ML14029A341

Official Exhibit - STP000090-00-BD01 - Safety Evaluation by NRR, Proposed Transfer of Oyster Creek Nuclear Generating Station Operating License from Jersey Central Power & Light Company and Gpu Nuclear, Inc. to Amergen Energy Company, LLC,

ML14029A341
Person / Time
Site:	Oyster Creek, 05200012, 05200013
Issue date:	07/01/2013
From:	Office of Nuclear Reactor Regulation
To:	Atomic Safety and Licensing Board Panel
SECY RAS
References
52-012-COL, 52-013-COL, ASLBP 09-885-08-COL-BD01, RAS 24757, +reviewedgfw
Download: ML14029A341 (6)

Text

United States Nuclear Regulatory Commission Official Hearing Exhibit In the Matter of

NUCLEAR INNOVATION NORTH AMERICA LLC (South Texas Project Units 3 and 4)

ASLBP #: 09-885-08-COL-BD01 Docket #: 05200012 l 05200013 Exhibit #:

Identified:

Admitted:

Withdrawn:

Rejected:

Stricken: Other: STP000090-00-BD01 1/6/2014 1/6/2014SAFETYEVALUATIONBYTHEOFFICEOFNUCLEARREACTORREGULATIONPROPOSEDTRANSFEROFOYSTERCREEKNUCLEARGENERATINGSTATIONOPERATINGLICENSEFROMJERSEYCENTRALPOWER&LIGHTCOMPANYANDGPUNUCLEAR,INC.TOAMERGENENERGYCOMPANY,LLCDOCKETNO.50-21

91.0INTRODUCTION

ByapplicationdatedNovember5,1999,assupplementedbytwolettersdatedApril6,2000,andanotherletterdatedApril13,2000,AmerGenEnergyCompany,LLC(AmerGen),andGPU Nuclear,Inc.(GPUN),actingonitsownbehalfandonbehalfofJerseyCentralPower&Light Company(JC),requestedthattheU.S.NuclearRegulatoryCommission(NRC)consenttothe transferofFacilityOperatingLicenseNo.DRP-16forOysterCreekNuclearGeneratingStation (OC,orOysterCreek)fromGPUNandJCtoAmerGen.TheapplicationalsorequestedNRC approvalofaconforminglicenseamendmenttoreflecttheproposedtransfer.Thelettersof April6,2000,andofApril13,2000,providedclarifyinginformationwhichdidnotexpandthe scopeoftheapplicationasoriginallynoticedintheFederalRegister.GPUNandAmerGenrequestedthattheNRCconsenttothistransferandauthorizeAmerGentopossess,use,andoperateOCunderthesameconditionsandauthorizationsincludedinthe existingOperatingLicense,exceptasmodifiedasrequestedbytheirapplication.Accordingto theapplicants,nophysicalchangeswillbemadetoOCasaresultofthistransfer,andtherewill benosignificantchangesintheday-to-dayoperationsofOC.GPUN,thelicensedoperatorof OC,isawhollyownedsubsidiaryofGPU,Inc.(GPU),anelectricutilityholdingcompany registeredunderthePublicUtilityHoldingCompanyActof1935.JCisthe100-percentowner ofOCandisalsoawhollyownedpublicutilitysubsidiaryofGPU.Aftertheproposedtransfer, AmerGenwillbecomethesolelicensedownerandoperatorofOC.

2.0BACKGROUND

AmerGenisalimitedliabilitycompanyformedtoacquireandoperatenuclearpowerplantsintheUnitedStates;itsprincipalofficeisinWayne,Pennsylvania.AmerGenisorganizedunder thelawsoftheStateofDelawarepursuanttotheAmerGenLimitedLiabilityCompany AgreementamongPECOEnergyCompany(PECOEnergy,orPECO),aPennsylvania company;BritishEnergy,plc(BritishEnergy,orBEplc),aScottishcorporation;andBritish Energy,Inc.(BEInc.),aDelawarecorporationthatisawhollyownedsubsidiaryofBEplc.

BEplcisapartytotheAmerGenLimitedLiabilityCompanyAgreement,butonlyPECOandBE, Inc.,aremembersofAmerGen,eachholdinga50-percentownershipinterestinAmerGen. NRCStaff'sConclusionontheDecommissioningFundingAssuranceMechanismTheNRCstaffconcludesthat,basedontheabovediscussionandsubjecttothetrustagreementcontainingtheprovisionspreviouslydiscussed,AmerGen'sproposeddecommissioningfunding assurancemechanismmeetstherequirementsof10CFR50.75(e).Thestafffurtherconcludes thattoensurethatthedecommissioningtrustismaintainedconsistentwiththestaff'sactiononthe application,thefollowingshouldbeincludedasaconditionofthetransferapprovalandasa conditionintheOperatingLicense:AmerGenshalltakeallnecessarystepstoensurethatthedecommissioningtrustismaintainedinaccordancewiththeapplicationforapprovalofthetransferoftheOyster CreeklicensetoAmerGenandtherequirementsoftheOrderapprovingthetransfer, andconsistentwiththesafetyevaluationsupportingtheOrder.5.0FOREIGNOWNERSHIP,CONTROL,ORDOMINATIONA.BackgroundSection104doftheAEAprohibitstheCommissionfromissuingalicenseforanuclearpowerplantunderSection104to"anycorporationorotherentityiftheCommissionknowsorhas reasontobelieveitisowned,controlled,ordominatedbyanalien,aforeigncorporation,ora foreigngovernment."TheCommission'sregulationsat10CFR50.38containvirtuallyidentical languagetoimplementthisprohibition.Theissueaddressedinthissectioniswhether,intheNRC staff'sview,AmerGeniscontrolledbyforeigninterestssuchthatitmaynotbeissuedalicense underSection104d.TheNRChasdevelopedaStandardReviewPlan(SRP)todocumenttheprocessthatthestaffusestoanalyzewhetheranapplicantisowned,controlled,ordominatedbyforeigninterestswithin themeaningofSection104d.ThestaffhasusedthisSRP,approvedbytheCommissionon August31,1999,asguidanceforevaluatingtheforeignownershipconsiderationsoftheproposed purchaseofOCbyAmerGen.B.DiscussionAmerGen'sOwnershipandOrganizationAmerGenisalimitedliabilitycompanyformedtoacquireandoperatenuclearpowerplantsintheUnitedStates.AmerGenisorganizedunderthelawsoftheStateofDelawarepursuanttoan agreementamongPECO,BEInc.,andBEplc.PECOandBEInc.eachown50percentof AmerGen.InitsapplicationAmerGenhassubstantivelyprovidedtheinformationrequiredin10 CFR50.33(d).AmerGen's50-percentindirectownershipbyBEplc,aforeigncorporation,raises theissueofwhetherAmerGenisowned,controlled,ordominatedbyforeigninterestswithinthe meaningoftheprohibitioninSection104doftheAEA. GuidanceRelevanttotheIssueofForeignControlTheCommissionhashadlimitedexperiencewithlicensetransferapplicationsthatinvolvetheissueofforeignownership,control,ordomination.TheCommissionhasstatedthat,inthecontext oftheotherprovisionsofSection104d,theforeigncontrollimitationshouldbegivenanorientation towardsafeguardingthenationaldefenseandsecurity.GuidanceintheSRPstatesthatan applicantpartiallyownedbyaforeignentityforexample,partialownershipof50-percentorgreatermaystillbeeligibleforalicenseifcertainconditionsareimposed,suchasrequiringthatofficersandemployeesoftheapplicantwhoareresponsibleforspecialnuclearmaterialmustbe U.S.citizens.Inaddition,partialownershipmustbeconsideredinlightofalloftheinformationthat bearsonwhointhecorporatestructureexercisescontroloverwhatissuesandwhatrightsmaybe associatedwithcertaintypesofownershipinterestsorshares.However,theNRCconsideredthe issueofforeignownership,control,ordominationintheTMI-1andClintontransfercasesand approvedAmerGen'spurchaseofTMI-1andClinton,andsincethesituationwithrespectto AmerGen'sownershipofTMI-1,Clinton,andOCisvirtuallyidentical,thestaffhasfollowedthe guidanceoftheTMI-1andClintondecisionsconsideringforeignownershipissueswithrespectto OC.InformationProvidedAmerGenhassubmitted,inadditiontoinformationrequiredby10CFR50.33(d),informationspecifiedinSection2.2oftheSRPonForeignOwnership,Control,andDomination.Inaddition, AmerGen'sinformationessentiallydescribesa"negationactionplan"asreferredtoinSection4.4 oftheSRP.Onthisbasis,thestaffconcludesthatAmerGenhastaken,orhascommittedtotake, sufficientmitigatingstepstocontinuetoensurethatAmerGenisnotowned,controlled,or dominatedbyanalien,aforeigncorporation,oraforeigngovernmentforthepurposesoftheAEA andtheNRC'sregulations.Asstatedearlier,AmerGenisalimitedliabilitycompanywithitsprincipalplaceofbusinessinWayne,Pennsylvania.PrincipalofficersofAmerGenincludeU.S.andBritishcitizens.The positionsofChiefExecutiveOfficer(CEO)andChiefNuclearOfficer(CNO)arejointlyheldbya U.S.citizen,andthePresidentisaBritishcitizen.Atleast50percentoftheManagement Committee,whichdirectsandcontrolstheaffairsofAmerGen,areU.S.citizens,includingthe Chairman.Accordingtotheapplication,the"CEOisauthorizedtoemployandretainotherofficers, subjecttotheapprovaloftheManagementCommittee."AmerGenfurtherstatesinitsapplicationthattherehasbeennomaterialchangeinthenatureandextentofforeignparticipationinAmerGensincetheissuanceoftheTMI-1safetyevaluation.AmerGen'sProposedMeasurestoAddressForeignControlConcernsAmerGendevelopedanegationactionplantoaddressforeigncontrolissueswhenitproposedtoacquireTMI-I.ThisplanwouldbeapplicabletoAmerGenasthelicenseeforOCaswell.Under theLimitedLiabilityCompanyAgreement(LLCAgreement)bywhichAmerGenwasformed,the property,business,andaffairsofAmerGenaredirectedandcontrolledbyaManagement CommitteepursuanttoArticle6.3.UnderArticle6.1(a)oftheLLCAgreement,PECO,throughthe PECOEnergyMemberGroup(oneofthetwomembergroupsofAmerGen),appointsandmay 1Thedefinitionof"safetyissue"alsostates:"AnymatteronwhichtheManagementCommitteeshallvoteinaccordancewithSection6.3thatisnotprimarilyoneofnuclear safetyshallnotconstituteaSafetyIssue,sothat,forpurposesofillustrationonly,any plantexpenditureofamaterialnatureintendedtoextendtheeconomicoperationallifeor improvetheeconomicperformanceofthepowerstationinquestionshallnotbe consideredasafetyquestion."Thestaffbelievesthat,forpurposesofestablishing whethersafetydecisionsaresubjecttoforeignownership,control,ordomination,this andanalogousdistinctionsareacceptableanddonotappeartocompromisesuchsafety

decisions.removehalfofthemembersoftheManagementCommittee,andBE,Inc.,throughtheBEMemberGroup,alsoappointsandmayremovehalfofthemembersoftheManagementCommittee.

(AmerGenstatesthatcurrentlytherearesixvotingmembersontheManagementCommittee,half ofwhomareappointedbyPECOandareU.S.citizens,andhalfofwhomareappointedbyBE,Inc.

andareU.K.citizens.)PursuanttoArticle6.1(d)oftheLLCAgreement,thePECOEnergy MemberGroupappointstheChairmanoftheManagementCommittee.TheChairmancanonlybe removedbythePECOEnergyMemberGroup.TheChairmanoftheManagementCommitteehas atie-breakingvoteonManagementCommitteedecisionsregarding"all[s]afetyissues."Theterm"safetyissue"isdefinedinSection1.7oftheLLCAgreementtomeananymatterthatconcernsanyofthefollowing:(i)implementationorcompliancewithanygenericletter,bulletin,order,confirmatoryorder,orsimilarrequirementissuedbytheNRC;(ii)preventionormitigationofanucleareventorincidentortheunauthorizedreleaseofradioactivematerial;(iii)placementoftheplantinasafeconditionfollowinganynucleareventorincident; (iv)compliancewiththeAtomicEnergyAct(AEA),theEnergyReorganizationAct,oranyNRCrule;(v)compliancewithaspecificoperatinglicenseanditstechnicalspecifications; (vi)compliancewithaspecificUpdatedFinalSafetyAnalysisReport,orotherlicensingbasisdocument.

1Thestaffhaspreviouslyconcludedandcontinuestoconcludethatthisdefinitionbroadly encompassesallissuesinvolvingthecommondefenseandsecurityandthepublichealthand safetythatareunderNRCjurisdiction.AmerGenstatesthatMichaelJ.Egan,aU.S.citizen,istheChairmanoftheManagementCommittee.Additionally,theCEOandCNOofAmerGen,whoiselectedbytheManagement Committeeandisresponsiblefortheday-to-dayoperationsofAmerGen,isGeraldR.Rainey,a U.S.citizen.ThePresidentofAmerGenisDr.RobinJeffrey,aU.K.citizen.AmerGenstatedinthe TMI-1andClintonapplicationsthatthePresidentwillnothavedecision-makingauthorityforTMI-1andClintonoperations.Rather,thePresident'sdutieswillbedirectedtowardbusinessdecisions, suchasfutureacquisitionsbyAmerGen.TheNRCstaffbelievesthattheprovisionsoftheLLC AgreementmaynotspecificallyrequirethatAmerGen'sCEOandChairmanoftheManagement CommitteemustbeU.S.citizensinthefuture.However,initsapplicationAmerGenhasproposed thattheNRCstaffrequirethatitsCEO,CNO(ifsomeoneotherthantheCEO),Chairmanofthe ManagementCommittee,andatleasthalfthemembersoftheManagementCommitteeshallallbe U.S.citizens,asreflectedinlicenseconditionsthatAmerGenhasproposedfortheOCtransfer.AmerGenhasalsostatedthatthecurrentsitepersonnelatOC,includingseniormanagers,"willremainessentiallyunchanged."However,asOCexperiencespersonnelchanges,AmerGen expectsthatadditionalexperiencedpersonnelmayjointhesiteorganizationduringtheperiod immediatelybeforeandafterthelicensetransfer.InitsapplicationforthetransferoftheTMI-1and ClintonOperatingLicenses,AmerGenrecommendedthatsubstantialweightbegiventothefact thatBEplcisacorporatecitizenoftheUnitedKingdom(U.K.).TheU.K.isacloseallyofthe UnitedStates,andtheU.S.andtheU.K.havehadanoftencited"specialrelationship"atleast sinceWorldWarII.TheU.K.isalsoasignatorytotheTreatyonNon-ProliferationofNuclear Weapons,supportstheInternationalAtomicEnergyAgency(IAEA)safeguards,isamemberofthe EuropeanAtomicEnergyCommunity(EURATOM),andadherestootherinternationalnuclear safetyandsafeguardsguidelines.AmerGenspecificallyciteda1995decisionbytheU.S.

SecretaryofEnergy,whichfoundthataU.S.-EURATOMagreementofcooperationisnotinimical tothecommondefenseandsecurityoftheUnitedStates.BEplc,asaU.K.corporation,issubject tothelawsoftheU.K.andtheinternationalconventionsandtreatiestowhichtheU.K.adheres.ThestaffbelievesthatsuchconsiderationsareconsistentwithmakinganoninimicalityfindingwithrespecttothecommondefenseandsecurityoftheU.S.Thoughnotdisposingoftheprohibitionof foreignownership,control,ordominationunderSection104doftheAEA,theseconsiderationsare alsoconsistentwithafavorabledeterminationunderthatsection,because,astheCommissionhas statedinGeneralElectricCo.andSouthwestAtomicEnergyAssociates,3AEC99(1966),incontextwiththeotherprovisionsofSection104d,theforeigncontrollimitationshouldbegivenan orientationtowardsafeguardingthenationaldefenseandsecurity.AmerGenstatesthatifitfillsaseniormanagementpositionwithsomeonefromoutsidetheexistingOCorganization"contemporaneouslywith"thelicensetransfer,itwillinformtheNRCinadvanceof anysuchchangeandprovidetheNRCwitharesumeforthepersoninadvanceoftheeffective dateofthechange.Asageneralrule,newpersonneldonotrequirepriorapprovalbytheNRC; however,theappointmentofanysuchpersonmustbeconsistentwiththeOCOperatingLicense andlicensingbasisandanyconditionsofapprovalofthetransfer.StaffConclusionsWithRespecttoForeignOwnershipConsiderationsThestaffhasconsideredguidanceintheCommission'spreviousdecisionsonforeignownership,controlordomination,andintheSRP.Additionally,thestaffhasreliedextensivelyontheanalysis andconclusionsoftheTMI-1andClintonsafetyevaluations.Thestaffhasalsoevaluated AmerGen'sproposedoperatingstructureandinformationconcerningthemanagementofficialsof thecompany.Asaresult,thestaffconcludesthatthetransferoftheOperatingLicenseforOCto AmerGenwouldnotviolatetheprohibitionsintheAEAagainstforeignownership,control,or domination,providedthatapprovalofthelicensetransfertoAmerGenissubjecttothefollowingconditions,tobecomelicenseconditionswhentheconformingamendmentisissued:TransferApprovalandLicenseConditions(1)TheLimitedLiabilityCompanyAgreementdatedAugust18,1997,andanysubsequentamendmentsasofthedateofthissafetyevaluation,maynotbe modifiedinanymaterialrespectconcerningdecision-makingauthorityover"safety issues"asdefinedthereinwithoutthepriorwrittenconsentoftheDirector,Officeof NuclearReactorRegulation.(2)AtleasthalfofthemembersofAmerGen'sManagementCommitteeshallbeappointedbyanonforeignmembergroup,allofwhoseappointeesshallbeU.S.

citizens.(3)TheCEO,CNO(ifsomeoneotherthantheCEO),andChairmanoftheManagementCommitteeofAmerGenshallbeU.S.citizens.Theyshallhavethe responsibilityandexclusiveauthoritytoensure,andshallensure,thatthebusiness andactivitiesofAmerGenwithrespecttotheOCOperatingLicenseareatalltimes conductedinamannerconsistentwiththeprotectionofthepublichealthandsafety andcommondefenseandsecurityoftheUnitedStates.(4)AmerGenshallcausetobetransmittedtotheDirector,OfficeofNuclearReactorRegulation,within30daysoffilingwiththeU.S.SecuritiesandExchange Commission,anySchedules13Dor13GfiledpursuanttotheSecuritiesExchange Actof1934thatdisclosebeneficialownershipofanyregisteredclassofstockof PECOEnergyoranyaffiliate,successor,orassigneeofPECOEnergytowhich PECOEnergy'sownershipinterestinAmerGenmaybesubsequentlyassignedwith priorwrittenconsentoftheNRC.ThestaffconcludesthattheseconditionsareconsistentwithCommissionprecedent(theyarevirtuallyidenticaltothoseimposedintheTMI-1andClintonlicensetransfers).Thestaffslightly modifiedcertainconditionsasproposedbytheapplicationinlightofthepotentialtransferof PECO'sinterestinAmerGentoasuccessorcompany,asnotedinaFebruary28,2000submittal fromAmerGenandAmerGenVermontLLCtotheNRC.6.0INSURANCETheprovisionsofthePrice-AndersonAct(Section170oftheAEA)and10CFRPart140requirethatAmerGenbeaddedtothecurrentOysterCreekindemnityagreement.Additionally,in accordancewiththeserequirements,AmerGenmustprovideprimaryinsuranceof$200millionand participateinthesecondaryretrospectiveinsurancepoolonceitbecomesalicensee.These requirementscanbemetbypurchasinginsurancepoliciesfromthenuclearliabilityinsurancepool, AmericanNuclearInsurers.AmerGenalsowillberequiredtomaintainpropertyinsuranceas specifiedin10CFR50.54(w).ThestaffdoesnothaveanyreasontobelievethatAmerGenwillbe unabletomeetthestatutoryandregulatoryinsurancerequirementsapplicabletoallpowerreactor

licensees.