[Federal Register Volume 66, Number 126 (Friday, June 29, 2001)]
[Notices]
[Pages 34723-34724]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-16387]



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NUCLEAR REGULATORY COMMISSION

[Docket Nos. 50-220 and 50-410; License Nos. DPR-63 and NPF-69]


In the Matter of Niagara Mohawk Power Corporation, et al. (Nine 
Mile Point Nuclear Station Unit Nos. 1 and 2); Order Approving Transfer 
of Licenses and Conforming Amendments

I

    Niagara Mohawk Power Corporation (NMPC) is the exclusive owner and 
operator of Nine Mile Point Nuclear Station, Unit 1 (NMP-1), and in 
regard thereto, holds Facility Operating License No. DPR-63. NMPC is 
also part-owner and exclusive operator of Nine Mile Point Nuclear 
Station, Unit No. 2 (NMP-2), and in connection therewith, is a holder 
of Facility Operating License No. NPF-69. The other co-owners of NMP-2 
and holders of the license are: New York State Electric & Gas 
Corporation (NYSEG), Rochester Gas and Electric Corporation (RG&E), 
Central Hudson Gas & Electric Corporation (CHGEC), and Long Island 
Lighting Company (LILCO, which is doing business as Long Island Power 
Authority). NMP-1 and NMP-2 (the facilities) are located at the 
licensees' site in Oswego County, New York.

II

    By application dated February 1, 2001 (submitted in proprietary and 
non-proprietary versions), Constellation Nuclear, LLC, on behalf of its 
indirect subsidiary Nine Mile Point Nuclear Station, LLC (NMP LLC), and 
NMPC, NYSEG, RG&E, and CHGEC requested the consent of the U.S. Nuclear 
Regulatory Commission (NRC or Commission) to a proposed direct transfer 
of the licenses for NMP-1 and NMP-2, to the extent held by the 
foregoing applicants, to NMP LLC. The application was supplemented by 
submittals from Constellation Nuclear, LLC, dated March 1, March 16, 
March 29, April 5, April 27, May 30 and June 7, 2001 (collectively 
herein referred to as the Application). The Application also requested 
the approval of conforming license amendments to reflect the direct 
transfer of the licenses. The Application further requested consent to 
certain indirect transfers of the licenses, to the extent such would 
occur following the direct transfers, resulting from (1) a planned 
realignment or restructuring of the Constellation Energy Group (CEG), 
Inc. organization of which NMP LLC is a part, and establishment of a 
new intermediate parent company of NMP LLC referred to as New 
Controlled, and (2) the acquisition by Virgo Holdings, Inc. (Virgo), an 
indirect subsidiary of The Goldman Sachs Group, Inc., of an equity 
interest in NMP LLC and up to a 17.5% voting interest in New 
Controlled, coupled with the distribution of the remaining voting 
shares of New Controlled, all of which would be held by CEG, Inc. up to 
the time of distribution, to the existing public shareholders of CEG, 
Inc., leaving Virgo with the largest single voting interest in NMP 
LLC's ultimate parent company.
    In connection with the direct transfers, NMP LLC would assume title 
to NMP-1 following approval of the proposed license transfers, and 
would assume the 82-percent ownership interest in NMP-2 currently held 
by NMPC (owner of a 41% interest), NYSEG (18% interest), RG&E (14% 
interest) and CHGEC (9% interest). LILCO is not involved in the direct 
transfer of NMP-2 and, therefore, will remain a licensee with respect 
to its 18% ownership interest. In addition, NMP LLC would become 
responsible for the operation of both NMP-1 and NMP-2. The Application 
states that NMP LLC would also assume the decommissioning 
responsibility of the current owners of NMP-1 and NMP-2 who are 
transferring their interests in the facilities to NMP LLC. NMP LLC 
would provide decommissioning funding assurance through the use of 
decommissioning trusts coupled with parent company guarantees.
    The proposed conforming license amendments would replace references 
to NMPC, NYSEG, RG&E, and CHGEC in the licenses with references to NMP 
LLC, as appropriate, and make other administrative changes to reflect 
the proposed direct transfer.
    The Application requested approval of the direct transfer of the 
facility operating licenses, conforming license amendments, and 
possible indirect license transfers pursuant to 10 CFR 50.80 and 10 CFR 
50.90. The staff published a notice of the request for approval and an 
opportunity for a hearing in the Federal Register on April 2, 2001 (66 
FR 17584). The Commission received no comments or requests for hearing 
pursuant to the notice.
    Under 10 CFR 50.80, no license, or any right thereunder, shall be 
transferred, directly or indirectly, through transfer of control of the 
license, unless the Commission shall give its consent in writing. Upon 
review of the information in the Application, and relying upon the 
representations and agreements contained in the Application, the NRC 
staff has determined that NMP LLC is qualified to hold the licenses to 
the extent proposed in the Application, that the establishment of New 
Controlled as a new intermediate parent of NMP LLC, if such follows the 
direct license transfers, will not affect the qualifications of NMP LLC 
as the holder of the NMP-1 license and as a holder of the NMP-2 
license, that the acquisition by Virgo of up to a 17.5% voting interest 
in New Controlled coupled with CEG, Inc.''s distribution of its voting 
shares of New Controlled to CEG, Inc.''s shareholders, resulting in 
Virgo becoming the largest single voting shareholder of the ultimate 
corporate parent of NMP LLC, if such follows the direct license 
transfers, will not affect the qualifications of NMP LLC as the holder 
of the NMP-1 license and as a holder of the NMP-2 license, and that the 
direct transfer of the licenses to NMP LLC as proposed and indirect 
license transfers, to the extent effected by the foregoing transactions 
if such occur after the direct license transfers, are otherwise 
consistent with applicable provisions of law, regulations, and orders 
issued by the Commission, subject to the conditions set forth below. 
The NRC staff has further found that the Application for the proposed 
license amendments complies with the standards and requirements of the 
Atomic Energy Act of 1954, as amended (the Act), and the Commission's 
rules and regulations set forth in 10 CFR Chapter I; the facilities 
will operate in conformity with the Application, the provisions of the 
Act, and the rules and regulations of the Commission; there is 
reasonable assurance that the activities authorized by the proposed 
license amendments can be conducted without endangering the health and 
safety of the public and that such activities will be conducted in 
compliance with the Commission's regulations; the issuance of the 
proposed license amendments will not be inimical to the common defense 
and security or to the health and safety of the public; and the 
issuance of the proposed amendments will be in accordance with 10 CFR 
Part 51 of the Commission's regulations and all applicable requirements 
have been satisfied.
    The findings set forth above are supported by a safety evaluation 
dated June 22, 2001.

III

    Accordingly, pursuant to sections 161b, 161i, and 184 of the Atomic 
Energy Act of 1954, as amended, 42 U.S.C 2201(b), 2201(i), and 2234; 
and 10 CFR 50.80, It Is Hereby Ordered that the direct transfer of the 
licenses as described herein to NMP LLC, and the indirect transfer of 
the licenses, to the

[[Page 34724]]

extent effected by the transactions described above that may occur 
following the direct transfers, are approved, subject to the following 
conditions:
    (1) NMP, LLC shall, prior to the completion of the direct 
transfers, provide to the Director of the Office of Nuclear Reactor 
Regulation satisfactory documentary evidence that NMP, LLC has obtained 
the appropriate amount of insurance required of licensees under 10 CFR 
Part 140 of the Commission's regulations.
    (2) On the closing date of the transfer of NMP1 and NMP2 to it, NMP 
LLC shall: (1) obtain from the transferors all of their accumulated 
decommissioning trust funds for NMP1 and NMP2, respectively, and (2) 
receive [a] parent company guarantee[s] pursuant to 10 CFR 
50.75(e)(1)(iii)(B) (to be updated annually as required under 10 CFR 
50.75(f)(1), unless otherwise approved by the NRC) in a form acceptable 
to the NRC and in [an] amount[s] which, when combined with the 
decommissioning trust funds for NMP1 and NMP2, equals or exceeds the 
total amounts required for NMP1 and NMP2, respectively, pursuant to 10 
CFR 50.75(b) and (c).
    (3) The master decommissioning trust agreement for NMP1 and NMP2, 
at the time the direct transfers are effected and thereafter, is 
subject to the following:
    a. The decommissioning trust agreement must be in a form acceptable 
to the NRC.
    b. With respect to the decommissioning trust funds, investments in 
the securities or other obligations of CEG Inc., New Controlled, or 
their affiliates, successors, or assigns, are and shall be prohibited. 
Except for investments tied to market indexes or other non-nuclear 
sector mutual funds, investments in any entity owning one or more 
nuclear power plants are and shall be prohibited.
    c. The decommissioning trust agreement must provide that no 
disbursements or payments from the trusts, other than for ordinary 
administrative expenses, shall be made by the trustee unless the 
trustee has first given the NRC 30 days prior written notice of the 
payment. The decommissioning trust agreement shall further contain a 
provision that no disbursements or payments from the trusts shall be 
made if the trustee receives prior written notice of objection from the 
Director of the Office of Nuclear Reactor Regulation.
    d. The decommissioning trust agreement must provide that the 
agreement cannot be amended in any material respect without 30 days 
prior written notification to the Director of the Office of Nuclear 
Reactor Regulation.
    e. The appropriate section of the decommissioning trust agreement 
shall state that the trustee, investment advisor, or anyone else 
directing the investments made in the trusts shall adhere to a 
``prudent investor'' standard, as specified in 18 CFR 35.32(a)(3) of 
the Federal Energy Regulatory Commission's regulations.
    (4) NMP LLC shall take all necessary steps to ensure that the 
decommissioning trusts are maintained in accordance with the 
Application, the requirements of this Order, and the related safety 
evaluation.
    (5) At the time of the direct transfers, NMP LLC shall enter or 
shall have entered into an intercompany credit agreement with CEG, Inc. 
or New Controlled, whichever entity is the ultimate parent of NMP LLC 
at that time, in the form and on the terms represented in the 
Application. Should New Controlled become the ultimate parent of NMP 
LLC following the direct transfer of the licenses to NMP LLC, NMP LLC 
shall enter or shall have entered into a substantially identical 
intercompany credit agreement with New Controlled at the time New 
Controlled becomes the ultimate parent; in such case, any existing 
intercompany credit agreement with CEG, Inc. may be canceled once the 
intercompany credit agreement with New Controlled is established. 
Except as otherwise provided above, NMP LLC shall take no action to 
void, cancel, or modify any intercompany credit agreement referenced 
above, without the prior written consent of the Director of the Office 
of Nuclear Reactor Regulation.
    (6) NMPC shall inform the Director of the Office of Nuclear Reactor 
Regulation of the date of the closing of the direct transfers no later 
than two business days prior to such date. If all of the direct and 
indirect transfers of the licenses approved by this Order are not 
completed by June 30, 2002, this Order shall become null and void, 
provided, however, upon written application and for good cause shown, 
such date may in writing be extended.
    It Is Further Ordered that, consistent with 10 CFR 2.1315(b), 
license amendments that make changes, as indicated in Enclosure 2 to 
the cover letter forwarding this Order, to conform the licenses to 
reflect the subject direct license transfers are approved. The 
amendments shall be issued and made effective at the time the proposed 
direct license transfers are completed.
    This Order is effective upon issuance.
    For further details with respect to this Order, see the initial 
application dated February 1, 2001, the supplemental submittals dated 
March 1, March 16, March 29, April 5, April 27, May 30 and June 7, 
2001, and the safety evaluation dated June 22, 2001, which are 
available for public inspection at the Commission's Public Document 
Room, located at One White Flint North, 11555 Rockville Pike (first 
floor), Rockville, Maryland, and accessible electronically through the 
ADAMS Public Electronic Reading Room link at the NRC Web site (http://www.nrc.gov).

    Dated at Rockville, Maryland this 22nd day of June 2001.

    For The Nuclear Regulatory Commission.
Jon R. Johnson,
Acting Director, Office of Nuclear Reactor Regulation.
[FR Doc. 01-16387 Filed 6-28-01; 8:45 am]
BILLING CODE 7590-01-P