International, LLC j.day@holtec.com

_______________________________________________________________________________________

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