ML23004A151

Michigan Attorney Generals Initial Written Statements of Position and Written Testimony with Supporting Affidavit

ML23004A151
Person / Time
Site:	Palisades, Big Rock Point  File:Consumers Energy icon.png
Issue date:	11/18/2022
From:	King J, Moody M, Nessel D State of MI, Dept of Attorney General
To:	Atomic Safety and Licensing Board Panel
SECY RAS
References
License Transfer, RAS 56587, 50-255-LT-2, 50-155-LT-2, 72-007-LT, 72-043-LT-2, ASLBP 22-974-01-LT-BD01
Download: ML23004A151 (0)

Text

UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Board 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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50-255-LT-2 50-155-LT-2 72-007-LT 72-043-LT-2 22-974-01-LT-BD01 MICHIGAN ATTORNEY GENERALS INITIAL WRITTEN STATEMENTS OF POSITION AND WRITTEN TESTIMONY WITH SUPPORTING AFFIDAVIT Dana Nessel Attorney General State of Michigan Michael E. Moody Joel B. King Assistant Attorneys General Special Litigation Division P.O. Box 30755 Lansing, Michigan 48909 MoodyM2@michigan.gov KingJ38@michigan.gov (517) 335-7627 Dated: November 18, 2022

i TABLE OF CONTENTS Page List of Abbreviations and Acronyms............................................................................. ii Introduction................................................................................................................... 1 Initial Written Statements of Positions........................................................................ 6 Conclusion.................................................................................................................... 18

ii LIST OF ABBREVIATIONS AND ACRONYMS Applicants Entergy Nuclear Operations, Inc.; Entergy Nuclear Palisades, LLC; Holtec International; and Holtec Decommissioning International, LLC ASLB Atomic Safety and Licensing Board BWR Boiling water reactor CDI Comprehensive Decommissioning International, LLC DCE Decommissioning Cost Estimate DOE United States Department of Energy Enbridge Enbridge, Inc.

ENOI Entergy Nuclear Operations, Inc.

Entergy Entergy Nuclear Operations, Inc.; and Entergy Nuclear Palisades FERC Federal Energy Regulatory Commission GAO Government Accounting Office GTCC Greater-than-class-C waste HDI Holtec Decommissioning International, LLC Holtec Holtec Intl; CDI; HDI; or Holtec Palisades Holtec Intl Holtec International Holtec Palisades Holtec Palisades, LLC ISFSI Independent spent fuel storage installation LTA License transfer application MPSC Michigan Public Service Commission NAMCo Nuclear Asset Management Company, LLC NRC United States Nuclear Regulatory Commission Oyster Creek Oyster Creek Nuclear Generating Station (New Jersey)

iii PFAS Per-and polyfluorinated alkyl substances PHMSA Pipeline and Hazardous Materials Safety Administration Pilgrim Pilgrim Nuclear Power Station (Massachusetts)

PNNL Pacific Northwest National Laboratory PSDAR Post-shutdown decommissioning activities report PWR Pressurized water reactor State State of Michigan TVA Tennessee Valley Authority

1 INTRODUCTION The Nuclear Regulatory Commission (NRC) is considering whether to grant an application by Entergy Nuclear Operations, Inc. (ENOI); Entergy Nuclear Palisades, LLC (ENP) (together Entergy); Holtec International (Holtec); and Holtec Decommissioning International, LLC (HDI), (collectively Applicants) requesting approval to transfer the operating licenses for the Palisades Nuclear Plant, Big Rock Point Plant, and associated independent spent fuel storage installation (ISFSI) from Entergy to Holtec and HDI.1 The license transfer application notes that Entergy plans to transfer all of the assets and liabilities of ENP to a new entity that will become Holtec Palisades, LLC (Holtec Palisades).2 The LTA also notes that Nuclear Asset Management Company, LLC (NAMCo), a wholly-owned subsidiary of Holtec, will acquire the equity interests in either the new Holtec Palisades or the parent company owner of Holtec Palisades; either way, emerging as the direct parent company of Holtec Palisades.3 Holtec plans to engage another Holtec subsidiary, Comprehensive Decommissioning International, LLC (CDI) to decommission the single unit at Palisades, restore the site, and manage on-1 License Transfer Application (LTA) at 12 (Dec. 23, 2020).

2 LTA at 2 (Dec. 23, 2020).

3 LTA at 2 (Dec. 23, 2020).

2 site spent nuclear fuel.4 Holtec5 represents that it will release the site for unrestricted use by approximately 2041.6 On February 24, 2021, the Michigan Attorney General (Attorney General, MIAG, or AG) filed with the NRC a petition for leave to intervene and request for a hearing.7 In December 2021, the NRC Staff issued an order approving both the transfer of the licenses and draft conforming license amendments as well as approving a related regulatory exemption requested by HDI in support of the license transfer application.8 Although the Staff issued this order, the NRC explained that the staffs order approving the license transfer... remains subject to our authority to rescind, modify, or condition the approved transfer based on the outcome of this adjudicatory proceeding.9 On July 15, 2022, the NRC issued its Memorandum and Order granting the Attorney Generals petition to intervene and request for a hearing.10 In the order, the NRC explained that an application for a license transfer must contain sufficient information to demonstrate that the applicant has the financial 4 LTA at 2-3 (Dec. 23, 2020). As noted in the NRCs Memorandum and Order in this case, HDI later informed the NRC that HDI no longer plans to contract with CDI to serve as the decommissioning general contractor for Palisades and that HDI is absorbing CDIs resources and will directly employ site personnel to perform the scope of work previously planned to be executed by CDI. In the matter of Entergy Nuclear Operations, Inc., Entergy Nuclear Nuclear Palisdades, LLC, Holtec International, and Holtec Decommissioning International, LLC (Palisades Nuclear Plant and Big Rock Point Site),

CLI-22-08 (2022), p 5.

5 Throughout this petition, use of the term Holtec refers to any or all of Holtec Intl, CDI, HDI, or Holtec Palisades unless otherwise specified.

6 LTA at 3 (Dec. 23, 2020).

7 Petition of the Michigan Attorney General for Leave to Intervene and for a Hearing, February 24, 2021.

8 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 1.

9 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 2.

10 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022).

3 qualifications to carry out the activities for which the license is sought, and the application also must provide reasonable assurance that funds will be available to decommission the facility including any ISFSI.11 The NRC further explained that its license transfer regulations do not require an applicant to demonstrate financial qualifications to cover site restoration costs, but that in this case [s]ite restoration costs nonetheless are relevant to this proceeding because Holtec intends to pay for those costs with the Palisades decommissioning trust, on which Holtec relies for its showing of financial qualifications.12 Although the Attorney General raised two contentions with the first contention containing nine issues, the NRC admitted only four issues raised in the first contention as follows: (1) the applicants estimated 11-year timeframe for the removal by DOE of all of the spent fuel at Palisades; (2) the reasonableness of the site-specific decommissioning cost estimates falling well below the minimum formula amount; (3) the 12% contingency allowance allocated to the radiological decommissioning, spent fuel management, and site restoration cost estimate; and (4) the applicants description of their planned means to adjust funding if necessary to complete decommissioning and terminate the license.13 After summarizing the parties arguments in their briefs, the NRC set forth the following scope of the hearing:

11 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 7.

12 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 10.

13 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p18.

4 The hearing will be limited to the following four challenges to the application as summarized below and as addressed in more detail in the applicable sections of this decision:

(a) The projected length of the time for transfer of all spent fuel off of the Palisades site:

The applicants should address how the determined that the estimated 11-year spent fuel transfer period constitutes a plausible timeframe for removal of all Palisades spent fuel. In their description, the applicants should clarify the assumptions on which they relied, including what fuel acceptance priority and fuel allocation or transfer rate they assumed for their schedule.

In assessing financial qualifications for a license transfer we accept plausible forecasts. The parties arguments therefore should address whether the estimated 11-year period reflects a plausible timeframe to complete the fuel transfer.

(b) Reasonableness of the site-specific decommissioning cost estimate falling below the minimum formula amount:

The applicants should provide a detailed explanation of the primary reasons that the cost estimate falls significantly below the minimum formula amount. We also direct the parties and invite the staff to address whether the minimum formula regulation in section 50.75(b) applies to this application.

(c) Adequacy of contingency funding:

The applicants should explain how they calculated and derived the 12% level applied for contingency and concluded that this amount for contingency is reasonably adequate for Palisades. The parties should address relevant industry norms, practices, and standards for the contingency amount added to reactor decommissioning cost estimates at a similar project stage.

The parties should address whether the 12% funding added reflects a plausible amount of funding for covering the contingency costs reasonably expected to be incurred at Palisades.

(d) Ability to provide additional financial assurance as a means to adjust funding:

The applicants should describe how they will ensure that sufficient additional funding will be available as a means to adjust funding if

5 needed. As part of their description, the applicants should address the issues described at the end of Section III.C.1.h. The parties additionally should address whether license conditions or forms of assurances are warranted.14 As stated in her Petition, the Attorney General supports prompt, thorough, and safe decommissioning and site restoration at Palisades and Big Rock, but she does not believe Holtec possesses the financial qualifications or assurances necessary to complete such a risk-intensive project. Accordingly, the Attorney General appreciates that the NRC granted her petition and that it is seeking further answers from the applicants to the arguments raised in the Attorney Generals petition. In this written statement, the Attorney General will address the questions posed by the NRC in its order based on her review of the mandatory disclosures and will respond to the applicants answers to these questions in the written responses and rebuttal testimony due on December 16, 2022.

14 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), pp 134-135.

6 INITIAL WRITTEN STATEMENTS OF POSITIONS A.

The projected length of the time for transfer of all spent fuel off of the Palisades site:

The applicants should address how the determined that the estimated 11-year spent fuel transfer period constitutes a plausible timeframe for removal of all Palisades spent fuel. In their description, the applicants should clarify the assumptions on which they relied, including what fuel acceptance priority and fuel allocation or transfer rate they assumed for their schedule.

In assessing financial qualifications for a license transfer we accept plausible forecasts. The parties arguments therefore should address whether the estimated 11-year period reflects a plausible timeframe to complete the fuel transfer.

As noted by the NRC in its order, the Attorney Generals argument is that Holtecs projected 11-year spent fuel removal period is unreasonably short and that this acceptance period results in significantly understated spent fuel management costs.15 In addition, there is no commitment by Holtec to use any costs recovered by the DOE or any other financial assurance commitment to address this issue in its application.16 In attached testimony by Attorney General expert witness Nicholas Capik, Mr. Capik explains that the current owner of all Palisades spent fuel will incur costs to safely store that fuel until title to all of that spent fuel is transferred to DOE.17 Thus, Hotecs projected 11-year period for transfer of all spent fuel off the 15 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 28.

16 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 33.

17 Exhibit MICH001, p 3.

7 Palisades site is important in determining the financial qualifications for a license transfer. Accordingly, Mr. Capik examined the underlying assumptions of Holtecs 11-year projection.

Holtec states that the 2040 final acceptance date is based on DOE accepting spent fuel according to the Oldest Fuel First (OFF) priority ranking developed by DOE.18 In reviewing DOEs contracts with utilities for accepting spent fuel and DOE 1987 Annual Capacity Report which provides acceptance rates, it is clear that a 2040 date is not plausible. Assuming DOE starts accepting spent fuel in 2030 (the Holtec assumption in its DCE) and accepts 18,600 MTU of spent fuel in the first ten year (the contract rate) following by 3,000 MTU of spent fuel each year thereafter (the general rate assumed), the last fuel discharged by Palisades would not be accepted until 2064 using OFF (the Holtec assumption).19 If the spent fuel removal is delayed from 2040 to 2064, then additional costs will be incurred for the additional 24 years of ISFSI security, operation, and maintenance as well as the decommissioning of the ISFSI itself being delayed.20 As explained by Mr. Capik, Holtec has failed to provide any contingency or financial assurance to account for this added cost.21 Moreover, Mr. Capik explained that 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 is not plausible because of the lack of a ramp-up in acceptance rate, capabilities of the 18 Exhibit MICH001, p 4.

19 Exhibit MICH001, p 5.

20 Exhibit MICH001, p 5.

21 Exhibit MICH001, p 5.

8 facilities likely to be designed and constructed by DOE, the lack of any firm plans that DOE would give priority to shutdown reactors, and that priority would match the 11-year period assumed by Holtec.22 B.

Reasonableness of the site-specific decommissioning cost estimate falling below the minimum formula amount:

The applicants should provide a detailed explanation of the primary reasons that the cost estimate falls significantly below the minimum formula amount. We also direct the parties and invite the staff to address whether the minimum formula regulation in section 50.75(b) applies to this application.

As the NRC explained in its order, one of the key requirements is to ensure that adequate funds are accumulated for, or a holder of, an operating license under Part 50 provide a certification of decommissioning funding in an amount which may be more, but not less, than the amount stated in the NRCs table of minimum amounts provided for in section 50.75(c)(1) and (c)(2).23 The purpose of this minimum formula is to provide a method with clear criteria that would both provide a reasonable assurance of decommissioning funding while also minimizing licensee and NRC administrative effort.24 Thus, [w]hether a site-specific cost estimate meets the minimum formula amount therefore bears on whether a site-specific estimate is acceptable.25 The NRC explained that Holtecs claim that the site-specific estimate is more reliable that the minimum formula because it is a site-22 Exhibit MICH001, p 6.

23 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 34.

24 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), pp 34-35.

25 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 40.

9 specific estimate effectively renders meaningless the NRC guidance on site-specific decommissioning cost estimates, which calls for an adequate justification if a site-specific cost estimate falls below the formula.26 Mr. Capik similarly explains that the intent of the minimum formula amounts is to ensure that utilities can provide financial assurance for the bulk of the funds required for decommissioning.27 He explains however, that comparisons of these formula amounts to site-specific estimates show that 75% of the time the formula amounts are less than site-specific DCEs with the formula reflecting from 57 to 91 percent of the site-specific estimates. Experience demonstrates that the minimum formula amount is generally insufficient, and thus Holtecs reliance on a site-specific estimate that is less than the minimum means that Holtec is assuming significantly less funds are required for decommissioning with no explanation or support for this unreasonably low estimate.28 Moreover, Mr. Capik notes that Holtecs entire calculated license termination cost of $443.215 million should not be compared to the NRC formula amount without excluding the ten-year dormancy period assumed by Holtec in its DCE.29 A valid comparison would be to exclude these dormancy costs. Excluding the annual expenses during the dormancy years results in a calculated cost of $388.159 million for the scope comparable to the NRC formula.30 This number is $98.571 million 26 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 41.

27 Exhibit MICH001, p 7.

28 Exhibit MICH001, p 7.

29 Exhibit MICH001, p 7.

30 Exhibit MICH001, p 7.

10 less than the comparable NRC formula amount of $486.730 million, and thus 20 percent less funding than the NRC formula dictates.31 Mr. Capik explains that lack of justification for this substantial difference and the lack of detail in the DCE makes substantive comparison of the DCE costs to the NRC formula difficult.32 He further opined that any claim by Holtec that lessons learned or experience gained with other Holtec projects that could reduce costs fails to consider the delay due to the dormancy period that Holtec is proposing with Palisades.33 Thus, it is likely that much of the experience gained or lessons learned will not effectively reduce costs years into the future.34 The NRC also directed the parties to address in their submissions to the Presiding Officer, as part of the hearing record, their views on the applicability of the section 50.75(b) minimum funding requirement to this application.35 As explained by the NRC the order in this case, [o]ne of the NRCs key requirements to ensure that adequate funds are accumulated for decommissioning is the requirement in 10 C.F.R § 50.75(b)(1) that an applicant for, or a holder of, an operating license under Part 50 provide a certification of decommissioning funding in an amount which may be more, but not less, than the amount stated in the NRCs table of minimum amounts in section 50.75(c)(1),...36 31 Exhibit MICH001, p 7.

32 Exhibit MICH001, p 7.

33 Exhibit MICH001, p 7.

34 Exhibit MICH001, p 7.

35 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 42.

36 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 34.

11 The NRC inquired of the party whether the minimum formula regulation in section 50.75(b) require the application to provide decommissioning financial assurance at least to the level of the minimum formula amount.37 The NRC noted that the application stated that the minimum formular amount did not apply because by the time the projected license transfer closing, decommissioning funding will be governed by section 50.82.38 In response, the NRC explained that the regulations themselves leave unclear exactly when the section 50.75(b)-(c) minimum formula amount floor for decommissioning funding assurance may cease to apply.39 First, as noted by the NRC, its guidance on site-specific decommissioning cost estimates calls for a comparison of the estimate to the minimum formula, and this guidance expressly applies to the site-specific cost estimates submitted under the decommissioning regulations in section 50.82.40 Second, any ambiguity should be resolved in further protecting the public and not reducing those protections.

Given the NRCs commitment to protecting public health and safety from nuclear materials throughout this nation and its stated mission, under 62 FR 46517, to assure that civilian use of nuclear materials in the United States is carried out with adequate protection of public health and safety, the NRC should apply this minimum formula amount to Holtec in this case.41 37 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 42.

38 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 42.

39 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 42.

40 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 39.

41 Shieldalloy Metallurgical Corp. v. NRC, 624 F.3d 489, 496 (2010).

12 C. Adequacy of contingency funding:

The applicants should explain how they calculated and derived the 12% level applied for contingency and concluded that this amount for contingency is reasonably adequate for Palisades. The parties should address relevant industry norms, practices, and standards for the contingency amount added to reactor decommissioning cost estimates at a similar project stage.

The parties should address whether the 12% funding added reflects a plausible amount of funding for covering the contingency costs reasonably expected to be incurred at Palisades.

In its order, the NRC explained that site-specific decommissioning cost estimates include an amount added under the title of contingency to cover unknown costs.42 Thus, the identified contingency value, expressed as a percentage, reflects the percentage of the overall final cost estimate that was added as a margin to cover unknown costs.43 Here, the NRC agreed with the Attorney General that neither the applicants answer nor the contingency analysis identifies support for the 12% level that is used by Holtec in this proceeding.44 Attorney General expert witness Nicholas Capik explains that Holtec has included contingency in its DCE to address the estimate for defined scope of work and execution strategy.45 The problem with this definition is that it fails to account for scope changes, general inflation, or cost escalation over the course of the project.46 Mr. Capik notes that Holtec fails to address changes in scope and 42 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 43.

43 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 43.

44 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 47.

45 Exhibit MICH001, p 9.

46 Exhibit MICH001, p 9.

13 unrealistically relies on addressing escalation or inflation using the nuclear decommissioning trust (NDT) fund earnings (after taxes and fees) which could lead to insufficient funding. 47 In addition to these limitations to the contingency, Mr. Capik explains that the 12 percent contingency used by Holtec for Palisades is inconsistent with industry norms, practices, and standards.48 For example, the Association for the Advancement of Cost Engineering (AACE) in AACE International Recommended Practice No. 18R-97, provides guidelines for identifying proper contingency for various phases of project estimation.49 Mr. Capik opines that Holtecs contingency would be classified as a Class 2 estimate under the AACE guidelines which means that there is a 20 percent probability that costs will ultimately be better than 15 percent below the estimate or worse than 20 percent above the estimate.50 In addition, Holtecs 12 percent contingency is significantly less than the NRC 25 percent contingency guidance for ISFIS decommissioning in NUREG-1757.51 Moreover, Holtecs 12 percent contingency is unexplainably lower than the 19 percent contingency Holtec itself used for the Indian Point project which is the same reactor type as Palisades.52 It is also lower than Holtecs Oyster Creek (15 percent) and Pilgrim (17 percent) projects.53 Not only is Holtecs contingency for Palisades lower than its other decommissioning projects, but also the majority of work for 47 Exhibit MICH001, p 9.

48 Exhibit MICH001, p 9.

49 Exhibit MICH001, p 9.

50 Exhibit MICH001, p 10.

51 Exhibit MICH001, p 10.

52 Exhibit MICH001, p 11.

53 Exhibit MICH001, p 11.

14 Palisades will not be performed until over 15 years after the estimate was created, thus creating more estimating uncertainty for Palisades compared to other Holtec projects.54 Mr. Capik further notes that Holtecs Palisades DCE could not have benefitted from lessons learned from these other Holtec projects because at the time Holtec submitted the Paliades DCE, sufficient progress had not yet been made at these other projects to allow for any more accurate estimation for Palisades.55 Accordingly, Mr. Capik concludes that a 12 percent contingency is not reasonable given the proposed timing of decommissioning activities and apparent state of contracting.57 D.

Ability to provide additional financial assurance as a means to adjust funding:

The applicants should describe how they will ensure that sufficient additional funding will be available as a means to adjust funding if needed. As part of their description, the applicants should address the issues described at the end of Section III.C.1.h. The parties additionally should address whether license conditions or forms of assurances are warranted.

54 Exhibit MICH001, p 11.

55 Exhibit MICH001, p 12.

57 Exhibit MICH001, p 12.

15 In its order, the NRC stated that Holtecs projects major decommissioning activities begin in December 2035, following the dormancy period, with final license termination to occur in 2041.58 Under NRC regulations, for decommissioning activities that delay completion of decommissioning by included a period of storage or surveillance, the licensee must provide a means of adjusting cost estimates and of adjusting the associated funding levels over the storage or surveillance period.59 And, NRC guidance instructs the staff to determine whether the means described by the licensee provides adequate assurance that funds will be available for decommissioning activities at the time they are needed.60 Thus, the NRC explained that for this hearing, the applicants should describe how they will ensure that sufficient additional funding will be available to use at the time of decommissioning if additional funding proves necessary to complete decommissioning.61 Attorney General expert witness Nicholas Capik testifies that there are numerous reasons that Holtecs DCE could understate actual costs, including increase in scope due to unforeseen conditions, any delay in performance of activities, inflation beyond whats assumed with two percent real growth of the NDT, or higher than anticipated actual costs 14 years from now when decommissioning activities commence.62 He explains that delaying decommissioning activities (beyond Holtecs 10-year dormancy period) will not 58 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 74.

59 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), pp 74-75.

60 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), pp 79-80.

61 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 81.

62 Exhibit MICH001, p 13.

16 address a situation with insufficient funds because two percent real growth on

$325.5 million (the amount Holtec projects for the end of the dormancy period) will only grow by $6.3 million a year which is barely enough to cover the $4.4 million a year to store and maintain the facility as estimated by Holtec.63 Thus, it would require many years of dormancy to address a shortfall in funding.

As to the spent fuel management costs from DOE that Holtec relies upon, there are two significant problems. First, 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, and thus not necessarily available unless recovered funds were segregated and could not be withdrawn for other purposes.64 As noted by the NRC, its guidance requires its staff to determine whether the means described by the licensee provides adequate assurance that funds will be available for decommissioning activities at the time they are needed.65 Here, there is no commitment by Holtec that these funds will be available. Second, Mr. Capik notes that a sizeable portion of the projected spent fuel management costs (specifically related to transfer of spent fuel to DOE) may not be recovered from DOE or could be subject to an offset that significantly reduces recovery.66 Accordingly, as noted by the NRC, the applicants should describe how they will ensure that sufficient funding will be available to use at the time of 63 Exhibit MICH001, p 13.

64 Exhibit MICH001, p 13.

65 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), pp 79-80.

66 Exhibit MICH001, p 14.

17 decommissioning if additional funding proves necessary to complete decommissioning.67 Mr. Capik explained that for several other nuclear decommissionings, some of which Holtec is involved with, the company performing the decommissioing has provided financial assurances.68 For example, Mr. Capik explained that for the Vermont Yankee, NorthStars financial assurance included a parental support agreement of $140 million, escrow accounts of at least $55 million, performance bonds of approximately $400 million, a $25 million letter of credit, retained DOE proceeds, and a commitment not to withdraw funds for any task exceeding the allocated cost in a schedule provided.69 For Indian Point, which has $2.4 billion in the NDT) Holtec agreed to minimum NDT balances of $400 million at 10 years and

$360 million at Partial Site Release (PSR), when the operating license footprint is reduced to the ISFSI, and return of 50 percent of the DOE recoveries to the NDT.70 For Pilgrim, Holtec agreed to minimum NDT balances ($193.3 million 2019 dollars at PSR adjusted as decommissioning proceeds, as well as a minimum balance until all fuel is removed from the site), use of DOE recoveries if needed to maintain the minimum balances, performance bonds, $30 million of insurance, and additional financial reporting requirements.71 These financial assurances were in addition to starting with a NDT balance of approximately $1 billion which is significantly more 67 In the matter of Entergy Nuclear Operations, CLI-22-08 (2022), p 81.

68 Exhibit MICH001, p 14.

69 Exhibit MICH001, p 14.

70 Exhibit MICH001, p 14.

71 Exhibit MICH001, p 15.

18 than for Palisades.72 As noted by Mr. Capik, the Palisades NDT is substantially smaller than most other sites, and thus the risk associated with any unexpected costs is more significant, and the potential need for additional financial assurance more likely.73 CONCLUSION Given the nonstandard risks associated with nuclear power plant decommissioning and related activities, the consequences of which may not be apparent for decades, and in view of the structure of the proposed transfer, the Applicants sole reliance on the trust funds to demonstrate financial qualification does not meet regulatory standards.74 In the likely event of a cost overrun, the license transfer application fails to establish that Holtec will be financially healthy enough to provide additional financial assurance as required pursuant to 10 C.F.R. §§ 50.82(a)(8)(vi) and (vii).

Due to these concerns and on behalf of the People of the State of Michigan, Attorney General Dana Nessel requests that the Commission require the Applicants to provide additional forms of financial insurance.

72 Exhibit MICH001, p 15.

73 Exhibit MICH001, p 15.

74 See 10 C.F.R. § 50.33(f).

19 Respectfully submitted, Dana Nessel Attorney General State of Michigan Signed (electronically) by

/s/ Michael E. Moody Michael E. Moody Assistant Attorney General Special Litigation Division P.O. Box 30755 Lansing, Michigan 48909 MoodyM2@michigan.gov (517) 335-7627 Dated: November 18, 2022

1 STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Board 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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50-255-LT-2 50-155-LT-2 72-007-LT 72-043-LT-2 22-974-01-LT-BD01 CERTIFICATION OF SERVICE Pursuant to 10 C.F.R. § 2.305, I certify that I served the Michigan Attorney Generals initial written statements of position and written testimony with supporting affidavit in the above-captioned proceeding via the NRCs Electronic Information Exchange on November 18, 2022.

Signed (electronically) by

/s/ Michael E. Moody Michael E. Moody Assistant Attorney General Special Litigation Division P.O. Box 30755 Lansing, Michigan 48909 MoodyM2@michigan.gov (517) 335-7627 Dated: November 18, 2022