ML13228A225

NCP-2013-003, Non-Cconcurrence on Letter to W. Norton Request for Exemption from Title 10 of the Code of Federal Regulations 50.38 Requirements for Main Yankee Atomic Power Company, Connecticut Yankee Atomic Power Company, and Yankee Atomic

ML13228A225
Person / Time
Site:	Haddam Neck, Yankee Rowe, Maine Yankee
Issue date:	07/15/2013
From:	Fredrichs T, Simmons A, Simpson J Division of Inspection and Regional Support
To:	Mark Lombard NRC/NMSS/SFST
Lombard M
Shared Package
ML13227A348	List: ML13086A010 ML13228A225
References
TAC L24538, TAC L24565, TAC L24566 NCP-2013-003
Download: ML13228A225 (23)

Text

Non-Concurrence Process Record for NCP-2013-003 The U.S. Nuclear Regulatory Commission (NRC) strives to establish and maintain an environment that encourages all employees to promptly raise concerns and differing views without fear of reprisal and to promote methods for raising concerns that will enhance a strong safety culture and support the agency's mission.

Individuals are expected to discuss their views and concerns with their immediate supervisors on a regular, ongoing basis. If informa l discussions do not resolve concerns, individuals have various mechanisms for expressing and having their concerns and differing views heard and considered by management.

Management Directive MD 10.158, "NRC Non-Concurrence Process," describes the Non-Concurrence Process (NCP). http://pbadupws.nrc.gov/docs/ML0706/ ML070660506.pdf The NCP allows employees to document their differing views and concerns early in the decision-making process, have them responded to, and attach them to proposed documents moving through the management approval chain.

NRC Form 757, Non-Concurrence Process is used to document the process.

Section A of the form includes the personal opinions, views, and concerns of an NRC employee.

Section B of the form includes the personal opinions and views of the NRC employee's immediate supervisor.

Section C of the form includes the agency's evaluation of the concerns and the agency's final position and outcome.

NOTE: Content in Sections A and B reflects personal opinions and views and does not represent official factual representation of the issues, nor official rationale for the agency decision. Section C includes the agency's official position on the facts, issues, and rationale for the final decision.

The agency's officia l position (i.e., the document that was the subject of the non-concu rrence) is included in ADAMS Accession Number ML13098A210 This record has been redacted prior to discretionary release to the public.

NRC FORM 757 U.S. NUCLEAR REGULATORY COW.MISSION" NRC MD 10158 (7-20*, NCP TRACKING NUMBER NON-CONCURRENCE PROCESS NCP-2013-003 SECTION A -TO BE CO M~LETED BY NON-CONCURRING INDIVIDUAL

• TITLE OF SUBJECT DOCUMENT ADAMS ACCESSION NO. I REQUEST FOR EXEMPTION FROM I 0 CFR 50.38 REQUlREMENTS FOR YAl\lJ<.EE COMP ANTES ML13098A210 DOCUMENT SIGNER SIGI\t;R PHON[ r.;O Mark Lombard 492-3300 j ORG1\NIZA- 0 :-1 Division Director P'1}11SS/SFST NAM!:: OF NON-CONCURRING n,DIVI!)UAL(S) PHONE NO Anncilcse Simmons, Thomas Frednchs*, Jo Ann Simpson 415-2791 TIT:.<: ORGANIZATION '

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N ON ~ONC URREN CEPROCESS NCP TRACKING NUMBER NCP-20 13-003 TITLE OF SUBJECT DOCUMENT ADAMS ACCESS lOt\ NO.

Request for Exemption from I 0 CFR 50 .3~ . Yankee Facilities M LI3098A21 0 SECTIO N B -TO BE COMPLETED BY NON-CONC URRING INDIVIDUAL'S SUPERVISOR r---

NAME Russell Allwcin TITLE PHONE NO Acting BrJnch Chief 415-7417 ORGANIZATION NRRIDIRS/ IFID COMMENTS FOR THE NCP REVlEWER TO CONSIDER REQUI:.ST FOR EXEMPTION FROM 10 CFR 50.38 REQUIREYIENTS FOR YANKEE COMPAN IES I agree "ith the RR technical stafTwhicn docs not concur with the determination to approve the exemption request. The 1MSS analysis supporting the exemption is prematme given the rc~.:cnt Commission guidance (SRM-SECY-12-0 16!!) to provid.: a fresh assessment of foreign ownership. control :md domination (FOCD). I agree that tt fails to meet the requirements of I 0 CFR 50. 12 for exemption for the following reason:

The draft approval states in. cctio n 3.3: "Additional ly. since FOCD restrictions are financia l ownership restrictions and arc neither technical nor operational requirements, granting the exemption have no bearing on the risk to public health and safety." This is inconsistent with the philosophy regarding FOCD regulations. FOCD regulations arc designed, by their very nature. to prohibit foreign entities from controlling decisions that might affect safety."' This, in and of itself has a d irect bearing on risk to public health and safety. Therefore the assertio n in the draft appears con tradictory.

Rcgardmg exemption requests, I 0 CFR 50. 12(a)(2)(ii) s tate~ that there must be "specia l circumsta nces" to gran I the exemption.

There arc no special circumstances specifically applicable to the Yankees Companies and gcncral liccnsc ho lders, in this instance.

Since the basic premise of the exemption request lies with interpretation of the language in the Atomic Energy Act of whether an Independent Spent Fuel Storage Installations (ISF I) is a "production or utili£<llion faci lity," thi s is germane to aiiiSFSI' s who still hold a Pan 50 license. In essence this is legal interpretation or policy decision and not an exemption to be granted to a unique set of licensees. Redefinition of a "utili7.ation facility" for Part 50 exemptions may be a policy decision. and at a minimum should be subject to a legal review and approval as it will set precedent.

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NON-CONCURRENCE PROCESS NCP TRACKING NUMBER NCP-2013-003 TITLE OF SUBJECT DOCUMENT ADAMS ACCESSION NO.

REQUEST fOR EXEMPTION FROM 10 CFR 50.31! REQUIREMEI\'TS FOR YANKEE COMPANIES :'v1Ll3098A210 SECTION C - TO BE COMPLETED BY DOCUMENT SPONS OR NAME Mark Lom bard I liLt: t-'HUNt: I'OV, D1vision Director '30)-..2-f?" /* !5i?J

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!'~! ON -CONCURRENCE PROC ESS NCP-20 13-003 TITLE OF SUBJECT DOCUMU H ADAMS ACCESSION NO REQUEST FOR EXEMPTION FROM 10 CFR 50.38 REQUTREMENTS FOR YANKEE COW ANTES ML13098A210 SECTION 0 : CONTIN UATION PAGE CONTINUATION OF SECTION A B c SEE SECTION E FOR IMPLEMENTATION GUIDANCE NRC fO RM 757 (7*2011) Use ADAMS Template NRC-006

Attachment A: Non-Concurrence 2013-003: Exemption from 10 CFR 50.38 for the Yankee Facilities NMSS intends to approve an exemption from the foreign ownership, control and domination (FOCD) prohibition of 10 CFR 50.38 for three Part 50 Licensees. The NRR technical staff does not concur with the determination. The NMSS analysis supporting the exemption :

o Is premature due to recent Commission guidance per SRM-SECY-12-01 68 to provide a fresh assessment of FOCD o Is contrary to the AEA and current Commission guidance o Is contrary to NMSS Guidance o Is contrary to NOV issued for failure to comply with the FOCD requ irements o Fa ils to meet the requirements of 10 CFR 50.12 for exemptions c Lacks documentation and justification of novel, industry-proposed legal position o Lacks Transparency and is therefore inconsistent with the principles of sound regulation Recommendation:

1. The exemption request should be suspended because issuing an exemption before the Commission reviews SRM-SECY-12-0168 could limit the Commission's flexibility to resolve foreign ownership issues. No exemption to FOCD should be issued prior to the Commission 's resolution of the issues. The licensees are currently in compliance , the burden of compliance is not significant, and compliance is necessary to ensure adequate protection of health and safety for the Yankee facilities.

2. The novel legal interpretation regarding "utilization" facilities, proposed by the licensee as justification for an exemption from their licensing basis under Part 50:

a. should be subject to a full legal review and formal, documented interpretation by the NRC General Counsel

b. sent to the Comm ission for approval as a new agency interpretation; and

c. if approved by the Commission, should be incorporated into new NRR and NMSS guidance and subject to notice and comment, consistent with NRC procedures.

Background:

The Yankee Companies include three NRC licensees: Yankee Rowe, Maine Yankee, and Connecticut Yankee. These licensees are currently licensed under Part 50, which qualify them for general licenses for ISFISis under Part 72.212. The Yankee reactors are fully decommissioned, and only ISFSis remain. As Part 50 licensees, they are required to comply with the FOCD requirements of 10 CFR 50.38 and section 103d of the Atomic Energy Act.

Currently, foreign ownership, control and domination reviews for Part 50 are conducted by NRR/DIRS/IFIB by staff.

In 2006, an indirect 1:cense transfer was approved without informing the NRR technical staff staff; this resulted in 75% ultimate foreign ownership, control or domination, (FOCD) contrary to 10 CFR 50.38 a1d the Atomic Energy Act .

In 2010, as part of another license transfer review, the NRR technical staff identified the 75%

foreign ownership. Per the review procedures approved by the Commission in the Standard Review Plan on Foreign Ownership, Control and Domination, the staff reviewed additional information and ultimately determined that the licensee was 1) not in compliance with 1 0 CFR 50.38 or the Atomic Energy A ct 2) would be recuired to implement a negation action plan in order to meet the requirements of 10 CFR 50.80 prior to transfer of the license.

The staff continued with the license transfer review and simultaneously initiated the NRC enforcement process.

License Transfer The staff continued the license transfer review. On April 20, 2011 (ML111101402), the staff requested additional information (RAI) from MYAPC and requested MYAPC to submit a negation action plan to negate the FOCD or take action to remove the FOCD, to restore compliance with 10 CFR 50.38.

On May 16, 2011, the licensee responded to the RAI (ML11139A088) acknowledged the foreign ownership and stated that establishing a negation action plan would result in undue hardship to the licensee and shareholders . In lieu of submitting a negation action pla n and restoring compli ance with NRC regu lations, the licensee requested an exemption from the FOCD requirements in 10 CFR 50.38 . The staff determined that the Yankees wou ld need to be in compliance before a transfer could be approved per 10 CFR 50.80 and concluded its safety evaluation, conditioning the license transfer on implementation of a negation action plan by the Yankee board (ML113270127). The staff determined that the exemption would be dispos itioned separately.

On December 21, 201 1, as supplemented April 24, 2012, the Yankee licensees submitted letters to the NRC (ML11364A053 and ML12125A042} , stating that it had implemented a Negation Action Plan by adopting a Board of Directors Resolution to ens ure compliance w ith Section 103d of the AEA and 10 CFR 50.38. The Board of Directors Resol ution was passed on December 14, 2011 . Approval of the transfer was published in Federal Register on January 2, 2012.

Enforcement Process An Enforcement Panel, composed of NMSS, OE , NRR and OGC was convened to process the apparent violation. The NRR technical staffs position was that as holders of Part 50 licenses, the Yankees were required to be in compliance with Part 50, they had been aware of the regulations and had fa iled to ensure compliance since 2006 . The Yankee licensees' position was that they were exempt from the requirements of 10 CFR 50.38 because they were no longer "utilization" faci lities.

The licensee's position was discussed and ultimately rejected by the agency enforcement panel.

Specifically, the panel agreed that Part 50 licensees are subject to the requirements of Part 50, that the "utilization" argument had no legal precedent and was likely a policy issue. The pane!

discussed the issues related to ISFSis with Par. 72 vs. Part 50 licensees, but ultimately decided to issue an NOV, consistent with the NRC Enfo ~cement policy because .

1. The apparent violation was identified by the NRC staff; the licensees were aware of the requirements and failed to remain in conpliance .

2. The licensee's justification regarding their status as a "non-utilization, Part 50" license holder had no legal precedent, was either a Commission policy decision, or should be addressed in a broader analysis of ISFSI licensing issues to avoid ad-hoc decisions.

3. The flexibility of negation action plans, and the fact that the Yankees came into compliance to obtain their transfer approval indicated that compliance was not unduly burdensome.

The enforcement panel issued a notice of violation January 27, 2012 citing the Enforcement policy and Level 4 violation since the FOCD was discovered by the NRC staff. The letter stated that the Yankees, as Part 50 licensees, needed to comply with 10 CFR 50.38.

NRC (NMSS) issued confirmatory orders on June 4 , 2012 (ML12124A373).

The Yankees contested the violation and on Au~ust 9, 2012, and in response NRC stated :

(ML12226A232):

That Yankee Atomic is no longer authorized to operate an electric power production facility does not relieve it of the applicable 10 CFR Part 50 license requirements, including the FOCD requirements of 10 CFR 50.38.

NMSS and OGC further advised that the exemption be denied. At the request of NMSS, NRR technical staff prepared the exemption denial per the requirements of 50.12.

Senior Management Involvement and Change in Position In discussions with the Enforcement Panel, OGC indicated they would support the denial.

Later, in November 2012, an OGC staff attorney informed NMSS that they would not give an NLO until OGC was able to brief DEDO Mike Weber on pros and cons of denying the exemption.

OD Cathy Haney subsequently directed her Division Director, Mark Lombard, to engage OGC to (1) get their NLO for the denial (2) determine if the Weber briefing is the result of high-level drop-ins, and (3) arrange briefings with Office Directors before briefing Mike Webber.

On November 19, 2012 , NRR staff attended a briefing for DEDO (Weber) by OGC . NMSS staff, including the Division Director, Mark Lombard atso attended. In the briefing OGC stated that OGC could support either an exemption or a denial. Mark Lombard stated that NMSS intended to deny the exemption .

The NRR staff completed the draft exemption denial as agreed on November 19 and received an NLO (email from John Goshen dated December 12, 2012).

On or about February 14, 2013, Mark Lombard requested another meeting with NRR technical staff to understand their views on the exemption request. He indicated that OGC had conducted a subsequent briefing of the DEDO, (without NRR) and that Mark Lombard had

decided to allow the exemption . After the meeting, NMSS drafted the memo approving the exemption on the basis that the Yankee facilities are no longer utilization facilities.

The Exemption would Resul t in Fewer Protections to Health and Safety The foreign ownership prohibition covers all NRC licensed activities, including financial activities which may impact decommissioning. NRC guidance also states that special nuclear material must be controlled by U.S. citizens. An exemption to the requirements would prevent the NRC from ensuring that special nuclear material remains in U.S. control.

There is ample basis to require the Yankee licensees to maintain FOCD compliance via the current board resolution to ensure that NRC licensees are properly insulated from the foreign parent and that actions taken by the foreign parent have no impact on public health and safety.

Negation action plans insulate licensees from foreign parent companies for all licensed activities to ensure public health and safety. For example , foreign entities often do not file financial reports with the Securities and Exchange Commission, and thus prevent the staff from readily monitoring the financial status of parent companies. Therefore, negation action plans are also a protection against a foreign parent draining assets from a licensee. The State of Maine imposed such conditions on Ma ine Yankee after its 2006 acquisition by lberdrola (the acquisition that was not reviewed or approved by the technical staff).

On November 28, 2012 Standard and Poor's assessed lberdrola's financial risk as "significant" due to sovereign debt issues in Spain, and downgraded its credit rating. Central Ma ine Power filed a petition with State of Maine to intervene 1) to ensure that lberdrola may not increase its equity position (and control) over Central Maine Power and 2) to ensure that foreign owner may not pull assets from CMP to cover its debt. This is relevant to the Yankee companies, since the staff identified a potential decommissioning funding shortfall for Connecticut Yankee in 2011 .

The board resolution provision of the FOCD requirements must remain in place to ensure continued insulation from the foreign parent.

NMSS Guidance was not followed NMSS failed to follow its own guidance in reviewing the foreign ownership, control and domination of the Yankees. Specifically, NUREG-1556, Vol. 15, "Consolidated Guidance About Materials Licenses: Program-Specific Guidance About Changes of Control and About Bankruptcy Involving Byproduct, Source, or Special Nuclear Material Licenses, " p. 5-2, November 2000, states:

In the area of materials licensing, there are no categorical foreign ownership, control, or domination lim itations . However, under Sections 57c, 63b, and 82b of the AEA, NRC must make a finding that issuance of the license for special nuclear material, source material , or byproduct material would not be "inimical to the common defense and security, and would not constitute unreasonable risk to the health and safety of the public." The Commission must make the same finding when consenting to a change of control. As a part of that determination, NRC will consider foreign ownership, control, and domination .. ...Although NRC has never adopted any explicit criteria for determining whether a particular transaction will be "inimical to the

common defense and security," the Commission has historically focused on a relationship between a potential licensee and other entities involved in the transaction that could lead to the ultimate power of a foreign entity to direct the actions of the licensees with regard to licensed activities.

In the area of materials licenses, indirect control by a foreign entity of 100 percent of the licensee may be permissible , provided insulation measures are taken to protect the national security . Such measures include, but are not limited to, management directives shielding directors o r board members from decisions invo lving classified or secret information, or from the management or control of special nuclear material.

An exemption approval would fail to ensure that sufficient measures insulating NRC licensed activities from the foreign entity will be in place, including protecting the licensees' finances frc m the fc'eign entity, and ensuring that special nuclear material is controlled by U.S. citizens, co:-~sistent with the statute, NRC regulations and both NRR and NMSS guidance.

The Approval Does not Provide a Basis for the Exemption The NMSS review does not provide a basis for an exemption from Part 50. Instead, the exemption approval only discusses Part 72. The exemption request does not explain the change in agency position reflected in the confirmatory orders that the Yankees were not exempt from FOCD requirements. Nor does the exemption explain how it will impact the agency-issued confirmatory orders.

The grant of the exemption is based on SECY-78-378. This SECY paper was prepared for a proposed rule, not the final rule, so the SECY does not have precedential value in granting an exemption to the final rule.

10 CFR 50.1 states that "The regulations in this part are promulgated by the Nuclear Regulatory Commission ... to provide for the licensing of production and utilization facilities." Consequently, if the Yankees wish to claim they are not production & utilization facilities , then they are not eligible to hold a Part 50 license. Without a Part 50 license, they are no longer eligible to hold a Part 72 general license. In order to store spent fuel , the Yankees must obtain a specific Part 72 license. This would, however, relieve them of the FOCD burdens of Part 50, since Part 72 has no such restrictions. Once the Part 72 specific license is obtained, the Part 50 license may be terminated .

Redefinition of a "utilization facility" for Part 50 exemptions may be a policy decision, and at minimum should be subject to a legal review and approval as it will set precedent. Also, this legal position introduces several other issues:

o Exempting Part 50 licensees from specific requirements makes the licensing basis even more inconsistent with Part 72 requirements. Which of the other Part 50 requirements may allow for exemption based on proposed legal interpretation?

o Part 50 is the license for production and utilization facilities. If a facility is neither of those, how can it hold a Part 50 license?

o The moment a licensee is no longer a utilization facility will it be exempt from Part 50 requirements? Which requirements? How will this affect the other Part 50 licensees?

The Exemption Process was Contrary to NRC Principles of Good Regulation There is significant stakeholder interest in the licensees. Multiple NGOs attended the Yankee License transfer public meeting. The State of Maine also has conditioned previous transfers regarding Maine Yankee's ownership by a foreign entity and discussed these issues regarding the 2010 license transfer with the NRC staff. The NRC public docket regarding the Yankees' foreign ownership, control and domination, including staff correspondence, safety evaluation findings and enforcement action demonstrate objective, unbiased assessments of all information, are documented with reasons explicitly stated and consistent with the statute , NRC regulations and public guidance.

The proposed exemption to foreign, ownership, control and dom ination requirements, would fail to provide any insight as to a significant change in agency position. The proposed exemption has no documented legal basis for an exemption from the statute (beyond an apparent wholesale acceptance of a violative licensees' asserted legal position), no rationale for a change in agency position, and no opportunity for other stakeholders , public or State input to the NRC regarding a significant change in agency position regarding foreign ownership.

Attachment C: Response to NCP 2013-003 Non-Concurrence Process (NCP) 2013-003 states that NMSS intends to approve an exemption from the foreign ownership, control and domination (FOCD) prohibition of 10 CFR 50.38 for three Part 50 Licensees. The Office of Nuclear Reactor Regulation (NRR) technical staff does not concur with the determination. Accord ing to NCP 2013-003, the Office of Nuclear Material Safety and Safeguards (NMSS) analysis supporting the exemption:

1. Is premature due to recent Commission guidance per SRM-SECY-12-0168 to provide a fresh assessment of FOCD

2. Is contrary to the Atomic Energy Act (AEA) and current Commission guidance

3. Is contrary to NMSS Guidance

4. Is contrary to the Notice of Violation (NOV) issued for failure to comply with the FOCD requirements

5. Fails to meet the requirements of 10 CFR 50.12 for exemptions

6. Lacks documentation and justification of novel, industry-proposed legal position

7. Lacks transparency and is therefore inconsistent with the principles of sound regulation Responses to these points in the NCP are as follows:

1. Is premature due to recent Commission guidance per SRM-SECY-12-0168 to provide a fresh assessment of FOCD In SRM-12-0168, the Commission instructed the staff to "provide a fresh assessment on issues relating to foreign ownership. " The limitation on FOCD stems from Section 103d of the Atomic Energy Act (AEA), which relates to production and utilization facilities . It is unlikely that the staffs response to the SRM will address the factual situation presented by this exemption request because it will likely focus on FOCD at the construction/operation phase. The licensee requesting the subject exemption is similar to a Part 72 licensee and there is no prohibition on FOCD for Part 72 specific licensees. Notwithstanding, the Commission request does not presuppose any particular outcome. The request also does not contain any directive or suggestion for the staff to cease review of FOCD matters before it or to not take licensing actions involving FOCD issues until the "fresh assessment" is complete. In the absence of such direction, NMSS is acting according to the Commission's policy to not delay the decision in this matter unnecessarily. Review of the exemption req uest needs to stand on its own merits based on staff review. In addition, the SRM applies to an initial licensing matter involving 100% foreign ownership of a nuclear power plant. The NMSS case involves an exemption request for an ISFSI that is partially foreign owned. Therefore, there is very little similarity. And, as discussed below, this matter does not involve a new or different interpretation of the statute, regulations, or guidance.

Therefore, granting the exemption is not premature relative to actions that may be taken in accordance with the SRM.

2. Is contrary to the AEA and current Commission guidance Granting the exemption is not contrary to the AEA or Commission guidance. The AEA, specifically, Sections 103d and 104d, prohibits the issuance of a license to an entity if the Commission knows or has reason to believe that is owned, controlled or dominated by a foreign entity. Those sections are applicable to production or utilization facilities. The Yankee facilities are stand-alone ISFSis. Therefore, there is no statutory barrier to granting the exemption from 10 CFR 50.38.

1

Part 72 specific licensees are not required by the pertinent regulations to comply With FOCD and promulgation of the related requirements was not contrary to the AEA. Therefore, approval of a FOCD exemption for a Part 72 general licensee would also not be contrary to the AEA, especially since the subject Yankee sites are no longer production or utilization facilities. There is no public health and safety or common defense and security reason to treat these similarly situated licensees differently. As stated in the response to number 1 above, the action is not contrary to Commission guidance.

3. Is contrary to NMSS Guidance As pointed out in the NCP discussion, NMSS guidance says the NRC will consider foreign ownership , control and domination (FOCD) and that there are no categorical FOCO limitations. FOCD was considered in the review and found not to be a matter of concern.

4. Is contrary to NOV issued for failure to comply with the FOCD requirements The notice of violation (NOV) was issued because the licensees did not meet NRC requirements in force at the time. Nor had the licensees requested an exemption from 10 CFR 50.38. They were therefore in violation of 10 CFR 50.38 at that time. The Office of Enforcement (OE) confirmed that prior issuance of an enforcement action should not affect a decision to disposition an exemption request. OE noted that the NOVs issued to the Yankee facilities remain valid citations because a violation existed at that time and the exemption cannot and would not be given retroactive effect. Issuance of an NOV does not preclude modification of any requirements at a later date. Therefore, granting the FOCD exemption is not contrary to the previous NOV.

5. Fails to meet the requirements of 10 CFR 50.12 for exemptions The NCP did not provide specifics regarding this point. However, the NMSS analysis of the exemption request did consider the pertinent aspects of 10 CFR 50.12, including the special circumstances in Section (a)(2), as well as the AEA in the associated Safety Evaluation Report (SER) and found that the application satisfied these requirements.

6. Lacks documentation and justification of novel, industry-proposed legal position It is unclear what the basis is for this point in the NCP. The position taken by NMSS in granting the exemption is not novel. It is based on an analysis of a particular factual situation as it relates to the regulations and the AEA. Furthermore, the Commission reviewed this topic in the 1970s when considering ru lemaking for ISFSis and determined to promulgate the specific license requirements in Part 72 without FOCD limitations after they were determined to not be necessary. In deciding whether to promulgate Part 72, the Commission considered an option of amending Part 50 to "define an ISFSI as a utilization facility and to cover the specific activity of storage of spent fuels in an ISFSI" (see Alternative 4 in SECY 78-378, "LICENSING OF SPENT FUEL STORAGE IN AN INDEPENDENT SPENT FUEL STORAGE INSTALLATION", dated July 7, 1978). One of the reasons in this SECY for not opting to amend Part 50 was: "Under the Atomic Energy Act, a 'utilization facility' is defined as equipment or devices 'capable of making use of special nuclear material. ' Defining an ISFS I, which is for storage only, as an 'utilization facility' may be questionable." The Commission, rather than opting to amend Part 50, approved the option of promulgating Part 72 and not require that specific licensees meet FOCD requirements (see Staff Requirements Memorandum M780831 D, dated September 8, 1978). Thus, the 2

Commission was aware of the possible problem of regulating a non-utilization facility under Part 50 back in 1978.

7. Lacks transparency and is therefore inconsistent with the principles of sound regulation Granting the subject exemption request is consistent with the principles of good regulation as the SER and associated letter will be made public. Other activities to engage the public prior to the action being taken are not required due to the nature of the action. Granting this exemption is also consistent with the principle of Efficiency since it is consistent with the requirements for specific licenses which are not production or utilization facilities like the subject Yankee ISFSis. The action also reduces unnecessary regulatory burden.

To briefly address other points raised in the NCP but not identified in the "Issue" section:

The NCP states that in 2006 an indirect transfer was approved resu lting in 75% foreign ownership of the Yankees and the NRR technical staff was not informed of the transfer or made aware of this until 2010. However, this statement is not entirely correct. The 2006 transaction did not involve a 75% transfer. In fact, while Maine Yankee was 74%

foreign owned, Yankee Rowe was only 44% foreign owned and Connecticut Yankee 26% foreign owned. The foreign ownership happened incrementally with the transfer in 2006 being the last of several transfers. Several of the transfers, including the 2006 transfer, did not require NRC consent because they did not reach the 10 CFR 50.80 threshold .

The exemption request was fully reviewed by the Office of the General Counsel, including the Acting General Counsel at the time of its development and was found to have a sound legal basis. It is not required to send this topic to the Commission for approval as the agency has already made this interpretation and decision for specific licenses that store high level waste similar to the Yankees. The decision involves no change of policy or new interpretation of the statute or regulations.

Since specific licensees with similar material do not require FOCD limitations, denying the subject exemption is not required to ensure adequate protection of public health and safety.

While I was under a different impression previously, I confirmed there was not a meeting between Mike Weber and OGC without other offices represented.

A meeting was held with NRR staff to discuss the possibility of granting the exemption request. While a handful of concerns were discussed, it was not evident that these concerns rose to the level of a non-concurrence on the letter if it were processed . No other meetings or discussions were held on the topic of non-concurrence prior to that requested by me after I received the NCP package.

FOCD limitations do not apply to all NRC licensed facilities as discussed above.

The SER for the subject letter to grant the exemption does address Part 50 and AEA requirements.

There is no effect on the previously-issued confirmatory orders as they were based on requirements in force at the time .

3

There is no redefinition of utilization facility involved in granting this exemption. It does involve treating the Yankee ISFSis the same as specific license ISFSis which are also not production or utilization facilities.

Exempting the Yankees from FOCD does not also exempt them from other Part so requirements. If that were desired, the Yankees would have to submit exemption requests for them separately. Our regulations allow the NRC to determine if specific regulations apply or do not apply. An example is the recently issued exemptions to 10 CFR 73.55 requirements for ISFSis.

Based on my assessment of all available information as well as a meeting with one of the individuals who signed the non-concurrence, I have decided to grant the requested exemption to the Yankee sites.

4

Lombard, Mark From: Simmons, Anneliese Sent: Monday, August OS, 2013 9:34 AM To: Lombard, Mark; Fredrichs, Thomas; Simpson, JoAnn; Allwein, Russell Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho

Subject:

RE: Response to NCP 2013.docx No problem, thank you.

From: Lombard, Mark Sent: Monday, August OS, 2013 8:08AM To: Fredrichs, Thomas; Simpson, JoAnn; Allwein, Russell Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho; Simmons, Anneliese

Subject:

RE: Response to NCP 2013.docx Tom , JoAnn, and Russ, Do you have a concern if the NCP is public and your names are released with it? Please let me know by COB tomorrow.

Thank you ,

Mark From: Simmons, Anneliese Sent: Wednesday, July 17, 2013 9:00AM To: Lombard, Mark; Fredrichs, Thomas; Simpson, JoAnn Cc: Sewell, Margaret ; Pedersen, Renee; Nieh, Ho; Allwein, Russell

Subject:

RE: Response to NCP 2013.docx I have no problem with this. Thanks.

From: Lombard, Mark Sent: Wednesday, July 17, 2013 8:48AM To: Simmons, Anneliese; Fredrichs, Thomas; Simpson, JoAnn Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho; Allwein, Russell

Subject:

RE: Response to NCP 2013.docx PS-is there any reason not to make the NCP package available to the public in ADAMS? I want to make sure you all are comfortable with me doing so.

Thank you, Mark From: Lombard, Mark Sent: Friday, July 12, 2013 3:33 PM To: Simmons, Anneliese; Fredrichs, Thomas; Simpson, JoAnn Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho; Allwein, Russell

Subject:

Response to NCP 2013 .docx 1

Lombard, Mark From: Allwein, Russell Sent: Monday, August 05, 2013 9:22 AM To: Lombard, Mark

Subject:

RE: Response to NCP 2013 .docx

Mark, I have no concern.

Ras4'ell Russell Allwein, Chief Budget Operations Branch 1/DPB Office of the Chief Financial Officer U.S. Nuclear Regulatory Commission (301) 415-7417 From: Lombard, Mark Sent: Monday, August 05, 2013 8:08 AM To: Fredrichs, Thomas; Simpson, JoAnn; Allwein, Russell Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho; Simmons, Anneliese

Subject:

RE : Response to NCP 2013.docx Tom , JoAnn, and Russ ,

Do you have a concern if the NCP is public and your names are released with it? Please let me know by COB tomorrow.

Thank you ,

Mark From: Simmons, Anneliese Sent: Wednesday, July 17, 2013 9:00AM To: Lombard, Mark; Fredrichs, Thomas; Simpson, JoAnn Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho; Allwein, Russell

Subject:

RE : Response to NCP 2013.docx I have no problem with this. Thanks.

From: Lombard, Mark Sent: Wednesday, July 17, 2013 8:48AM To: Simmons, Anneliese; Fredrichs, Thomas; Simpson, JoAnn Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho; Allwein, Russell

Subject:

RE: Response to NCP 2013.docx PS-is there any reason not to make the NCP package available to the public in ADAMS? I want to make sure you all are comfortable with me doing so.

Thank you.

1

Lombard, Mark From: Fredrichs, Thomas Sent: Monday, August 05, 2013 9:34 AM To: Lombard, Mark; Simpson, JoAnn; Allwein, Russell Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho; Simmons, Anneliese

Subject:

RE: Response t o NCP 2013 .docx It's OK to release to the public.

From: Lombard, Mark Sent: Monday, August 05, 2013 8:08 AM To: Fredrichs, Thomas; Simpson, JoAnn; Allwein, Russell Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho; Simmons, Anneliese

Subject:

RE : Response to NCP 2013.docx Tom, JoAnn, and Russ, Do you have a concern if the NCP is public and your names are released with it? Please let me know by COB tomorrow.

Thank you ,

Mark From: Simmons, Anneliese Sent: Wednesday, July 17, 2013 9:00AM To: Lombard, Mark; Fredrichs, Thomas; Simpson, JoAnn Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho; Allwein, Russell

Subject:

RE: Response to NCP 2013 .docx I have no problem with this. Thanks.

From: Lombard, Mark Sent: Wednesday, July 17, 2013 8:48AM To: Simmons, Anneliese; Fredrichs, Thomas; Simpson, JoAnn Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho; Allwein, Russell

Subject:

RE: Response to NCP 2013.docx PS-is there any reason not to make the NCP package available to the public in ADAMS? I want to make sure you all are comfortable with me doing so.

Thank you ,

Mark From: Lombard, Mark Sent: Friday, July 12, 2013 3:33 PM To: Simmons, Anneliese; Fredrichs, Thomas; Simpson, JoAnn Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho; Allwein, Russell

Subject:

Response to NCP 2013.docx 1

Lombard, Mark From: Simpson, JoAnn Sent: Wednesday, August 07, 2013 8:52 AM To: Lombard, Mark

Subject:

RE: Response to NCP 2013.docx Mark ,

I don't have a concern with this.

Regards, Jo From: Lombard, Mark Sent: Monday, August OS, 2013 8:08 AM To: Fredrichs, Thomas; Simpson, JoAnn; Allwein, Russell Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho; Simmons, Anneliese

Subject:

RE: Response to NCP 2013.docx Tom , JoAnn, and Russ, Do you have a concern if the NCP is public and your names are released with it? Please let me know by COB tomorrow.

Thank you ,

Mark From: Simmons, Anneliese Sent: Wednesday, July 17, 2013 9: 00AM To: Lombard, Mark; Fredrichs, Thomas; Simpson, JoAnn Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho; Allwein, Russell

Subject:

RE: Response to NCP 2013.docx I have no problem with this. Thanks.

From: Lombard, Mark Sent: Wednesday, July 17, 2013 8:48 AM To: Simmons, Anneliese; Fredrichs, Thomas; Simpson, JoAnn Cc: Sewell, Margaret; Pedersen, Renee; Nieh, Ho; Allwein, Russell

Subject:

RE: Response to NCP 2013.docx PS-is there any reason not to make the NCP package available to the public in ADAMS? I want to make sure you all are comfortable with me doing so.

Thank you, Mark 1

Lombard, Mark From: Simmons, Anneliese Sent: Friday, August 09, 2013 10:49 AM To: Lombard, Mark; Allwein, Russell; Simpso n, JoAnn; Fredrichs, Thomas Cc: Pedersen, Renee; Sewell, Margaret

Subject:

RE: ca n you please send me the original NCP package back? Thanks, Mark Thanks, I still intend to non-concur.

From: Lombard, Mark Sent: Friday, August 09, 2013 10:38 AM To: Simmons, Anneliese; Allwein, Russell; Simpson, JoAnn; Fredrichs, Thomas Cc: Pedersen, Renee; Sewell, Margaret

Subject:

FW: can you please send me the original NCP package back? T hanks, Mark I apologize but I neglected to ask you all whether you still wan t to non-concur on the letter granting the exemption to the Yankees . Please let me know by August 14, 2013, whether you still intend to non-concur or if you changed your mind to concur on the letter.

Thank you, Mark From: Sewell, Margaret Sent: Tuesday, July 30, 20 13 3:37 PM To: Lombard, Mark

Subject:

RE: can you please send me the original NCP package back? Thanks, Mark

Mark, I combined all 3 sections into a PDF document (attached). I'm also attaching my 7/24 ema il to Anneliese requesti ng she send back the original form to you , but I haven't heard back from her yet. Have you?

Thanks ,

Marge From: Lombard, Mark Sent: Tuesday, July 30, 2013 12:43 PM To: Sewell, Margaret

Subject:

can you please send me the original NCP package back? Thanks, Mark 1

Lombard, Mark From: Allwein, Ru ssell Sent: Friday, August 09, 2013 11:16 AM To: Lombard, Mark

Subject:

RE: can you please send me the original NCP package back? Thanks, Mark My non-concur stands.

Ru sse ll Allwein, Chief Budget Operations Branch 1/DPB Office of the Chief Financial Officer U.S. Nuclear Regulatory Commission (301) 415-7417 From: Lombard, Mark Sent: Friday, August 09, 2013 10:38 AM To: Simmons, Anneliese; Allwein, Russell; Simpson, JoAnn; Fredrichs, Thomas Cc: Pedersen, Renee; Sewell, Margaret

Subject:

FW: can you please send me the original NCP package back? Thanks, Mark I apologize but I neglected to ask you all whether you still want to non-concur on the letter granting the exemption to the Yankees. Please let me know by August 14, 2013, whether you still intend to non-concur or if you changed your mind to concur on the letter.

Thank you ,

Mark From: Sewell, Margaret Sent: Tuesday, July 30, 2013 3 :37PM To: Lombard, Mark

Subject:

RE : can you please send me the original NCP package back? Thanks, Mark

Mark, I combined all 3 sections into a PDF document (attached). I'm also attaching my 7/24 email to Anneliese requesting she send back the original form to you, but I haven't heard back from her yet. Have you?

Thanks, Marge From: Lombard, Mark Sent: Tuesday, July 30, 2013 12:43 PM To: Sewell, Margaret

Subject:

can you please send me the original NCP package back? Thanks, Mark

Lombard, Mark From: Fredrichs, Thomas Sent: Friday, August 09, 2013 2:12 PM To: Lombard, Mark; Simmons, Anneliese; Allwein, Russell; Simpson, JoAnn Cc: Pedersen, Renee; Sewell, Margaret

Subject:

RE: can you please send me the original NCP package back? Thanks, Mark I also still intend to non-concur From: Lombard, Mark Sent: Friday, August 09, 2013 11:13 AM To: Simmons, Anneliese; Allwein, Russell; Simpson, JoAnn; Fredrichs, Thomas Cc: Pedersen, Renee; Sewell, Margaret

Subject:

RE: can you please send me the original NCP package back? Thanks, Mark Thank you for your reply.

From: Simmons, Anneliese Sent: Friday, August 09, 2013 10:49 AM To: Lombard, Mark; Allwein, Russell; Simpson, JoAnn; Fredrichs, Thomas Cc: Pedersen, Renee; Sewell, Margaret

Subject:

RE: can you please send me the original NCP package back? Thanks, Mark Thanks, I still intend to non-concur.

From: Lombard, Mark Sent: Friday, August 09, 2013 10:38 AM To: Simmons, Anneliese; Allwein, Russell; Simpson, JoAnn; Fredrichs, Thomas Cc: Pedersen, Renee; Sewell, Margaret

Subject:

FW: can you please send me the original NCP package back? Thanks, Mark I apologize but I neg lected to ask you all whether you still want to non-concur on the letter granting the exemption to the Ya nkees. Please let me know by August 14, 2013, whether you still intend to non-concur or if you changed your mind to concur on the letter.

Thank you, Mark From: Sewell, Margaret Sent: Tuesday, July 30, 2013 3:37 PM To: Lombard, Mark

Subject:

RE: can you please send me the original NCP package back? Thanks, Mark

Mark, I combined all 3 sections into a PDF document (attached). I'm also attaching my 7/24 email to Anneliese requesting she send back the original form to you , but I haven't heard back from her yet. Have you?

Thanks, Marge 1

Lombard, Mark From: Simpson, JoAnn Sent: Thursday, August 15, 2013 8:01 AM To: Lombard, Mark; Sewell, Margaret

Subject:

RE: can you please send me the original NCP package back? Thanks, Mark Good Morning, Yes I do.

Regards, Jo From: Lombard, Mark Sent: Thursday, Augu st 15, 2013 7:41AM To: Sewell, Margaret Cc: Simpson, JoAnn

Subject:

RE: can you please send me the original NCP package back? Thanks, Mark That is not the question I was looking to get answered . It was whether JoAnn still wants to non-concur.

From: Sewell, Margaret Sent: Wednesday, August 14, 2013 2:56PM To: Lombard, Mark Cc: Simpson, JoAnn

Subject:

RE: can you please send me the original NCP package back? Thanks, Mark

Mark, Maybe this will help (attached).

Marge From: Lombard, Mark Sent: Wednesday, August 14, 2013 2:52PM To: Simpson, JoAnn Cc: Sewell, Margaret

Subject:

FW: can you please send me the original NCP package back? Thanks, Mark

JoAnn, I may have misplaced your reply to my question below. If you sent it can you please re-send it to me?

Thanks, Mark From : Lombard, Mark Sent: Friday, August 09, 2013 10:38 AM To: Simmons, Anneliese; Allwein, Russell; Simpson, JoAnn; Fredrichs, Thomas 1