ML23093A208

Applicants Redacted Post-Hearing Statement of Position on Michigan Attorney General Contentions

ML23093A208
Person / Time
Site:	Palisades, Big Rock Point  File:Consumers Energy icon.png
Issue date:	03/20/2023
From:	Day J, Israel A, Leidich A, Doris Lewis, Lovett A, Raimo S, 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 56689, 50-255-LT-2, 50-155-LT-2, 72-007-LT, 72-043-LT-2, ASLBP 22-974-01-LT-BD01
Download: ML23093A208 (0)

Text

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 March 20, 2023 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Board APPLICANTS POST-HEARING STATEMENT OF POSITION ON MICHIGAN ATTORNEY GENERAL CONTENTIONS 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

TABLE OF CONTENTS I.

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

LEGAL STANDARD..................................................................................................... 5 III.

APPLICANTS STATEMENT OF POSITION ON ADMITTED CONTENTIONS........ 7 A.

Contention MI-1(a): Plausibility of Eleven-Year DOE Pickup Window............... 7 1.

Mr. Capiks new claims regarding the size of DOEs acceptance facility and rate at which DOE will pick up fuel are contradictory to his original declaration and are beyond the scope of this hearing................................. 9 2.

Even assuming the parameters of the acceptance facility are relevant, the assumptions underlying the DOE 2013 Study support the 11-year removal schedule.................................................................................... 11 3.

Mr. Gravess well-founded testimony confirms that HDIs estimated eleven-year spent fuel transfer period constitutes a plausible timeframe for removal of all Palisades spent fuel..................................................... 15 4.

Mr. Capiks various criticisms of Mr. Gravess acceptance paradigms are unfounded......................................................................................... 18 B.

Contention MI-1(b): Comparison of the DCE to the NRC Formula.................... 31 1.

The minimum formula requirement in 50.75(b) does not apply............... 31 2.

Applicants have provided reasonable explanations for the $30 million difference between the formula and the DCE.......................................... 41 C.

Contention MI-1(c): The Reasonableness of HDIs Contingency........................ 51 1.

Applicants explained how they developed the 12% contingency factor and why it, along with other factors in the DCE, reasonably bound the types of expected costs that are required to be addressed at this stage of the project.......................................................................................... 51 2.

None of the Attorney Generals critiques rebut HDIs demonstration that the DCE addresses the expected costs that are required to be covered at this stage of the project.......................................................... 56 3.

The Attorney General has not established the materiality of any of the alleged deficiencies in HDIs contingency calculations........................... 67 D.

Contention MI-1(d): Means of Adjusting Funding under § 50.82(a)(8)(iv)......... 68 1.

In arguing that Applicants have not shown the ability to adjust funding, the Attorney General focuses on potential cost overruns that might occur after the dormancy period, which is not required by

§ 50.82(a)(8)(iv)..................................................................................... 70

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The Attorney Generals claim that HDIs many alternative funding sources are meaningless without a license condition ignores NRC regulations and enforcement authority.................................................... 72 3.

The Attorney Generals factual disputes with HDIs various additional funding sources are all immaterial to the ultimate question..................... 80 E.

The Attorney General has not carried her burden to show the materiality of any of her contentions to the overall plausibility of the Palisades DCE..................... 87 IV.

CONCLUSION............................................................................................................. 89

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 1

APPLICANTS POST-HEARING STATEMENT OF POSITION ON MICHIGAN ATTORNEY GENERAL CONTENTIONS Pursuant to 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 Post-Hearing Statement of Position (Post-Hearing Statement) on the portions of the Michigan Attorney Generals Contention MI-1 admitted for hearing by Commission Order CLI-22-08 (Order) 2 on the Palisades license transfer application (Application or LTA) and accompanying site specific decommissioning cost estimate (DCE).3 I.

INTRODUCTION The Commission admitted four discrete issues for hearing: (1) whether the projected eleven-year schedule for transfer of all spent fuel off the Palisades site is plausible; (2) the reasons HDIs site-specific cost estimate falls below the 50.75(c) regulatory formula amount and how that bears on the reasonableness of the DCE; (3) the adequacy of HDIs 12% contingency factor; and 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).

3 Letter from Entergy to US NRC, Application for Order Consenting to Transfers of Control of Licenses and Approving Conforming License Amendments, Palisades Nuclear Plant, Docket Nos. 50-255 and 72-007, Renewed Facility Operating License No. DPR-20, Big Rock Point, Docket Nos. 50-155 and 72-043, License No.

DPR-6, dated Dec. 23, 2020 (ADAMS Accession No. ML20358A075) [hereinafter Application or LTA];

Palisades Nuclear Plant Post Shutdown Decommissioning Activities Report, attached to Letter from HDI to US NRC, Post Shutdown Decommissioning Activities Report including Site-Specific Decommissioning Cost Estimate, dated Dec. 23, 2020 (ADAMS Accession No. ML20358A232) [hereinafter PSDAR]; Palisades Nuclear Plant Site Specific Decommissioning Cost Estimate, attached to letter from HDI to US NRC, Post Shutdown Decommissioning Activities Report including Site-Specific Decommissioning Cost Estimate, dated Dec. 23, 2020 (ADAMS Accession No. ML20358A232) [hereinafter DCE].

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(4) HDIs and Holtec Palisadess ability to provide additional financial assurance as a means of adjusting funding pursuant to 50.82(a)(8)(iv). 4 Applicants have answered the Commissions directives on each countexhaustively briefing and providing pre-filed and hearing testimony from expert witnesses and HDI subject-matter experts. The Attorney General and her expert, Mr.

Nicholas Capik, have responded by criticizing a handful of discrete points for each issue, but without ever connecting those one-off critiques back to the overall question of this proceeding:

whether HDI and Holtec Palisades have provided reasonable assurance that funds will be available to decommission the facility.5 For the eleven-year pickup window, HDI presented expert testimony from Mr. Frank Graves that shows multiple avenues by which Palisades fuel can be removed even earlier than HDI assumed in the DCE. At the hearing, Mr. Capik raised a host of alleged technical hurdles to DOEs performance, but most of those arguments amount to a collateral attack on the Commissions determination that it is plausible that by 2030 a storage facility will be available to receive the Palisades spent fuel.6 Boiled down, the Attorney Generals argument is really just that HDI is required to provide funds to cover the slowest and least-efficient way in which DOE could remove fuel from Palisades. But HDI is not required to fund the worst-case scenario. It is required to provide plausible forecasts, which it has done, as demonstrated by Mr. Graves.

For the formula comparison, Applicants expert witness, Mr. Chris Tierney, provided an extensive explanation of the formulas underlying technical bases and a comparative analysis to explain the differences between the formula and the DCE.

4 Mem. and Order, CLI-22-08, slip op., at 134-135.

5 Id. at 7.

6 Id. at 27.

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Turning to contingency, Applicants provided extensive testimony from HDIs director of project controls, Mr. Allen Goulette, explaining how HDI developed the 12% contingency factor and how the DCE fully addresses the expected costs the Commission determined must be covered at this stage of the project.10 At the hearing, Mr. Capik agreed that HDIs methodology is reasonable, although he has a problem with certain inputs.11 But, while Mr. Capik criticized a few individual variables, he did not identify any historically inevitable12 risks that HDI failed to capture. Nor did he provide any alternative quantification of contingency or attempt to show that, on the whole, 12% contingency is inadequate and jeopardizes overall funding. Applicants 10 See Mem. and Order, CLI-22-08, slip op., at 49-50.

11 Tr. 441:7-14 (Capik).

12 Cf. Mem. and Order, CLI-22-08, slip op., at 50 n.175.

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disagreements with Mr. Capiks critiques are explained below, but because the Attorney General did not offer any evidence for what contingency should be, the Attorney General has not carried her burden on this point.

Finally, the requirement to provide a means of adjusting funding under 50.82(a)(8)(iv) is mostly a legal disagreement about whether the Commission should credit the multitude of alternative funding sources Applicants have identified. The Attorney General has not meaningfully disputed that HDI and Holtec Palisades have options that can account for more than $100 million in alternative funding. The Attorney Generals real argument is that none of these matter without a licensing commitment to lock in a specific form and amount today or a parent guarantee to backstop those alternative funding sources. That approach would render NRCs ongoing oversight meaningless. As the Commission explained, the cash flow analysis in a license transfer application reflects a snapshot in time.... The funding picture may change, but that is why the NRC continues to oversee the status of licensees funding until license termination.13 In sum, Applicants have complied with the Commissions direction to further explain the handful of DCE assumptions admitted for hearing and to demonstrate the plausibility of those assumptions. None of the Attorney Generals arguments prove that these portions of the DCE are implausible or unreasonable, much less demonstrate that they materially call into question the adequacy of overall funding to decommission Palisades. The Commission should resolve all contentions in Applicants favor without further condition or limitation and terminate this proceeding.

13 Mem. and Order, CLI-22-08, slip op., at 17 (quotes and citations omitted).

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II.

LEGAL STANDARD In general, the applicant has the burden of proof at a hearing,14 while the party submitting a contention has the burden of going forward to buttress that contention.15 This burden of going forward is satisfied when the intervening party has introduced sufficient evidence to establish a prima facie case.16 In establishing its prima facie case, an intervener must provide a colorable reason to question the accuracy of the applicants representations within its application.17 A simple contention that more information is required when an applicant has already satisfied the ultimate burden of proving reasonable assurance is, on its own, insufficient to meet the burden of going forward.18 Likewise, merely casting doubt on the application is not enough.19 Given the nature of the issues admitted for hearing in this proceeding and the plausibility standard that governs decommissioning financial assurance,20 these general legal principles can be distilled into fairly straightforward requirements. Applicants have the burden of justifying the plausibility of the DCEs assumptions in the context of their overall decommissioning funding demonstration in the LTA. The Commission does not require prescience, lack of uncertainty, or the most conservative forecast.21 An assumption is not implausible simply because there could conceivably be other outcomesor there may be lingering uncertainty, the possibility of a less 14 10 CFR § 2.325.

15 La. Power & Light Co. (Waterford Steam Electric Station, Unit 3), ALAB-732, 17 N.R.C. 1076, 1093 (1983).

16 Consumers Power Co. (Midland Plant, Units 1 and 2), ALAB-123, 6 A.E.C. 331, 345 (1973).

17 Phila. Elec. Co. (Limerick Generating Station, Units 1 & 2), ALAB-857, 25 N.R.C. 7, 13 (1987).

18 Id.

19 North Atlantic Energy Serv. Corp. (Seabrook Station, Unit 1), CLI-99-6, 49 N.R.C. 201, 222 (1999).

20 Mem. and Order, CLI-22-08, slip op., at 17-18.

21 Id. at 16-17.

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favorable outcome, or other plausible alternatives.22 For the Attorney General to prevail, then, she must show that HDIs assumptions are implausible and that the implausibility of one or more assumptions is so inadequate that it jeopardizes the overall availability of funding for Palisades decommissioning.23 On each of the four portions of the Attorney Generals contention admitted for hearing, the Attorney General and her expert witness have merely identified areas of uncertainty where they perceive lingering risk or where reasonable minds might conceive of different plausible outcomes.

That is not enough. At best, the Attorney Generals arguments establish that the possibility is not insignificant that things will turn out less favorably than expected.24 But that does not make HDIs assumptions implausible. Moreover, while the Attorney General and her expert identify a few areas of risk and uncertainty (which, at this point in the project, is a given), they never attempted to demonstrate that HDIs estimate is so unreasonably deficient as to jeopardize the overall available funding for Palisadess decommissioning. The Attorney General did even not quantify the impacts of her preferred alternatives (and sometimes did not even offer one). Instead, she simply offered evidence to suggest that HDIs approach might not be the only possible outcome. Again, that is not enough. To prevail, the Attorney General was required to provide evidence that HDIs assumptions are so unreasonably deficient that they prevent the Commission from finding, at this stage of the project, that there is reasonable assurance that funds will be available to decommission the facility.

22 Id.

23 Id. at 48.

24 Id. at 17 (quoting Entergy Nuclear Operations, Inc. (Pilgrim Nuclear Power Station), CLI-20-12, 92 N.R.C. 351, 368 (2020)).

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For these reasons, which are articulated in great detail in the sections that follow, the Attorney General has not met her burden, and the Commission should resolve all contentions in Applicants favor without further condition or limitation.

III.

APPLICANTS STATEMENT OF POSITION ON ADMITTED CONTENTIONS A.

Contention MI-1(a): Plausibility of Eleven-Year DOE Pickup Window.

As part of its DCE, HDI was required to estimate its spent fuel management costs during the decommissioning process at Palisades. Of course, HDI only incurs costs as long as it is required to manage its spent nuclear fuel (SNF) inventory itself. Once the DOE begins to perform under the Standard Contract and accepts title to Palisadess SNF, HDI has no further responsibility for the fuel. Based on the most recent pronouncement of DOEs intentions of meeting that obligation, HDI assumed that DOE would remove all of the SNF from Palisades over the course of an eleven-year window beginning in 2030 and concluding by 2040.25 The Attorney General challenged the plausibility of both the 2030 start date assumption and the eleven-year pick up window. Because the Commission accept[ed] as plausible that by 2030 a storage facility will be available to receive the Palisades spent fuel,26 the DOE start date is not at issue in this proceeding. However, the Commission did order HDI to address how [it] determined that the estimated 11-year spent fuel transfer period constitutes a plausible timeframe for removal of all Palisades spent fuel.27 As the DCE says, the estimated eleven-year removal schedule is initially based upon DOE acceptance of fuel according to the Oldest Fuel First [OFF] priority ranking provided in the 25 DCE, at 21-22.

26 Mem. and Order, CLI-22-08, slip op., at 27.

27 Id. at 134.

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Standard Contract.28 Then, layered on top of that initial allocation of acceptance rights, HDI assumed that Holtec Palisades will seek the most expeditious means of removing fuel from the site, based on shutdown reactor priority and other contract provisions.29 In other words, HDI assumed that the least efficient OFF priority ranking likely would be altered based on shutdown reactor priority and other contract provisions to more efficiently and expeditiously remove fuel from Palisades.30 After the Commission admitted the Attorney Generals challenge for hearing, HDI hired Frank Graves of the Brattle Group (who regularly analyzes SNF priority rankings and exchange modeling in SNF litigation cases) to further evaluate the plausibility of HDIs assumed eleven-year pick-up window and to supply the evidentiary basis needed for an NRC hearing. In both his pre-filed and hearing testimony, Mr. Graves confirmed that Palisadess fuel can, indeed, be removed within an eleven-year window Mr. Gravess testimony shows that HDIs assumed eleven-year fuel transfer period is plausible under multiple acceptance scenarios and the Attorney Generals criticism of Mr. Gravess analysis misses the mark on multiple fronts.

28 DCE, at 22; HOL001, Pre-filed Direct Testimony of Frank C. Graves, at 3 [hereinafter Graves Direct Test.].

29 DCE, at 22.

30 31 HOL001, Graves Direct Test., at 10-11; Tr. 94:13-15 (Graves).

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1.

Mr. Capiks new claims regarding the size of DOEs acceptance facility and rate at which DOE will pick up fuel are contradictory to his original declaration and are beyond the scope of this hearing.

In the Order, the Commission accept[ed] as plausible that by 2030 a storage facility will be available to receive the Palisades spent fuel.32 The Commission did not direct the parties to litigate over the specific technical characteristics of the storage facility. Nor did the Commission direct the parties to litigate over the rate at which DOE will pick up fuel beginning in 2030, except to the extent HDI assumed a faster removal rate than the commonly applied maximum transfer rate of 3,000 metric tons of uranium/year33 (i.e., the transfer rate outlined in the DOEs 1987 Annual Capacity Report and 1987 Mission Plan Amendment (the 1987 Acceptance Rate), which courts have determined DOE is contractually bound to meet34). That is because the Attorney Generals original petition and Mr. Capiks accompanying declaration accepted that the 1987 Acceptance Rate is the rate at which Palisadess fuel will be accepted.35 Nevertheless, for the hearing, Mr. Capik focused nearly exclusively on the technical parameters of the storage facilities that will accept Palisadess fuel, and he now claims that DOE will remove Palisadess fuel at a much slower rate than the one he endorsed in his original declaration. Neither of these criticisms have any merit, as explained below, but more fundamentally, they are beyond the scope of the issues the Commission directed the parties to resolve.

32 Mem. and Order, CLI-22-08, slip op., at 27 (emphasis added).

33 Id. at 32 n.118.

34 See Applicants Initial Statement of Position on Michigan Attorney General Contentions, 16 (Nov. 18, 2022) (ADAMS Accession No. ML22322A324) [hereinafter Applicants Initial Statement].

35 Petition of the Michigan Attorney General for Leave to Intervene and for a Hearing, 17 (Feb. 24, 2021)

(ADAMS Accession No. ML21055A888) [hereinafter AG Petition]; Declaration of Nicholas J. Capik, attached to AG Petition, at 7 [hereinafter Capik Declaration].

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 10 Mr. Capiks newfound arguments are based on his criticism of HDIs reliance on DOEs Strategy for the Management and Disposal of Used Nuclear Fuel and High-Level Radioactive Waste, published in 2013 (2013 Study).36 HDIs reliance on the 2013 Study is not new.37 The DCE specifically cites it as the basis for HDIs assumed 2030 start date.38 As the DCE explains:

In January 2013, the DOE issued the Strategy for the Management and Disposal of Used Nuclear Fuel and High-Level Radioactive Waste (Reference 6), indicating plan to implement a program over the next 10 years that begins operations of a pilot interim storage facility by 2021 with an initial focus of accepting used nuclear fuel from shutdown reactor sites with a larger interim storage facility to be available by 2025.39 While the 2013 Study indicates that DOE would begin accepting fuel by 2025, because no progress ha[d] been made in the repository program40 at the time HDI was developing the DCE, the DCE assume[d] a start date for DOE fuel acceptance of 2030 and completing in 2040.41 The 2030 start date is not subject to challenge in this proceeding, so Mr. Capik has converted his original arguments against the start date into a new argument that, if a facility is 36 HOL009, Strategy for the Management and Disposal of Used Nuclear Fuel and High-Level Radioactive Waste (Jan. 2013) [hereinafter 2013 Study].

37 Nor is HDI unique in citing the 2013 Study as a basis for projecting what DOE will do in the future. See Letter from Entergy to US NRC, ISFSI Decommissioning Funding Plans (10 CFR 72.30), dated Dec. 15, 2021 (ADAMS Accession No. ML21350A155) (stating that Entergy relied on the 2013 DOE study and 2030 start date for Arkansas Nuclear One, Grand Gulf, River Bend, and Waterford Unit 3); Decommissioning Cost Analysis for the Beaver Valley Power Station, attached to Letter from Energy Harbor to US NRC, Submittal of the Decommissioning Funding Status Reports for Beaver Valley Power Stations, Unit Nos. 1 and 2, Davis-Besse Nuclear Power Station, and Perry Nuclear Power Plant, dated Mar. 29, 2021, at 8 (ADAMS Accession No. 21088A295) (using the 2030 DOE pickup start date for Beaver Valley and Perry); 2018 Decommissioning Cost Estimate for the Duane Arnold Energy Center, attached to Letter from NextEra Energy to US NRC, Response to Request for Additional Information Related to Post Shutdown Decommissioning Activities Report, dated Feb. 5, 2021, at 22 (ADAMS Accession No. ML21036A160).

38 DCE, at 21-22.

39 Id. at 21.

40 Id.

41 Id. at 22.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 11 available by 2030, it will be very small and DOE will bring fuel to it very slowly.42 This new theory contradicts his original declaration, in which he claimed that, [e]ven assuming a 2030 DOE start date... the last Palisades spent fuel would not be accepted by DOE until about 2064.43 To arrive at that opinion, he assumed that DOE would pick up Palisadess fuel at 3,000 metric tons of uranium (MTUs) per year (a rough approximation of the 1987 Acceptance Rate), and the facility accepting Palisadess fuel will be capable of holding at least 88,000 MTUs.44 Now, he claims the facility accepting Palisadess fuel is capped at 20,000 MTUs, and DOE will pick up fuel at 870 MTUs per year.45 As explained below, those claims not only dont stand up to technical scrutiny but are also beyond the scope of this hearing and are contradictory to Mr. Capiks own sworn declaration submitted earlier in this proceeding.46 2.

Even assuming the parameters of the acceptance facility are relevant, the assumptions underlying the DOE 2013 Study support the 11-year removal schedule.

Mr. Capik criticized HDIs reliance on the DOEs 2013 Study, claiming that the study assume[s] a pilot facility would be ready within eight years (2021) and acceptance of 20,000 MTU would start after 12 years (2025), with a repository being available by 2048.47 According to Mr. Capik, assuming a flat annual acceptance rate (that appears nowhere in the 2013 Study),

[t]his results in an average acceptance of 870 MTU per year from 2025 through 2048 (based on 42 MICH019, Rebuttal Testimony of Nicholas Capik, at 9-10 [hereinafter Capik Rebuttal Test.].

43 Capik Declaration, at 7.

44 Id. at 7 nn.17-18.

45 MICH019, Capik Rebuttal Test., at 9; Tr. 238:1-24 (Capik).

46 See Entergy Nuclear Operations, Inc. (Indian Point, Units 2 and 3) LBP-08-13, 68 N.R.C. 43, 161 (2008);

USEC, Inc. (American Centrifuge Plant) CLI-06-09, 63 N.R.C. 433, 439 (2006); Entergy Nuclear Operations, Inc.

(Indian Point, Unit 2) LBP-15-26, 82 N.R.C. 163, 180 (2015).

47 MICH019, Capik Rebuttal Test., at 9.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 12 the stated 20,000 MTU capacity).48 Based on this low acceptance rate, and ignoring shutdown priority or any other means of improving Palisadess starting OFF allocation, Mr. Capik says that the last acceptance of spent fuel from Palisades would not occur until approximately 207849 thirty-eight years after HDI assumed final removal of all Palisades SNF in its DCE. But Mr. Capik ignores what the 2013 Study actually says and assumes an artificially low acceptance rate for DOE performance that, at the hearing, he admitted isnt actually the rate he thinks DOE will use.50 First, Mr. Capik is incorrect that the 2013 Study assumes a facility available in 2030 would be capped at 20,000 MTU. Instead, the 2013 Study assumes the development of a pilot interim storage facility with an initial focus on accepting used nuclear fuel from shut-down reactor sites, plus a larger consolidated interim storage facility with greater capacity and capabilities that will provide flexibility in operation of the transportation system and disposal facilities.51 This larger consolidated interim storage facility could take possession of sufficient quantities of used nuclear fuel to make progress on the reduction of long-term financial liabilities and could have a capacity of 20,000 MTHM or greater, and could be co-located with the pilot facility or the eventual geologic repository.52 As the 2013 Study makes clear and as Mr. Graves testified at the hearing, 20,000 MTU is the floor, not a ceiling.53 48 Id. at 9.

49 Id. at 10.

50 Tr. 238:21-24 (Capik).

51 HOL009, 2013 Study, at 6.

52 Id. (emphasis added).

53 Id. (noting that the proposed consolidated interim storage facility could have a capacity of 20,000 MTHM or greater.... (emphasis added)); Tr. 269:13-17 (Graves) (I read it as following on the clause beforehand about aspiring to make progress on reducing the long term financial liabilities which [i]f that were to be true, it would have to be a floor on the size of the program.).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 13 Moreover, the 2013 Study assumed an initial focus on accepting used nuclear fuel from shut-down reactor sites.54 As Mr. Graves explained at the hearing, starting with a facility that size, DOE would have to prioritize shutdown facilities if they were actually trying to make progress on the reduction of long-term financial liabilities.55 In fact, as Mr. Graves explained at the hearing, a 20,000 MTU facility makes sense if that facility is meant to accommodate fuel discharged from shutdown plants.56 Finally, there is no basis for assuming (and in fact Mr. Capik does not actually believe) that DOE will pick up industry fuel at a rate of 870 MTU per year. Mr. Capik arrived at this pickup rate by just dividing 20,000 MTUs (the minimize size of the interim storage facility contemplated by the 2013 Study) by 23 years (the number of years between the planned operational date of the interim storage facility (2025) and the full repository (2048)).58 This rate appears nowhere in the 2013 Study or any other evaluation of DOEs capability to accept industry fuel. As Mr. Graves explained, if the DOEs goal is to take possession of sufficient quantities of used nuclear fuel to make progress on the reduction of long-term financial liabilities,59 it would need to accept at least 54 HOL009, 2013 Study, at 6.

55 Id.; Tr. 88:1-13, 267:17-268:7, 270:7-271:11 (Graves).

56 Tr. 263:2-18 (Graves).

58 Tr. 238:1-24 (Capik).

59 HOL009, 2013 Study, at 6.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 14 2,000 MTU per year.60 That is because [w]e know that the industry discharge is about 2,000 tons a year... and thats going to continue for the next 20 years or so. So if the program is much smaller than that rather than making progress on reducing liabilities, you will be accruing greater and greater liabilities that remain unsolved over time.61 As Mr. Graves explained, there are very good reasons for DOE to accept fuel faster than the 3,000 MTU per year DOE said it could achieve in the 1987 Acceptance Rate documents.62 There is no technical or economic rationale for why DOE, having finally constructed a facility to accept industry fuel, would pick up fuel at such an anemic rate (less than 1/3 the 1987 Acceptance Rate) that just drags out its liability.63 Applicants need not belabor this point, because at the hearing Mr. Capik said he wasnt suggesting that 870 MTU per year is the rate DOE would actually use.64 Thus, not only is Mr. Capiks criticism of HDIs reliance on the DOEs 2013 Study for its estimated eleven-year SNF acceptance schedule without merit, but if the Commission accepts Mr.

Capiks premisethat HDI must assume DOEs performance in 2030 will be fully in line with the strategy DOE articulated in the 2013 Studythen it is plausible DOE will prioritize shutdown plants and Palisades fuel will be removed by 2040. Mr. Capik has offered no contrary conclusion and has, instead, as discussed above, essentially disclaimed that his alternative (870 MTU per year) is a likely outcome.

60 Tr. 79:16-22 (Graves). Mr. Capik apparently agrees with this, according to his original declaration. Capik Declaration, at 7 n. 18.

61 Tr. 267:17-23 (Graves).

62 Tr. 80:4-82:4, 119:6-120:18 (Graves); HOL001, Graves Direct Test., at 8-10.

63 Tr. 88:1-24 (Graves).

64 Tr. 238:22-24 (Capik) (I wasnt opining on what it [(the rate)] would be from year to year. But thats the average over that period.).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 15 3.

Mr. Gravess well-founded testimony confirms that HDIs estimated eleven-year spent fuel transfer period constitutes a plausible timeframe for removal of all Palisades spent fuel.

After the Commission admitted the Attorney Generals challenge to HDIs estimated eleven-year spent fuel acceptance schedule for hearing, HDI hired Mr. Graves to evaluate the plausibility of HDIs assumption.

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CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 18 Applicants do not dispute that Mr. Graves was not involved in preparing the December 2020 DCE. That does not mean his analysis, which shows that HDIs assumed eleven-year pickup window is plausible under a variety of different scenarios, should be dismissed. It is entirely appropriate for Applicants to present expert testimony demonstrating the plausibility of the pickup schedule assumed in the DCE. Ignoring this probative, material expert analysis would deprive HDI of the opportunity to meaningfully respond to the Commissions Order and disregard the (complicated but objective) math that shows HDI was conservative in establishing a removal window of eleven years, because it could do much better.

4.

Mr. Capiks various criticisms of Mr. Gravess acceptance paradigms are unfounded.

Instead, Mr. Capik just criticizes Mr.

Gravess paradigms without really offering an alternativeclaiming that

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. These criticisms are all without merit. They were primarily offered up because the Attorney General and Mr. Capik appear to believe that HDI should be required to provide funding to cover the slowest and least-efficient means of removing Palisadess fuel, even if HDI is pursuing faster alternatives.75 But that is not what the NRC requires.76 a.

Any political concerns at play would actually weigh in favor of a more efficient acceptance priority and against application of strict OFF priority.

First, although Mr. Capik claims that political concerns will effectively foreclose any priority ranking other than strict OFF, he readily admits that the attitude in most of the states with shutdown reactors is, we want to get as much out of the state, as soon as possible.77 It was this concession that prompted Judge Gibson to observe that it seems to me that if people want as much gone as possible, then it would militate for moving it offsite as soon as possible and to question

[a]m I missing something there?78 The answer is no.

75 See Tr. 240:17-23 (Capik).

76 Mem. and Order, CLI-22-08, slip op., at 17 (For a demonstration of reasonable assurance of financial qualification, we do not demand the most conservative forecasts but will accept plausible forecasts.).

77 Tr. 214:6-8 (Capik).

78 Tr. 214:16-19 (Gibson).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 20 Such an unreasonable assumption denies common sense and in no way undercuts the plausibility of the pickup schedule assumed in the DCE. Instead, it is far more plausible, indeed highly likely, that Holtec and any potential outside political concerns b.

81

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 21

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 22

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

The technical design of the DOE repository would not constrain Palisadess ability to reschedule or exchange acceptance rights.

Mr. Capik also criticizes Mr. Gravess for failing to account for the technical limitations in the geologic repositorys design basis. According to Mr. Capik, OFF is more than just the allocation method.

OFF was then used in the design91 of the repository. For example, Mr. Capik says that [w]hen the repository was being designed, there were limits on... how much decay heat each assembly generated. 92 After a fuel assembly is removed from the reactor, it continues to be highly radioactive and continues to generate heat.93 As a result, Mr. Capik says that [w]hen the repository was designed, there were limits on which fuel was assumed to be accepted, and what ratio of fuel.94 Mr. Capik says that, when fuel assemblies are initially discharged, they continue to generate something on the order of 2,000 watts of energy.95 But, according to him, [t]he repository was designed for heat loads of between 700 and 800 watts, which could take decades to reach.96 So, Mr. Capik suggests that the heat load of the fuel being transferred to DOE may somehow limit the ability to reschedule acceptance rights in some way other than OFF. However, as Mr. Capik recognizes, the initial repository design was created decades ago. The fuel has had 91 Tr. 206:15-16 (Capik).

92 Tr. 205:8-10 (Capik).

93 Tr. 205:20-22 (Capik).

94 Tr. 206:5-7 (Capik).

95 Tr. 205:24-25 (Capik).

96 Tr. 206:2-4 (Capik).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 24 time to decay.97 And [t]here is no current design.98 So, it is reasonable to expect that DOE would design the to-be-built repository to take account of current fuel conditions.

Mr. Capik also says that Mr. Gravess According to Mr. Capik, back when performance was considered more likely, DOE has looked at facilities that had multiple parallel trains to process casks, which only a small capacity of that would be designed to handle canistered fuel.101 The process of accepting fuel thats not in a canister, and fuel thats in a canister, is very different.102 And that is because as part of the repository design, DOE had to analyze the safety of maintaining SNF in the repository for a million years.103 Because, according to the DOE, [t]he canisters used by the industry do not satisfy those repository limits,104 all of the fuel thats in canisters at sites, has to be repackaged into disposal packages to go into a repository.105 In other words, DOEs facilities would have to accept the canister, 97 Tr. 206:20 (Capik).

98 Tr. 211:6 (Capik).

101 Tr. 209:13-17 (Capik).

102 Tr. 212:12-14 (Capik).

103 Tr. 210:12-23 (Capik).

104 Tr. 210:23-24 (Capik).

105 Tr. 211:1-4 (Capik).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 25 unload the canister, and then reload it into these other packages.106 In order to do that, Mr. Capik says that the repository design had multiple parallel systems so [i]f something happens at one, you can still continue to accept at the other.107 So, according to Mr. Capik, thats why it matters how many of those parallel processes would be dedicated to canistered fuel.108 But Mr. Capiks criticism is irrelevant for several reasons. First, the Commission has already rejected this very same point. Indeed, Mr. Capik made the same claim in his original declaration and the Commission rejected it.109 Second, it ignores the reality that much more of the nations SNF inventory is now being safely stored in fuel canisters than was the case when the repository was initially designed. And because, as noted above, [t]here is no current design,110 it is reasonable to expect the DOE would design the to-be-built repository to account for the large number of fuel canisters it will need to process. Finally, to the extent Mr. Capik was suggesting that DOE and the industry are incapable of moving enough fuel from a small number of sites in a given year or campaign, he did not provide any specifics as to why they could not move the amount required to support Mr. Gravess modeling for Holtecs plants. The only concerns he raised were genericthat DOE might not have enough casks or temperature restrictions on crane operations during very cold or very hot months might impact the schedule.111 As Mr. Graves explained, it is within the industrys experience and engineering capabilities to handle a large continuous 106 Tr. 211:20-22 (Capik).

107 Tr. 212:8-10 (Capik).

108 Tr. 212:15-17 (Capik).

109 Mem. and Order, CLI-22-08, slip op., at 65-68; Capik Declaration, at 15-16.

110 Tr. 211:6 (Capik).

111 Tr. 231:24-232:19 (Capik).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 26 campaign at a single site.112 General observations by Mr. Capik that there may be technical details that dictate the precise removal schedule at any given plant do not call into question the plausibility of HDIs eleven-year removal schedule for Palisades.

Mr. Capik also identifies several other technical issuestime-to-boil, storage rack degradation, fuel degradation, and curie inventoriesthat he says affect the modeling of acceptance 112 Tr. 176:20-177:17 (Graves).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 27 And this conclusion is further supported by additional language in the Standard Contract.

None of technical issues that Mr. Capik raised at the hearing affect the plausibility of HDIs eleven-year pickup window. HDI does not have to predict with perfect clarity precisely how DOE will ultimately meet its obligations to remove fuel from Palisades. The fact that there may be lingering design or technical issues that DOE will need to work out on its end does not make it unreasonable to assume that they will ultimately be able to do so. Indeed, the Commission already determined that it is plausible to assume that DOE will sort these things out in a manner that supports removal of Palisadess fuel beginning in 2030. Beyond that, all the what ifs Mr. Capik raises about supposed technical and design limitations are simply an attempt to relitigate an issue the Commission has already put to bed for purposes of this proceeding.

d.

The only issue before the Commission in this proceeding is the adequacy of Palisadess fundingand, as it relates to this contention, whether the eleven-year pick-up window is plausible.

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

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 29 As long as HDI can continue to demonstrate that it possesses adequate funding to cover ISFSI O&M costs through the DOE pickup date regardless of how that date may change due to the passage of time or a more sophisticated assessment of how and when DOE will ultimately meet its obligations under the Standard Contractthat is all that is required by NRC regulations.125

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 30 There is no NRC requirement that licensees must use the same set of assumptions for purposes of demonstrating decommissioning funding assurance at different plants owned by the same parent.126 This proceeding illustrates that. For Pilgrim and Indian Point, which have robust trust funds, HDI took the most conservative approach and assumed the least efficient and longest DOE removal schedule in those DCEs.127 Obviously HDI did not make the same assumption in the Palisades DCE or the Oyster Creek DCE (which predated the Indian Point and Pilgrim DCEs).

Requiring that HDI use the same removal paradigm at every facility would set a precedent that simply punishes licensees for including conservatism in their estimates. It also would not achieve the objective of this hearing: to determine if Palisadess funding is adequate. Mr. Capik has not shown that HDIs Palisadess eleven-year removal estimate is not plausible.

Considering the evidence presented before and during the hearing, HDI has carried its burden to show that the eleven-year SNF transfer period it assumed in the Palisades DCE is plausible. The Commission should, therefore, reject the Attorney Generals challenge in Contention MI-1(a).

126 Mem. and Order, CLI-22-08, slip op., at 17 ([A] range of potential differing estimates and outcomes may be plausible, although some may be notably more or less conservative than others. For a demonstration of reasonable assurance of financial qualification, we do not demand the most conservative forecasts but will accept plausible forecasts.).

127 Pilgrim Nuclear Power Station DECON Site-Specific Decommissioning Cost Estimate, at 24 (Nov.

16, 2018), attached to Letter from HDI to US NRC, Notification of Revised Post-Shutdown Decommissioning Activities Report and Revised Site-Specific Decommissioning Cost Estimate for Pilgrim Nuclear Power Station, Docket No. 50-293, dated Nov. 16, 2018 (ADAMS Accession No. ML18320A040); Indian Point Energy Center Site-Specific Decommissioning Cost Estimate, at 64, attached to letter from HDI to US NRC, Post Shutdown Decommissioning Activities Report including Site-Specific Decommissioning Cost Estimate for Indian Point Nuclear Generating Units 1, 2, and 3, Docket Nos. 50-3, 50-247, 50-286 and 72-051 (Dec. 19, 2019) (ADAMS Accession No. 19354A698).

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

Contention MI-1(b): Comparison of the DCE to the NRC Formula.

For the Attorney Generals second admitted contention, the Commission directed Applicants to address two questions: (1) whether the minimum formula regulation in 50.75(b) applies to this application, and (2) the primary reasons that the cost estimate falls significantly below the minimum formula amount.128 Section 50.75(b) does not apply, 1.

The minimum formula requirement in 50.75(b) does not apply.

a.

NRC Staff and Applicants agree that the minimum formula requirement in 50.75(b) does not apply at this stage.

As set out in detail in Applicants Initial Statement and NRC Staffs position on the applicability of the minimum formula regulation, both Applicants and Staff agree that, once a licensee submits a site specific cost estimate called for by 10 CFR 50.82, the funding threshold of 50.75(b) ceases to apply in a manner that requires licensees to maintain radiological decommissioning funding in an amount that is more, but not less, than the formula amount.129 This understanding of NRCs decommissioning regulations is the only way to apply 50.75 and 50.82 in a cohesive manner that gives logical meaning to both.130 Moreover, this understanding of 50.75(b) is consistent with the regulatory formulas purposeto provide an easily administered 128 Mem. and Order, CLI-22-08, slip op., at 134.

129 Applicants Initial Statement,Section IV.B.1; NRC Staff Position on the Applicability of the 10 CFR § 50.75 Minimum Funding Requirement to the License Transfer Application,Section I (Nov. 18, 2022) (ADAMS Accession No. ML22322A159) [hereinafter NRC Staffs Position].

130 Applicants Initial Statement, at 33-34; NRC Staffs Position, at 5-6.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 32 funding target during operations, but not to substitute for an actual cost estimate as a facility approaches decommissioning131and it is consistent with NRC guidance and precedent.132 HDIs DCE is a site specific cost estimate called for by 50.82.133 Even though it was submitted before shutdown, the DCE took effect after shutdown and license transfer and after Entergy incurred decommissioning planning costs as contemplated by 50.82(a)(8)(ii). 134 Accordingly, Staff and Applicants agree that NRC regulations did not require HDI to estimate radiological decommissioning costs in excess of the regulatory formula, nor provide funding to cover the higher formula amount. There is no other logical way to apply NRCs decommissioning regulations to the Application and DCE.

b.

Mr. Capiks new theories offered at the hearing are time barred, incorrect, and cannot be reconciled with NRC regulations.

The Attorney General has not really asserted that HDI was required to estimate costs in an amount that is more than the regulatory formula. As discussed in the next section, the Attorney Generals argument is that the formula applies as a funding threshold because of the LTA (even accepting, or at least not contesting, that the DCE can be lower than the formula). 135 However, Mr. Capik offered a few new theories at the hearing for why HDIs DCE must meet or exceed the formula, which Applicants will address.

131 Applicants Initial Statement, at 30-32; NRC Staffs Position, at 7.

132 Applicants Initial Statement, at 34-36; NRC Staffs Position, at 9-12.

133 Applicants Initial Statement, at 29 n. 102.

134 Id. at 34; LTA, at 18, n. 1; DCE, at Table 5-1, n. 1.

135 AG Written Responses, at 12-13.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 33 First, all of Mr. Capiks testimony in this respect is too late. None of Mr. Capiks theories for why the formula applies to the DCE were presented in his pre-filed testimony or the Attorney Generals pleadings. Accordingly, these arguments are time barred.136 Turning to the substanceMr. Capiks testimony suggests that NRC precedent actually does require a cost estimate to meet or exceed the NRC formula amount, at least at shutdown.137 As support for this point, he claimed that NRC Staff made HDI re-analyze their cash flow based on the NRC formula, in the Pilgrim proceeding,138 and the NRC continues to have licensees report the formula amount throughout decommissioning.139 Although he conceded that he cant speculate140 as to why Staff requires ongoing reporting against the formula, because he agrees that that number [(the formula)] does not continue to have applicability through decommissioning.141 The upshot, and apparent remedy, is that Mr. Capik believes HDI should have also obtained an exemption from 50.75(b) in addition to the exemption it obtained from 50.82(a)(8)(i)(A).142 He claims there is precedent for such exemptionsciting Big Rock Point as an example.143 None of these points provide a basis for questioning Applicants and NRC Staffs application of the decommissioning regulations, as explained in turn below.

136 Nuclear Mgmt. Co., LLC (Palisades Nuclear Plant), CLI-06-17, 63 N.R.C. 727, 732 (2006); La. Energy Servs. L.P. (Natl Enrichment Facility), CLI-04-25, 60 N.R.C. 223, 225 (2004).

137 Tr. 325:18-19 (Capik).

138 Tr. 323:10-12 (Capik) (as corrected).

139 Tr. 324:3-6 (Capik).

140 Tr. 324:5-6 (Capik).

141 Tr. 325:24-25 (Capik).

142 See Tr. 325:1-3 (Capik).

143 Tr. 324:18-25 (Capik).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 34 On the first point (the Pilgrim cost estimate), presumably Mr. Capik is referring to the request for additional information (RAI) NRC Staff issued on the Pilgrim license transfer application, in which they requested that HDI justify using a total radiological decommissioning cost estimate value... that is less than the minimum amount calculating using 10 CFR 50.75(c),

and [u]sing the 10 CFR 50.75(c) minimum amount... provide an updated, revised decommissioning cash flow analysis.144 In response to the RAI, HDI provided an explanation similar to the one filed by Applicants and NRC Staff in this proceedingfor why the Pilgrim cost estimate was not required to exceed the regulatory formula.145 Without waiving this regulatory position, HDI acceded to Staffs request for an alternative cash flow table, which (because the formula is not a cost estimate) HDI created by simply spreading the higher formula amount across the period of active decommissioning on a pro-rata basis.146 But the point Mr. Capik did not acknowledge is that NRC Staff accepted HDIs regulatory justification and specifically found that HDIs original radiological decommissioning cost estimate was reasonable, even though it was

$40 million lower than the formula.147 Staff did not rely on the hypothetical pro-rated formula cash flows, nor did Staff require HDI to obtain an exemption from 50.75(b).

This position was confirmed in the Indian Point license transfer that followed on the heels of Pilgrim. HDI submitted a radiological decommissioning cost estimate for Indian Point 2 that 144 Email from US NRC to ENOI, Final RAI - Pilgrim License Transfer and Holtec DTF Exemption Requests, Encl. at 5, dated July 26, 2019 (ADAMS Accession No. ML19207B366).

145 Letter from HDI to US NRC, Response to NRC Request for Additional Information, Encl. E-2 to E-4, dated July 29, 2019 (ADAMS Accession No. ML19210E470).

146 Id. at Encl. E-5 and Att. 1.

147 Safety Evaluation by the Office of Nuclear Reactor Regulation Related to Request for Direct and Indirect Transfers of Control of Renewed Facility Operating License No. DPR-35 and the General License for the ISFSI from Entergy Nuclear Generation Company and ENOI to Holtec Pilgrim, LLC and HDI, 10-11 (Aug. 22, 2019) (ADAMS Accession No. ML19234A364) [hereinafter Pilgrim SER].

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 35 was approximately $52 million lower than the NRC formula amount.148 In the license transfer application, HDI included an abbreviated version of the regulatory justification from its Pilgrim RAI response.149 NRC Staff did not request additional justification for why the Indian Point Unit 2 estimate was lower than the formula, and Staffs safety evaluation report did not address the formula at all.150 And, of course, in approving the Palisades LTA, Staff accepted HDIs Palisades estimate that is $30 million lower than the formula. Thus, contrary to Mr. Capiks testimony, NRC Staff precedent makes it clear that 50.82 cost estimates are not required to meet or exceed the 50.75(c) formula.

Second, regarding ongoing reporting against the formula during decommissioning, Mr.

Capik himself agrees that there is no apparent purpose to continue reporting against the formula during decommissioning.151 NRC Staffs written position in this proceeding confirms that the reporting called for in 50.82(a)(8)(v) (annual reporting against to-go costs) supersedes the reporting required by 50.75(f)(1) (biennial reporting against the formula).152 The fact that some licensees in decommissioning conservatively report the formula number NRC Staff is used to seeing and licensees are used to calculating is not evidence that either Staff or the licensees believe the formula has any ongoing relevance. HDI itself updates the 50.75(c) formula amount in its 148 Letter from Entergy to US NRC, Application for Order Consenting to Transfers of Control of Licenses and Approving Conforming License Amendments, Indian Point Nuclear Generating Units 1, 2 and 3, Docket Nos. 50-3, 50-247, 50-286 and 72-051, Encl. 1, at 19, dated Nov. 21, 2019 (ADAMS Accession No. ML19326B953)

[hereinafter Indian Point LTA].

149 Id.

150 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 ENOI, Entergy Nuclear Indian Point 2, LLC, and Entergy Nuclear Indian Point 3, LLC to Holtec International and HDI, Section 3.1.1 (Nov. 23, 2020) (ADAMS Accession No. ML20297A333) [hereinafter Indian Point SER].

151 Tr. 325:24-25 (Capik).

152 NRC Staffs Position, at 5-6.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 36 annual decommissioning reportsaccompanied by a note that says HDI does not use this calculation for any decommissioning cost estimates or evaluations.153 In NRC Staffs reports to the Commission on the status of decommissioning funding for reactors in decommissioning, they report current funding against the cost to complete, not the 50.75(c) formula.154 ZionSolutions actually stopped reporting the formula calculation in 2012, which, at the time, prompted an RAI.155 In its response, ZionSolutions articulated the same regulatory logic as Applicants and NRC Staffs written positions in this proceeding. 156 Going forward, ZionSolutions continued to report solely against its cost estimate and not the regulatory formula.157 NRC Staff did not issue further RAIs, much less a violation, and shortly thereafter, Staff approved an indirect transfer of the Zion licenses based on its review of to-go costs versus to-go funding, with no mention of the NRC formula and no 50.75(b) exemption.158 In other words, conservative over-reporting of the formula amount, which everyone agrees is irrelevant at that point, does not change the fact that NRC regulations do not require licensees to continue meeting the formulas funding target during decommissioning. The same is true at the 153 Letter from HDI to US NRC, Report on Status of Decommissioning Funding for Reactors and Independent Spent Fuel Storage Installations, Encl. 1, p.1, dated Mar. 25, 2022 (ADAMS Accession No. ML22084A059).

154 See e.g., SECY-21-0108, Summary of Staff Biennial Review and Findings of the 2021 Decommissioning Funding Status Reports from Operating and Decommissioning Power Reactor Licensees, Encl. 2 (Dec. 16, 2021) (ADAMS Accession No. ML21285A226).

155 Letter from US NRC to ZionSolutions, Zion Nuclear Power Station, Units 1 and 2 - 2012 Decommissioning Funding Status Report - Request for Additional Information, Encl., p.1, dated July 26, 2012 (ADAMS Accession No. ML12207A565).

156 Letter from ZionSolutions to US NRC, ZionSolutions Response to 2012 Decommissioning Funding Status Report Request for Information (RAIs/RFIs), at 2-3, dated Sept. 27, 2012 (ADAMS Accession No. ML12276A218).

157 See, e.g., Letter from ZionSolutions to US NRC, Report on Status of Decommissioning Funding for Shutdown Reactors, Att., at 1, dated Mar. 26, 2013 (ADAMS Accession No. ML13092A140).

158 Safety Evaluation by the Office of Nuclear Reactor Regulation Indirect Transfer of Facility Operating Licenses Docket Nos. 50-295 and 50-304, at 5-8 (May 8, 2013) (ADAMS Accession No. ML13122A058).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 37 beginning of decommissioning. Mr. Capik did not offer any specific regulatory interpretation to support his opinion that the formula should apply at shutdown, even if it doesnt apply once decommissioning begins.159 Mr. Capik did not elaborate on what he means by, when you shut down, that number [(the formula)] still applies [but] as you complete decommissioning work, the formula no longer applies.160 The formula is not a cost estimate against which progress can be tracked, nor is there any mechanism in NRC regulations or guidance for gradually lowering the formula amount to reflect decommissioning progress. Mr. Capiks embedded premise, then, is that at some point it is appropriate for licensees to pivot from reporting against the formula to reporting against the cost estimate. Applicants agree. That pivot point is defined in NRCs regulations:

[a]fter submitting its site-specific DCE required by [50.82](a)(4)(i).161 Finally, Mr. Capiks assertion that HDI should have (and could have) obtained an exemption from 50.75(b) suggests that he does not actually believe HDIs estimate is unjustifiably low; instead, the defect in HDIs Application is merely that HDI did not add 50.75(b) to their 50.82(a)(8)(i)(A) exemption request. The justification for obtaining access to Palisadess nuclear decommissioning trust (NDT) funds for spent fuel management and site restoration costs (such that the funds allocated to radiological decommissioning are reduced below the formula amount) would be exactly the same justification for having a radiological decommissioning estimate that is lower than the formula amount (since that, in turn, justifies having less funding reserved to radiological decommissioning). So, even taking Mr. Capiks untimely arguments at face value, the 159 See Tr. 325:18-21 (Capik).

160 Id.

161 10 CFR § 50.82(A)(8)(v).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 38 remedy would simply be to remand the matter to NRC Staff to issue an exemption from 50.75(b) to accompany the exemption Staff already granted from 50.82(a)(8)(i)(A).

But, despite Mr. Capiks claim that such an exemption has been used in a number of cases, neither he nor the Attorney General have provided any citations to any exemption from 50.75(b) for a shutdown plant. Mr. Capik testified that Big Rock Point obtained such an exemption because Big Rock Point is smaller than the smallest number in 10 CFR 50.75[, s]o they have an exemption to use a different number.162 Mr. Capik did not elaborate, but Big Rock Point was a 240 MWt boiling water reactor, 163 which is much smaller than the 1200 MWt floor in 50.75(c)(1)(ii). While the Attorney General has not cited, and Applicants have not otherwise found, a 50.75(b) or (c) exemption for Big Rock Point, it would not be surprising for very small reactors like Big Rock Point to request an exemption from 50.75 to lower their funding targets during operationsespecially given Pacific Northwest National Labs assumption, which is embedded in the formula itself, that costs scale with thermal capacity.164 Even assuming Mr.

Capiks memory is correct and Consumers (the utility that owned Big Rock during operations) obtained such an exemption for Big Rock Point, the technical justification and regulatory logic for issuing an exemption from 50.75(b) or (c) for an operating plant that is much smaller than 1200 MWt does not establish any precedent for requiring an exemption for a shutdown plant that falls squarely within the capacity range codified in 50.75(c), like Palisades. In fact, when Consumers 162 Tr. 324:23-25 (Capik).

163 Consumers Energy Company Big Rock Point Plant Docket 50-155 Post Shutdown Decommissioning Activities Report, Rev. 1 1, attached to Letter from Consumers Energy to US NRC, Big Rock Point Plant -

Documents Associated with Decommissioning, dated Sept. 19, 1997 (ADAMS Accession No. ML19196A241)

[hereinafter Big Rock PSDAR, Rev. 1].

164 10 CFR § 50.75(c)(1); Technology, Safety and Costs of Decommissioning a Reference Pressurized Water Reactor Power Station, NUREG/CR-0130, Add. 4, Section 6.1 (July 1988) (ADAMS Accession No. ML20151R145).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 39 submitted the Big Rock Point PSDAR and accompanying cost estimate at shutdown, they relied on a site-specific cost estimate, not any formula amount (whether the original formula or some lower exempt number), to demonstrate the adequacy of their funding.165 In sum, none of Mr. Capiks too-late arguments change the fact that NRC Staffs and Applicants understanding of sections 50.75 and 50.82 are the only logical way to apply the agencys decommissioning regulations.

c.

The Attorney Generals argument that the formula applies to any LTA is time barred and inapplicable to shutdown plants.

While not discussed at the hearing, the Attorney Generals response pleading asserted that the formula applies to the LTA (rather than the DCE) because the LTA was an application for an operating license.166 As stated in Applicants Concluding Statement, this argument is too late because it was offered for the first time in the Attorney Generals Written Responses.167 More substantively, the argument ignores the fact that the LTA sought approval to transfer the license to HDI after shutdown, at which point NRC regulations and the Palisades license no longer authorized operations.168 The Attorney General does not dispute Applicants and NRC Staffs 165 Big Rock PSDAR, Rev. 1, at 15.

166 AG Written Responses, at 12.

167 See Nuclear Mgmt. Co., LLC (Palisades Nuclear Plant), CLI-06-17, 63 NRC 727, 732 (2006); La. Energy Servs. L.P. (Natl Enrichment Facility), CLI-04-25, 60 NRC 223, 225 (2004); La. Energy Servs. L.P. (Natl Enrichment Facility), CLI-04-35, 60 NRC 619, 621 (2004); Consumers Energy Co. (Palisades Nuclear Power Plant),

CLI-07-22, 65 NRC 525, 527-28 (2007).

168 The effectiveness of the license transfer, DCE, and exemption authorizing use of trust funds for non-radiological costs were all conditioned on Entergys submission of the § 50.82(a)(1)(ii) certification of permanent defueling. LTA, Encl. 1, at 3; 10 CFR § 50.82(a)(2). See also PSDAR, at 2 (This PSDAR is contingent upon NRC approval of the LTA and the transfer of the Palisades licenses. If the licenses are not transferred, this PSDAR will be ineffective.). DCE, at 1 (This DCE provides the Holtec Decommissioning International (HDI) site-specific DCE for decommissioning following license transfers and sale of the entity that owns Palisades from Entergy to Holtec.);

Safety Evaluation by the Office of Nuclear Reactor Regulation Related to the Request for Transfer of Control of Facility Operating License DPR-6, Renewed Facility Operating License DPR-20, and the General Licenses for the Independent Spent Fuel Storage Installations from Entergy Nuclear Operations, Inc. and Entergy Nuclear Palisades, LLC to Holtec International and Holtec Decommissioning International, LLC, 16 (Dec. 13, 2021) (ADAMS Accession

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 40 explanation that, as part of this transition, the certification requirements in § 50.75 cease to apply and licensees begin reporting against their § 50.82 site-specific cost estimate. Considering that the formula does not apply to a reactor in decommissioning, the Attorney Generals argument that

§ 50.75(b) nevertheless constrains the LTA would require HDI to meet the funding requirements for an operating reactor, despite not having requested authority to own or operate one.169 This argument would also mean that any license transferee for any Part 50 license (including Big Rock Point and other generally-licensed ISFSIs) are required to provide funding to the full formula amount, even if decommissioning were nearly complete. Of course, NRC did not apply that construction of its regulations to Big Rock Point and has not applied its regulations in such an obviously illogical way for other similarly-situated licenses.170 This assertion that a shutdown reactor must be treated the same as an operating reactor is inconsistent with NRC precedent and Mr. Capiks own testimony that the formula does not continue to have applicability throughout decommissioning.171 No. ML21292A148) (The staff is issuing its approval of the exemption request concurrent with its approval of the LTA; the exemption is effective immediately, but will only apply to Holtec Palisades and HDI if and when the proposed transfer transaction is consummated.) [hereinafter SER].

169 See Applicants Concluding Statement of Position on Michigan Attorney General Contentions, 10 (Jan.

27, 2023) (ADAMS Accession No. ML23027A242) [hereinafter Applicants Concluding Statement]. In reviewing other transfers for shutdown plants, NRC Staff has only reviewed applicants qualifications in light of the limited activities that are authorized by the license following shutdown. See, e.g., Safety Evaluation by the Office of Nuclear Reactor Regulation Related to Amendment No. 185 to Facility Operating License No. DPR-39 and Amendment No.

172 to Facility Operating License No. DPR-48, Exelon Generating Co., LLC, Zion Nuclear Power Station, Units 1 and 2, Docket Nos. 50-295 and 50-304, 3 (May 4, 2009) (ADAMS Accession No. ML090930063) ([ZionSolutions]

would not be allowed to conduct any of the operations contemplated by the financial qualifications provisions of 10 CFR § 50.33(f)(2).) [hereinafter Zion SER].

170 See, e.g., Safety Evaluation by the Office of Nuclear Material Safety and Safeguards Related to the EnergySolutions, LLC Request for Indirect Transfer of Control of License Nos. DPR-39, DPR-48, DPR-73, DPR-45, and DPR-43, and the General Licenses for the Associated Independent Spent Fuel Storage Installations, 8-9 (May 3, 2022) (ADAMS Accession No. ML22076A012) (approving indirect transfer of Zion, La Crosse, Kewaunee, and TMI 1&2 based on review of decommissioning funding against to-go costs to complete radiological decommissioning).

171 Tr. 325:24-25 (Capik).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 41 2.

Applicants have provided reasonable explanations for the $30 million difference between the formula and the DCE.

In addition to the threshold legal question of whether § 50.75(b) even applies here, the Commission directed Applicants to provide a more detailed or substantive explanation of the primary reasons that the cost estimate falls significantly below the formula amount. The ostensible purpose of this comparison is to determine if the reasons HDIs estimate is lower than the generic formula are reasonable, assuming, as the Commission determined, that it still remains a relevant benchmark.

Mr. Capik also abandoned and modified his already procedurally-barred challenge to HDIs waste density assumption, and his modified argument would only lower HDIs estimate if accepted.

a.

The properly measured difference between the DCE and the formula is $30 million.

In Mr. Tierneys pre-filed direct testimony, he explained that the difference between the DCE and the formula amount is $30 million.174 The reasons the difference is half that assumed in the Commissions Order are (1) the comparison needs to be in the same years dollars, and (2) the comparison needs to account for pre-transfer amounts assumed to be incurred by Entergy (which 172 Tr. 326:17-21 (Capik).

173 Tr. 327:15-21 (Capik).

174 HOL002, Tierney Direct Test., at 19.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 42 are still part of the overall estimate of decommissioning costs, even though they were assumed to be incurred prior to license transfer).175 In his pre-filed testimony and at the hearing, Mr. Tierney explained that the most reasonable comparison point is in 2020 dollars, because there is already an existing, objective measurement of both the NRC formula and HDIs cost estimate in 2020 dollars.176 Mr. Capik apparently agrees, because he also made his comparison in 2020 dollars.177 The Attorney General has not asserted that HDI was required to escalate the DCE into 2021 dollars (or any other years dollars) for purposes of comparing the DCE to the 2021 version of the formula amount Entergy submitted in March 2022 (more than a year after the DCE was filed).178 Nor has the Attorney General presented what it believes the DCE should be in 2021 dollars (again, Mr. Capik was satisfied to make the comparison in 2020 dollars). Nevertheless, for clarity, Mr. Tierney explained that using 2020 as the common year to compare costs was the most logical approach (a no brainer179) because, had HDI escalated the DCE into 2021 dollars solely for purposes of this 175 Id. at 16-19.

176 Id. at 17; Tr. 313:18-314:13, 315-20-316:15 (Tierney). In the Application, HDI compared the DCE to Entergys calculation of the formula amount in 2019 dollars because that was the only data point available at the time the LTA and DCE were filed. See LTA, at 18 n. 1 (citing Letter from Entergy to US NRC, Decommissioning Funding Status Report per 10 CFR § 50.75(f)(1) and 10 CFR 50.82 (a)(8)(v), dated Mar. 26, 2020 (ADAMS Accession No. ML20086Q904)). In December 2020, an updated calculation of the formula was not yet due from ENOI, and the escalation factors used to increase the formula to 2020 dollars were not available. Accordingly, HDI provided the data point that was available to provide a basis for the qualitative description in the Application that the Commission found insufficient in the Order, and thus directed the parties to prepare a more detailed, analytical reconciliation between the formula and the cost estimate. The first step of that detailed, analytical reconciliation is putting the two amounts in equivalent dollars. See NRC, General Requirements for Decommissioning Nuclear Facilities, 53 Fed. Reg. 24,018, 24,029 (June 27, 1988) ([I]n any comparison of costs it is necessary to place the costs in the same years dollars in order to have a meaningful basis for comparison.).

177 MICH001, Testimony of Nicholas Capik, at 8 [hereinafter Capik Direct Test.].

178 Cf. Letter from ENOI to US NRC, Decommissioning Funding Status Report per 10 CFR §50.75(f)(1) and 10 CFR 50.82(a)(8)(v), Encl. 1, p.1, dated Mar. 28, 2022 (ADAMS Accession No. ML22087A500).

179 Tr. 315:20 (Tierney).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 43 proceeding,180 it would have just added a new set of subjective issues to resolve, without adding any value to the comparative task set by the Commission.181 In fact, as Mr. Tierney explained, using 2020 as the comparison year does not lose any precision in the comparison and is conservative because the NRC did not update the waste burial factor between 2020 and 2021 (i.e.,

that portion of the formula did not increase between 2020 and 2021).182 On the second pointaccounting for pre-transfer coststhe Attorney General has never engaged with HDIs claim that the $13.3 million assumed to be incurred by Entergy prior to license transfer should be counted for purposes of comparing the total radiological decommissioning costs projected by the formula to the total radiological decommissioning costs estimated by HDI.183 To the contrary, Mr. Capik opined in his pre-filed testimony that the Commission should ignore some of HDIs post-closing radiological decommissioning costs. 184 As Applicants have already explained, there is no regulatory or analytical basis for parsing HDIs estimate to only compare some decommissioning costs to a regulatory formula that is intended to be representative of all decommissioning costs.185 In fact, at the hearing, Mr. Capik testified that HDIs would no longer apply to the analysis 180 While HDI is required to update its estimated to-go costs every year pursuant to 10 CFR § 50.82(a)(8)(v),

HDI did not acquire Palisades until mid-2022. Accordingly, HDI will file its first updated cost estimate for Palisades by March 31, 2023, which will update the cost estimate to 2022 dollars.

181 HOL002, Tierney Direct Test., at 17; Tr. 315:20-316:15 (Tierney).

182 HOL002, Tierney Direct Test., at 17; Tr. 313:18-314:13 (Tierney).

183 See Applicants Initial Statement, at 49-50; DCE, at 46, Table 5-1 n.1.

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

185 Applicants Response to Michigan Attorney Generals Initial Statement of Position and Written Testimony, 13-14 (Dec. 16, 2022) (ADAMS Accession No. ML22350A788) [hereinafter Applicants Written Response]. See also HOL031, Pre-Filed Rebuttal Testimony of Christopher F. Tierney, 3-4 [hereinafter Tierney Rebuttal Test.].

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 44 of the formula.186 Applicants agree with the embedded logic in Mr. Capiks testimony: that all decommissioning costs, including those already spent, must be taken into account if you want a meaningful comparison to the formula. Accordingly, the $13.3 million in pre-transfer costs must be added to the comparison, and all post-closing costs should be considered too.

Thus, when properly compared, the difference between the cost estimate and the formula is $30 million.

b.

Applicants provided reasonable explanations for much more than the $30 million difference.

In his pre-filed testimony, Mr. Tierney offered a number of reasons for the $30 million difference, the most material being:

These three items more than explain a $30 million difference, even without considering the other factors set forth in Mr. Tierneys testimony. Indeed, as Mr. Tierney testified, which actually bolsters the reasonableness of the DCE.190 186 Tr. 326:3-6 (Capik).

190 Id. at 26.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 45 The Attorney General has never challenged Mr. Tierneys quantification of the differences or offered any alternative comparative breakdown.191 At the hearing, Mr. Capik agreed 191 Mr. Capik stated in his pre-filed testimony that he was unable to prepare a comparison between the DCE and regulatory formula. MICH001, Capik Direct Test., at 8.

192 Tr. 326:17-21 (Gibson).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 46 Putting aside the Attorney Generals challenge to waste density for the moment (which, as explained below, would just decrease the cost estimate), it is really just contingency that the Attorney General disputes. Here, the Attorney Generals reliance on the formula amount provides no basis for increased contingency, The fact that HDIs estimate is only $30 million shy of the formula means that the other portions of HDIs cost estimate exceed the formula baseline.

Even accepting arguendo the Attorney Generals challenge to contingency, and assuming that a proper contingency amount would be 25% (the number used by Pacific Northwest National Labs in the 1970s), the overall comparison to the formula demonstrates that the DCE is reasonable, c.

The Attorney Generals late challenge to waste density is a red herring and would just lower HDIs waste costs.

In his pre-filed rebuttal testimony, Mr. Capik claimed for the first time that HDI underestimated waste volumes because their Class A waste density assumption is too high.201 As Applicants explained in their final pre-hearing statement, this argument is procedurally and 201 MICH019, Capik Rebuttal Test., at 10.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 47 analytically flawed.202 At the hearing, Mr. Buckley and Mr. Tierney explained that waste density varies throughout a project, and so the snapshot Mr. Capik submitted for Vermont Yankee waste203 is not representative of the density of bulk Class A debris HDI will remove across the entire Palisades project.204 The original NUREG/CR-0130 appendices developed by Pacific Northwest National Labs in support of the 50.75(c) formula confirm this. They assessed the average density for rad waste from the containment building at about 86 lb/ft3 (205) and the average density of other contaminated materials from other buildings at about 63 lb/ft3.206 But, more importantly, Mr.

Buckley explained that 80 is a bounding number, an upper bounding number.207 That is because HDI estimated waste volumes (cubic feet) first, not weight (pounds),208 and so lowering the density while keeping volumes fixed would simply drive down the weight and thereby reduce weight-based costs.209 Following Mr. Buckleys hearing testimony, Mr. Capik dropped his criticism of HDIs waste quantities.210 He accepted that volume is the fixed variable in HDIs estimate and that 202 Applicants Concluding Statement, at 14-16.

203 MICH031, NorthStar Vermont NDCAP Presentation, at 32; MICH019, Capik Rebuttal Test., at 10-11.

204 Tr. 302:9-17; 303:13-19; 304:1-23 (Buckley).

205 Technology, Safety, and Costs of Decommissioning a Reference Pressurized Water Reactor Power Station, NUREG/CR-0130, Vol. 2, Appx. G, at G-27 and G-31, Tables G.4-3 and G.4-4 (June 1978), available at https://doi.org/10.2172/6596923 (total weight (3,278,600 lb + 8,190,500 lb) ÷ total volume (42,072 ft3 + 90,670 ft3)=

86.4 lb/ft3.

206 Id. at Appx. G, G-32, Table G.4-5 (total weight 30,191,310 lb ÷ 477,111 ft3 = 63.2 lb/ft3).

207 Tr. 302:22-23 (Buckley).

208 HOL003, Buckley Direct Test., at 6-7; Tr. 287:5-8; 288:9-25 (Buckley).

209 Tr. 297:24-298:19 (Tierney).

210 Tr. 335:4-16; 338:12-17 (Capik). Mr. Capik specifically said, Im not advocating that they change the number [(waste quantities)] today[, b]ut one has to recognize the uncertainties that could result in a much larger number. Tr. 337:11-14 (Capik).

it appears that Mr. Capik is not disputing the reasonableness of HDIs waste quantities based on the data available today, but rather he believes HDI should

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 48 reducing the density would reduce the weight.211 This argument was offered for the first time at the hearing, which is too late. Nevertheless, Mr. Capiks testimony just further demonstrates why the 80 lbs/ft3 used in Mr. Buckleys workpapers is conservative.

have added more contingency to account for uncertainties in waste volumes. Applicants will address Mr. Capiks theory for what types of uncertainty must be addressed with contingency in the contingency section below.

211 Tr. 338:12-17 (Capik).

21

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 49 Applicants agree with all this, but Mr. Capik didnt finish his thought.

But its just math at this point.

Hence, as Mr. Buckley explained, 80 is...

an upper bounding number.219 Mr. Capiks density argument just shows that HDIs waste cost 219 Tr. 302:22-23 (Buckley).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 50 estimate is conservative because Mr. Buckley used an upper bounding density that is considerably higher, according to Mr. Capik, than the density HDI could have justifiably used.

d.

The formula comparison bolsters the reasonableness of HDIs DCE.

Returning to the overall comparison to the NRC formulathe Attorney Generals only remaining argument for why the DCE is unjustifiably lower than the regulatory formula is based on Mr. Capiks belief that HDI should have included more contingency Applicants will address that argument next; the formula comparison bolsters the reasonableness of HDIs overall DCE. Accordingly, Contention MI-1(b) should be rejected, regardless of the Commissions disposition of the Attorney Generals challenge to HDIs 12% contingency. In fact, Applicants comparison to the formula provides its own basis for rejecting the Attorney Generals contingency challenge as immaterial in light of the substantial additional costs included in the DCE as compared to the NRC formula, For the foregoing reasons, Contention MI-1(b) should be rejected.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 51 C.

Contention MI-1(c): The Reasonableness of HDIs Contingency.

The Commission determined, based on the summary-level information in the LTA, that there is no way to meaningfully assess why HDI concluded that the 12% level is appropriate for Palisades, and accordingly directed Applicants to explain how they calculated and derived the 12% level applied for contingency and concluded that this amount for contingency is reasonably adequate for Palisades.221 In his pre-filed testimony and at the hearing, HDIs director of project controls, Mr. Allen Goulette, explained in great detail the process HDI used to develop contingency and the ways in which the factors the Commission determined must be covered by contingency at the outset of the project are addressed either with contingency funding or in the base cost estimate. Following all the pre-filed and hearing testimony, Mr. Capik has explained that his criticisms of HDIs contingency are limited to a couple specific inputs to the methodology, but not with the methodology itself.222 As addressed below, none of his specific critiques are valid, but more importantly, the Attorney General never demonstrated that the alleged deficiencies in HDIs contingency inputs are material to the overall availability of funding. Accordingly, contention MI-1(c) must be rejected.

1.

Applicants explained how they developed the 12% contingency factor and why it, along with other factors in the DCE, reasonably bound the types of expected costs that are required to be addressed at this stage of the project.

NRC regulations and guidance do not dictate how licensees are expected to quantify contingency, but the Commission articulated the requirements for a reasonable contingency factor 221 Mem. and Order., CLI-22-08, slip op., at 48, 134.

222 Tr. 441:7-14 (Capik).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 52 in the Order.223 Applicants have recited this standard in prior pleadings and need not repeat the general principles here. 224 In articulating the Commissions expectations for a reasonable contingency factor, the Order cited a TLG study prepared for Entergy for the Pilgrim facility.225 However, in relying on TLGs general practices and coverage to define the regulatory expectation, the Commission explicitly recognized that, while TLG studies are representative of what NRC typically receives, HDIs contingency analysis may be different, and if so, Applicants should use the hearing to explain further.226 223 Mem. and Order, CLI-22-08, slip op., at 49.

224 See Applicants Initial Statement, at 70.

225 Mem. and Order, CLI-22-08, slip op., at 49 (citing ENOI Site-Specific Decommissioning Cost Estimate for Pilgrim Nuclear Station, at xii (ENOI 2018 Site-Specific DCE for Pilgrim Nuclear Station), attached to ENOI Post-Shutdown Decommissioning Activities Report for Pilgrim Nuclear Station (Nov. 2018) (ML18320A034)).

226 Mem. and Order, CLI-22-08, slip op., at 49 n.174. Beyond that, the Order specifically rejected the Attorney Generals attempts to simply compare the DCE to a prior TLG study prepared for Palisades, (Id. at 49 n.

174), and the Order explained that where much uncertainty still exists for financial predictions, a range of potential differing estimates and outcomes may be plausible, although some may be notably more or less conservative than others. For a demonstration of reasonable assurance of financial qualification, we do not demand the most conservative forecasts but will accept plausible forecasts. Mem. and Order, CLI-22-08, slip op., at 17.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 53 Mr. Goulette explained that this approach is consistent with his professional experience in his 35-year career in project forecasting and reporting in the electric power industry.232 He brought this methodology with him from SNC-Lavalinthe global construction firm where he worked for nearly two decades.233 In addition to this, Mr. Tierney testified that HDIs approach, which relies on sophisticated statistical analysis and common risk modeling tools, is consistent with his own professional experience and with general industry practices (including the AACE guidelines invoked by the Attorney General before Mr. Capik dropped his challenge to HDIs methodology).234 HDIs DCE addressed all the categories of expected costs the Commission requires licensees to cover in an estimate at the outset of a decommissioning projectand then some.235 232 See HOL004-R, Goulette Direct Test., at 1, 17-18.

233 Tr. 373:19-374:2 (Goulette).

234 Tr. 375:1-376:14 (Tierney); HOL031, Tierney Rebuttal Test., at 7-9.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 54 Beyond this, HDIs team considered impacts of events that are potential but highly uncertain, 240 236 Mem. and Order, CLI-22-08, slip op., at 57.

240 Cf. Mem. and Order, CLI-22-08, slip op., at 50 n. 175.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 55 HDI also added uncertainty contingency that likewise goes beyond the Commissions mandate because it is specifically meant to address the possibility that cost judgments that may have been reasonable earlier may need to be readjusted later.243 Mr. Goulette also described several other sources of conservatism in the DCEall of which are available to serve the same purpose as contingency: to cover cost overruns in the future, should they occur.244 243 Mem. and Order, CLI-22-08, slip op., at 50 n.175. See HOL004-R, Goulette Direct Test., at 11-12. Mr.

Capik appears to agree that the uncertainty portion of HDIs contingency goes beyond NRCs requirements. As he said in his pre-filed testimony, the uncertainty contingency is not the same type of contingency that the industry and the NRC discuss which is expected to be fully consumed during decommissioning. Rather, this is Holtecs attempt to capture uncertainty in its cost estimating. MICH019, Capik Rebuttal Test., at 12. At the hearing, he described the uncertainty portion as unknown unknowns (Tr. 423:5-6 (Capik))as opposed to the known unknowns, which he believes were addressed by risk modeling (Tr. 422:19-20 (Capik)). According to him, the known unknown [is] what has typically been used as contingency. Tr. 423:12-13 (Capik).

244 HOL004-R, Goulette Direct Test., at 26-35. Mr. Capik agrees that mechanisms other than contingency should be considered in assessing the adequacy of HDIs contingency. As he explained at the hearing, while he does not believe 12% is enough, that doesnt mean its necessarily unreasonable if theres a mechanism to address a shortfall. Tr. 429:4-7 (Capik). Of course, Applicants believe there are ample mechanisms to address shortfalls, beyond contingency, while the Attorney General disagrees. That is, essentially, the dispute that remains with respect to contention MI-1(d) (means of adjusting).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 56 and the other conservatisms Mr. Goulette describes in his pre-filed testimony, all provide a means of addressing the types of historically inevitable costs that must be assumed at this stage of the project, should those historically inevitable costs lead to material cost impacts in the future.

The vast majority of HDIs contingency analysis is uncontested by the Attorney General.

In fact, despite earlier criticisms in pre-filed testimony, Mr. Capik testified at the hearing that HDIs methodology is appropriate; his issue is just with some of the inputs.250 And he explained that, while he does not believe 12% is enough, that doesnt mean its necessarily unreasonable if theres a mechanism to address a shortfall.251 Of course, Applicants believe there are ample mechanisms to address shortfalls, beyond contingency, while the Attorney General disagrees that these mechanisms are adequate without a license condition. That dispute is for contention MI-1(d),

but it bears noting that, the Attorney General has acknowledged that HDIs contingency may be reasonable today, provided that there are adequate backstops to account for the possibility that things turn out less favorably than expected. For now, Applicants will focus on the handful of critiques to the 12% contingency factor that are still at issue after the extensive briefing and testimony on this topic.

2.

None of the Attorney Generals critiques rebut HDIs demonstration that the DCE addresses the expected costs that are required to be covered at this stage of the project.

The remaining areas of dispute can be boiled down to a handful of issues: (1) the Attorney General believes HDI was required to include additional contingency to address cost escalation 250 Tr. 441:7-14 (Capik).

251 Tr. 429:4-7 (Capik).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 57 during the dormancy period; (3)

Mr. Capik claims that HDI improperly used probability distributions in their inputs to the Monte Carlo models; and (4) Mr. Capik believes, in general, that HDI did not evaluate enough risks, and for the risks it did evaluate, it did not assign high enough probabilities or impacts to those risks. In addition to these, Mr. Capik raised a handful of other arguments in his pre-filed testimony that he did not revisit during the hearing.252 Applicants prior pleadings have addressed those arguments, to the extent the Attorney General continues to pursue those claims following the testimony heard at the hearing.253 a.

The Attorney Generals claim that HDI was required to add contingency to cover escalation is an impermissible challenge to NRC regulations.

In many places throughout his pre-filed testimony and at the hearing, Mr. Capik opined that HDI did not adequately add contingency to cover the possibility of future cost increases.

For the most part, these arguments boiled down to Mr. Capiks worry that costs might escalate more than HDI thinks they will.257 But the DCE (like all cost estimates submitted to NRC) is in constant dollars, and the cash flow table that demonstrates the adequacy of present funds to 252 See MICH001, Capik Direct Test., at 8-12; MICH019, Capik Rebuttal Test., at 11-12.

253 Applicants Written Response, at 16-28; Applicants Concluding Statement, at 20-23.

257 See Tr. 416:8-12, 420:10-25 (Capik); MICH001, Capik Direct Test., at 9.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 58 cover future costs uses the NRC regulatory assumption that costs will escalate at a rate that is 2%

less than fund growth.258 Mr. Capiks claim that HDI is required to add contingency dollars to reflect the possibility that NRCs regulatory assumption will not ultimately be correct is an impermissible challenge to 10 CFR 50.82(a)(8)(vi). In her original petition, the Attorney General challenged the other side of the equation (NDT fund growth), which the Commission rejected.259 Mr. Capiks arguments regarding cost escalation are retreading the same ground and just pivot to the other half of the 2% real rate of return allowed by NRC regulation.

Beyond his general worry about escalation, the handful of specific claims that Mr. Capik offers for why certain costs might disproportionately change from HDIs estimate are not supported by any evidence and are not the types of historically inevitable costs that HDI is required to cover with contingency.

258 HOL033, Goulette Rebuttal Test., at 3; 10 CFR § 50.82(a)(8)(vi); Tr. 357:20-24 (Tierney).

259 Mem. and Order, CLI-22-08, slip op., at 76-74.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 59 As Applicants have previously explained, and Mr. Capik has agreed,264 there is no requirement to have executed contracts for all future decommissioning work at the outset of a project nor are executed contracts a necessary precondition to preparing a reasonable cost estimate At the hearing, Mr. Capik also raised the concern that specialty contractors may not be around by 2035, or may have fundamentally different pricing structures than they do currently.266 264 Tr. 327:3-7, 430:10-431:7 (Capik).

266 Tr. 416:16-418:1 (Capik).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 60 Mr. Capik does not attempt to quantify this risk, because, frankly, it is the kind of risk that would be impossible to quantify today. Hence, as the Commission has explained, HDI is only required to address events that are almost certain to occur in decommissioning, based on industry experience.270 b.

Mr. Capiks claim that HDI inadequately covered the cost of a more stringent site release standard are procedurally barred, unsupported by evidence, and does not constitute a valid challenge to contingency.

At the hearing, though, Mr. Capik transformed this footnote into a wholly different claim that EPA groundwater requirements mandate a more stringent radiological cleanup standard of

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 61 roughly 15 millirem per year today (as Mr. Capik put it, this is a certainty, not a risk274), and the direct costs (not mitigation costs) of meeting that standard is tens of millions.275 Neither Mr.

Capik nor the Attorney General made any of these arguments in pleadings or pre-filed testimony, nor did they disclose or cite any documents or studies explaining how EPAs groundwater standard supposedly translates into a 15 millirem per year limit through specific exposure pathways at the Palisades site, whether there is any groundwater contamination at Palisades that would implicate such a standard, how much more soil or other contaminated material HDI would need to remove from the Palisades site by 2041, or how much more it would cost given natural attenuation and decay during the dormancy period276 and the fact that HDI already has to meet NRCs 25 millirem site release criteria.277 Mr. Capik claimed at the hearing that they have quantified the additional costs due to removal of additional material to meet the lower limit. And those numbers have been between 20 and 30 million dollars.278 In response to follow-up questions, Mr. Capik clarified that the they who supposedly quantified the additional costs of meeting a lower standard was Holtec.279 Neither Holtec nor HDI has produced any such quantification of costs.

274 Tr. 435:6-7 (Capik).

275 Tr. 426:2-7, 431:8-435:7, 445:12-447:20 (Capik).

276 Mr. Capik explained that the dormancy period could reduce the amount of contaminated material required to be removed to meet a lower standard. Tr. 432:6-16 (Capik).

277 See 10 CFR § 2.1402.

278 Tr. 431:21-25 (Capik).

279 Tr. 447:21-448:15 (Capik).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 62 So, Mr. Capiks claim that they determined the costs of meeting a lower site release standard of 20 to 30 million is incorrect.281 Also, in response to follow-up questions, Mr. Capik qualified his claim that EPA standards already mandate a 15 millirem standard at Palisades today. He conceded that implementation of a lower cleanup standard is a function of state authority, and lower standards imposed by states largely were negotiations between the state and the [NRC] licensee.282 Accordingly, [t]hat becomes a legal question about what are their [(Michigans)] rights and how does preemption fit in, to which he admittedly did not know the answer. 283 As it turns out, pursuant to the memorandum between EPA and NRC that Mr. Capik referenced at the hearing (but never disclosed 281 Mr. Capik did not explain or provide any citation for where he came up with the between 20 and 30 million (Tr. 431:23-25 (Capik)) that he attributed (incorrectly) to Holtec (Tr. 448:14 (Capik)). It nevertheless bears noting that a Government Accountability Office (GAO) report (that neither Mr. Capik nor the Attorney General ever cited or disclosed in this proceeding) estimated that it would cost Maine Yankee between $25 million and $30 million to meet a state-imposed 4 millirem groundwater standard. U.S. Govt Accountability Off., GAO-02-48, Nuclear Regulation: NRCs Assurances of Decommissioning Funding During Utility Restructuring Could Be Improved, 39 (2001). Mr. Capik has not claimed that Michigan can or will impose a 4 millirem groundwater standard. In fact, while he offered no citations or support for this claim either, he testified that EPAs groundwater standard correlates to a 15 millirem site release criteria. Tr. 434:11-15 (Capik). Also, to the extent Mr. Capik actually meant that Maine Yankee (and not Holtec) was the source of the 20 to 30 million estimate for meeting a lower standard, the Commission has already rejected the Attorney Generals attempts to compare Maine Yankee to Palisades because Maine Yankee is an outlier that involved unusually large amounts of radioactive waste. Mem. and Order, slip op., at 52. In fact, GAO compiled a separate report that suggests the cost differences of meeting different millirem cleanup standards is orders of magnitude lower than Capik claims. See U.S. Gov't Accountability Off., GAO/RCED-00-152, Radiation Standards:

Scientific Basis Inconclusive, and EPA and NRC Disagreement Continues 28 (2000). For NRC-licensed power plants, GAO reported that the incremental soil cleanup costs of meeting a 15 millirem standard is only about $100,000 (in 1997$) more than meeting a 25 millirem standard. Id. at 29, Table 1.

282 Tr. 447:8-12 (Capik).

283 Tr. 447:8-15 (Capik).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 63 or cited),284 NRC does not require licensees to comply with EPAs groundwater standards.285 In fact, the memorandum says EPA will continue its longstanding policy of deferring to NRCs regulation of decommissioning nuclear sites, provided that NRC consults with EPA if it appears there will be radiological groundwater contamination in excess of EPAs prescribed limits after license termination.286 Further, Mr. Capik never provided any information suggesting the existence of groundwater contamination at Palisades that might necessitate further remediation if a lower release standard were applied.

More fundamentally, his late-breaking claim is clearly procedurally barred for two reasons.

First, Mr. Capik made all of these arguments for the first time at the hearing, and the Attorney General never disclosed or cited any documents or other authority to support Mr. Capiks claims in a manner that would have afforded Applicants a meaningful opportunity to present its own evidence or witnesses to rebut these arguments.287 Second, the Commission already rejected the Attorney Generals claim that the DCE includes insufficient costs or contingency to cover state remediation standards beyond those mandated by NRC.288 284 Tr. 446:11-15 (Capik).

285 Memorandum of Understanding Between the EPA and the NRC, Consultation and Finality on Decommissioning and Decontamination of Contaminated Sites (2002) available at https://www.nrc.gov/reading-rm/doc-collections/news/2002/mou2fin.pdf [hereinafter EPA MOU].

286 EPA MOU, at 3. In such a circumstance, NRC will discuss with EPA the use of flexibility under EPAs phased approach for addressing ground-water contamination, and if NRC does not adopt EPAs recommendations, NRC will inform EPA of the basis for its decision not to do so. Id.

287 Pursuant to 10 CFR § 2.336(d) and the Boards Order Governing Mandatory Disclosures, the Attorney General had an ongoing obligation to disclose public documents they intended to rely on. Order, Protocols Governing Mandatory Disclosures, ¶ 9 (ADAMS Accession No. ML22243A145). At the hearing, Mr. Goulette responded to these claims based on his knowledge and role in the process, but as he explained, he is not the subject matter expert on every individual risk HDIs decommissioning team evaluated. Tr. 386:14-388:2 (Goulette).

288 Mem. and Order, CLI-22-08, slip op., at 63.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 64 Accordingly, Mr. Capiks claims that HDI inadequately addressed the risk of a lower site release standard are procedurally barred. To the extent the Commission nevertheless considers them, they are uncorroborated by any documents or evidence other than Mr. Capiks bare opinion offered at the hearing, which is not enough on its own.289 And, as it turns out, his opinion is wrong.

c.

Mr. Capiks continued insistence that HDI used normal distributions as an input to the Monte Carlo models is wrong.

His pre-filed testimony did not explain what this really means in the context of HDIs contingency calculations or why it makes 12% deficient, but at the hearing, he finally elaborated.

289 USEC, Inc. (American Centrifuge Plant) CLI-06-10, 63 N.R.C. 451, 472 (2006) (quoting Private Fuel Storage, LLC (Independent Spent Fuel Storage Installation) LBP-98-07, 47, N.R.C. 142, 181 (1998)) (holding that an expert opinion that merely states a conclusion (e.g., the application is deficient, inadequate, or wrong) without providing a reasoned basis or explanation for that conclusion is inadequate because it deprives the reviewing body to make the necessary assessment of the opinion).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 65 Applicants need not get into the statistical weeds to respond to Mr. Capiks criticisms because his starting premise is wrong.

Stripped of all the confusion and statistical jargon, HDI didnt do the thing Mr. Capik has a problem with.

d.

Mr. Capiks generic claims that HDI should have evaluated more risks or should have assumed higher probability or higher impacts do not provide any evidentiary bases for finding HDIs contingency deficient.

In his pre-filed rebuttal testimony, Mr. Capik generically criticized HDIs risk modeling because the costs included were not adequate and the probability distributions not wide enough to capture the range of possibilities.294 But in his pre-filed testimony he never explained why HDIs risk inputs were too low or by how much. Given the opportunity to elaborate at the hearing, he still did not provide any alternative quantification of probabilities or impacts that HDI should have used.295 294 MICH019, Capik Rebuttal Test., at 12.

295 Tr. 440:6-7 (Capik) (I dont know that I have any off the top of my head.).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 66 N

Regardless, the possibility of future regulatory changes are not

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 67 the types of historically inevitable costs that HDI is required to include in its initial contingency buildup.

Simply opining that HDI should have considered more risks, and should have assigned higher factors to the risks it did consider, is not enough. To prevail, the Attorney General was required to demonstrate, with evidence, why HDIs quantification was deficient, which additional risks it was required, but failed, to consider under the Commissions standard, and how those deficiencies affect the overall contingency amount in a way that materially calls into question HDIs overall funding.305 3.

The Attorney General has not established the materiality of any of the alleged deficiencies in HDIs contingency calculations.

All of the Attorney Generals arguments against HDIs contingency are one-off criticisms of various parts and pieces of HDIs analysis. But as the Order says, [t]he material issue is whether the 12% contingency level is unreasonably low or inadequate for the Palisades project and could jeopardize the overall available funding for decommissioning and spent fuel management.306 The Attorney General never connected Mr. Capiks discrete critiques back to the ultimate question. In his original declaration, Mr. Capik claimed HDI should have used a 17.15% contingency level, which he said (incorrectly) equates to an additional $29 million.307 But that was the last time the Attorney General provided any alternative quantification of contingency. Despite the opportunity 305 Mem. and Order, CLI-22-08, slip op., at 48.

306 Mem. and Order, CLI-22-08, slip op., at 48.

307 Capik Declaration, at 10.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 68 to provide analytical support for Mr. Capiks original position, to demonstrate the materiality of the various criticisms he raised during the hearing process, or to perform his own contingency analysis with all the information Applicants disclosed, Mr. Capik did not. In fact, he testified that 12% is not necessarily unreasonable,308 as long as HDI has other mechanisms to address future cost overruns. Accordingly, the Commission is presented with a list of unquantified alleged risks, uncertainties, and methodological critiques that neither Mr. Capik nor the Attorney General connect back to the only question that matters: whether there is enough money to decommission Palisades. A list of unconnected arguments that seek to simply cast doubt on bits and pieces of HDIs contingency analysis is not enough to demonstrate that HDIs DCE is materially deficient.309 For the foregoing reasons, the Attorney General has not shown that HDIs contingency amount is unreasonable or implausible and has not provided any alternative quantification of contingency to demonstrate that HDIs contingency is so deficient as to call into question the overall availability of funding at Palisades.

D.

Contention MI-1(d): Means of Adjusting Funding under § 50.82(a)(8)(iv).

Because Holtec Palisadess decommissioning schedule includes a 10-year period of storage or surveillance, NRC regulations require Holtec Palisades to provide a means of adjusting cost estimates and associated funding levels.310 In this final issue admitted for hearing, the Commissions Order directed Applicants to describe how they will ensure that sufficient 308 Tr. 429:4-7 (Capik).

309 North Atlantic Energy Serv. Corp. (Seabrook Station, Unit 1), CLI-99-06, 49 N.R.C. 201, 222 (1999).

310 10 CFR § 50.82(a)(8)(iv).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 69 additional funding will be available as a means to adjust funding if needed, and to address various particular points related to anticipated recoveries of SNF management costs from DOE.311 Applicants addressed this contention by offering four principal sources of additional funding if needed: (1) there is a sufficient cushion in the NDT to cover any necessary funding adjustments; (3) adjusting the decommissioning schedule will maximize the funds in the NDT; and (4) Holtec Palisades will recover SNF management costs from DOE just before active decommissioning begins.

The Attorney Generals criticism of these funding sources seems to be based less on their availability and more on speculative what ifs. As she stated in her Concluding Statement:

Attorney General expert Nicolas Capik testifies that there are numerous reasons that Holtecs DCE could understate actual costs, including an increase in scope due to unforeseen conditions, any delay in performance of activities, inflation beyond what is assumed with two percent real growth of the NDT, or higher than anticipated actual costs 14 years from now when decommissioning activities commence.312 But that is really just a circular argument, because the whole point of the funding adjustment requirement is that if at any point in the dormancy period, Holtec has reason to believe any of those situations exist, it can adjust the funding. And the four options it has identified are all adequate to do so.

311 Mem. and Order, CLI-22-08, slip op., at 135.

312 Michigan Attorney Generals Written Concluding Statements of Position on the Issues, 24 (Jan. 27, 2023)

(ADAMS Accession No. ML23027A126) [hereinafter AG Concluding Statement].

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 70 1.

In arguing that Applicants have not shown the ability to adjust funding, the Attorney General focuses on potential cost overruns that might occur after the dormancy period, which is not required by

§ 50.82(a)(8)(iv).

The plain wording of the regulation is that Applicants must show a means to adjust funding over the storage or surveillance period313i.e., if they identify a potential shortfall before decommissioning commences. The Attorney Generals arguments, however, are that shortfalls could be identified after the storage or surveillance period:

For example, if in year five of decommissioning (after dormancy), costs proved higher than estimated there is no mechanism for Holtec Palisades to retrieve funds paid to Holtec and HDI for home office costs incurred in years one through four.314

Also, Holtec did not assess any costs that may be incurred to demobilize and place the facility in a storage condition and costs to remobilize for dismantlement should the shortfall be identified after dismantlement begins.315

Thus, the availability of funds recovered from DOE to address a shortfall that may not occur until later in the decommissioning process (2038 or later) is unlikely unless such funds are segregated and preserved.316

For these costs, Holtec offered no explanation of how such costs could be deferred if a potential shortfall were to be identified sometime during decommissioning.317 313 10 CFR § 50.82(a)(8)(iv).

314 AG Written Response, at 35 (emphasis added).

315 Id. (emphasis added).

316 Id. (emphasis added).

317 AG Concluding Statement, at 30 (emphasis added).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 71 As Applicants have already explained in multiple submissions, over and after are not synonymous. And the Attorney General does not offer any interpretation of § 50.82(a)(8)(iv) to support her arguments. Instead, she relies on her reading of the Order and related NRC guidance, neither of which can amend NRC regulations.

In admitting this issue for hearing, the Order distinguished other recent license transfers (where intervenors also sought license conditions requiring escrow of DOE recoveries and additional parent commitments but were denied a hearing) on the basis that, unlike this proceeding, those license transfers involved a decommissioning schedule without a dormancy period, and so

§ 50.82(a)(8)(iv) did not apply.318 The Commission explained the policy justification for the means of adjusting requirement for plants with a dormancy period but not those pursuing a more accelerated schedule: [w]here decommissioning is projected to begin soon [i.e., no dormancy period], and to be completed within several years, actual decommissioning costs also will be known relatively soon.319 That justification is easily reconciled with the text of § 50.82(a)(8)(iv) because it assumes that the means of adjusting requirement is no longer needed once active decommissioning is projected to begin sooni.e., at the beginning of a DECON project or at the end of a SAFSTOR storage or surveillance period. Neither the regulatory text nor the Commissions stated policy justification is reconcilable with the Attorney Generals demand that HDI must indefinitely provide a means of adjusting to cover any conceivable cost overrun on the projectduring and after the dormancy period.

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

319 Id.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 72 2.

The Attorney Generals claim that HDIs many alternative funding sources are meaningless without a license condition ignores NRC regulations and enforcement authority.

Ultimately, the Attorney Generals incorrect reading of § 50.82(a)(8)(iv) does not matter though, because all of the means of adjusting described in Applicants pleadings and testimony will be available in one form or another both during and after the dormancy period. In fact, the Attorney General does not really dispute that HDI will have access to more than $100 million dollars in the form of DOE recoveries, unallocated NDT funds, Rather, she simply complains that those sources are not committed to the project in a specific, quantified form today. At the hearing, Mr. Capik expressed nothing more than a vague concern that the funds will not be available if and when needed based on the fact that other companies have filed bankruptcy or ran out of funds.320 But Mr. Capik has not identified any licensee who declared bankruptcy and abandoned a decommissioning plantbecause no one has.

The Commission has explained many times that the specter of bankrupt LLCs is not a valid challenge to a license transfer application and is more than adequately addressed by existing regulatory guardrails.321 a.

Requiring a license condition at the outset makes NRC regulations meaningless.

320 Tr. 480:17-19 (Capik).

321 Indian Point, CLI-21-01, 93 N.R.C. at 43-44 (dismissing a contention based upon the possibility that an LLC licensee could declare bankruptcy and walk away, leaving the decommissioning project without funds, because:

1) LLCs are no more likely to experience financial stress leading to bankruptcy than other entities, and 2) NRC rules contain provisions designed to avoid such depletion scenarios, such as annual financial assurance status reports and pledging DOE recoveries or other specific funding if necessary); FirstEnergy Nuclear Operating Company (Beaver Valley Power Station, Units 1 and 2) (Davis-Besse Nuclear Power Station, Unit 1) (Perry Nuclear Power Plant, Unit

1) DD-19-01, 89 N.R.C. 317, 323 (2019) (stating that the NRC monitors the bankruptcy proceedings of any licensee and will take action to ensure that the Licensee remains in compliance with the agencys regulations if necessary);

Gulf States Utilities Co. (River Bend Station, Unit 1) LBP-95-10, 41 N.R.C. 460, 464 (indicating that the mere fact that [a licensee] faces bankruptcy does not indicate that the [licensed] facility could not be operated safely).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 73 Mr. Capiks hypothetical concerns do not require Applicants to irrevocably commit those funds today. If NRC required licensees to lock in alternative funding sources to cover all possible future scenarios, then the regulation would become meaningless because there would never be any funding to adjustit would be static from the beginning. Similarly, the Attorney Generals logic makes § 50.82(a)(8)(vi)s ongoing reporting and oversight irrelevant and runs counter to the Commissions explanation that NRCs review at this stage of the project is just a snapshot in time.322 The funding picture may change, but that is why the NRC continues to oversee the status of licensees funding until license termination.323 In support of that regulatory oversight, the NRC has enforcement authority that includes the ability to revoke HDIs § 50.82(a)(8)(i)(A) exemption or require additional funding sources be provided to support Palisadess decommissioning if, at any point during decommissioning, the sum of the balance of any remaining decommissioning funds, plus earnings on such funds calculated at not greater than a 2 percent real rate of return...

does not cover the estimated cost to complete the decommissioning.324 The Attorney General cannot dispute the import of these regulations but, apparently, simply distrusts Holtec to follow them. When pressed at the hearing, it became apparent that the gravamen of Mr. Capiks criticism is simply the Holtec entities corporate structure:

MR. CAPIK: They are correct [that 10 CFR 50.82a(8)(v) applies to Holtec Palisades, LLC, regardless of whether or not NRC imposes a license condition on it325]. Again, the problem is the LLC can have an obligation, but no way to meet the obligation.

JUDGE GIBSON: Okay. And thats really your criticism?

322 Id. at 17.

323 Id. (emphasis added).

324 10 CFR § 50.82(a)(8)(vi).

325 Tr. 480:24-481:3 (Gibson).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 74 MR. CAPIK: Correct.326 In other words, he assumes both that Holtec Palisades will intentionally violate NRC funding requirements and that Holtec and HDI will simply abandon Holtec Palisades if the NDT proves to be insufficient. But his argument that a license condition is necessary to ensure that does not happen is based on nothing more than speculation and conjecture. Mr. Capik admitted that he had no basis to assume Holtec would not make additional funding available if necessary: Im not aware of any statement where they say they would refuse.327 Moreover, NRC has enforcement options it can take against Holtec Palisades (the subsidiary), including revocation or modification of its 50.82(a)(8)(i)(A) exemption to require Holtec Palisades to come up with an alternative spent fuel funding plan under 50.54(bb). Mr. Capik has not claimed or demonstrated with any evidence or financial analyses that Holtec Palisades will be unable to obtain, if it ever becomes necessary, surety bonds, insurance, a letter of credit, a revolving line of credit, or some combination of these with DOE recoveries and or other funds.329 In short, beyond her apparent mistrust of Holtecs corporate structure, the Attorney General has offered no regulatory or factual basis for imposing a license condition. Indeed, her interpretation would render... meaningless [the text of § 50.82(a)(8)(iv) and the requirements of § 50.82(a)(8)(vi)], which violates elementary rules of construction that the language of 326 Tr. 481:8-13.

327 Tr. 482:7-8 (Capik).

328 Tr. 471:8-11 (Goulette).

329 See Indian Point, CLI-21-1, 93 NRC at 38 n.215.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 75 a regulation should not be read to destroy itself... and a provision should not be read in a way that is inconsistent with its purpose. 330 The Commission should not accept the Attorney Generals invitation to rewrite its regulatory framework.

b.

There is no precedent for requiring an up-front license condition like the one suggested by the Attorney General.

Mr. Capiks insistence that EnergySolutions put up a parent guarantee to backstop its subsidiarys (ZionSolutions) decommissioning of Zion (and, thus, Holtec International should do the same here) is wrong and just further proves Applicants point. Mr. Capik claimed, incorrectly, in his pre-filed testimony and again at the hearing the NRC required EnergySolutions to put up a parent guarantee to ensure that ZionSolutions would not run out of money. 331 He cited ZionSolutions license transfer application for this point,332 but he misunderstood the application.

The parent guarantee attached to that application was a guarantee provided by EnergySolutions to Exelon as part of the underlying transaction pursuant to which Exelon transferred Zion and the trust fund to ZionSolutions, and ZionSolutions committed to complete decommissioning and hand the site back to Exelon when it was done.333 The guarantee backstops ZionSolutions contractual obligations to Exelon. It was not provided for NRCs benefit, NRC cannot enforce it, and while ZionSolutions tried to take credit for it in the license transfer application,334 NRC Staff did not 330 In the Matter of Usec Inc. (Am. Centrifuge Plant), 65 N.R.C. 429, 429 (2007) (citing Citizens Bank of Maryland v. Strumpf, 516 U.S. 16, 20 (1995); Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 668-69 (1990); Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Foundation, Inc., 484 U.S. 49, 59 (1987)).

331 MICH019, Capik Rebuttal Test., at 6 n. 16; Tr. 479:16-480:4 (Capik).

332 MICH019, Capik Rebuttal Test., at 6 (citing Application for Order and Conforming License Amendments for License Transfers (NRC Facility Operating License Nos. DPR-39 and DPR-48), attached to Letter from Exelon to US NRC, Application for License Transfers and Conforming Administrative License Amendments, dated Jan. 25, 2008 (ADAMS Accession No. ML080310521) [hereinafter Zion LTA]).

333 Zion LTA, at 11-12.

334 Id. at 10-12.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 76 rely on it or even discuss this commercial arrangement when determining that ZionSolutions was financially qualified to hold the Zion licenses.335 EnergySolutionss guarantee to Exelon only demonstrate that corporate parents cannot and do not treat their subsidiaries obligations so cavalierly as Mr. Capik believes. Without any direct regulatory obligation to do so, EnergySolutions funded site operations at Zion near the end of the project.337 Licensing conditions that simply mandate a parent company will not intentionally divest its subsidiaries of assets to avoid their regulatory obligations are not necessary or reasonable given real world experience and the underlying business realities, yet they can impose real world costs to corporate borrowing authority, credit ratings, and balance sheets that now must reflect 335 Safety Evaluation by the Office of Nuclear Reactor Regulation Related to Amendment No. 185 to Facility Operating License No. DPR-39 and Amendment No. 172 to Facility Operating License No. DPR-48 3-9 (May 4, 2009) (ADAMS Accession No. ML090930063). While NRC Staff did not give any credit to the parent guarantee, Staff did rely on an additional letter of credit for the approval of the ZionSolutions transfer because the NDT contained insufficient decommissioning funds without the additional letter of credit. Id. at 8-9.

337 Letter from ZionSolutions to US NRC, Report on Status of Decommissioning Funding for Shutdown Reactors, Att. 1, 1 n.1, dated Mar. 26, 2020 (ADAMS Accessioning No. ML20097C644) (explaining that the plant owners parent company will continue to fund additional decommissioning project activities using company cash reserves without a regulatory obligation to do so); Id. at 2 (EnergySolutions has provided, and will continue to provide, to ZionSolutions funds necessary to complete decommissioning.).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 77 contingency liabilities in a way that creates immediate financial impacts, whether a shortfall ever materializes or not (i.e., parent guarantees are not free even if they are never called upon).

Moreover, if Holtec International were to abandon Holtec Palisades, HDI, and the Palisades project, it would be committing corporate suicide. Other decommissioning projects aside, Holtec International has an ongoing billion-dollar dry storage business that relies on contracts with NRC licensees and ongoing regulatory credibility with NRC for cask certification and delegated QA responsibilities.

As for Presiding Officer Exhibits 002 and 003 (reflecting commitments Dominion made to address the means of adjusting requirement at Kewaunee, which the Board requested the parties address in their final briefs), Dominions voluntary concession to apparent NRC Staff requests in 2013 does not establish precedent, nor does it indicate that the commitment Dominion volunteered to expedite its exemption request is the only way of satisfying the means of adjusting requirement in 50.82(a)(8)(iv). From the limited context available, Staff apparently requested that Dominion replace an existing parent support agreement with a parent guarantee as part of discussions on Dominions request for a 50.82(a)(8)(i)(A) exemption (allowing Dominion to access its NDT funds for spent fuel management costs).339 To support its exemption request, Dominion showed that it could use Kewaunees currently-funded NDT for both radiological decommissioning and spent fuel management and would still have $52 million left over.340 As additional comfort, Dominion pointed out to Staff that an existing $60 million parent support 339 Letter from Dominion to US NRC, Request for Exemptions from 10 CFR 50.82(a)(8)(i)(A) and 50.75(h)(1)(iv), dated Apr. 4, 2013 (ADAMS Accession No. ML13098A031) [hereinafter Kewaunee Exemption Request]; PSO003, Kewaunee Power Station - Supplement to Request for Exemptions from 10 CFR 50.82(a)(8)(i)(A) and 50.75(h)(1)(iv), Att. 1, p.2 [hereinafter Kewaunee Exemption Supplement].

340 Kewaunee Exemption Request, at 2.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 78 agreement would remain in place during decommissioning and could serve as a backstop if necessary.341 According to Dominions supplement to its exemption request (PSO003), Staff was not willing to credit the existing parent support agreement because, at the time, Staff viewed a support agreement as more (perhaps only) appropriate to meet operational funding requirements under 50.33(f). Staff expressed concern that Dominion was not relying on a form of funding listed in 50.75(e) (a parent support agreement is not included in the list), to meet the means of adjusting requirement of 50.82(a)(8)(iv) during decommissioning.342 The commitment Dominion offered up as an alternativeto provide a parent guarantee if one is ever neededis really just an up-front articulation of the way in which Dominion intended to meet NRC regulations in the future.343 It was also offered up with the backdrop of an existing, equivalently-valued support agreement in place (i.e., a $60 million commitment from the parent was already in place); Dominion agreed to simply change the form of that commitment.

Applicants are skeptical that this particular regulatory commitment, which was not imposed as a license condition, would have ultimately been required if Dominion had pressed the point. Neither NRC regulations nor guidance specify that the means of adjusting funds can only be one of the forms of funding contemplated by 50.75(e), especially where the licensee has a 50.82(a)(8)(i)(A) exemption authorizing use of trust fund dollars to pay for spent fuel management activities that can (pursuant to 50.54(bb)) be funded from sources other than those prescribed by 341 Id. at Att. 1, p.2.

342 PSO003, Kewaunee Exemption Supplement, at Att. 1, p.2.

343 Id. at Att. 1, p.2-3. In fact, Dominion specifically reserved the right to change its compliance mechanism.

Id. at Att. 1, p.3 (DEK reserves the right to seek approval to use alternative funding mechanisms acceptable to the NRC.).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 79 50.75(e).344 But, apparently, Dominion decided it was something it could agree to at the time, and as many licensees do, it offered up a speedy solution to avoid delaying Staffs approval of its exemption request. In fact, since then, Staff has retreated from its (apparent) position at the time that licensees can only rely on 50.75(e) forms of funding to backstop NDTs in this context.345 And now it would seem that the Commission has definitively put that question to bed. The Order accepted that future DOE recoveries can serve as a means of adjusting funding, hence the direction to Applicants to elaborate on the expected timing of receiving that funding.346 DOE recoveries are not a form of financial assurance listed in 50.75(e). Accordingly, the Dominion-volunteered commitment was not imposed as a license condition and does not establish relevant precedent that a license condition or other up-front commitment is either necessary or required under for HDI and Holtec Palisades to satisfy 50.82(a)(8)(iv).

344 See Safety Evaluation by the Office of Nuclear Reactor Regulation and Office of Nuclear Material Safety and Safeguards Related to Request for 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 11 (Oct. 11, 2018) (ADAMS Accession No. ML18242A639);

Letter from EnergySolutions to US NRC, Response to Request for Additional Information Regarding Application for Order Approving Transfer of Control of Kewaunee Power Station License and Conforming License Amendments, dated Oct. 28, 2021 (ADAMS Accession No. ML21301A178; Safety Evaluation by the Office of Nuclear Material Safety and Safeguards Related to the Request for Transfer of Control of Renewed Facility Operating License No.

DPR-43 and the General License for the Independent Spent Fuel Storage Installation from Dominion Nuclear Projects, Inc. to EnergySolutions, LLC, (Mar. 31, 2022) (ADAMS Accession No. ML22014A394).

345 When Dominion transferred the Kewaunee license to Kewaunee Solutions in 2022, Kewaunee Solutions did not maintain Dominions commitment to put up a parent guarantee, even though (for purposes of transferring the license) Kewaunee Solutions relied on Dominions 50.82(a)(8)(i)(A) exemption that was the genesis of that commitment. See Dominion Energy Kewaunee Letter to NRC, Application for Order Approving Transfer of Control of KPS License and Conforming License Amendments, Att. 1, pp.11-12, dated May 10, 2021 (ADAMS Accession No. ML21131A141). Instead, Kewaunee Solutions relied on future DOE recoveries to backstop NDT funds and NRC Staff agreed that Kewaunee Solutions commitment to maintain a revolving account with one years worth of ISFSI O&M costs and a contingent commitment to put a performance bond in the future if they do not reach a settlement with DOE by 2024. See Safety Evaluation by the Office of Nuclear Material Safety and Safeguards Related to the Request for Transfer of Control of Renewed Facility Operating License No. DPR-43 from Dominion Nuclear Projects, Inc. to EnergySolutions, LLC, Docket Nos. 50-305 and 72-64, at 15-16 (Mar. 31, 2022) (ADAMS Accession No. ML22014A394). This arrangement goes beyond the funding options prescribed by § 50.75(e).

346 Mem. and Order, CLI-22-08, slip op., at 80-81.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 80 3.

The Attorney Generals factual disputes with HDIs various additional funding sources are all immaterial to the ultimate question.

Applicants have demonstrated that the various avenues they have for adjusting funding over the dormancy period are plausible, which is all that is required. The Attorney Generals arguments to the contrary rely on nothing more than unfounded speculation.

a.

There is a sufficient cushion in the NDT to cover any necessary funding adjustments.

As Applicants have pointed out throughout this proceeding, the NRC has no requirement that prevents an applicant from relying on a single funding source.347 Thus, a primary means of adjusting funding over the dormancy period is the approximately $20 million of unallocated dollars in the NDT. According to Mr. Capik, this cushion is only realized if the Palisades costs are significantly less than other Holtec projects (which includes its unreasonable assumptions regarding spent fuel management acceptance dates and annual costs). 348 Applicants have exhaustively briefed why the estimates in the DCE are reasonable and why their projected spent fuel acceptance dates are plausible. The Attorney General offered no different arguments at the hearing, and there is no need to restate those points here.

The evidence at the hearing actually demonstrated that, if anything, that NDT is likely to be much cushier than $20 million because there is a lot of conservatism in the Palisades DCE.349 347 Mem. and Order, CLI-22-08, slip op., at 77.

348 MICH019, Capik Rebuttal Test., at 6.

349 Tr. 453:20 (Goulette).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 81 Indeed, testimony at the hearing further illustrated how each of the other avenues work to further bolster the leftover funds in the NDT.

While Mr. Capik tries to undermine each source of additional funding in isolation, he never addresses the significance of the combined impact they have on the bottom line, which is that HDI will have access to more than enough funding to complete decommissioning.

b.

353 Tr. 452:10-11 (Goulette).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 82 c.

Adjusting the decommissioning schedule would increase the funds in the NDT as a means of adjusting funding.

While the contingency and $20 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.358 Mr. Capik does not dispute that the concept of extending the dormancy period is a 358 HOL004-R, Goulette Direct Test., at Table 10.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 83 legitimate source of additional funding,359 but contends that it is not clear that such extended dormancy would result in substantial additional funding.360 However, Mr. Capiks own math belies that conclusion.

359 Tr. 451:13-16 (Gibson) (And the two methods that Mr. Capik deems to be legitimate sources of additional funding are DOE recoveries and added earnings on the trust fund due to delays in major decommissioning expenditures.)

360 MICH019, Capik Rebuttal Test., at 7.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 84 Importantly, that projection only accounts for the regulatory 2% real rate of return.365 As the Commission has recognized in the past, actual rates of return may differ from the regulatory baseline over the long run.366 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.367 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.

d.

Recoveries of SNF management costs from DOE provide a substantial means of adjusting funding if necessary.

A final 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.

Mr. Capik does not dispute that DOE recoveries are a legitimate source of additional funding.368 365 See 10 CFR § 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 Direct 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.

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

367 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))).

368 Tr. 451:13-16 (Gibson) (And the two methods that Mr. Capik deems to be legitimate sources of additional funding are DOE recoveries and added earnings on the trust fund due to delays in major decommissioning expenditures.)

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 85 Rather, the gravamen of Mr. Capiks criticism is that much of the DOE funds will be received before any hypothetical shortfall encountered during decommissioning. What he ignores is that those funds will be received over the storage or surveillance periodi.e., precisely during the time 10 CFR

§ 50.82(a)(8)(iv) requires the ability to adjust funding. In fact, they will be received in the latter part of the dormancy period when actual decommissioning costs also will be known relatively soon.370 Because a claim for breach of the Standard Contract must be brought within six years of incurring damages 371 and Holtec Palisades incurred such damages beginning in 2022, it is plausible to assume it will file its claim as late as 2028. Mr. Capik does not contest that it is reasonable to assume Holtec Palisades will file a DOE claim in 2028. Based on the timelines of similar litigated suits against DOE, Holtec Palisades has pointed out that it could be five to eight years from the filing of its claim before payment is received.372 Based primarily on cases in which the parties reached a settlement after the government made an offer of judgment 373and, therefore, were not litigated through full discovery and trialMr. Capik concludes that a typical 370 Mem. and Order, CLI-22-08, slip op., at 79.

371 Indiana Michigan Power Co. v. United States, 422 F.3d 1369, 1378 (Fed. Cir. 2005) (citing 28 U.S.C.

§ 2501).

372 See Applicants Initial Statement, at 92-93.

373 This includes River Bend 2, Judgment, Entergy Louisiana, LLC v. USA, No. 1:16-cv-01717 (Fed. Cl.

Aug. 23, 2019), ECF No. 41; River Bend 3, Judgment, Entergy Louisiana, LLC v. USA, No. 1:20-cv-00016 (Fed. Cl.

Aug. 26, 2021), ECF No. 18; Indian Point 3, Judgment, Entergy Nuclear Indian Point 2, LLC v. USA, No. 1:19-cv-00949 (Fed. Cl. Oct. 12, 2021), ECF No. 30; Palisades 3, Judgment, Entergy Nuclear Palisades, LLC v. USA, No.

1:19-cv-00484 (Fed. Cl. Jan. 22, 2021), ECF No. 36, Pilgrim 3, see Judgment, Holtec Pilgrim, LLC v. USA, No. 1:19-cv-01159 (Fed. Cl. Aug. 3, 2021), ECF No. 38; Grand Gulf 3, Judgment, System Energy Resources, Inc. v. USA, No.

1:17-cv-01998 (Fed. Cl. Oct. 30, 2020), ECF No. 45; ANO3, Judgment, Entergy Arkansas, Inc. v. USA, No. 1:17-cv-00899 (Fed. Cl. Dec. 4, 2019), ECF No. 38; and Waterford 2, Judgment, System Fuels, Inc. v. USA, No. 1:18-cv-00148 (Fed. Cl. Apr. 28, 2020), ECF No. 31.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 86 time from the end of the period of incurred costs to recovery of costs is between three and four years.374 Even accepting Mr. Capiks position that Holtec Palisades will receive some SNF recoveries in 2032, though, does not mean that Applicants have not shown the ability to adjust funding as required by the regulation. As with his other arguments, Mr. Capiks opinion to the contrary is based on the wrong timeframe: he says the availability of funds recovered from DOE to address a shortfall that may not occur until later in the decommissioning process (2038 or later) is unlikely unless such funds are segregated and preserved for decommissioning costs.375 There is no requirement that Holtec Palisades show the DOE recoveries will be received during the decommissioning phase. Rather, 50.82(a)(8)(iv) requires a means to adjust funding over the storage or surveillance period if theres a reason to believe the future decommissioning costs will be higher than originally estimated before the dormancy period.

Receiving DOE recoveries in 2032 still satisfies the regulation. That will be just three years before active decommissioning is scheduled to begin, at a time when Holtec will have updated its estimate of the imminent decommissioning costs. The Attorney General has pointed to no evidence to suggest that Holtec would refuse to use recoveries from Palisadess spent nuclear fuel litigation if it appeared there will be a shortfall at that time.376 And Mr. Capik admitted as much at the hearing: Im not aware of any statement that they would refuse to do something.377 374 MICH019, Capik Rebuttal Test., at 7.

375Id. at 8.

376 Nor is there any basis to assume that the NRC Staff, upon review of the § 50.82(a)(8)(v)-(vii) funding status reports would not require such added assurance at that time.

377 Tr. 481:22-23 (Capik).

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 87 A license condition is unnecessary, and the Commission should reject the Attorney Generals Contention MI-1(d).

E.

The Attorney General has not carried her burden to show the materiality of any of her contentions to the overall plausibility of the Palisades DCE.

As noted above, in order to prevail on her contentions, the Attorney General must show that HDIs assumptions are implausible and that the implausibility of one or more assumptions is so inadequate that it jeopardizes the overall availability of funding for Palisadess decommissioning. 378 But for each of her four contentions, the Attorney General does not demonstrate that each of HDIs assumptions is not a plausible outcome, but instead argues that something else might also be plausible. The truly fatal flaw, though, is that the Attorney General never quantifies any of her alternatives in a way that shows HDIs overall estimate is materially deficient. A license transfer proceeding is not intended to be a line-item by line-item refinement of a decommissioning cost estimate. If a petitioner claims that a specific cost was overlooked, its materiality must be supported.379 On the first contention, Applicants evidence shows that there are several plausible avenues for HDIs estimated eleven-year SNF pick-up window by DOE, as discussed above. Mr. Capik does not directly confront the details of those alternatives, including the plausibility of DOE itself taking actions to speed up the acceptance program.

Instead, he focuses on the possibilities that political concerns might prevent those actions But he never actually quantifies what that means in terms of projected costs. Thus, while he apparently believes they might be different in some 378 Mem. and Order, CLI-22-08, slip op., at 48.

379 Id. at 67.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 88 way, he hasnt shown that the costs will be materially different in a way that affects the overall estimate.

The Attorney Generals criticism regarding the second contentionexplanation of the difference between HDIs DCE and the minimum formulasuffers from the same flaw. Once again, with one exception, Mr. Capik does not directly dispute the specific underlying differences identified by Applicants, such as the DCEs site-specific analysis or HDIs unique business model.

Without some basis to say how much, or when, or under what circumstances, Mr. Capik has failed to show that that possibility would have a material impact on the overall cost estimate.

For the third contention, [t]he material issue is whether the 12% contingency level is unreasonably low or inadequate for the Palisades project and could jeopardize the overall available funding for decommissioning and spent fuel management.

380 As with the other contentions, Mr. Capik selects a few discrete concepts to criticize, but generally just repeats that the contingency for Palisades is lower than that for other plants. Of course, it does not necessarily follow that the contingency amount is implausible simply because it is different. And, once again, Mr. Capik has failed to quantify an alternative contingency analysis to show that the supposed deficiency materially impacts HDIs overall cost estimate for Palisades, or even suggests that there is a risk that funds are insufficient to complete decommissioning.

Finally, in support of her fourth admitted contention, the Attorney General has failed to raise any material issue relating to Applicants ability to adjust funding during the dormancy 380 Mem. and Order, CLI-22-08, slip op., at 48.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 89 period. In fact, Mr. Capik seems to acknowledge that unallocated funds in the NDT, pushing out the decommissioning schedule, and SNF cost recoveries from DOE are all legitimate sources of additional funding. His main criticism is that they are not committed to the project today and unexpected costs could arise decades in the future during decommissioning. Those arguments, though, are not materially linked to HDIs ability to allocate the funds over the storage or surveillance period should its overall estimate be revised in a material way.

The Commission need not wade through the Attorney Generals unquantified risks, uncertainties, and methodological critiques for each of the four contentions because neither the Attorney General nor her expert witness, Mr. Capik, has connected those specific critiques to a material impact on the overall cost estimate. Even accepting, for example, Mr. Capik has not quantified how those assumptions have any material effect on the Applicants ability to decommission the plant as set forth in the DCE.

IV.

CONCLUSION For the reasons stated in the Application, Applicants prior pleadings, and above, the Commission should resolve the Attorney Generals contentions in Applicants favor without further condition or limitation and terminate this proceeding.

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 90 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 Alan D. Lovett/

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

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

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

CONFIDENTIAL INFORMATION SUBMITTED UNDER 10 C.F.R. § 2.390 91 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION Before the Atomic Safety and Licensing Board CERTIFICATE OF SERVICE I hereby certify that the foregoing Applicants Post-Hearing Statement of Position has been served through the E-Filing system on the participants in the above-captioned proceeding, this 20th day of March, 2023.

Respectfully submitted,

/Signed electronically by Alan D. Lovett/

Alan D. Lovett BALCH & BINGHAM LLP 1710 Sixth Avenue North Birmingham, AL 35203-2015 (205) 226-8769 alovett@balch.com In the Matter of ENTERGY NUCLEAR OPERATIONS, INC., ENTERGY NUCLEAR PALISADES, LLC, HOLTEC INTERNATIONAL, and HOLTEC DECOMMISSIONING INTERNATIONAL, LLC

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Docket Nos.

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50-255-LT-2 50-155-LT-2 72-007-LT 72-043-LT-2

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