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SECY-02-0180

October 7, 2002

• PURPOSE
• BACKGROUND
• DISCUSSION
• RECOMMENDATION
• COORDINATION

PURPOSE:

To obtain Commission approval of staff positions on issues related to modular plant licensing, merchant plant licensing and high-temperature gas-cooled reactor (HTGR) licensing.

BACKGROUND:

By letter dated December 5, 2000, Exelon Generation Company (Exelon) expressed an interest in pre-application activities for the pebble bed modular reactor (PBMR). The staff began its pre-application review at a meeting with Exelon on April 30, 2001. During the meeting, Exelon discussed legal and financial issues, among others, that Exelon believed merited special consideration due to the unique features of the modular facility, the gas-cooled reactor design, and Exelon's intention to operate the PBMR as a merchant plant.

By letter dated May 10, 2001 (ADAMS Accession No. ML011420393), Exelon submitted white papers on these legal and financial issues and requested a response from the Nuclear Regulatory Commission (NRC). The Exelon white papers addressed requirements associated with:

• fuel cycle impacts: Tables S-3 and S-4 in 10 CFR 51.51 and 51.52
• financial qualifications
• decommissioning funding
• operator staffing requirements
• fuel cycle impacts: Waste Confidence Rule (10 CFR 51.23)
• minimum decommissioning costs
• antitrust review
• modular reactor licensing
• annual fees
• financial protection

In addition to the issues discussed in the white papers, the staff identified the following related issue:

• testing of new design features for a COL

SECY-01-0207, "Legal and Financial Issues Related to Exelon's Pebble Bed Modular Reactor (PBMR)," dated November 20, 2001 (ADAMS Accession No. ML012850139), presented preliminary staff positions related to the staff's assessment of Exelon's proposals on legal and financial issues and additional staff-identified licensing-related issues. In that paper, the staff informed the Commission that it would engage stakeholders on these preliminary staff positions, amend the positions as necessary, and make recommendations on policy issues related to the legal and financial issues for Commission approval. On March 27, 2002, the staff conducted a public workshop to apprise Exelon and other stakeholders of the positions presented in the paper and obtain their feedback. The workshop transcript and a summary of stakeholder comments were provided in a meeting summary dated June 4, 2002 (ADAMS Accession No. ML021500200).

The staff also solicited written comments on the preliminary staff positions in SECY-01-0207. In response, General Atomics submitted comments by letter dated April 10, 2002 (ADAMS Accession No. ML021070343). In its letter, General Atomics also provided a justification of the applicability of the issues discussed in SECY-01-0207 to the gas turbine- modular helium reactor (GT-MHR) design it is currently developing.

On April 16, 2002, Exelon announced that it would not proceed with the PBMR project after the completion of the current feasibility study. After this announcement regarding the PBMR project, the Nuclear Energy Institute (NEI) requested a meeting with the NRC to discuss modular plant and merchant plant licensing issues that NEI believes have generic applicability. On May 22, 2002, the staff held a public meeting with NEI, Exelon, and other interested stakeholders to discuss NEI's proposed integrated approach to modular plant licensing, including the assessment of annual fees. By letter dated June 17, 2002 (ADAMS Accession No. ML021970596), NEI submitted a white paper providing the details of this proposed approach. In the June 17, 2002, letter, NEI also provided comments on the preliminary staff positions discussed in SECY-01-0207 related to decommissioning funding assurance, timing of the approval of new and spent fuel storage casks, testing requirements for COL applicants, and NRC antitrust review requirements.

Following receipt of stakeholder comments at the workshop and through written correspondence, the staff reviewed the positions presented in SECY-01-0207 and prepared final recommendations as discussed below in the summary.

Finally, it should be noted that technical policy issues related to licensing non-light water designs are not included in this paper. They will be addressed in a separate paper to the Commission as discussed in SECY-02-0139, "Plan for Resolving Policy Issues Related to Licensing Non-Light Water Reactor [non-LWR] Designs."

DISCUSSION:

Based on the staff's review of stakeholder comments on the preliminary staff positions discussed in SECY-01-0207 and the staff's assessment of NEI's proposals, the staff has developed final positions on modular plant, merchant plant, and HTGR licensing issues (the issues are discussed in detail in the attachment). The staff is providing Commission recommendations for issues 1 through 3. For remaining issues, the staff is providing information to the Commission regarding the status or resolution of the issue.

1. Fuel cycle and transportation impacts: Tables S-3 and S-4 in 10 CFR 51.51 and 51.52

Should the NRC initiate rulemaking specifying the environmental impacts of the production, transportation, and storage of reactor fuel and radioactive waste for HTGRs on a generic basis?

The staff recommends that the environmental effects of the production, transportation, and storage of reactor fuel and radioactive waste be reviewed on an application-by-application basis for other-than-LWR applicants.

2. Financial qualifications in 10 CFR 50.33(f)

Are there regulatory and policy bases for establishing by rulemaking a class of non-utility licensees who need not submit the financial qualifications information otherwise required by 10 CFR 50.33(f)?

The Commission has the authority to determine by regulation that a given class of non-electric-utility applicants for nuclear power plant licenses shall not be required to submit financial qualifications information. However, the staff has not identified a reasonable basis for establishing such a class of applicants. The staff recommends that non-electric-utility applicants continue to be required to submit financial qualifications information in accordance with 10 CFR 50.33(f).

3. Decommissioning funding requirements in 10 CFR 50.75

Can a non-utility utilize an alternative method for decommissioning funding, such as partial prepayment?

According to current NRC regulations, an applicant has several options for funding decommissioning. Non-electric-utility applicants are not allowed to use the sinking fund option exclusively (uniform series of payments). The staff recommends that the NRC require non-electric-utility applicants to use the other options provided in 10 CFR 50.75 to fund decommissioning costs. The staff does not recommend that the regulations be modified to allow additional alternatives for decommissioning funding.

4. Operator staffing in 10 CFR 50.54(m)

Should a modular facility be allowed to control more than two reactors from one control room and operate with a control room staffing complement that is less than would be required for individual reactors?

Current regulations do not address the possibility of more than two reactors being controlled from one control room. Applicants will need to address the safety implications to demonstrate that more than two reactors can be adequately controlled from one control room. Regarding operator staffing requirements, applicants could request an exemption to current requirements to allow an alternate level of operator staffing for modular reactors, provided they address the safety implications.

5. Fuel cycle impacts: the Waste Confidence Rule (10 CFR 51.23)

Would PBMR and GT-MHR spent fuel fall within the scope of the NRC's Waste Confidence Rule?

The staff concluded that PBMR and GT-MHR facilities appear to be within the scope of the generic determination in Section 51.23(a). With respect to the Department of Energy's (DOE's) acceptance of PBMR or GT-MHR spent nuclear fuel (SNF), applicants should discuss DOE's acceptance of non-LWR SNF with DOE, as appropriate.

6. Minimum decommissioning cost estimates in 10 CFR 50.75(c)

Can a non-LWR applicant submit design-specific decommissioning cost estimates?

The staff will accept a minimum decommissioning cost estimate specifically for the PBMR or for the GT-MHR if the applicant can technically justify this estimate.

7. Antitrust review requirements in 10 CFR 50.33a

Can the NRC except applicants for nuclear plants that will be operated as merchant plants from the prelicensing antitrust review?

The authority of the NRC to except certain applicants for new nuclear generating facilities from the NRC's antitrust review requirements is being addressed separately by the Office of the General Counsel.

8. Licensing multiple modular reactors and the duration of a combined license (COL)

Can the NRC conduct a single set of licensing reviews and a single public hearing for multiple, nearly identical COL applications? What is the effective duration of a COL?

The Commission has the authority to conduct a single set of licensing reviews and a single public hearing for multiple COL applications for nuclear power plants of essentially the same design. Under current regulations, the term of operation for each COL would be limited to 40 years from the date of issuance of the COL. However, legislation submitted by the

Commission addressing 40-year terms, if enacted, would permit the 40-year term of operation to begin when the Commission authorizes operation (i.e, makes the initial 10 CFR 52.103(g) finding). This pending legislation would not specify the duration of the construction period of the COL and the design approval.

The NRC did not envision the delayed use of COLs that is possible under pending legislation, which is inconsistent with the Commission's policy on duration of design approvals. The staff will provide the Commission with a recommended course of action on this issue six months after Congress acts with respect to the pending legislation.

9. Annual fee requirements in 10 CFR Part 171

How should annual fees be assessed for a set of modular reactors that constitute a facility?

Based on the provisions of 10 CFR Part 171 that a separate annual fee be assessed for each license, if a separate COL is issued for each module of a modular facility, a separate annual fee would be assessed for each module. The annual fees for the COLs would be determined based on the requirements of Omnibus Budget Reconciliation Act of 1990 (OBRA-90), as amended, that the charges be assessed in a fair and equitable manner and, to the maximum extent practicable, reflect a reasonable relationship to the costs of providing services to the licensees or classes of licensees. Therefore, the staff has concluded that no further change to the fee rule is necessary at this time to address the assessment of annual fees for modular facilities.

10. Financial protection requirements in 10 CFR Part 140

Should Price-Anderson financial protection requirements be applied to each reactor module or to the entire modular "facility"?

The House of Representatives and the Senate passed legislation to amend Section 170b. of the Atomic Energy Act (AEA) to allow a combination of two or more reactor modules (each rated 100-300 MWe) with a combined rated capacity of not more than 1300 MWe to be considered one facility for the purposes of application of Price-Anderson financial protection requirements. This legislation is currently being considered in the Energy Bill conference.

11. Testing of new design features for a COL

Should a COL be issued before completion of all testing that is necessary to demonstrate the performance of safety systems and components?

This issue will be resolved as part of the 10 CFR Part 52 rulemaking after review of public comments provided in response to the proposed rule change which was provided in SECY-02-0077, "Proposed Rule To Update 10 CFR Part 52, 'Early Site Permits, Standard Design Certifications, and Combined Licenses For Nuclear Power Plants'," dated May 8, 2002 (ADAMS Accession No. ML021040009).

RECOMMENDATION:

That the Commission approve the following recommendations:

1. The staff recommends that the environmental effects of the production, transportation, and storage of reactor fuel and radioactive waste be reviewed on an application-by-application basis for other-than-LWR applicants;

2. The staff recommends that non-electric-utility applicants continue to be required to submit financial qualifications information in accordance with 10 CFR 50.33(f); and

3. The staff recommends that the NRC require non-electric-utility applicants to use the options provided in 10 CFR 50.75 to fund decommissioning costs. The staff does not recommend that the regulations be modified to allow additional alternatives for decommissioning funding.

COORDINATION:

The Office of the General Counsel has no legal objections to this paper. The Office of the Chief Financial Officer has concurred in this paper.

Attachments: Policy Issues, Analysis and Recommendations

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