[Federal Register Volume 84, Number 180 (Tuesday, September 17, 2019)]
[Notices]
[Pages 48955-48959]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20091]


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NUCLEAR REGULATORY COMMISSION

[Docket Nos. 50-275 and 50-323; NRC-2019-0131]


Pacific Gas and Electric Company; Diablo Canyon Nuclear Power 
Plant Units 1 and 2

AGENCY: Nuclear Regulatory Commission.

ACTION: Exemption; issuance.

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SUMMARY: The U.S. Nuclear Regulatory Commission (NRC) has issued 
exemptions in response to a December 13, 2018, request from Pacific Gas 
and Electric Company (PG&E or the licensee) from certain regulatory 
requirements for the Diablo Canyon Nuclear Power Plant, Units 1 and 2 
(Diablo Canyon).

DATES: The exemptions were issued on September 10, 2019.

ADDRESSES: Please refer to Docket ID NRC-2019-0131 when contacting the 
NRC about the availability of information regarding this document. You 
may obtain publicly-available information related to this document 
using any of the following methods:
     Federal Rulemaking Website: Go to https://www.regulations.gov and search for Docket ID NRC-2019-0131. Address 
questions about NRC docket IDs in Regulations.gov to Jennifer Borges; 
telephone: 301-287-9127; email: [email protected]. For technical 
questions, contact the individual listed in the FOR FURTHER INFORMATION 
CONTACT section of this document.
     NRC's Agencywide Documents Access and Management System 
(ADAMS): You may obtain publicly-available documents online in the 
ADAMS Public Documents collection at https://www.nrc.gov/reading-rm/adams.html. To begin the search, select ``Begin Web-based ADAMS 
Search.'' For problems with ADAMS, please contact the NRC's Public 
Document Room (PDR) reference staff at 1-800-397-4209, 301-415-4737, or 
by email to [email protected]. The ADAMS accession number for each 
document referenced (if it is available in ADAMS) is provided the first 
time that it is mentioned in this document.
     NRC's PDR: You may examine and purchase copies of public 
documents at the NRC's PDR, Room O1-F21, One White Flint North, 11555 
Rockville Pike, Rockville, Maryland 20852.

FOR FURTHER INFORMATION CONTACT: Balwant K. Singal, Office of Nuclear 
Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington DC 
20555-0001; telephone: 301-415-3016; email: [email protected].

SUPPLEMENTARY INFORMATION: The text of the exemption is attached.

    Dated at Rockville, Maryland, this 12th day of September 2019.

    For the Nuclear Regulatory Commission.
Balwant K. Singal,
Senior Project Manager, Plant Licensing Branch IV, Division of 
Operating Reactor Licensing, Office of Nuclear Reactor Regulation.

ATTACHMENT--Exemptions

NUCLEAR REGULATORY COMMISSION

Docket Nos. 50-275 and 50-323

Pacific Gas and Electric Company, Diablo Canyon Nuclear Power Plant, 
Units 1 and 2 Exemption

I. Background

    Pacific Gas and Electric Company (PG&E or the licensee) is the 
holder of Facility Operating License Nos. DPR-80 and DPR-82, which 
authorizes operation of Diablo Canyon Nuclear Power Plant (Diablo 
Canyon), Units 1 and 2, respectively. The licenses provide, among other 
things, that Diablo Canyon, Units 1 and 2 are subject to all rules, 
regulations, and orders of the U.S. Nuclear Regulatory Commission (NRC 
or the Commission) now or hereafter in

[[Page 48956]]

effect. Diablo Canyon is located in San Luis Obispo, California.
    By letter dated November 27, 2018 (Agencywide Documents Access and 
Management System (ADAMS) Accession No. ML18331A553), the licensee 
informed the NRC of its intent to permanently cease operations for 
Diablo Canyon, Units 1 and 2, on November 2, 2024, for Unit 1, and 
August 26, 2025, for Unit 2.
    By letter dated January 29, 2019 (ADAMS Accession No. ML19029A020), 
PG&E notified the NRC that a voluntary petition for relief under 
Chapter 11 of Title 11 of the United States Code was filed on January 
29, 2019, in the United States Bankruptcy Court for the Northern 
District of California. The NRC acknowledged PG&E's bankruptcy 
notification on February 5, 2019 (ADAMS Accession No. ML19031C816). By 
letter dated March 14, 2019, the NRC staff stated that it does not 
anticipate that the PG&E bankruptcy filing, including that of its 
parent company, will have any adverse safety impacts at Diablo Canyon, 
Units 1 and 2 (ADAMS Accession No. ML19074A109). Additionally, the NRC 
staff stated that the bankruptcy filing does not relieve PG&E of its 
obligations to comply with NRC requirements and that PG&E must continue 
to comply with all of its obligations under the Atomic Energy Act of 
1954 (AEA) as amended, and the NRC's regulations, including the 
obligations relating to decommissioning financial assurance. The NRC 
continues to monitor PG&E's decommissioning financial assurance for 
Diablo Canyon and continued compliance with NRC's decommissioning 
funding requirements.

II. Request/Action

    By letter dated December 13, 2018 (ADAMS Accession No. 
ML18347B552), PG&E submitted a request for exemptions from the 
requirements of 10 CFR 50.82(a)(8)(i)(A) and 10 CFR 50.82(a)(8)(ii) for 
Diablo Canyon, Units 1 and 2. The exemptions would allow the licensee 
to use an amount of funds from the Diablo Canyon Nuclear 
Decommissioning Trust (NDT) \1\ for decommissioning planning above the 
amount limitations specified in NRC regulations for operating reactors 
and use withdrawals from the NDT for planning activities associated 
with spent fuel management and site restoration. Overall, the proposed 
action would allow PG&E to withdraw $187.8 million ($2017) from the 
Diablo Canyon NDT to fund radiological decommissioning, spent fuel 
management, and site restoration planning activities necessary prior to 
permanent cessation of operations of Diablo Canyon, Units 1 and 2, in 
2024 and 2025, respectively.
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    \1\ The NRC notes that decommissioning trust funds in the NDT 
are not property of PG&E's estate and are held in trust for the 
exclusive purpose of providing funds for the decommissioning of the 
nuclear plants. See 10 CFR 50.75.
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    According to the application, planning activities necessary to 
support direct transition to physical decommissioning upon permanent 
shut down of Diablo Canyon, Units 1 and 2, include: Obtaining revisions 
to NRC licenses and requirements; obtaining state and local permits 
required for decommissioning activities and supporting required 
stakeholder processes related to future land use and disposition of 
facilities; completing engineering design, work plans, technical 
evaluations, and procurement to support several major, critical 
decommissioning projects scheduled at the front end of the 
decommissioning effort; developing and supporting decommissioning cost 
estimates and supporting nuclear decommissioning proceedings at the 
California Public Utilities Commission (CPUC); and developing detailed 
executable work plans for decommissioning work, revising plant 
processes and procedures as necessary.
    PG&E has estimated that a total of $187.8 million ($2017) would be 
required to be spent on pre-shutdown planning activities; $148.4 
million would be for radiological decommissioning planning activities, 
and $39.4 million would be for spent fuel management and site 
restoration planning activities. The estimated $148.4 million amount is 
more than 3 percent of the generic minimum decommissioning amount 
calculated for an operating reactor using the formula set forth by NRC 
regulations at 10 CFR 50.75. Furthermore, withdrawals from the 
decommissioning trust fund cannot be used to fund the PG&E estimated 
$39.4 million for spent fuel management and site restoration planning 
activities absent (1) a clear indication that monies in the fund were 
collected for those purposes and are clearly and consistently accounted 
for separately,\2\ or (2) an exemption from the requirements of 10 CFR 
50.82(a)(8)(i)(A) for use of funds for those purposes.
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    \2\ The NRC does not preclude the commingling of funds 
accumulated to comply with NRC radiological decommissioning 
requirements and funds accumulated to address site restoration costs 
and spent fuel management costs, as long as the licensee is able to 
identify and account for the NRC radiological decommissioning funds 
that are contained within its single account. See NRC Regulatory 
Issue Summary 2001-07, Revision 1, ``10 CFR 50.75 Reporting and 
Recordkeeping for Decommissioning Planning,'' dated January 8, 2009 
(ADAMS Accession No. ML083440158); Regulatory Guide 1.184, Revision 
1, ``Decommissioning of Nuclear Power Reactors,'' dated October 2013 
(ADAMS Accession No. ML13144A840).
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    The requirements of 10 CFR 50.82(a)(8)(ii) restrict the use of the 
NDT for decommissioning planning to 3 percent of the generic minimum 
decommissioning amount calculated using the formula set forth by the 
regulations at 10 CFR 50.75. For licensees that have submitted the 
certifications required under 10 CFR 50.82(a)(1) and commencing 90 days 
after the NRC has received the Post-Shutdown Decommissioning Activities 
Report, an additional 20 percent may be used. A site-specific 
decommissioning cost estimate must be submitted to the NRC prior to the 
licensee using any funding in excess of these amounts. Furthermore, as 
required by 10 CFR 50.82(a)(8)(i)(A), decommissioning trust funds may 
be used by the licensee if the withdrawals are for legitimate 
decommissioning activities, consistent with the definition of 
decommissioning in 10 CFR 50.2. The definition in 10 CFR 50.2 states, 
that ``Decommission means to remove a facility or site safely from 
service and reduce residual radioactivity to a level that permits (1) 
Release of the property for unrestricted use and termination of the 
license; or (2) Release of the property under restricted conditions and 
termination of the license.''
    This definition addresses radiological decommissioning and does not 
include activities associated with irradiated fuel management or site 
restoration activities. Therefore, these regulations would limit 
withdrawals from the Diablo Canyon NDT to $37.2 million ($18.6 million 
per unit) and would allow spending only on planning activities for 
radiological decommissioning. In addition, as noted above, the licensee 
does not plan to permanently cease operations for Diablo Canyon, Units 
1 and 2, until November 2, 2024 for Unit 1, and August 26, 2025, for 
Unit 2. Therefore, exemptions from 10 CFR 50.82(a)(8)(i)(A) and 10 CFR 
50.82(a)(8)(ii) are needed to allow the licensee to use an amount of 
funds from the Diablo Canyon NDT for decommissioning planning above the 
3 percent limitation specified in NRC regulations and to use 
withdrawals from the NDT for planning activities associated with spent 
fuel management and site restoration.

III. Discussion

    Pursuant to 10 CFR 50.12, the Commission may, upon application by 
any interested person or upon its own initiative, grant exemptions from 
the requirements of 10 CFR part 50 when (1)

[[Page 48957]]

the exemptions are authorized by law, will not present an undue risk to 
public health or safety, and are consistent with the common defense and 
security; and (2) any of the special circumstances listed in 10 CFR 
50.12(a)(2) are present. These special circumstances, as stated in 10 
CFR 50.12(a)(2) include, among other things: (a) ``Application of the 
regulation in the particular circumstances would not serve the 
underlying purpose of the rule or is not necessary to achieve the 
underlying purpose of the rule''; and (b) ``Compliance would result in 
undue hardship or other costs that are significantly in excess of those 
contemplated when the regulation was adopted, or that are significantly 
in excess of those incurred by others similarly situated.''

A. The Exemptions Are Authorized by Law

    The exemptions would allow PG&E to withdraw $187.8 million ($2017) 
from the Diablo Canyon NDT to fund planning activities for radiological 
decommissioning, spent fuel management, and site restoration prior to 
permanent cessation of operations. As stated above, 10 CFR 50.12 allows 
the NRC to grant exemptions from the requirements of 10 CFR part 50. 
The NRC staff has determined, as explained in Section D below, that 
there is reasonable assurance of adequate funding for radiological 
decommissioning because PG&E's withdrawal of $187.8 million ($2017) 
from the Diablo Canyon NDT for planning activities for radiological 
decommissioning, spent fuel management, and site restoration will not 
adversely impact PG&E's ability to complete radiological 
decommissioning within 60 years of permanent cessation of operations 
and terminate the Diablo Canyon licenses. Accordingly, the exemption is 
authorized by law because granting the licensee's proposed exemptions 
will not result in a violation of the Atomic Energy Act of 1954, as 
amended, or the Commission's regulations.

B. The Exemptions Present No Undue Risk to Public Health and Safety

    The proposed exemptions would allow PG&E to withdraw $187.8 million 
($2017) from the Diablo Canyon NDT to fund planning activities for 
radiological decommissioning, spent fuel management, and site 
restoration between now and permanent cessation of operations, to 
support a safe and efficient transition from operational to 
decommissioning status. PG&E has estimated that a total of $187.8 
million ($2017) would be needed for pre-shutdown planning activities; 
$148.4 million would be for radiological decommissioning planning 
activities, and $39.4 million would be for spent fuel management and 
site restoration planning activities. According to the licensee, 
spending the $187.8 million now will save approximately $166.1 million 
($2017) in overall decommissioning cost mainly due to savings on 
security, fire protection, and overall staffing costs mainly due to 
savings on security, fire protection, and overall staffing costs.
    As explained in further detail in Section D below, based on the NRC 
staff's review of PG&E's exemption request and site-specific cost 
estimate and the staff's independent cash flow analysis, the NRC staff 
finds that PG&E's withdrawal of $187.8 million ($2017) from the Diablo 
Canyon NDT for planning activities for radiological decommissioning, 
spent fuel management, and site restoration, will not adversely impact 
PG&E's ability to complete radiological decommissioning within 60 years 
of permanent cessation of operations and terminate the Diablo Canyon 
licenses. Therefore, the requested exemptions will not present an undue 
risk to public health and safety if granted.
    In addition, granting the requested exemptions will not alter the 
operation of any plant equipment or systems and, therefore, does not 
present an undue risk to safety. The proposed exemptions do not 
introduce any new industrial, radiological, chemical, or radiological 
hazards that would present a health and safety risk nor would granting 
the exemptions result in modifying or removing design or operational 
controls or safeguards that are intended to mitigate onsite hazards. 
This exemption does not diminish the effectiveness of other regulations 
that ensure available funding for decommissioning, including 10 CFR 
50.82(a)(6), which prohibits licensees from performing any 
decommissioning activities that could foreclose release of the site for 
possible unrestricted use, result in significant environmental impacts 
not previously reviewed, or result in there no longer being reasonable 
assurance that adequate funds will be available for decommissioning. 
Therefore, the requested exemptions will not present an undue risk to 
public health and safety if these exemptions are granted.

C. The Exemptions Are Consistent With the Common Defense and Security

    The exemptions, allowing withdrawal of $187.8 million ($2017) of 
the Diablo Canyon NDT for planning activities for radiological 
decommissioning, spent fuel management, and site restoration do not 
alter the design, function, or operation of any structures or plant 
equipment that is necessary to maintain the safe and secure status of 
the plant and will not adversely affect PG&E's ability to physically 
secure the site or protect special nuclear material. Therefore, the 
common defense and security is not impacted by the exemptions.

D. Special Circumstances

    The regulation under 10 CFR 50.12(a)(2) states, in part, that 
``[t]he Commission will not consider granting an exemption unless 
special circumstances are present,'' and identifies, in 10 CFR 
50.12(a)(2)(i)-(vi), when special circumstances are present. Special 
circumstances, in accordance with 10 CFR 50.12(a)(2)(ii), are present 
whenever application of the regulation in the particular circumstances 
would not serve the underlying purpose of the rule or is not necessary 
to achieve the underlying purpose of the rule.
    The underlying purpose of 10 CFR 50.82(a)(8)(i)(A) and 10 CFR 
50.82(a)(8)(ii) is to provide reasonable assurance that adequate funds 
will be available for radiological decommissioning of power reactors 
within 60 years of permanent cessation of operations. Strict 
application of these requirements would limit withdrawal from the 
Diablo Canyon NDT to $37.2 million ($18.6 million per unit) and would 
allow spending only on planning activities for radiological 
decommissioning.
    The NRC staff performed an independent cash flow analysis using 
information provided in PG&E's cash flow statement in Enclosure 2 of 
the exemption request, dated December 13, 2018, and information 
provided in PG&E's site-specific cost estimate submitted by letter 
dated March 26, 2019 (ADAMS Accession No. ML19094B780). The balance in 
the NDT as of December 31, 2018, was $1.31 billion for Unit 1 and $1.71 
billion for Unit 2. The site-specific cost estimate states that PG&E 
plans to deposit $226.7 million per year into the Unit 1 NDT in 2020-
2024, and $151.1 million per year into the Unit 2 NDT in 2020-2025. The 
site-specific cost estimate also states that the estimated costs for 
radiological decommissioning are $1.581 billion for Unit 1 and $1.578 
billion for Unit 2.
    Using the costs for radiological decommissioning for both units 
provided in the site-specific cost estimate, a 2% rate of return on the 
NDT (as allowed by 10 CFR 50.75(e)(1)(ii)), and considering withdrawal 
of $187.8

[[Page 48958]]

million ($2017) from the Diablo Canyon NDT for the specified planning 
activities, the NRC staff determined that the balance in the NDTs at 
the completion of radiological decommissioning in 2038 is expected to 
be approximately $1.046 billion for Unit 1 and $1.117 billion for Unit 
2 indicating that the licensee will have sufficient funds to complete 
radiological decommissioning. In addition, the staff's independent cash 
flow analysis projects that the Diablo Canyon NDT would contain 
approximately $3.68 billion in 2076 (for both units) when PG&E projects 
the site will be fully decommissioned, and all spent fuel will be 
removed from the site. Therefore, the NRC staff finds that there is 
reasonable assurance of adequate funding for radiological 
decommissioning because PG&E's withdrawal of $187.8 million ($2017) 
from the Diablo Canyon NDT for radiological decommissioning, spent fuel 
management, and site restoration planning activities will not adversely 
impact PG&E's ability to complete radiological decommissioning within 
60 years of permanent cessation of operations and terminate the Diablo 
Canyon licenses.
    In addition, under 10 CFR 50.75(f), the licensee will be required 
to submit an annual report regarding the status of decommissioning 
funding for Unit 1, beginning in 2020, and for Unit 2, beginning in 
2021 because the units will be within five years of permanently 
shutting down. Also, under 10 CFR 50.75(h)(2), the licensee is required 
to provide the NRC with written notice at least 30 business days prior 
to any disbursement from the NDT for spent fuel management and site 
restoration planning activities. Lastly, the NRC notes that PG&E is an 
electric utility as defined by 10 CFR 50.2, and therefore, has the 
ability to address any future shortfall in the NDT with the CPUC (who 
sets the electric rates for PG&E), should that be necessary in the 
future.
    In transitioning to and planning for decommissioning activities, 
several power reactor licensees have requested exemptions from the 
decommissioning funding assurance requirements in 10 CFR 50.75 and 10 
CFR 50.82 to allow for the withdrawal of funds from their NDTs for 
expenses unrelated to radiological decommissioning as defined in 10 CFR 
50.2, such as for spent fuel management and site restoration. 
Generally, the NRC has granted these exemption requests, on a case-by-
case basis, finding reasonable assurance that even after the proposed 
withdrawals of funds for the requested use (e.g., spent fuel and site 
restoration), sufficient funding remains in the NDT to complete 
radiological decommissioning and terminate the license.
    The Commission addresses a similar issue in Staff Requirements 
Memorandum (SRM) SECY-02-0085, ``Recent Issues With Respect to 
Decommissioning Funding Assurance That Have Arisen as Part of License 
Transfer Applications and Other Licensing Requests,'' dated January 3, 
2003 (ADAMS Accession No. ML030030539). In that SRM, the Commission 
stated that, ``[t]he staff should continue to review requests for 
withdrawal or non-transfer of funds from decommissioning trusts on a 
case-by-case basis,'' and ``. . . while a trust is accumulating, our 
regulations should be interpreted as strictly as possible to preclude 
withdrawals . . . (both radiological and non-radiological).'' The staff 
recognizes that PG&E's exemption request has been submitted by the 
licensee during the operational life and decommissioning funding-
accumulating phase of the license. However, given the unique 
circumstances of PG&E's request, including the known date of shutdown 
of the units in advance, the time period until the units are 
permanently shut down, PG&E's projected cost savings of $166.1 million 
($2017), the current balance of the NDT, the projected balance of the 
NDT at license termination based on the staff's independent cash flow 
analysis, and PG&E's ability to address any future shortfalls in the 
NDT with the CPUC, the NRC staff determined that the request is 
justified under the SRM.
    In summary, the NRC staff found that reasonable assurance exists 
that adequate funds will be available in the Diablo Canyon NDT to 
complete radiological decommissioning and terminate the Part 50 
license, with sufficient funding available beyond that required under 
10 CFR 50.75 to pay for PG&E's proposed planning activities for 
radiological decommissioning, spent fuel management, and site 
restoration. Accordingly, the NRC staff concludes that application of 
the 10 CFR 50.82(a)(8)(i)(A) and 10 CFR 50.82(a)(8)(ii) requirements 
that limit the withdrawal of funds from the Diablo Canyon NDT for 
decommissioning planning to 3 percent for operating reactors and 
preclude withdrawals from the NDT for planning activities associated 
with spent fuel management and site restoration are not necessary to 
achieve the underlying purpose of the rule; thus, special circumstances 
are present supporting approval of the exemption request.
    Special circumstances, in accordance with 10 CFR 50.12(a)(2)(iii), 
are present whenever compliance would result in undue hardship or other 
costs that are significantly in excess of those contemplated when the 
regulation was adopted, or that are significantly in excess of those 
incurred by others who are similarly situated.
    The NRC staff analyzed PG&E's cash flow statements in Enclosure 3 
of the application dated December 13, 2018, that compared conducting 
planning activities while the units are in operation and spending the 
proposed $187.8 million ($2017) over the next few years against waiting 
until permanent cessation of operations and then conducting the 
planning activities. PG&E's analysis shows that by waiting to conduct 
the planning activities, the licensee would need to spend significant 
resources ($166.1 million) on various activities (security, operations, 
chemical and radiation protection, and fire brigade) that can be 
avoided by conducting the planning activities while the units are in 
operation. The licensee also stated that executing on planning and 
permitting activities between now and permanent shut down would allow 
physical decommissioning to begin shortly after permanent shut down. 
The licensee estimates this would reduce the duration of the 
decommissioning activities by 2 years. Based on the above, the staff 
finds that this increased cost would result in undue hardship or other 
costs to the licensee that are significantly in excess of those 
contemplated when the regulation was adopted as these increased costs 
can be avoided by granting the exemption request.

E. Environmental Considerations

    In accordance with 10 CFR 51.31(a), the Commission has determined 
that granting of these exemptions will not have a significant effect on 
the quality of the human environment (see Environmental Assessment and 
Finding of No Significant Impact published on August 16, 2019 (84 FR 
42025)).

IV. Conclusions

    In consideration of the above, the NRC staff finds that PG&E has 
provided reasonable assurance that adequate funds will be available for 
the radiological decommissioning of Diablo Canyon, even with the 
withdrawal of $187.8 million ($2017) from the Diablo Canyon NDT for 
planning activities for radiological decommissioning, spent fuel 
management, and site restoration.
    Accordingly, the Commission has determined that, pursuant to 10 CFR 
50.12(a), the exemptions are authorized by law, will not present an 
undue risk to the public health and safety, and are

[[Page 48959]]

consistent with the common defense and security. Also, special 
circumstances are present. Therefore, the Commission hereby grants PG&E 
exemptions from the requirements of 10 CFR 50.82(a)(8)(i)(A) and 10 CFR 
50.82(a)(8)(ii) to allow the licensee to use $187.8 million ($2017) 
from the Diablo Canyon NDT for decommissioning planning above the 3 
percent limitation specified in NRC regulations and for withdrawals 
from the NDT for planning activities associated with spent fuel 
management and site restoration.
    The exemptions are effective upon issuance.

    Dated at Rockville, Maryland, this 10th day of September 2019.

    For the Nuclear Regulatory Commission.

    /RA/

Craig G. Erlanger,
Director, Division of Operating Reactor Licensing, Office of Nuclear 
Reactor Regulation.
[FR Doc. 2019-20091 Filed 9-16-19; 8:45 am]
 BILLING CODE 7590-01-P