ML25365A989

Enclosure IV: Exemptions

ML25365A989
Person / Time
Site:	99902049
Issue date:	12/31/2025
From:	Holtec, SMR
To:	Office of Nuclear Reactor Regulation
Shared Package
ML25365A983	List: ML25365A984 ML25365A985 ML25365A986 ML25365A987 ML25365A988 ML25365A989 ML25365A993
References
300-USNRC-123
Download: ML25365A989 (0)

Text

Pioneer Units 1 & 2 Construction Permit Application Part I 300-USNRC-123 Enclosure IV Exemptions 31 pages follow Attachments:

Attachment A: Exemption 1 Attachment B: Exemption 2 Attachment C: Exemption 3

Pioneer Units 1 & 2 Construction Permit Application Part I Enclosure IV Exemptions Enclosure IV Exemptions Attachment A Exemption 1 10 pages follow within attachment

Exemption 1 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 1-1 1 10 CFR 50.10(c) Exemption Request to Install Support of Excavation Walls 1.1 Proposed Exemption In accordance with the requirements of Title 10 of the Code of Federal Regulations (10 CFR) 50.12, Specific exemptions, SMR, LLC (SMR), on behalf of Palisades SMR, LLC, hereby requests exemption from portions of 10 CFR 50.10, License required; limited work authorization, paragraph (c), Requirement for construction permit, early site permit authorizing limited work authorization activities, combined license, or limited work authorization, 10 CFR 50.10(c), for the dual-unit SMR-300 plant located at the Palisades Energy Center (PEC) in Covert, Michigan. Specifically, SMR is requesting an exemption from 10 CFR 50.10(c) to allow for construction of support of excavation (SOE) walls, which will remain in place after construction is complete, during the excavation for the SMR-300 plant prior to issuance of a limited work authorization (LWA). The proposed exemption would allow SMR to proceed, prior to LWA issuance, with this limited construction activity that is needed to prevent costly delays in site preparation and supports the timely addition of generation to meet regional power needs.

Compliance with the regulation would represent an undue hardship of costs significantly in excess of those contemplated when the regulation was adopted.

SMR is requesting that the U. S. Nuclear Regulatory Commission (NRC) grant this exemption request prior to approval of the LWA application and separate from the two additional exemption requests contained in this submittal, to allow SMR to commence with construction of SOE walls, which will remain in place after construction is complete, during NRC review of the LWA application.

1.2 Background

One of the additional exemption requests that is included in this LWA application is to allow construction of below-grade portions of the Containment Structure (CS), the Reactor Auxiliary Building (RAB), the Intermediate Building (IB), and portions of select structures, systems, and components (SSCs), prior to obtaining full construction permit approval. Installation of SOE walls is necessary to maintain excavation stability, protect adjacent structures and utilities, manage groundwater pressures, and support excavation personnel safety and constructability of these SSCs. SMR proposes to commence excavation for these select SSCs prior to LWA issuance in order to prevent costly delays in site preparation and support the timely addition of generation to meet regional power needs.

SMR has determined that alternative methods to stabilize the excavation or remove the SOE walls post excavation is not cost or schedule effective.

Therefore, the construction of these SOE walls, prior to LWA issuance associated with this application, is necessary to maintain excavation stability, protect adjacent structures and utilities, manage groundwater pressures, and support excavation personnel safety and constructability for these select SSCs, and to prevent costly delays in site preparation, and support the timely addition of generation to meet regional power needs.

Exemption 1 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 1-2 1.3 Detailed Description The SOE walls that will remain in place once construction is complete and are the subject of this exemption request, provide support for the excavation during construction and serve no SMR-300 design function after construction is complete. They will be retired in place because removal would be unnecessary and costly. The space between the SOE walls and the permanent structures will be backfilled to bring the area back to plant grade.

SMR plans to install three different wall designs, diaphragm walls, soldier pile soil mixed walls, and perimeter cutoff walls. Tieback anchors will be used as necessary to support the differing wall designs. Additional details on the design and function of each wall type are provided below.

1.3.1 Diaphragm Walls Diaphragm walls that are approximately 36 to 42 inches thick and 25 feet wide will be installed up to a nominal depth of 100 feet below working grade. The walls surround the nuclear island excavation and will be constructed using slurry-supported panel excavation, steel reinforcement cages equipped with embedded tieback sleeves, and tremie-placed concrete. The space between the reinforced concrete panel walls and the permanent structures will be backfilled, effectively retiring the walls in place.

1.3.2 Soldier Pile Soil Mixed Walls Soldier pile soil mixed walls will consist of overlapping soil mixed columns with wide-flange soldier piles. The columns will be approximately 36 to 42 inches in diameter and spaced 2 feet on center. The walls will be installed up to a nominal depth 65 feet below working grade. The walls will support the Turbine Island and portions of the Intermediate Building excavation. The columns will be installed using a fixed-mast rig with multiple soil mixing axes to install multiple soil mixed columns concurrently. The fast-mast rig pumps cement slurry through each axis that is then mixed with the soil with paddles to form homogenous soilcrete columns.. The soldier piles, either two small wide-flange beams or one large wide-flanged beam, will then be placed into every second column. The space between the SOE walls and the permanent structures will be backfilled, effectively retiring the walls in place.

1.3.3 Perimeter Cut-off Walls Perimeter cut-off walls consist of a bentonite-soil mixture, a cement-bentonite-soil mixture, or a cement-bentonite-soil mixture with steel reinforcement (e.g., wide-flange beams). The walls are constructed using slurry trench or deep mixing techniques typical of temporary groundwater barriers. The wall is approximately 36 to 42 inches thick and 3,875 feet long and fully encloses the SMR construction area. The walls will be installed up to a nominal depth of 65 feet below working grade. Depending on location and loading conditions, the cut-off wall is provided in three general configurations, bentonite-soil mixture (hydraulic barrier), cement-bentonite-soil mixture (hydraulic barrier and beneath haul roads), or cement-bentonite-soil mixture with steel reinforcement (hydraulic barrier and supports temporary grade differences). The wall is continuous around the site perimeter and is keyed into the underlying glacial clay to ensure continuity of the low-permeability cutoff.

1.3.4 Support of Excavation Walls SMR-300 Design Impacts The reinforced concrete panel walls, soldier pile soil mixed walls, and perimeter cutoff walls (hereafter referred to as SOE walls) will be installed using traditional construction techniques,

Exemption 1 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 1-3 such as excavation, dewatering, and forms. The SOE walls serve no function with respect to structural SSC support, or radiological health or safety. During normal plant operations, the SOE walls will have no significant impact on plant SSCs. During a seismic event, the existence of the walls may have a small impact on the behavior of the surrounding soil and backfill. SMR intends to consider these impacts, for the applicable SIE wall design, when performing soil-structure interaction analysis.

SMR acknowledges that geologic mapping of the excavation is required and that NRC staff must be notified when the excavation is open for inspection. It is also anticipated that construction of SOE walls has the potential to obscure portions of the excavation. Hence, SMR will use appropriate methods to ensure that the excavation is comprehensively mapped, either by performing mapping prior to construction of the walls or by utilizing an acceptable alternative approach that does not require visual access to the excavation walls. Therefore, SMR intends to perform geologic mapping of the excavations for safety-related structures and provide written notification to the NRC when the excavations are open for inspection.

1.4 Justification for Exemption In accordance with 10 CFR 50.12, the Commission may, upon application by any interested person, or upon its own initiative, grant exemptions from the requirements of the regulations of Part 50 which are authorized by law, will not present an undue risk to the public health and safety, and are consistent with the common defense and security. 10 CFR 50.12 also states that the Commission will not consider granting an exemption unless special circumstances are present. Additionally, 10 CFR 50.12(b) requires that, in considering an exemption request permitting the conduct of activities prior to the issuance of a construction permit prohibited by 10 CFR 50.10, the Commission must consider and balance the following factors:

1) Whether conduct of the proposed activities will give rise to a significant adverse impact on the environment and the nature and extent of such impact, if any;

2) Whether redress of any adverse environment impact from conduct of the proposed activities can reasonably be effected should such redress be necessary;

3) Whether conduct of the proposed activities would foreclose subsequent adoption of alternatives; and

4) The effect of delay in conducting such activities on the public interest, including the power needs to be used by the proposed facility, the availability of alternative sources, if any, to meet those needs on a timely basis and delay costs to the applicant and to consumers.

1.4.1 Criteria of 10 CFR 50.12(a) 1.4.1.1 The Exemption is Authorized by Law 10 CFR 50.12 allows the NRC to grant exemptions from the requirements of 10 CFR Part 50.

The requested exemption to 10 CFR 50.10(c) to allow construction of SOE walls that will remain in place once construction is complete, in the SMR-300 plant excavation, for the purpose of stabilizing soils to support excavating below grade portions of the Containment Structure (CS),

the Reactor Auxiliary Building (RAB), Intermediate Building (IB), and portions of select SSCs, does not result in a violation of the Atomic Energy Act of 1954, as amended, or the Commissions regulations. As specifically recognized in 10 CFR 50.12(b) the Commission may

Exemption 1 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 1-4 grant exemptions associated with the conduct of activities prior to the issuance of a construction permit prohibited by 10 CFR 50.10. Therefore, this exemption is authorized by law.

1.4.1.2 The exemption will not present an undue risk to public health and safety This exemption does not affect NRC safety requirements that apply to the design, construction, or operation of the SMR-300 plant. The SOE walls do not serve a structural purpose in the SMR-300 design; they merely support the excavation during construction. Further, design and analysis activities for SMR-300 structures will consider the effects of retiring the SOE walls in place to ensure no safety impacts. Therefore, this exemption does not present an undue risk to public health and safety.

1.4.1.3 The exemption is consistent with the common defense and security This exemption, to allow construction of SOE walls, which will remain in place after construction is complete, prior to issuance of an LWA, does not affect the design, function, or operation of structures or plant equipment that is necessary to maintain the secure status of the plant. The requested exemption has no impact on plant security or safeguards procedures. Therefore, the proposed exemption is consistent with the common defense and security.

1.4.2 Criteria of 10 CFR 50.12(b) 1.4.2.1 The exemption will not give rise to a significant adverse impact on the environment This exemption, to allow construction of SOE walls, which will remain in place after construction is complete, prior to issuance of a work authorization, will have non-detectable or so minor environmental effects that they will neither destabilize nor noticeably alter any important attribute of the Palisades Energy Center (PEC) site. This conclusion is supported by the comprehensive environmental report (ER), included as Enclosure III to this LWA application, that addresses the nature and extent of the environmental impact associated with this exemption request, the remainder of the construction activities necessary to construct the plant, and plant operations.

The ER determined the environmental impact of the LWA activities, including SOE wall construction, which will remain in place after construction is complete, to be to be no more than MODERATE impact for the following potential environmental impacts.

1) Land-use

2) Water Resources

3) Ecological

4) Socioeconomics

5) Historic and Cultural Resources

6) Air Resources

7) Nonradiological Health

8) Radiological Health

9) Nonradiological Waste Management Therefore, this activity will not give rise to an adverse environmental impact.

Exemption 1 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 1-5 1.4.2.2 The exemption will allow redress to be reasonably effected for any adverse environment impacts As discussed above, this exemption to allow construction of SOE walls, which will remain in place after construction is complete, prior to issuance of an LWA will not result in significant adverse environmental impacts. Should redress be necessary, the below-grade SOE walls will be retired in place, backfilled, and graded to conform to the adjacent land surface, allow stormwater runoff, and prevent soil erosion. Specific details in the redress plan addresses both the LWA activities permissible under 10 CFR 50.10 and those construction activities for which exemptions are requested. The redress plan is included as Enclosure VIII to this LWA.

1.4.2.3 The exemption will not foreclose subsequent adoption of alternatives This exemption to allow construction of SOE walls, which will remain in place after construction is complete, prior to issuance of an LWA will not foreclose subsequent adoption of alternatives.

As discussed above, construction and retiring in place the SOE walls does not impact the environment. Retiring the SOE walls in place includes grading the impacted areas to conform to the adjacent land surface which will support adoption of subsequent alternatives. Also, while not anticipated to be necessary for adoption of subsequent alternatives, the costly removal of the SOE walls could be performed.

A discussion of potential subsequent alternatives that could be pursued in lieu of SMR-300 plant construction are provided in Enclosure III, Environmental Report (ER), Chapter 9, of this LWA application.

1.4.2.4 Delaying support of excavation wall construction will have an effect on the public interest If this exemption to allow construction of SOE walls, which will remain in place after construction is complete, prior to issuance of an LWA is not approved, excavation activities for the below grade portions of the CS, RAB, IB and portions of select SSCs will be delayed adding a significant time delay and construction costs to the SMR-300 plant project. Delaying the construction of the dual-unit Palisades SMR-300 plant, will delay the addition of 680 mega-watts of clean energy and a reliable lower cost energy supply for working families and small businesses in the state of Michigan.

1.5 Special Circumstances 10 CFR 50.12(a)(2) states that the Commission will not consider granting an exemption unless special circumstances are present and identifies in 10 CFR 50.12(a)(2)(i)-(vi) when special circumstances are present. Special circumstances are present and those applicable to this exemption are discussed below.

1.5.1 Compliance Results in Undue Hardship 10 CFR 50.12(a)(2)(iii) states, Compliance would result in undue hardship or other costs that are significantly in excess of those contemplated when the regulation was adopted, or that are significantly in excess of those incurred by others similarly situated.

Delaying SOE wall construction and associated excavation activities until LWA approval will result in substantial costs by negatively impacting the construction schedule for the SMR-300 plant and delaying the startup date for the delivery of clean, reliable, energy to working families and small businesses.

Exemption 1 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 1-6 Removal of the excavation supports (to render the supports temporary so that they are not construction) is not practical because of the high unnecessary cost associated with removal that would be added to the project.

These circumstances clearly demonstrate an undue hardship significantly in excess of the circumstances and associated hardships that were anticipated when the regulation was adopted and as such, provide justification for the issuance of this exemption. Accordingly, this additional special circumstance is present to justify this exemption request.

1.6 Precedent Tennessee Valley Authority (TVA), letter to U.S. Nuclear Regulatory Commission, Request for Exemption from 10 CFR 50.10(c) to Allow Excavation at the Clinch River Nuclear Site Prior to Construction Permit Issuance, dated November 30, 2023, (ADAMS Accession No. ML23335A100).

1.7 Environmental Assessment In accordance with 10 CFR 51.21, Criteria for and identification of licensing and regulatory actions requiring environmental assessments, an exemption is a licensing action subject to an environmental assessment.

1.7.1 Environmental Impacts As previously discussed, the purpose of the SOE walls is to maintain excavation stability, protect adjacent structures and utilities, manage groundwater pressures, and support excavation personnel safety and constructability for select SSCs. A detailed description of the SOE walls is provided in the Preliminary Safety Analysis Report (PSAR) Section 2.5.4. The SOE walls serve no functional purpose for the SMR-300 plant SSCs post-construction. Figure 1-1 illustrates the perimeter cutoff walls and dewatering system to be installed to support dewatering during preconstruction and construction activities. Additional information on the site structures can be found in Figure 1.2-1 in Enclosure II. Traditional construction techniques, such as excavation, dewatering, and forms, will be used to install the SOE walls. The space between the SOE walls and the SSCs will be backfilled to bring the area back to planned grade, the SOE walls will be abandoned in place.

The environmental impacts associated with installing the SOE walls during the preconstruction timeframe, prior to LWA issuance, as opposed to during the SMR-300 construction period, are small and equal to those anticipated during construction activities. Environmental impacts due to construction and operation are discussed in detail in the Palisades SMR, LLC (Palisades SMR)

Pioneer Units 1 and 2 Environmental Report (ER), Enclosure III of the LWA application, and are briefly described in the following resource subsections as they relate to the walls.

1.7.1.1 Land Use As discussed in ER Section 4.1, SMR is in consultation with all relevant agencies to ensure that all site preparation and construction activities are conducted in accordance with applicable federal, state, and local regulations. It is anticipated that the implementation of construction best management practices (BMPs) minimizes impacts from construction activities and temporary construction disturbances. As discussed in ER Section 5.1, there are no identified potential impacts to local or regional land-use or economic-development plans attributable to the SMR-300 project. The timing of installing the SOE walls does not change the environmental

Exemption 1 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 1-7 impacts for operation of the SMR-300 units as no additional land-use conversion is planned once construction is completed and operation is expected to be consistent with designated land uses. Land use impacts associated with the walls are consistent with those discussed in the ER and anticipated to be SMALL.

1.7.1.2 Water Resources As discussed in ER Section 4.2, the SMR-300 plant area is not located within a flood zone, and there are no significant natural channels, rivers, or streams within, or adjacent to, the proposed SMR-300 plant area. No surface water or groundwater use is expected during construction other than dewatering activities. Preconstruction and construction water demand is expected to be met by municipal supply. As discussed in ER Section 4.2.1, the impacts related to dewatering are anticipated to be temporary and limited to the Palisades Energy Center (PEC) Site.

Construction dewatering impacts would be limited by the perimeter cutoff wall. Stormwater runoff around areas of ground disturbance will be managed and stormwater will be directed to catch basins or drainage swales.

SMR will obtain the necessary permits and implement appropriate construction BMPs prior to commencing preconstruction activities. Therefore, impacts to water resources associated with preconstruction installations are consistent with those discussed in the ER and are anticipated to be SMALL. Although there is no net change in potable water usage, the installation of the SOE walls during preconstruction activities will reduce potable water demands during the peak construction period and distribute usage more equally over preconstruction and construction timeframes.

As discussed in ER Section 5.2, the SOE walls will be abandoned in place after construction activities and during the operation of the facility. No groundwater is expected to be used as part of the operation of SMR-300 plant or the associated facilities. No permanent dewatering systems are planned for the operation of SMR-300 plant. The buildings are anticipated to be waterproofed to prevent groundwater intrusion because they are expected to be installed into the water table. Groundwater conditions in the SMR-300 plant area, including hydraulic gradients and groundwater flow rates, are expected to equilibrate to static levels over time.

Stormwater within the facility is expected to be diverted to a stormwater management system, limiting infiltration to groundwater. Therefore, the impact to water resources due to hydrologic alternations from abandonment of the SOE walls are consistent with those identified in the ER and anticipated to be SMALL.

1.7.1.3 Ecological As discussed in ER Sections 4.3 and 5.3, three wetlands onsite are regulated by Michigan Department of Environment, Great Lakes, and Energy (EGLE). To the extent possible, regulated wetlands are planned to be avoided during site construction activities and the excavation footprint does not encroach on these areas. Obtaining the necessary permits and implementing construction BMPs is expected to limit indirect impacts to wetlands, as well as impacts to wetlands from stormwater runoff. Construction of SMR-300 plant is not anticipated to result in dewatering of wetlands or changes to surface drainage patterns in a way that might affect terrestrial biota. There is no change in the planned area of disturbance due to the SOE walls or their abandonment. Therefore, the timing of installation of the walls is not expected to change the construction or operation impacts evaluated in the ER and impacts are anticipated to be SMALL.

Exemption 1 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 1-8 1.7.1.4 Socioeconomics The socioeconomic impacts for construction and operation to physical, social, economics, and community infrastructure are detailed in ER Sections 4.4 and 5.4. There was no change in the anticipated level of impacts due to the change in timing of installation of the SOE walls; however, the number of workers onsite could slightly increase during the preconstruction timeframe with a corresponding slight decrease during the construction timeframe. The socioeconomic impact of construction is based on peak construction and would remain bounding.

1.7.1.5 Historic and Cultural Resources Relative to construction, ER Section 4.6 concluded that because there are no historic or archaeological properties present within the PEC Site, no adverse effect to any historic properties is anticipated. Because there is no change in aboveground structures or change in the excavation footprint, the installation of the SOE walls during the preconstruction phase does not change the construction or operation impacts evaluated in the ER.

1.7.1.6 Air Resources Air resource impacts during construction and operation of SMR-300 plant are discussed in ER Sections 4.7 and 5.7. To construct the SMR-300 plant, SMR will obtain the required permit from EGLE. Air emissions from the facility are estimated to be below 100 tons per year for all criteria pollutants during the construction period. There is no change in proposed equipment use and, therefore, no net change in anticipated emissions as a result of the proposed change in timing of the installation of the SOE walls. Estimated offsite emissions are expected to be insignificant from all phases of the project. Direct and indirect human health impacts beyond the site boundary during building activities are anticipated to be SMALL. There is no anticipated impact to air quality as a result of the timing of installation of the walls and, as stated in the ER, operational impacts are anticipated to be SMALL.

1.7.1.7 Nonradiological Health Impacts of construction and operation on the health, public, and nonradiological occupational health, of surrounding communities are discussed in ER Sections 4.8 and 5.8, respectively. As stated in the ER, people working or living near the PEC Site may experience physical effects of noise, fugitive dust, and gaseous emissions from construction. To address these effects, SMR anticipates implementing BMPs, plans, and procedures, as well as control work area access with health and safety monitoring, as required. There would be no change in anticipated impacts during construction or operation as a result of preconstruction installation of the SOE walls. As stated in the ER, through implementation of work safety requirements and an industrial health and safety program, the occupational health impacts are anticipated to be SMALL and not beyond that expected of similar industrial development sites during construction and operation.

1.7.1.8 Radiological Health Changing the timing of installation of the SOE walls would not contribute to radiological exposure. Based on the analyses, the radiological impacts to site construction workers due to the operation of the Palisades Nuclear Plant (PNP) is SMALL. There is no change in the radiological health impacts evaluated in the ER, Sections 4.9 and 5.9, for the installation of the SOE walls.

Exemption 1 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 1-9 1.7.1.9 Nonradioactive Waste Management Environmental impacts that could result from the generation, handling, and disposal of nonradioactive waste during construction and operation are detailed in ER Sections 4.10 and 5.10, respectively. The installation of the SOE walls during preconstruction activities does not impact overall waste volumes during construction or operation, solely the timing of generation of waste.

1.7.2 Environmental Impacts Conclusion Therefore, the impacts are anticipated to be no more than MODERATE and consistent with those evaluated in the ER.

1.8 Conclusion In Accordance with 10 CFR 50.12, SMR is requesting an exemption, from 10 CFR 50.10(c) to allow for construction of SOE walls prior to LWA issuance to support excavation for a dual-unit SMR-300 plant on the Palisades Energy Center (PEC) site. Based on the considerations discussed above, SMR proposes that the requested exemption is authorized by law, will not present an undue risk to the public health and safety, is consistent with the common defense and security, and special circumstances are present as set forth in 10 CFR 50.12(a)(2).

Additionally, SMR proposes that the requested exemption does not give rise to a significant adverse impact on the environment, will allow redress to be reasonably effected for any adverse environment impacts, will not foreclose subsequent adoption of alternatives, and delaying SOE wall installation will have an effect on the public interest as set forth in 10 CFR 50.12(b).

1.9 References

1.

SMR, LLC, Letter to U.S. NRC, Submittal of Pioneer Units 1 and 2 Limited Work Authorization Application (Docket No. 05000616 and 05000617), dated December 2025, Enclosure III, Environmental Report.

2.

Keller, Job Number 14111228 Final LWA Design Deliverable (Revision 1), to Palisades Power Plant Covert Township, Michigan, Diaphragm Wall & Soldier Pile Soil Mixed Wall Support of Excavation, dated December 19, 2025.

Exemption 1 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 1-10 Figure 1-1 Site Walls Layout

Pioneer Units 1 & 2 Construction Permit Application Part I Enclosure IV Exemptions Enclosure IV Exemptions Attachment B Exemption 2 10 pages follow within attachment

Exemption 2 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 2-1 2

10 CFR 50.10(d)(1) Exemption Request to Install Additional Structures, Systems, and Components 2.1 Proposed Exemption In accordance with the requirements of Title 10 of the Code of Federal Regulations (10 CFR) 50.12, Specific exemptions, SMR, LLC (SMR), on behalf of Palisades SMR, LLC, hereby requests exemption from portions of 10 CFR 50.10, License required; limited work authorization, paragraph (d), Request for limited work authorization, 10 CFR 50.10(d), for the dual-unit SMR-300 plant located at the Palisades Energy Center (PEC) in Covert, Michigan.

Specifically, SMR is requesting an exemption from 10 CFR 50.10(d)(1) to allow construction of structures, systems, and components (SSCs) beyond those described in 10 CFR 50.10(d)(1).

The proposed exemption would allow SMR to proceed, prior to issuance of the construction permit, with this additional limited construction activity needed to prevent costly delays in site preparation and supports the timely addition of generation to meet regional power needs.

Compliance with the regulation would represent an undue hardship or costs significantly in excess of those contemplated when the regulation was adopted.

SMR is requesting that the U.S. Nuclear Regulatory Commission (NRC) grant this exemption request coincident with issuance of the limited work authorization (LWA) associated with this application.

2.2 Background

This exemption request would allow installation of SSCs beyond those allowed by 10 CFR 50.10(d)(1). The preliminary safety analysis report (PSAR), submitted as Enclosure II to this LWA application, contains the required construction design and details applicable to the SSCs that are within the LWA application scope (including associated exemption requests). The SSCs installed under this exemption will be designed and constructed using the same requirements that would be applicable to construction under a traditionally issued construction permit (CP). Additionally, consistent with 10 CFR 50.10(d)(3)(i), the PSAR provides a complete description of the quality assurance measures applicable to design and construction of the LWA SSCs.

In accordance with 10 CFR 2.101, Filing of application, subsection (a)(9),

10 CFR 2.101(a)(9)(ii), SMR is submitting this LWA application as the first of a two-part construction permit application (CPA). SMR intends to submit the second part of the application, which includes the remainder of the CPA (CPA Part 2), within 18 months of this submittal. The CPA Part 2 will include a PSAR revision that contains an updated description of the SMR-300 plant SSCs that are within the scope of the LWA (including those SSCs added by NRC granted exemptions), to add the interface considerations between the LWA SSCs and the remainder of the dual-unit SMR-300 plant SSCs.

SMR acknowledges that activities undertaken with a LWA are performed entirely at the risk of the applicant, and that issuance of the LWA has no bearing on the issuance of the subsequent CP. Should the NRC identify SSC safety concerns during review of CPA Part 2, SMR will be responsible for the necessary action(s) to remediate the condition.

Exemption 2 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 2-2 2.3 Detailed Description SMR is requesting an exemption from the limitation on activities that can be performed under an LWA, as described in 10 CFR 50.10(d)(1), to allow construction of SSCs as listed in Table 2-1 below. In addition to the list of SSCs, Table 2-1 also provides reference to the corresponding LWA application PSAR section (Enclosure II of the LWA application), which provides a more detailed description of the SSC.

Table 2-1. SSCs within the Scope of this Exemption Request SSC PSAR Section Reactor Building and Containment Internal Structures Steel-concrete containment vessel (SCCV) 3.8.1 Additional SSCs inside the SCCV Bio-shield wall Passive core makeup water tank walls Spent fuel pool walls 3.8.3 3.8.3 3.8.3 Containment internal structures (walls and columns) 3.8.3 Reactor coolant pump support blocks 3.8.3 Transfer girder 3.8.1 Intermediate Building (IB) Structures IB exterior walls 3.8.4 Reactor Auxiliary Building (RAB) Structures RAB exterior walls 3.8.4 RAB internal structures (walls and columns) 3.8.4 Additional Structures, Systems, and Components Turbine Building structural steel 1.2 Buried electrical duct banks 8.3 Raw Water System basin 9.2.9 Fire Protection System structures, systems and components 9.5.1 2.4 Justification for Exemption In accordance with 10 CFR 50.12, the Commission may, upon application by any interested person, or upon its own initiative, grant exemptions from the requirements of the regulations of Part 50 which are authorized by law, will not present an undue risk to the public health and

Exemption 2 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 2-3 safety, and are consistent with the common defense and security. 10 CFR 50.12 also states that the Commission will not consider granting an exemption unless special circumstances are present. Additionally, 10 CFR 50.12(b) requires that, in considering an exemption request permitting the conduct of activities prior to the issuance of a construction permit prohibited by 10 CFR 50.10, the Commission must consider and balance the following factors:

1) Whether conduct of the proposed activities will give rise to a significant adverse impact on the environment and the nature and extent of such impact, if any;

2) Whether redress of any adverse environment impact from conduct of the proposed activities can reasonably be effected should such redress be necessary;

3) Whether conduct of the proposed activities would foreclose subsequent adoption of alternatives; and

4) The effect of delay in conducting such activities on the public interest, including the power needs to be used by the proposed facility, the availability of alternative sources, if any, to meet those needs on a timely basis and delay costs to the applicant and to consumers.

2.4.1 Criteria of 10 CFR 50.12(a) 2.4.1.1 The Exemption is Authorized by Law 10 CFR 50.12 allows the NRC to grant exemptions from the requirements of 10 CFR Part 50.

The requested exemption to 10 CFR 50.10(d)(1) to allow construction of the SSCs as listed in Table 2-1 above prior to CP issuance, that are beyond those allowed by 10 CFR 50.10(d)(1),

does not result in a violation of the Atomic Energy Act of 1954, as amended, or the Commissions regulations. As specifically recognized in 10 CFR 50.12(b) the Commission may grant exemptions associated with the conduct of activities prior to the issuance of a construction permit prohibited by 10 CFR 50.10. Therefore, this exemption is authorized by law.

2.4.1.2 The exemption will not present an undue risk to public health and safety Design and construction of the SSCs as listed in Table 2-1 above will be performed in accordance with the quality assurance requirements submitted in the SMR-300 CP application and as approved by the NRC. The quality assurance practices that will be applied to each SSC are described in the PSAR, Enclosure II to the LWA application, and the Quality Assurance Program Description, Enclosure VII to the LWA application. The revised PSAR, to be submitted with CPA Part 2, will provide additional information on the interfaces between the LWA SSCs (including those SSCs added by NRC granted exemptions) and the remainder of the dual-unit SMR-300 plant SSCs that describes their safety attributes in the context of the integrated plant.

Therefore, this exemption does not present an undue risk to public health and safety.

2.4.1.3 The exemption is consistent with the common defense and security This exemption, to allow construction of the SSCs as listed in Table 2-1 above prior to CP issuance, does not affect the design, function, or operation of structures or plant equipment that is necessary to maintain the secure status of the plant. The requested exemption has no impact on plant security or safeguards procedures. Therefore, the proposed exemption is consistent with the common defense and security.

Exemption 2 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 2-4 2.4.2 Criteria of 10 CFR 50.12(b) 2.4.2.1 The exemption will not give rise to a significant adverse impact on the environment This exemption, to allow construction of the SSCs as listed in Table 2-1 above prior to CP issuance, will have non-detectable or so minor environmental effects that they will neither destabilize nor noticeably alter any important attribute of the Palisades Energy Center (PEC) site. This conclusion is supported by the comprehensive environmental report (ER), included as Enclosure III to the LWA application, that addresses the nature and extent of the environmental impact associated with this exemption request, the remainder of the construction activities necessary to construct the plant, and plant operations.

The ER determined the environmental impact of the LWA activities, including the SSCs as listed in Table 2-1 above to be no more than MODERATE for the following potential environmental impacts.

1) Land-use

2) Water-Use

3) Water-Quality

4) Terrestrial and Wetlands

5) Aquatic

6) Socioeconomic

7) Historic and Culture

8) Air

9) Nonradiological Health

10) Radiological Health

11) Nonradiological Waste Management Therefore, this activity will not give rise to an adverse environmental impact.

2.4.2.2 The exemption will allow redress to be reasonably effected for any adverse environment impacts As discussed above, this exemption to allow construction of the SSCs as listed in Table 2-1 above prior to CP issuance, will not result in significant adverse environmental impacts. Should redress be necessary, the below-grade portions of the LWA SSCs (including those SSCs added by NRC granted exemptions) that are not removed will be retired in place, backfilled, and graded to conform to the adjacent land surface, allow stormwater runoff, and prevent soil erosion. The above grade portions of the LWA SSCs will be removed. Specific details in the redress plan addresses both the LWA activities permissible under 10 CFR 50.10 and those construction activities for which exemptions are requested. The redress plan is included as Enclosure VIII to the LWA.

Exemption 2 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 2-5 2.4.2.3 The exemption will not foreclose subsequent adoption of alternatives This exemption to allow construction of the SSCs as listed in Table 2-1 above prior to CP issuance will not foreclose subsequent adoption of alternatives. As discussed above, construction and retiring in place the below-grade portions of the LWA SSCs (including those SSCs added by NRC granted exemptions) that are not removed does not impact the environment. The above-grade portions of the LWA SSCs will be removed. The SSCs retired in place includes grading the impacted areas to conform to the adjacent land surface which will support adoption of subsequent alternatives. Also, while not anticipated to be necessary for adoption of subsequent alternatives, the costly removal of below-grade LWA SSCs could be performed.

A discussion of potential subsequent alternatives that could be pursued in lieu of SMR-300 plant construction are provided in Enclosure III, Environmental Report (ER), Chapter 9, of this LWA application.

2.4.2.4 Delaying construction will have an effect on the public interest If this exemption to allow construction of the SSCs as listed in Table 2-1 above prior to CP issuance is not approved, construction of these SSCs will be delayed, which will add significant time delay and construction costs to the SMR-300 plant project. Delaying the construction of the dual-unit Palisades SMR-300 plant, will delay the addition of 680 mega-watts of clean energy and a reliable lower cost energy supply for working families and small businesses in the state of Michigan.

2.5 Special Circumstances 10 CFR 50.12(a)(2) states that the Commission will not consider granting an exemption unless special circumstances are present and identifies in 10 CFR 50.12(a)(2)(i)-(vi) when special circumstances are present. Special circumstances are present and those applicable to this exemption are discussed below.

2.5.1 Compliance Results in Undue Hardship 10 CFR 50.12(a)(2)(iii) states, compliance would result in undue hardship or other costs that are significantly in excess of those contemplated when the regulation was adopted, or that are significantly in excess of those incurred by others similarly situated.

2.5.1.1 Considerations in Adoption of the LWA Rule The LWA concept was initially proposed in 1974 (39 FR 4582, February 5, 1974) (Reference 1),

and the rule was issued later that year (39 FR 14506; April 24, 1974) (Reference 2). At the time, specific NRC authorization was needed to perform site preparation, excavation, and other non-safety-related work. The NRC introduced the LWA concept to improve construction timelines by allowing constructors to begin some site activity prior to issuance of a CP.

SECY-R-74-167 (Reference 3) describes the NRCs responses to comments on the proposed rule. In particular, the SECY responds to comments relating to the extent of activity that should be allowed prior to a full hearing and decision on safety matters (i.e., full CP approval). The SECY documents the NRCs thinking at the time the LWA concept was established in 10 CFR Part 50.

Exemption 2 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 2-6 As discussed in SECY-R-74-167, the NRC considered multiple options for the activities that should be allowed under an LWA. Significant factors in evaluating the alternatives included:

(1) the schedule improvement that can be achieved by allowing the proposed scope to occur prior to CP approval, (2) the administrative and procedural burden on the regulatory organization and hearing delays, and (3) predictability and preciseness of the regulation. An additional consideration is redacted from the SECY.

Upon balancing these considerations, the NRC determined that the appropriate scope of work for an LWA would include:

(i) site preparation, (ii) installation of temporary construction support facilities, (iii) excavation, (iv) installation of service facilities, and (v) installation of non-safety-related SSCs.

The NRC included an additional provision to allow installation of foundations for safety-related structures (at the time, 10 CFR 50.10(e)(3)), provided that relevant safety concerns are addressed.

When the NRC evaluated the schedule improvement afforded by the LWA concept, it focused on critical path work that could occur in the period between LWA approval and full CP approval, which the NRC expected to be roughly 10 months. On page eight of SECY-R-74-167, the NRC noted that there is: a strong incentive to ensure that the rule establishing the LWAs incorporates sufficient critical path work to effectively utilize the time saving that an LWA offers.

(emphasis in original) The NRC considered that site preparation and other non-safety-related activities would represent the critical path for most of the time between LWA and CP approval.

However, the NRC recognized that in many cases, non-safety-related critical path work will be completed prior to approval of the CP. To address this issue, the NRC created the additional allowance to install safety-related foundations.

Balancing schedule improvement with the other considerations, the NRC determined that site preparation, non-safety-related work, and installation of foundations was the appropriate scope for an LWA.

The 2007 revision to 10 CFR 50.10 removed many activities from the definition of construction due to an updated understanding of the NRCs responsibilities under the National Environmental Policy Act (72 FR 57416; October 9, 2007) (Reference 4). The updated definition in 10 CFR 50.10(a) specifically excludes site preparation, installation of construction support facilities, installation of service facilities, and excavation. After the 2007 rule was issued, the only activities that require NRC authorization but can be performed under an LWA are those associated with installation of foundations for SSCs within the definition of construction (e.g.,

subsurface preparation, installation of permanent retaining walls, and installation of foundations).

2.5.1.2 Application of the Modern LWA Rule to 10 CFR Part 50 Construction Under 10 CFR 2.101(a)(9), for Part 50 applicants, the maximum duration between submittal of

Exemption 2 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 2-7 an LWA application (CPA Part 1) and the remainder of the CP application (CPA Part 2) is 18 months. Assuming a 12-month review for LWA application (CPA Part 1) and an 18-month review period for the CP application (CPA Part 2), the duration between issuance of the LWA (CPA Part 1) and CPA Part 2 would also be 24 months as shown in Figure 2-1. If the LWA review is faster or the CPA Part 2 review is slower, then the duration could be longer.

The critical path work for the Palisades SMR-300 plant includes site preparation and excavation that will continue prior to issuance of the LWA. Upon issuance of an LWA, SMR would be authorized to perform additional critical path work (installation of permanent retaining walls, subsurface preparation, and foundations). The critical path work allowed by 10 CFR 50.10(d) can be accomplished more quickly than the 24 months that are anticipated between issuance of the LWA and issuance of CPA Part 2. SMR estimates that critical path work associated with foundations for the major SMR-300 structures (the Reactor Building, Reactor Auxiliary Building, and Turbine Building) can be installed in roughly 15 months following issuance of the LWA.

2.5.1.3 Undue Hardship SMR requests approval to install the SSCs as listed in Table 2-1 above prior to CP issuance, to ensure that critical path construction can proceed continuously for the anticipated 24-month duration that may exist between issuance of the LWA and CPA Part 2. All information relevant to the safety functions of the Table 2-1 listed SSCs is included in the LWA application. In addition, the comprehensive Environmental Report included as Enclosure III of the LWA application provides the relevant information to perform the required environmental assessment of the LWA application.

If the exemption is not granted, SMR will face an undue hardship significantly in excess of that contemplated when the regulation was adopted. In development of the LWA rule, the NRC considered that the proposed scope of work was sufficient to fill the duration between LWA issuance and issuance of CPA Part 2. At the time the regulation was adopted, the NRC did not contemplate that modern understandings of NEPA would decrease the critical path work to a time period much shorter than the time between the LWA and CPA Part 2 issuances.

If this exemption is not granted, SMR will either need to 1) after LWA issuance complete the regulatory allowed LWA work and then wait several months until CPA Part 2 issuance to begin the work on SSCs as listed in Table 2-1 above, or 2) demobilize its construction workforce while awaiting issuance of CPA Part 2. Either option represents a significant cost. In both cases, the delay to construction would delay the start of plant operations and delivery of power to the grid.

In the second option, additional costs would be incurred to demobilize and remobilize the construction workforce.

The NRCs allowance to install foundations in the 1974 rule indicated that the staff considered the possibility that safety-related construction could be pursued under an LWA, provided that sufficient information to support a safety evaluation was provided. This application includes the necessary information to support a safety evaluation for the requested additional LWA scope.

2.5.2 Conclusion These circumstances clearly demonstrate an undue hardship significantly in excess of the circumstances and associated hardships that were anticipated when the regulation was adopted and as such, provide justification for the issuance of this exemption.

Exemption 2 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 2-8 2.6 Environmental Assessment In accordance with 10 CFR 51.21, Criteria for and identification of licensing and regulatory actions requiring environmental assessments, an exemption is a licensing action subject to an environmental assessment.

The proposed construction of the SSCs as listed in Table 2-1 above will have non-detectable or so minor environmental effects that they will neither destabilize nor noticeably alter any important attribute of the Palisades Energy Center (PEC) site. This conclusion is supported by the ER, included as Enclosure III to this LWA application, that addresses the nature and extent of the environmental impact associated with this exemption request, the remainder of the construction activities necessary to construct the plant, and plant operations.

The ER determined the environmental impact of the LWA activities, including the construction of the SSCs as listed in Table 2-1 of this exemption request to be no more than MODERATE impact for the following potential environmental impacts.

1)

Land-use

2)

Water-Use

3)

Water-Quality

4)

Terrestrial and Wetlands

5)

Aquatic

6)

Socioeconomic

7)

Historic and Culture

8)

Air

9)

Nonradiological Health

10)

Radiological Health

11)

Nonradiological Waste Management Therefore, the impacts are anticipated to be no more than MODERATE and consistent with those evaluated in the ER.

2.7 Conclusion Pursuant to the provisions of 10 CFR 50.12, SMR is requesting an exemption, from 10 CFR 50.10(d)(1) to allow construction of the SSCs as listed in Table 2-1 above prior to CP issuance to support critical path construction activities for a dual-unit SMR-300 plant on the Palisades Energy Center (PEC) site. Based on the considerations discussed above, SMR proposes that the requested exemption is authorized by law, will not present an undue risk to the public health and safety, is consistent with the common defense and security, and special circumstances are present as set forth in 10 CFR 50.12. Additionally, SMR proposes that the requested exemption does not give rise to a significant adverse impact on the environment, will allow redress to be reasonably effected for any adverse environment impacts, will not foreclose subsequent adoption of alternatives, and delaying construction of the SSCs as listed in

Exemption 2 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 2-9 Table 2-1 above will have an effect on the public interest as set forth in 10 CFR 50.12(b).

2.8 References

1.

Federal Register Notice 39 FR 4582, Nuclear Regulatory Commission, dated February 5, 1974.

2.

Federal Register Notice 39 FR 14506, Nuclear Regulatory Commission, dated April 24, 1974.

3.

SECY-R-74-167, Accelerating the Start of Construction of Nuclear Power Plants, Nuclear Regulatory Commission, dated April 15, 1974.

4.

Federal Register Notice 72 FR 57416, Nuclear Regulatory Commission, dated October 9, 2007.

Exemption 2 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 2-10 Figure 2-1 Application and Construction Schedule

Pioneer Units 1 & 2 Construction Permit Application Part I Enclosure IV Exemptions Enclosure IV Exemptions Attachment C Exemption 3 8 pages follow within attachment

Exemption 3 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 3-1 3

10 CFR 50.33(f)(1) and 10 CFR Part 50, Appendix C Exemption Request to Provide Alternate Financial Qualifications 3.1 Proposed Exemption In accordance with the requirements of Title 10 of the Code of Federal Regulations (10 CFR) 50.12, Specific exemptions, SMR, LLC (SMR), on behalf of Palisades SMR, LLC, hereby requests exemption from portions of 10 CFR 50.33, Contents of applications; general information, paragraph (f)(1), 10 CFR 50.33(f)(1), and 10 CFR 50 Appendix C, A Guide for the Financial Data and Related Information Required to Establish Financial Qualifications for Construction Permits and Combined Licenses, for the dual-unit SMR-300 plant located at the Palisades Energy Center (PEC) in Covert, Michigan. Specifically, SMR is requesting an exemption from 10 CFR 50.33(f)(1) and 10 CFR 50 Appendix C to allow the application of the financial qualification standards required by 10 CFR 70.23, Requirements for the approval of applications, paragraph (a)(5), 10 CFR 70.23(a)(5), that the applicant appears to be financially qualified, in lieu of the construction financial qualification requirements in 10 CFR 50.33(f) and 10 CFR 50 Appendix C. This exemption request does not alter the underlying purpose of 10 CFR 50.33(f) nor 10 CFR 50 Appendix C. Compliance with 10 CFR 50.33(f) and 10 CFR 50 Appendix C, would not serve the underlying purpose of the rule, would represent an undue hardship of costs significantly in excess of those contemplated when the regulation was adopted, would provide only temporary relief from the applicable regulation, and material circumstance is present that was not considered when the regulation was adopted.

SMR is requesting that the U.S. Nuclear Regulatory Commission (NRC) grant this exemption request coincident with issuance of the limited work authorization (LWA) associated with this application.

3.2 Background

10 CFR 50.33(f)(1) requires a construction permit application (CPA) to include sufficient information to demonstrate that the applicant has reasonable assurance of obtaining the funds necessary to cover the costs of construction. 10 CFR Part 50, Appendix C, requires newly-formed companies that are not rate-regulated utilities to specifically identify the source(s) of funds that will be used to cover those costs.

These regulations were developed before electric market restructuring led to a significant increase in the number of nuclear facility owners and applicants who are not subject to cost-of-service ratemaking. Instead of relying on ratepayer collections to fund construction, merchant plant applicants generally resort to traditional project finance mechanisms. As prior applicants for merchant plants have explained, it is difficult, if not impossible, to finance nuclear construction prior to submission of the initial CPA to the NRC because lending institutions generally require submission (if not issuance) of the initial CPA as a condition to financing.

In SECY-13-0124 (Reference 1), NRC staff recognized the impact of these requirements on merchant plant applicants and recommended rulemaking to amend or rescind the financial

Exemption 3 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 3-2 regulations in Part 50 to allow such applicants to obtain NRC licenses without having to finance construction at the outset. The Commission approved staffs recommendation and directed staff to undertake rulemaking to align Part 50 with the financial standard in Part 70 applicants, that the applicant appears to be financially qualified (Reference 2). Rather than requiring a description of already-committed funding, the Part 70 standard is meant to ensure that the applicant [has] both a well-articulated understanding of the size of the project it [is] undertaking, and the financial capacity to obtain the necessary financing when it [is] ready to begin construction (Reference 1). The Commission directed NRC staff to consider exemptions for merchant plant applicants during the rulemaking.

In response, NRC issued such an exemption with the South Texas Project, Units 3 and 4 combined licenses (COLs) (Reference 3) and developed a proposed rule and regulatory basis document to address the issue for similarly-situated applicants (References 4 and 5). Staffs proposed rule required merchant plant applicants to submit a financial capacity plan that reflects the applicants level of understanding of the size and scope of the project, including the level of capital necessary to undertake the project and the experience, skills, and expertise required to obtain proper financing and ultimately finance the project, when appropriate (Reference 4). Staff guidance in Reference 5 contemplated that applicants who had not secured financing for more than 50% of project costs would propose a license condition to ensure financing was in place before the start of nuclear construction.

In 2022, the Commission disapproved the proposed rule and directed NRC staff to address the issue instead in the 10 CFR Part 53 rulemaking and, as part of that process, to solicit input from prospective Part 50 or Part 52 applicants regarding the present-day need for the proposed changes (Reference 6). This decision was motivated, in part, by the Commissioners view that the need for changes to financial qualifications may no longer be as acute of a concern for merchant plant applicants given intervening changes in nuclear reactor size and design and potential changes in the project finance landscape in the decade since this rulemaking effort initiated (Reference 7).

In response to the Part 53 solicitation, the Nuclear Energy Institute (NEI) filed comments supporting the approach the Commission approved to adopt Part 70s standard requiring that the applicant appears to be financially qualified (Reference 8). Two recent applicants for Part 50 construction permits, Kemmerer Power Station Unit 1 (Reference 9) and Long Mott Generating Station (Reference 10), have also requested exemptionsmodeled off the exemption granted for the South Texas Project COLs, that would allow them to use the Part 70 standard. NRC staffs recently completed safety evaluation for the Kemmerer construction permit (Reference

11) approved a similar exemption request to the one submitted with this application, subject to final Commission action on issuance of the Kemmerer construction permit.

Therefore, SMR is requesting an exemption from the requirements of 10 CFR 50.33(f)(1) and Part 50, Appendix C that require an applicant to identify specific sources of construction funds at this early stage of the Project, and instead, be allowed to demonstrate its qualifications under the 10 CFR Part 70 standard, that the applicant appears to be financially qualified.

3.3 Detailed Description SMR is requesting this exemption from the financial qualification requirements in 10 CFR 50.33(f) and 10 CFR 50 Appendix C, to allow SMR to demonstrate its financial

Exemption 3 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 3-3 qualifications under 10 CFR 70.23(a)(5), which requires demonstration that, the applicant appears to be financially qualified.

This LWA Application (also referred to as Part 1 of the Construction Permit (CP) Application) includes information to demonstrate that SMR appears to be financially qualified based on the NRC staff guidance provided in Reference 5. The Financial Capacity Plan, included in to this LWA application, demonstrates SMRs level of understanding of the size and scope of the project, including the level of capital necessary to undertake the project, and the organizational and human resources, experience, skills, and expertise required to obtain proper financing and to ultimately finance the SMR-300 plant, when appropriate. Also consistent with NRC guidance in Reference 5, SMR has proposed a license condition that will require confirmation of financing for the SMR-300 plant prior to the relevant construction phase.

This exemption is warranted for the reasons discussed in NRCs evaluation of the issue, recounted above. The financial realities that motivated the Commission to direct NRC staff to undertake rulemaking a decade ago have not changed. As discussed in CP Part 1 (LWA), SMR intends to finance up to 80% of the SMR-300 plant construction costs via a Department of Energy (DOE) loan guarantee under Title XVII of the Energy Policy Act of 2005, as amended, which Congress enacted to support financing of nuclear construction projects like the SMR-300 plant (among other qualifying projects). DOE regulations, 10 CFR 609, Loan guarantee for Clean Energy Projects, paragraph 8, Loan guarantee agreement, subparagraph (b)(15),

10 CFR 609.8(b)(15), require that, [t]he Borrower shall have filed applications for or obtained any required regulatory approvals for the Eligible Project, as a condition to issuance of a Title XVII loan guarantee. 10 CFR 609, paragraph 7, Closing on the loan guarantee agreement, subparagraph (a)(5), 10 CFR 609.7(a)(5), also requires DOE to complete any necessary environmental reviews under the National Environmental Policy Act (NEPA) as a condition to closing, which DOE has historically done by relying on NRC as the lead NEPA agency for nuclear projects. In order to comply with the above DOE regulatory requirements applicable to obtaining SMR-300 plant financing, SMR must first submit a LWA application to the NRC.

However, based on current NRC regulations, SMR cannot submit a complete LWA application unless it has already obtained DOE financing. This conflict in regulations prevents SMR from submitting a LWA application that does not provide any corresponding safety benefit. Hence the need for an exemption from 10 CFR 50.33(f) and 10 CFR 50 Appendix C.

3.4 Justification for Exemption In accordance with 10 CFR 50.12, the Commission may, upon application by any interested person, or upon its own initiative, grant exemptions from the requirements of the regulations of Part 50 which are authorized by law, will not present an undue risk to the public health and safety, and are consistent with the common defense and security. 10 CFR 50.12 also states that the Commission will not consider granting an exemption unless special circumstances are present.

3.4.1 Criteria of 10 CFR 50.12(a) 3.4.1.1 The Exemption is Authorized by Law 10 CFR 50.12 allows the NRC to grant exemptions from the requirements of 10 CFR Part 50.

The requested exemption to 10 CFR 50.33(f) and 10 CFR 50 Appendix C to allow the

Exemption 3 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 3-4 application of the financial qualification standards required by 10 CFR 70.23(a)(5), that the applicant appears to be financially qualified, in lieu of the construction financial qualification requirements in 10 CFR 50.33(f) and 10 CFR 50 Appendix C, does not result in a violation of the Atomic Energy Act (AEA) or any other law. The Commission has broad discretion under Section 182a. of the AEA to require such information as the Commission, by rule or regulation, may determine to be necessary to decide such of the technical and financial qualifications of the applicant, the character of the applicant, the citizenship of the applicant, or any other qualifications of the applicant as the Commission may deem appropriate for the license. The Commission has confirmed that, Section 182a. of the AEA does not impose any financial qualifications requirement on license applicants; it merely authorizes the Commission to impose such financial requirements as it may deem appropriate. (Public Service Co. of New Hampshire (Seabrook Station, Units 1 & 2), CLI-78-1, 7 NRC 1, 8-9 (1978)). Likewise, the U.S. Court of Appeals for the First Circuit has explained that [t]he Act gives the NRC complete discretion to decide what financial qualifications are appropriate. (New England Coalition on Nuclear Pollution v. NRC, 582 F.2d 87, 93 (1st Cir. 1978)). Therefore, the exemption is authorized by law.

3.4.1.2 The exemption will not present an undue risk to public health and safety This exemption does not affect NRC safety requirements that apply to the design, construction, or operation of the SMR-300 plant. Allowing SMR to proceed under the Part 70 financial qualification standard at this early stage of the project will not compromise safety because (1) SMR must still demonstrate its capacity to obtain the necessary financing in the future, (2) the proposed license condition will ensure that the applicable construction phases cannot proceed until adequate financing is in place, and (3) in light of NRCs multiple layers of licensing reviews and oversight, there is no direct correlation between nuclear safety and the financial qualifications of a LWA applicant.

References 1 and 5 include a detailed review of the history, efficacy, and necessity of NRCs financial requirements as an indirect proxy for plant safety. Reference 1 recounts NRCs response to electricity market restructuring and concerns that non-rate-regulated licensees may not have access to sufficient funds to safely operate merchant plants. Reference 5 discusses the multitude of programs and processes that more directly ensure safe construction and operation of merchant plants, including technical licensing reviews, the construction reactor oversight process, reactor oversight process, resident inspector program, operating experience program, vendor inspection program, and quality assurance inspection program. In light of these programs and processes, and accounting for NRCs safety mission (which does not require NRC to determine if a particular project is financially viable or is likely to be completed), NRC staff concluded that the details required by the current Part 50 regulations go well beyond

[NRCs] mandate of ensuring safety (Reference 5).

Accordingly, the exemption will not compromise public health and safety because the NRC maintains a number of oversight programs and processes that directly ensure the SMR-300 plant will be safely constructed and operated. These programs are well established and provide reliable mechanisms to readily identify any degradation in SMR performance independent of the timing or details of construction financing. In any event, the proposed license condition will ensure that SMR has obtained sufficient funding prior to the start of each phase of construction.

Therefore, this exemption does not present an undue risk to the public health and safety.

Exemption 3 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 3-5 3.4.1.3 The exemption is consistent with the common defense and security This exemption, to 10 CFR 50.33(f) and 10 CFR 50 Appendix C to allow the application of the financial qualification standards required by 10 CFR 70.23(a)(5), that the applicant appears to be financially qualified, in lieu of the construction financial qualification requirements in 10 CFR 50.33(f) and 10 CFR 50 Appendix C does not affect the design, function, or operation of structures or plant equipment that is necessary to maintain the secure status of the plant. The requested exemption has no impact on plant security or safeguards procedures. Therefore, the proposed exemption is consistent with the common defense and security.

3.5 Special circumstances 10 CFR 50.12(a)(2) states that the Commission will not consider granting an exemption unless special circumstances are present and identifies in 10 CFR 50.12(a)(2)(i)-(vi) when special circumstances are present. Special circumstances are present and those applicable to this exemption are discussed below.

3.5.1 Application of the regulation would not serve the underlying purpose of the rule 10 CFR 50.12(a)(2)(ii) states, application of the regulation in the particular circumstances would not serve the underlying purpose of the rule or is not necessary to achieve the underlying purpose of the rule.

The purpose of the financial qualification documentation required by 10 CFR 50.33(f)(1) and 10 CFR 50, Appendix C for a LWA application is to prevent safety issues during construction due to insufficiently funded projects. As discussed above, NRC reviewed the use of financial qualifications as a proxy for safety at merchant plants and concluded that the current Part 50 requirements go beyond NRCs safety mission and are unnecessary in light of the multiple layers of regulatory protection that directly ensure safe construction and operation. In evaluating SMRs financial qualification under the Part 70 standard, NRC will still evaluate SMRs capacity to obtain the necessary financing, and the proposed license condition ensures that sufficient financing will be in place before the relevant phase of nuclear construction. This demonstration, and all of the programs and processes the NRC uses to directly regulate safety, ensure public health and safety during construction, without the need to provide the information contemplated by 10 CFR 50.33(f)(1) and Part 50, Appendix C in this initial application. Accordingly, the special circumstances described in 10 CFR 50.12(a)(2)(ii) are present.

3.5.2 Compliance Results in Undue Hardship 10 CFR 50.12(a)(2)(iii) states, Compliance would result in undue hardship or other costs that are significantly in excess of those contemplated when the regulation was adopted, or that are significantly in excess of those incurred by others similarly situated.

Strict adherence to the existing requirements of 50.33(f)(1) and Part 50, Appendix C would functionally require SMR to secure financing for the SMR-300 plant before submitting this LWA application to the NRC. As discussed above, and as recounted in NRCs reviews of this topic, such a requirement is impractical in light of the fact that financial institutions typically require submission of the LWA to the NRC (if not approval) as a condition to financing. DOE regulations implementing the Title XVII loan program that congress created to support advanced nuclear

Exemption 3 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 3-6 projects require borrowers to submit NRC CPAs prior to obtaining DOE financing. Even assuming construction financing could be obtained from private lenders so far in advance of construction, strict adherence to NRCs Part 50 financial qualification requirements would still require merchant plant applicants to incur additional financing costs and/or accept materially less favorable lending terms to account for risks associated with financing a project so far in advance and to address perceptions in the financial community regarding the uncertainty of obtaining regulatory approvals. Such a result would limit the number of applicants who may realistically satisfy the requirements for a CPA and create an unnecessary impediment to the initial licensing of a merchant plant. Accordingly, the special circumstances described in 10 CFR 50.12(a)(2)(iii) are present.

3.5.3 Provides only Temporary Relief from Applicable Regulation 10 CFR 50.12(a)(2)(v) states, The exemption would provide only temporary relief from the applicable regulation and the licensee or applicant has made good faith efforts to comply with the regulation.

The exemption would only provide temporary relief by allowing SMR to submit this LWA application based on the demonstration of SMRs capacity to obtain the necessary financing in the future, followed by a demonstration that it has actually obtained that financing before the start of each phase of nuclear construction. In other words, the demonstration contemplated by 10 CFR 50.33(f)(1) and Part 50, Appendix C will be made, just not in the LWA application. The Financial Capacity Plan provided in Enclosure I of this LWA describes the efforts SMR has taken towards financing the SMR-300 plant, even at this early stage. Accordingly, the special circumstances described in 10 CFR 50.12(a)(2)(v) are present.

3.5.4 Other Material Circumstance Not Considered 10 CFR 50.12(a)(2)(vi) states, There is present any other material circumstance not considered when the regulation was adopted for which it would be in the public interest to grant an exemption.

Following adoption of the current regulations in 10 CFR 50.33(f)(1) and Part 50, Appendix C, the NRC extensively examined the ongoing efficacy and necessity of these regulations. In 2014, the Commission approved the NRC staffs plan to amend the financial qualification requirements to align with the appears to be financially qualified standard of Part 70. The Commission directed staff to consider exemptions from Part 50 in the meantime. Staff complied and developed a detailed regulatory basis for the proposed amendment to Part 50, including the guidance that SMR has followed in Part 1 of this CPA. While the Commission has since directed staff to fold this rulemaking into the omnibus Part 53 rule, the Commissions reasons for doing so did not call into question the original logic for modifying Part 50 or for granting exemptions in the meantime. Indeed, as evidenced by industry feedback on the Part 53 rule and exemption requests that accompany Part 50 applications, there is still a need to address this topic through rulemaking and, in the meantime, exemptions. The regulatory bases the NRC developed to support amending 10 CFR 50.33(f)(1) and Part 50, Appendix C are equally applicable to the requested exemption. Accordingly, special circumstances described in 10 CFR 50.12(a)(2)(vi) are present.

Exemption 3 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 3-7 3.6 Precedent U.S. Nuclear Regulatory Commission (NRC) Final Safety Evaluation Report to South Texas Project (STP), Final Safety Evaluation Report for the South Texas Project Units 3 and 4, Combined License Application, Chapter 1 - Introduction, dated September 29, 2015 (ADAMS Accession No. ML15271A126)

U.S. Nuclear Regulatory Commission (NRC) Final Safety Evaluation Report to U.S. SFR Owner, LLC, Safety Evaluation Related to the U.S. SFR Owner, LLC Construction Permit Application for the Kemmerer Power Station Unit 1, Dated November 30, 2025) (ADAMS Accession No. ML25329A252).

3.7 Environmental Assessment In accordance with 10 CFR 51.21, Criteria for and identification of licensing and regulatory actions requiring environmental assessments, an exemption is a licensing action subject to an environmental assessment.

The proposed exemption from 10 CFR 50.33(f)(1) and 10 CFR 50 Appendix C to allow the application of the financial qualification standards required by 10 CFR 70.23, Requirements for the approval of applications, paragraph (a)(5), 10 CFR 70.23(a)(5), that the applicant appears to be financially qualified, in lieu of the construction financial qualification requirements in 10 CFR 50.33(f) and 10 CFR 50 Appendix C will have non-detectable environmental effects nor noticeably alter any important attribute of the Palisades Energy Center (PEC) site. This conclusion is supported by the comprehensive environmental report (ER), included as Enclosure III to this LWA application, that addresses the nature and extent of the environmental impact associated with this exemption request, the remainder of the construction activities necessary to construct the plant, and plant operations.

The ER determined the environmental impact of the LWA activities, including construction activity timelines that would be enabled by allowing the application of the financial qualification standards required by 10 CFR 70.23, Requirements for the approval of applications, paragraph (a)(5), 10 CFR 70.23(a)(5), that the applicant appears to be financially qualified, to be no more than MODERATE impact for the applicable potential environmental impacts.

3.8 Conclusion Pursuant to the provisions of 10 CFR 50.12, SMR is requesting an exemption, from 10 CFR 50.33(f)(1) and 10 CFR 50 Appendix C, allowing use of the financial qualification standard under 10 CFR 70.23(a)(5), that the applicant appears to be financially qualified, in lieu of the financial requirements in 10 CFR 50.33(f)(1) and 10 CFR 50 Appendix C. Based on the considerations discussed above, SMR proposes that the requested exemption is authorized by law, will not present an undue risk to the public health and safety, is consistent with the common defense and security, and special circumstances are present as set forth in 10 CFR 50.12(a)(2).

Exemption 3 Pioneer Units 1 & 2 Construction Permit Application, Part 1 Exemptions Holtec International Copyrighted Material December 2025 - Revision 0 Page 3-8 3.9 References

1.

SECY-13-0124, Policy Options for Merchant (Non-Electric Utility) Plant Financial Qualifications, dated November 22, 2013, (ADAMS Accession No. ML13057A006).

2.

SRM-SECY-13-0124, Policy Options for Merchant (Non-Electric Utility) Plant Financial Qualifications, dated April 24, 2014, (ADAMS Accession No. ML14114A358).

3.

U.S. NRC letter to South Texas Project, Final Safety Evaluation Report, South Texas Project Units 3 and 4, Combined License Application, dated September 30, 2019, (ADAMS Accession No. ML15271A126).

4.

SECY-18-0026, Proposed Rule: Financial Qualifications Requirements for Reactor Licensing, dated March 14, 2018, (ADAMS Accession No. ML17172A536).

5.

U.S. NRC Regulatory Basis Document, Financial Qualifications for Reactor Licensing Rulemaking, dated October 14, 2016, (ADAMS Accession No. ML15322A185).

6.

SRM-SECY-18-0026, Proposed Rule: Financial Qualifications Requirements for Reactor Licensing, dated July 14, 2022, (ADAMS Accession No. ML22195A097).

7.

VR-SECY-18-0026, Proposed Rule: Financial Qualifications Requirements for Reactor Licensing, dated July 18, 2022, (ADAMS Accession No. ML22195A103).

8.

NEI Paper on NRCs Rulemaking on the Post-SRM Part 53, Risk-Informed, Technology-Inclusive Regulatory Framework for Advanced Reactors, dated February 14, 2025, (ADAMS Accession No. ML25051A092).

9.

Letter to U.S. NRC from TerraPower, LLC., Revision to Exemption Request from 10 CFR 50.33(f) and 10 CFR 50 Appendix C Financial Qualification Documentation Requirements and Revision to the General and Financial Information of the Kemmerer Power Station Unit 1 Construction Permit Application, dated September 9, 2025, (ADAMS Accession No. ML25251A127).

10.

Letter to U,S, NRC from Long Mott Energy, LLC., Long Mott Generating Station Construction Permit Application, Part V - Non-Applicabilities and Exemptions, dated March 31, 2025, (ADAMS Accession No. ML25090A065).

11.

U.S. NRC letter to U.S. SFR Owner, LLC., Final Safety Evaluation Report, Kemmerer Power Station Unit 1, Construction Permit Application, dated November 30, 2025, (ADAMS Accession No. ML25329A252).