[Senate Report 111-312]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 598
111th Congress                                                   Report
 2d Session                                                     111-312


                            IMPROVEMENT ACT


               September 27, 2010.--Ordered to be printed


   Mr. Bingaman, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 2052]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 2052) to amend the Energy Policy Act of 
2005 to require the Secretary of Energy to carry out a research 
and development and demonstration program to reduce 
manufacturing and construction costs relating to nuclear 
reactors, and for other purposes, having considered the same, 
reports favorably thereon without amendment and recommends that 
the bill do pass.


    The purpose of S. 2052 is to require the Secretary of 
Energy to carry out a research and development and 
demonstration program to reduce manufacturing and construction 
costs relating to nuclear reactors.

                          Background and Need

    The 104 nuclear power plants currently operating in the 
United States generate roughly 20 percent of the nation's 
electricity, and roughly 70 percent of the nation's carbon-free 
electricity. New nuclear power plants will need to be built in 
the years ahead to replace existing plants as they age and are 
retired, to meet increased energy demand, and to help reduce 
carbon dioxide emissions.
    The greatest challenge to the deployment of new nuclear 
power plants is their large capital cost. A new nuclear power 
plant is estimated to cost between $6 billion and $8 billion. 
Congress has previously sought to address this problem through 
loan guarantees in title XVII of the Energy Policy Act of 2005, 
insurance against regulatory delays in section 638 of the 
Energy Policy Act of 2005, production tax credits in section 
1306 of the Energy Policy Act of 2005, and improvements in the 
licensing process in title XXVIII of the Energy Policy Act of 
1992. In addition, section 952 of the Energy Policy Act of 2005 
established a Nuclear Energy Research Initiative within the 
Department of Energy for research and development on nuclear 
energy systems.
    Additional legislation is needed to make lowering the cost 
of nuclear reactor systems a primary objective of the 
Department of Energy's Nuclear Energy Research Initiative.

                          Legislative History

    S. 2052 was introduced by Senator Mark Udall on October 29, 
2009. Senators Bingaman, Murkowski, Crapo, Landrieu, Risch, and 
Klobachar are cosponsors. Similar legislation, H.R. 5163, was 
introduced in the House of Representatives on April 28, 2010.
    The Committee on Energy and Natural Resources held a 
legislative hearing on S. 2052 on December 15, 2009. S. Hrg. 
111-375. In addition, the Committee held an oversight hearing 
on nuclear energy development on March 18, 2009. S. Hrg. 111-
    The Committee ordered S. 2052 favorably reported, without 
amendment, at its business meeting on July 21, 2010.

                        Committee Recommendation

    The Senate Committee on Energy and Natural Resources, in 
open business session on July 21, 2010, by voice vote of a 
quorum present recommends that the Senate pass S. 2052.
    Senator Sanders asked to be recorded as voting no.

                      Section-by-Section Analysis

    Section 1 provides a short title.
    Section 2 amends section 952(a) of the Energy Policy Act of 
2005 (42 U.S.C. 16272(a)) by redesignating the existing 
subsection, which authorizes the Department of Energy's Nuclear 
Energy Research Initiative, as paragraph (1), and by adding 
five new paragraphs, numbered (2) through (6).
    Paragraph (2) requires the Secretary of Energy to conduct 
research to lower the cost of nuclear reactor systems as part 
of the Nuclear Energy Research Initiative, and identifies 
research on modular and small-scale reactors, balance-of-plant 
issues, cost-efficient manufacturing and construction, 
licensing issues, and enhanced proliferation controls as types 
of research included within the initiative.
    Paragraph (3) directs the Secretary of Energy, in carrying 
out research under paragraph (2), to consult with the Secretary 
of Commerce, the Secretary of the Treasury, the Nuclear 
Regulatory Commission, and any other individual who the 
Secretary determines to be necessary.
    Paragraph (4) directs the Secretary of Energy to develop 
and post on the Department of Energy's website a schedule 
outlining a five-year strategy to lower effectively the costs 
of nuclear reactors. Subparagraphs require the Nuclear Energy 
Advisory Committee to review the schedule, and the Secretary to 
update it annually. The Secretary is also required to solicit 
public comment through public workshops when developing and 
updating the schedule.
    Paragraph (5) applies the cost-sharing requirements of 
section 988 of the Energy Policy Act of 2005 to the Nuclear 
Energy Research Initiative.
    Paragraph (6) authorizes appropriation of $50 million for 
each of fiscal years 2011 through 2015.

                   Cost and Budgetary Considerations

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office.

S. 2052--Nuclear Energy Research Initiative Improvement Act of 2009

    Summary: S. 2052 would authorize the appropriation of $50 
million in each of fiscal years 2011 through 2015 for the 
Department of Energy (DOE) to conduct research aimed at 
reducing the costs of deploying new commercial nuclear 
reactors. Assuming appropriation of the authorized amounts, CBO 
estimates that implementing S. 2052 would cost $224 million 
over the 2011-2015 period, and $26 million in later years. 
Enacting S. 2052 would not affect direct spending or revenues; 
therefore, pay-as-you-go procedures do not apply.
    S. 2052 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
    Estimated cost to the Federal Government: For this 
estimate, CBO assumes that S. 2052 will be enacted in 2010 and 
that authorized amounts will be provided near the start of each 
fiscal year. Estimates of outlays are based on historical 
spending patterns for existing DOE programs related to research 
and nuclear energy. The estimated budgetary impact of S. 2052 
is shown in the following table. The costs of this legislation 
fall within budget function 270 (energy).

                                                                      By fiscal year, in millions of dollars--
                                                                     2011   2012   2013   2014   2015  2011-2015
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization Level...............................................     50     50     50     50     50      250
Estimated Outlays.................................................     15     44     50     60     55      224

    Pay-As-You-Go Considerations: None.
    Intergovernmental and private-sector impact: S. 2052 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal costs: Megan Carroll; Impact 
on state, local, and tribal governments: Ryan Miller; Impact on 
the private sector: Amy Petz.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Evaluation

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 2052.
    The bill is not a regulatory measure in the sense of 
imposing Government established standards or significant 
economic responsibilities on private individuals and 
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
    Little, if any, additional paperwork would result from the 
enactment of S. 2052.

                   Congressionally Directed Spending

    S. 2052, as ordered reported, does not contain any 
congressionally directed spending items, limited tax benefits, 
or limited tariff benefits as defined in rule XLIV of the 
Standing Rules of the Senate.

                        Executive Communications

    The testimony on S. 2052 given by the Assistant Secretary 
for Nuclear Energy at the Committee's December 15, 2009 
hearing, and the written comments of the Nuclear Regulatory 
Commission submitted following the hearing follow:

  Statement of Warren F. Miller, Jr., Assistant Secretary for Nuclear 
                      Energy, Department of Energy


    Thank you, Chairman Bingaman, Ranking Member Murkowski, and 
Members of the Committee. I appreciate the opportunity to 
appear before you and comment on legislation under 
consideration by the committee, as well as to provide 
information on where small modular reactors fit in the 
Department of Energy's portfolio.
    Let me start by saying clearly that the administration 
views nuclear power as an important element in its strategy to 
increase energy security and combat climate change. As the 
President said in Prague, ``[w]e must harness the power of 
nuclear energy on behalf of our efforts to combat climate 
change, and to advance peace and opportunity for all people.''
    Secretary Chu and I are working hard to advance nuclear 
power in the United States, and we expect the Department of 
Energy to award the first conditional loan guarantee for new 
nuclear plant construction soon.
    In the Office of Nuclear Energy, we have developed five 
imperatives to guide our activities.
    First, we are working with industry and the Nuclear 
Regulatory Commission to extend the lifetime of the existing 
reactor fleet. The 104 NRC-licensed commercial nuclear reactors 
produce roughly 20 percent of our nation's electricity but 70 
percent of our carbon-free electricity. Whether those plants 
retire at 60 or, for example, 80 years of age could greatly 
affect our carbon emissions profile in the future. Research is 
needed to answer outstanding questions about how long these 
reactors can safely be operated.
    Second, we are engaged with industry to enable new plant 
builds and improve the affordability of nuclear energy. I 
mentioned our efforts with respect to loan guarantees, but also 
some of our research, such as the soon-to-be-implemented 
Modeling and Simulation Hub, we expect will also help reduce 
    Third, we are working to reduce the carbon footprint of the 
transportation and industrial sectors. Nuclear power can supply 
more low-carbon electricity for increased electrification of 
the transportation sector, and provide low-carbon process heat 
for a range of industrial applications.
    Fourth, we are researching ways to create a sustainable 
nuclear fuel cycle. In particular, we are looking at ways of 
extending nuclear fuel supplies and reducing the amount and 
toxicity of waste requiring a permanent repository.
    And fifth, we are working to understand and minimize 
proliferation risks. All nuclear fuel cycles entail some amount 
of risk, but that risk can be reduced with appropriate 
technology applications and international guidelines and 

                         small modular reactors

    With that, let me turn to the focus of today's hearing: 
small modular reactors (SMRs) and their potential benefits.
    Let me first define what we mean by ``small'' and 
    To begin with, there is no exact definition for what 
constitutes a ``small'' reactor. The International Atomic 
Energy Agency defines them to be less than 300 MWe as does S. 
2812. This boundary is based mainly on two factors: (1) 
liability insurance, and (2) factory fabrication and 
portability to a site by rail or truck. For liability reasons, 
reactors above 300 MWe must carry separate indemnification 
insurance for each unit. Reactors modules that are sized 300 
MWe and below can be linked together to form one reactor-unit 
for liability insurance. Reactor modules of this size are 
conducive to off-site fabrication prior to transportation by 
rail or truck, rather than by barge, to an approved site for 
    The term ``modular'' implies several things that could 
create a potential advantage over larger plants. First, modular 
reactors can be linked together to create a larger power plant. 
This is potentially advantageous because it allows an owner the 
flexibility to incrementally increase the size of a plant. As 
demand increases, the owner can add more modules. Secondly, a 
smaller plant requires less initial capital outlay or 
investment. The existing operating modules can then be used to 
finance future additions. Multiple units are also important 
during refueling or maintenance because taking a single module 
offline does not require the shutdown of the entire plant.
    The term ``modular'' can also refer to potentially faster 
and more efficient construction techniques using factory 
fabrication. The U.S. defense nuclear shipbuilding industry is 
an excellent example where modular construction techniques have 
been proven to be highly successful. These same techniques can 
be applied to the commercial nuclear industry. This fabrication 
technique has the potential to make nuclear energy more 
economical and appealing to investors because it reduces the 
perceived ``risks'' associated with new nuclear builds such as 
construction delays and schedule uncertainty.
    There are several reasons why small modular reactors may 
prove advantageous compared to the Generation III+ nuclear 
plants in terms of economics, performance, and security.
    First, the high capital cost for new nuclear reactors has 
been a challenge for private entities to finance. Smaller 
projects would carry lower investment risk and could be more 
affordable to smaller utilities. This reduction in investment 
risk also provides an advantage in rate recovery, regardless of 
whether the licensee is regulated through state public utility 
commissions or whether it must sell the electricity in 
unregulated commercial markets.
    Second, there are areas in this country--and elsewhere in 
the world--where large plants are not needed or the existing 
infrastructure cannot support the larger capacity. Small 
modular reactors could be used to provide power to these 
smaller electrical markets, isolated areas or smaller grids. 
There is both a domestic and international market for small 
modular reactors and U.S. industry is well positioned to lead 
and compete for these markets.
    Third, some of the SMR designs may offer significant 
environmental or safety advantages for siting in industrial 
settings or where, for example, water for cooling is a problem. 
Some reactor designs would produce a higher temperature outlet 
heat that can be used for either electricity or process heat 
for nearby industries while others use little or no water for 
    Fourth, there are also some potential nonproliferation 
benefits to use of small reactors that could be designed to 
operate for decades without refueling. These reactors could be 
fabricated and fueled in a factory, sealed and shipped to the 
site for power generation, and then shipped back to the factory 
to be defueled. This approach could minimize the spread of 
nuclear material.
    Fifth, small reactors could also enter into traditionally 
non-nuclear energy markets for applications beyond electricity 
production. The possibilities include low carbon process heat 
for: fossil fuel recovery and refinement, synthetic or biofuel 
production, water desalination, hydrogen production, and a 
range of other petrochemical applications.
    Finally, while traditional economy-of-scale concepts favor 
larger nuclear plants, there are a number of reasons why SMRs 
may have some economic advantages.
    As mentioned previously, a sizeable portion of the cost and 
schedule uncertainty for building large nuclear plants is the 
amount of work that must be performed on site. Factory 
production and fabrication, and transport to and assembly 
onsite can significantly reduce that uncertainty.
    Research into small modular reactors could address several 
of the Office of Nuclear Energy's imperatives: improving the 
affordability of nuclear power; supplying low-carbon 
electricity and process heat to the transportation and 
industrial sectors; and minimizing proliferation risks. More 
importantly, the advancement of SMRs will respond to U.S. 
economic and environmental market conditions for low-carbon 
energy sources.

                    comments on s. 2052 and s. 2812

    It should be clear from the preceding comments that the 
Department believes that small modular reactors are an 
important area of research and development.
    The Nuclear Energy Research Initiative Improvement Act of 
2009, S. 2052, gives broad authority to conduct research into 
small modular reactors, as well as other related issues. The 
Department is still evaluating the details of the bill.
    S. 2812, the Nuclear Power 2021 Act, would require the 
Department of Energy to carry out a program to develop and 
demonstrate two small modular reactor designs. The Department 
is still evaluating the details of the bill.


    In considering a small modular reactor program, a variety 
of factors need to be assessed, including issues such as 
reactor size, industry readiness and responsibilities, and 
research and development needs.
    That concludes my formal remarks. Thank you for the 
opportunity to testify and I look forward to answering your 
questions and working with the Committee to achieve the 
administration's goals of energy security and reducing the 
nation's carbon emissions.
                                      United States
                             Nuclear Regulatory Commission,
                                 Washington, DC, December 10, 2009.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: As requested in your letter dated 
December 1, 2009, I am submitting, on behalf of the U.S. 
Nuclear Regulatory Commission (NRC), the following comments 
regarding S. 2052, the ``Nuclear Energy Research Initiative 
Improvement Act of 2009,'' and S. 2812, the ``Nuclear Power 
2021 Act.''
    Because of our role as a regulator, the NRC offers no 
comments on whether, as a policy matter, small modular reactors 
or other new nuclear reactor technologies should or should not 
be pursued. The NRC's role would be limited to ensuring that 
any reactors utilizing new technologies will be constructed and 
operated in a manner that will provide adequate protection of 
public health and safety and the common defense and security. 
Accordingly, the NRO's comments relate to the NRC's regulatory 

                                S. 2052

    S. 2052 would require the U.S. Department of Energy (DOE) 
to ``conduct research to lower the cost of nuclear reactor 
systems.'' This language would not, though, expressly direct 
the DOE to conduct research on safety in conjunction with its 
research related to cost reduction for nuclear reactor systems. 
Such safety research could be valuable in supporting the NRC's 
role in determining whether particular cost-saying measures are 
consistent with public health and safety--a determination the 
NRC would need to make before making any licensing decisions. 
Accordingly, the NRC suggests adding the words ``consistent 
with protection of public health and safety'' after the words 
``lower the cost of nuclear reactor systems'' in the provision 
of Section 2 of S. 2052 that would add a new paragraph (2) to 
section 952(a) of the Energy Policy Act of 2005.
    To the extent that the research into nuclear reactor 
systems leads to submission to the NRC of applications based 
upon new technologies or designs, the NRC may need to conduct 
infrastructure development and confirmatory research before 
receiving applications in order to ensure an efficient and 
effective review process once applications do arrive. To 
facilitate efficient licensing reviews, Congress would 
therefore need to provide the NRC with adequate appropriations 
to cover this pre-application work.

                                S. 2812

    S. 2812 requires the DOE to obtain two small modular 
reactor design certifications from the NRC by January 1, 2018, 
and to obtain two NRC combined licenses--one for each certified 
design--by January 1, 2021. As the NRC staff has indicated in 
prepared written testimony for the Committee's December 15, 
2009 hearing, the NRC has already begun conducting preparatory 
work on various matters related to small modular reactors. 
However, the amount of additional work that the NRC must do to 
prepare itself for efficient reviews of the small modular 
reactor design certification and combined license applications 
described in S. 2812 will vary based upon the technologies 
ultimately chosen. For example, the NRC expects that it is much 
closer to being able to efficiently evaluate applications for 
small modular reactors that would utilize light water reactor 
technology--the same technology employed in the existing fleet 
of large commercial nuclear plants--than applications reliant 
on technologies with which the NRC has much less experience.
    Thus, while the NRC is not contending that the deadlines in 
S. 2812 are unattainable, and while the NRC would make a 
concerted effort to make licensing decisions within any 
statutory timeframe, the NRC emphasizes that the time and 
resources it will need to develop the appropriate 
infrastructure and conduct any necessary confirmatory research 
could vary substantially depending upon which small modular 
reactor technologies are ultimately pursued. S. 2812 does set 
target dates for ultimate receipt of NRC licenses, but it sets 
no deadline for determining which technologies will be chosen 
as the basis for the designs that the DOE and its private-
sector partners would seek to have licensed. Therefore, it is 
not clear how much advance warning the NRC would have about 
which technologies the license applications will reference.
    In addition, pursuant to its Atomic Energy Act 
responsibilities, the NRC will not grant a license if the 
applicant does not demonstrate to the NRC that public health 
and safety and common defense and security will be adequately 
protected. Therefore, for the deadlines in S. 2812 to be met, 
the NRC would need to receive appropriations adequate to 
support any necessary infrastructure development and 
confirmatory research as well as the application reviews 
themselves, and applicants would need to submit high quality 
applications in a timely manner.
    In light of the considerations described above, the NRC 
suggests adding language to the deadline provisions of S. 2812 
to ensure there is no undue pressure on the DOE or the NRC to 
compromise on safety or security because of impending statutory 
deadlines. Section 645 of the Energy Policy Act of 2005 
provides an example of possible alternative language. That act 
established the Next Generation Nuclear Plant Project, and 
Section 645(c) sets forth a specific date by which the DOE is 
to complete construction and begin operations of a prototype 
nuclear plant and associated facilities. But Section 645(c) 
also gives the DOE the option--in the event it cannot comply 
with the statutory deadline--of ``submit[ting] to Congress a 
report establishing an alternative date for completion.'' The 
NRC believes that similar safety-valve language would be 
appropriate for S. 2812 to account for any complications 
related to safety or security that might arise as new small 
modular reactor technologies are developed and assessed.
    If you have questions about these views, please do not 
hesitate to contact me.
                                         Gregory B. Jaczko,

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill S. 2052, as ordered reported, are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

                       ENERGY POLICY ACT OF 2005

                           Public Law 109-58

   AN ACT To ensure jobs for our future with secure, affordable, and 
reliable energy.

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Subtitle E--Nuclear Energy

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    (a) Nuclear Energy Research Initiative.--
          (1) In general.--The Secretary shall carry out a 
        Nuclear Energy Research Initiative for research and 
        development related to nuclear energy.
          (2) Authorized research initiatives.--In carrying out 
        the program under this subsection, the Secretary shall 
        conduct research to lower the cost of nuclear reactor 
        systems, including research regarding--
                  (A) modular and small-scale reactors;
                  (B) balance-of plant issues;
                  (C) cost-efficient manufacturing and 
                  (D) licensing issues; and
                  (E) enhanced proliferation controls.
          (3) Consultation requirement.--In carrying out 
        initiatives under paragraph (2), the Secretary shall 
        consult with--
                  (A) the Secretary of Commerce;
                  (B) the Secretary of the Treasury;
                  (C) the Nuclear Regulatory Commission; and
                  (D) any other individual who the Secretary 
                determines to be necessary.
          (4) Schedule.--
                  (A) In general.--Not later than 180 days 
                after the date of enactment of this paragraph, 
                the Secretary shall develop and publish on the 
                website of the Department of Energy a schedule 
                that contains an outline of a 5-year strategy 
                to lower effectively the costs of nuclear 
                  (B) Public workshops.--In developing the 
                schedule under subparagraph (A), the Secretary 
                shall conduct public workshops to provide an 
                opportunity for public comment.
                  (C) Review.--Before the date on which the 
                Secretary publishes the schedule under 
                subparagraph (A), the Nuclear Energy Advisory 
                Committee shall conduct a review of the 
                  (D) Annual updates.--
                          (i) In general.--Not later than 180 
                        days after the date on which the 
                        Secretary publishes the schedule under 
                        subparagraph (A) and annually 
                        thereafter, the Secretary shall update 
                        this schedule.
                          (ii) Public workshops.--In updating 
                        the schedule under clause (i), the 
                        Secretary shall conduct public 
                        workshops in accordance with 
                        subparagraph (B).
          (5) Cost sharing.--Section 988 shall apply to 
        initiatives carried out under this section.
          (6) Authorization of appropriations.--There is 
        authorized to be appropriated to carry out this section 
        $50,000,000 for each of fiscal years 2011 through 2015.

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