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January 03, 2024 Feature

V. Nuclear Energy

Darani M. Reddick

A. Introduction

The nuclear energy landscape continues to evolve to address the age of the current operating fleet, efforts to save existing plants from shutdown, and the development of advanced nuclear reactors. On the administrative front, the composition of the Nuclear Regulatory Commission (NRC or Commission) returned to a full five-member bench. Energy policies continue to evolve as federal and state governments address the importance of nuclear power and the presence of spent nuclear fuel (SNF). The NRC issued two licenses for consolidated interim storage facilities (CISF), but litigation challenging the licenses is ongoing. Lastly, NRC staff proposed a new rule in response to the Commission’s 2022 decision that the license renewal general environmental impact statement (GEIS) applies only to initial license renewal.

B. Developments in Nuclear Regulatory Commission Membership

The Commission returned to full membership in August 2022, following the nomination and confirmation of Annie Caputo and Bradley D. Crowell. Annie Caputo returned as a Commissioner following the expiration of her previous term in June 2021. She was sworn in on August 9, 2022. Bradley D. Crowell joined the Commission from his most recent position as the Director of the Nevada Department of Conservation and Natural Resources. He was sworn in on August 26, 2022. Following the addition of these Commissioners, the Commission has a full five members: Chair Christopher T. Hanson and Commissioners Jeff Baran, David Wright, Annie Caputo, and Bradley D. Crowell. Commissioner’s Baran’s term expired June 30, 2023; his renomination for another term is pending confirmation in the Senate.

C. Federal and State Policy Developments

1. DOE’s Civil Nuclear Credit Program

The Civil Nuclear Credit Program (CNCP) completed its first round of applications in 2022, and the Department of Energy (DOE) awarded a conditional award during this first application cycle. The CNCP seeks to preserve the existing U.S. reactor fleet. Under the program, owners and operators of U.S. reactors can apply for certification to bid on credits to support their continued operation. Applications must demonstrate that the reactor is projected to close for economic reasons and that the closure will result in the rise of air pollutants.

In November 2022, DOE conditionally selected Diablo Canyon to receive the first award from the program. Units 1 and 2 at Diablo Canyon were scheduled for decommissioning in 2024 and 2025, but the conditional award of credits, valued up to $1.1 billion, created a path for the units to continue operating. Pacific Gas and Electric Company (PG&E), the owner of Diablo Canyon, will be required to enter into a Credit Award and Redemption Agreement for DOE to make the final award. In parallel, PG&E has taken steps to restart NRC’s review of its license renewal application for the units, which PG&E previously submitted but withdrew in 2018 prior to creation of the CNCP.

The Michigan Governor’s office announced in 2022 that the state is in discussions with Holtec International (Holtec) to potentially restart the recent shutdown Palisades facility. The Palisades renewed operating license ran through 2031, but the facility shut down in mid-2022. Entergy sold the facility to Holtec shortly after permanent removal of fuel from the reactor. Holtec’s initial application for CNCP funding for Palisades proved unsuccessful. One of the program’s criteria requires that the facility be capable of operating in accordance with its existing NRC licensing basis. The Palisades license no longer authorizes operations. Holtec has since submitted an application for a DOE loan in lieu of pursuing CNCP credits. DOE has not yet announced any other decisions related to the second cycle, which closed in May 2023.

2. Inflation Reduction Act of 2022

President Biden signed into law the Inflation Reduction Act of 2022 (IRA) on August 16, 2022. The IRA includes historic investment in domestic energy policies designed to set the stage to reduce carbon emissions in the United States by roughly forty percent by 2030. Discussing the IRA, President Biden said, “This bill is the biggest step forward on climate ever.”

Among other things, the legislation ensures that existing nuclear reactors can continue to provide reliable, clean energy with a new production tax credit (PTC), the first of its kind for existing nuclear facilities. The nuclear PTC is a credit of up to $15 per megawatt-hour of electricity produced and will be in effect from 2024 through 2032.

The IRA also encourages new nuclear technology with a clean electricity PTC available for advanced nuclear reactors and power uprates that enter service in 2025 or later. The IRA also creates a clean electricity investment credit for zero-emissions facilities entering service in 2025 or later. This provides a credit of thirty percent of investment in new zero-carbon electricity facilities, including nuclear. The legislation also makes a significant investment in high assay low-enriched uranium, which will be critical to fueling advanced nuclear reactors.

The legislation also supports nuclear energy by expanding the DOE’s loan guarantee abilities, creating a PTC for hydrogen production, and including an extension of the Advanced Energy Project Credit program.

3. State Policy Development

Some states are opposing the storage of SNF within their borders. In March 2023, New Mexico passed a law that bans the storage of SNF in New Mexico. Following the signing into law by Governor Michelle Lujan Grisham, public agencies are prohibited from granting permits for an SNF disposal project unless certain conditions are met, including state consent to storage of the waste. This followed similar legislation in Texas that effectively banned high-level radioactive materials from coming into the state. These state laws present challenges for the two CISF applicants, Holtec and Interim Storage Partners, LLC (ISP), which are planning to construct facilities in these two states.

Other states have enacted legislation to support new nuclear developments. In particular, Wyoming enacted a bill in 2022 to support TerraPower’s plans to develop an advanced nuclear reactor at the site of a former coal-fired power plant. The legislation also established spent fuel management requirements and certain tax exemptions for nuclear facilities that source at least eighty percent of their fuel from domestic supplies. Indiana also enacted coal-to-nuclear legislation in 2022. Similarly, the Indiana law directs state regulators to develop regulations accommodating the construction and operation of small modular reactors at retiring coal and natural gas plants. Many other states have passed state climate legislation that encourages or mandates carbon-free electricity generation, including from new nuclear facilities.

D. Judicial and Regulatory Updateon Consolidated Interim Storage

Although the federal used fuel management program has been largely inactive for more than a decade, private companies have launched two private CISFs, one in Texas and the other in New Mexico. ISP, a joint venture between Waste Control Specialists and Orano USA, received a 10 C.F.R. Part 72 license for its CISF in 2021. The NRC also issued a Part 72 license to Holtec for its facility in May 2023. Both projects have faced legal challenges, and federal courts are actively handling several lawsuits challenging the NRC’s licensing of these facilities.

The ISP license faces several judicial challenges. In Don’t Waste Michigan v. NRC, 2023 WL 395030 (D.C. Cir. Jan. 23, 2023), several organizations argued that the NRC violated the Nuclear Waste Policy Act (NWPA) by including a license condition stating that ISP must have an executed contract with the commercial owners of used fuel or DOE before beginning operations. In June 2022, the NRC, intervenor ISP, and amicus Nuclear Energy Institute filed briefs in support of affirming the NRC decisions granting a license to ISP for its CISF in Texas.

The U.S. Court of Appeals for the D.C. Circuit held that the license condition related to executed contracts requires contracts with either DOE or private entities as the titleholders of SNF. The court acknowledged that DOE would violate NWPA by taking title to and transporting nuclear fuel to the CISF, but the NRC’s authority to license and regulate the possession and use of nuclear material under the Atomic Energy Act (AEA), unaffected by the NWPA, permits it to issue licenses to store SNF. The court also dismissed the other challenges to NRC’s issuance of ISP’s license.

In State of New Mexico v. NRC, 5 F.4d 1112 (10th Cir. 2023), the Tenth Circuit dismissed New Mexico’s challenge to the NRC’s issuance of ISP’s license. The court ruled that New Mexico did not qualify as an aggrieved party because it only commented on the NRC’s draft environmental impact statement (DEIS) and did not request a hearing, seek to intervene, or propose contentions. As a result, the court held that it lacked jurisdiction under the Hobbs Act and AEA. The court highlighted that New Mexico could have raised its concerns by filing contentions based on the applicant’s environmental report or by filing new or amended contentions based on the NRC’s DEIS. Additionally, the court further held that it lacked jurisdiction under NWPA because the NRC’s action was in response to an application by a private entity taken in reliance on its AEA authority, not the NWPA.

A similar case is pending in the Fifth Circuit, State of Texas v. NRC. In that case, Texas argued that the NRC lacked authority to issue the license under the AEA and NWPA, and alleged violations of the National Environmental Policy Act (NEPA). The NRC responded by arguing that the Fifth Circuit lacks jurisdiction because Texas did not participate in the adjudicatory proceedings before the NRC.

E. Decommissioning

1. Rulemaking

On March 3, 2022, the NRC published in the Federal Register a Notice of Proposed Rulemaking regarding a proposed rule for operating reactors transitioning to decommissioning. NRC staff is currently in the comment review period following the closing of public comments in August 2022. The NRC received over 4,000 comments on the proposed rulemaking in addition to the periodic public meetings held on the proposal. NRC staff is expected to complete the comment-review period and send a final rule package to the Commission for approval in the fall of 2023, with a final rule published in mid-2024. The details of the decommissioning rulemaking, which has been underway for nearly a decade, have been addressed in prior reports.

2. Industry Trends

The asset transfer model, in which the incumbent utility transfers the shutdown facility, NRC licenses, decommissioning liability, and decommissioning trust funds to a new company to execute decommissioning, is still the most prevalent means of decommissioning within the industry.

Entergy Nuclear Operations used this model to transfer Palisades to subsidiaries of Holtec in 2022. During the transfer application process, several parties filed contentions against the transfer, including the Michigan Attorney General. NRC staff approved the license transfers in December 2021, and the transaction closed in June 2022; however, in July 2022, the Commission (which acts as the presiding officer in license transfer proceedings) admitted four portions of the Michigan Attorney General’s financial challenge and rejected the other contentions filed in the proceeding.

In that order (CLI-22-08), a three-member Commission admitted financial contentions similar to those previously rejected by a full Commission (over two Commissioners’ dissent) in proceedings involving Holtec’s acquisition of Oyster Creek, Pilgrim, and Indian Point. The evidentiary hearing on portions of the Michigan Attorney General’s admitted contentions took place in February 2023 before a single-member licensing board. The board certified the record to the Commission in March 2023. A final decision by the Commission is likely to take several months.

As noted above, the Michigan Governor also announced that the state is in discussion with Holtec regarding a potential restart of Palisades. Holtec submitted a regulatory engagement plan to NRC and participated in two public meetings to discuss the licensing process for restarting Palisades but has not yet notified NRC of its intent to formally pursue the restart approval process. Palisades would be the first facility to request authority to resume operations following the certification of permanent removal of fuel, at which point the facility license no longer authorizes operations.

F. Vogtle Units 3 and 4

On August 3, 2022, Georgia Power Company (GPC) and Southern Nuclear Operating Company, Inc. received NRC authorization under 10 C.F.R. § 52.103(g) to load fuel in Vogtle Unit 3, marking the first reactor to achieve this milestone under the NRC’s Part 52 framework. Fuel loading began in October 2022. Following pre-operational testing, Unit 3 safely began operation at one hundred percent power in May 2023.

Unit 4 completed hot functional testing (HFT) in May 2023. HFT verifies the successful operation of reactor components and systems together and confirms the reactor’s readiness for fuel load. HFT includes the last series of major test prior to initial fuel load. GPC projects that Unit 4 will enter service in early 2024.

G. Subsequent License Renewal

In early 2022, the Commission ordered (CLI-22-02) that the license renewal GEIS applies only to initial license renewal and does not address subsequent license renewal (SLR). The Commission issued a separate adjudicatory order (CLI-22-03) applicable to pending SLR proceedings, essentially discarding all SLR environmental reviews performed to date. The order directed staff to perform new evaluations based on, at the election of the applicant, either (1) new site-specific information provided by the applicant, or (2) the future updated GEIS and revisions to 10 C.F.R. Part 51, once completed. In April 2022, the Commission directed staff to develop a final rule within twenty-four months related to SLR.

Consistent with the Commission Staff Requirements Memorandum issued in April 2022, staff published a proposed rule in the Federal Register concerning SLR in March 2023. The proposed rule redefines the number and scope of environmental issues addressed by the NRC and license renewal applications. The proposed rule is the result of NRC staff thoroughly re-evaluating SLR as directed by SECY-22-0024. From the previous regulation in 2013, the total amount of environmental issues addressed rose from seventy-eight to eighty, and the number of Category 2 issues addressed in plant-specific environmental impact statements increased from seventeen to twenty. These changes include the following: (1) the consolidation of some issues within their respective categories; (2) the addition of greenhouse gas effects on climate change to Category 1; (3) the movement of severe nuclear accident impacts from Category 2 to Category 1; (4) the division of one Category 2 issue into three separate issues addressing various endangered species and habitats; and (5) the addition of National Marine Sanctuaries and climate change impact on environmental resources to Category 2. As with the current regulation, the GEIS addresses Category 1 considerations, and licensees must address any varied impacts of Category 1 items at the specific site and all Category 2 items. Under the proposed regulation, SLR applications will be subject to the same supplemental environmental impact statement requirements as an initial license renewal. Additionally, the NRC simultaneously published a draft of the revised license renewal GEIS for comment. The draft revised license renewal GEIS and proposed regulation specifically cover both initial license renewal and SLR. The comment period closed in May 2023.

As a result of the Commission’s 2022 determination that the license renewal GEIS did not apply to SLR, the expiration dates of the subsequent renewed licenses for Turkey Point (Florida Power & Light Company (FP&L)) and Peach Bottom (Constellation) reverted to the original renewed license (sixty-year) expiration dates pending completion of the additional NEPA review. In response to the Commission’s decision, FP&L submitted an Environmental Report Supplement as an additional appendix to the Turkey Point SLR application. NRC continues to review the SLR application, and the final Federal Register notice is projected to be issued in late 2023.

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Darani M. Reddick

Darani M. Reddick is Director of Licensing at Constellation Energy Generation. The Committee gratefully acknowledges the contributions of Jerry Bonanno, Deputy General Counsel, Jonathan Rund, Deputy General Counsel and Assistant Secretary, and Kaitlin Rekola, Senior Staff Counsel, at the Nuclear Energy Institute; Anne Leidich, Partner, and Ashley Meredith, Associate, at Pillsbury Winthrop Shaw Pittman LLP; and Alan Lovett, Partner, Samantha Renshaw, Associate, and Lisa Ezell, Paralegal, at Balch & Bingham LLP.