Please be aware that it appears the NRC has taken an unusual step of requesting public comment on SECY 2019-67, which is focused on proposed enhancements to the Regulatory Oversight Program (ROP). Comments are due by October 7, 2019. Please see 84FR38675. We previously reported on this SECY, which was provided by NRC Staff to the Commission, notwithstanding no requirement to do so for several of the proposed revisions. This action may have been prompted by a July 15 letter to NRC Chairman Kristine Svinicki jointly signed by the Chairman of the Committee on Energy and Commerce; Chairman of the Committee on Energy and Commerce subcommittee on Energy; Chairwoman, Committee on Appropriations; and the Chairwoman of the Committee on Appropriations Subcommittee on Energy and Water Development, and Related Agencies. We will continue to monitor developments regarding ROP modification initiatives.

The Federal Energy Regulatory Commission (FERC) ordered PJM Interconnection, LLC’s (PJM) on July 25 to suspend its 2019 Base Residual Auction (BRA), which provides for capacity payments to electric generators. FERC found that delaying the auction until FERC establishes a replacement rate would provide greater certainty to the market than conducting the auction under the existing rules.

This is the second time that the 2019 BRA, which provides for capacity payments for 2022–2023, has been delayed. PJM originally planned to run the auction in May, but delayed it based on a prior FERC order. FERC’s July 25 order delays the 2019 BRA until FERC establishes a replacement rate.

Read FERC’s order.

On July 25, 2019, the United States Government Accountability Office (GAO) released GAO-19-384, a report to congressional requesters analyzing the cybersecurity risk management of 23 civilian agencies—including the Nuclear Regulatory Commission (NRC). Using key elements such as risk tolerance and risk mitigation strategies, GAO examined the extent to which all agencies established a cybersecurity risk management program; what challenges, if any, agencies identified in developing and implementing such programs; and what steps the Office of Management and Budget (OMB) and the US Department of Homeland Security (DHS) have taken to meet their risk management responsibilities to address any challenges agencies face in this area. In its analysis, GAO compared policies and procedures from the 23 civilian agencies to key federal cybersecurity risk management practices, attained the agencies’ own views on challenges they faced, identified and analyzed actions taken by the OMB and DHS to determine whether such actions address agency challenges, and interviewed responsible agency officials.

In SECY-19-0068 dated July 1 but recently made available, the NRC staff has asked the Commission to approve a proposed direct final rule that would eliminate one of the two financial tests used to qualify a company to issue a parent guarantee for decommissioning funding assurance. The NRC staff cites a 2010 Dodd-Frank Act mandate that agencies remove references to credit ratings in their regulations and substitute alternative standards of creditworthiness. However, rather than substituting alternative standards, the NRC staff proposes to simply eliminate one of its two current financial tests, and instead rely upon the single remaining test. Unfortunately, many companies that would qualify under the current financial test based on having an investment-grade credit rating do not qualify under the alternative test that would remain. As such, this change would heighten the credit requirements for using a parent guarantee and limit the availability of parent guarantees to provide financial assurance for decommissioning. Nonetheless, the NRC staff considers the proposal “non‑controversial” and seeks to issue the change to the regulations as a direct final rule.

NRC staff proposed to the Commission (see SECY-2019-067) certain changes to the Reactor Oversight Process (ROP) on June 28. Overall, these changes, if approved by the Commission, will result in a net reduction in the amount of time the NRC spends on planning and implementing certain inspections, and how it addresses the results of those inspections in the ROP. Proposed focus areas are as follows:

  1. Eliminate the minimum four-quarter requirement for consideration of greater-than-Green inspection findings
  2. Revise greater-than-Green–related performance indicator treatment
  3. Change the description of a White inspection finding from "low to moderate" safety significance to "low" safety significance, and change the description of a Yellow inspection finding from "substantial" to "moderate" safety significance
  4. Revise the sample sizes, which action is expected to reduce NRC inspection person-hours for several common inspections
  5. Revise the frequency of the Problem Identification & Reporting inspection from two three years
  6. Revise the Emergency Planning Significance Determination Process to focus more heavily on functions that have the greatest impact on public health and safety

The Ohio House of Representatives approved HB 6 on July 23, providing up to $150 million in financial support for the two operating nuclear plants in the state. A version of the House bill was passed by the Ohio Senate last week, and Governor Mike DeWine signed the bill into law shortly after the legislation passed the House.

Read the full text of HB 6 >>

The Nuclear Regulatory Commission (NRC) published a Federal Register notice on July 16 requesting comments on a regulatory basis supporting a “limited scope” rulemaking to develop physical security requirements for advanced reactors. For this rulemaking, “advanced reactors” means “light-water small modular reactors (SMRs) and non-light water reactors (non-LWRs)” which includes, but “is not fully coextensive with,” the definition of an “Advanced Nuclear Reactor” in the recently enacted Nuclear Energy Innovation and Modernization Act. The deadline to submit comments is August 15.

We previously reported on this rulemaking process, which started with the NRC Staff’s August 1, 2018, report to the Commission, evaluating options for revising physical security regulations for advanced reactors. We also reported on the Commission’s approval of the NRC’s Staff’s proposed rulemaking plan, which occurred on November 19, 2018. The NRC’s physical security requirements for large LWRs—in 10 CFR § 73.55>—is focused on preventing significant core damage and spent fuel sabotage. Current regulations require each site to have at least 10 armed responders for emergency security response (10 CFR § 73.55(k)(5)(ii)), and an on-site secondary alarm station to monitor potential issues (10 CFR § 73.55(i)(4)(iii)).

On June 24, the US Supreme Court issued its opinion in Food Marketing Institute v. Argus Leader Media, expanding the scope of information protected under Exemption 4 of the Freedom of Information Act (FOIA). FOIA establishes an expansive right for the public to access records from executive agencies to hold the government accountable. Limiting that broad right, FOIA includes several broadly worded exceptions whereby the release of certain information may not be compelled under FOIA. One such exemption, Exemption 4, states that “trade secrets and commercial or financial information obtained from a person” that are “privileged or confidential” are protected from mandatory public disclosure. The statute does not define “confidential,” so the question of what “commercial or financial information” is protected from disclosure has resulted in much litigation.

Justice Gorsuch’s majority opinion held that commercial or financial information that is both customarily and actually treated as private by its owner—and that is provided to the government under an assurance of privacy—is exempt from disclosure under FOIA. This holding has significant implications for all businesses that turn any information over to the US government. No longer may courts require proof that the information, if disclosed, would “cause substantial harm” to the company’s competitive position. Mere confidentiality, plus agency representations that the information will remain confidential, is enough.

To address national security interests and prevent the unauthorized transfer of scientific and technical information to certain foreign entities, the US Department of Energy (DOE) issued Order No. 486.1 on June 7. The order prohibits DOE employees and contractors from participating in certain “talent recruitment programs” – specifically “talent recruitment programs” of foreign governments determined by the DOE to be a “foreign country of risk.” DOE contractors and subcontractors within the utility and nuclear sectors should be prepared to implement controls to ensure that neither they nor their employees or subcontractors participate in these foreign-sponsored programs for identified countries, which apparently include China and Russia.

Read more about the new DOE order and what contractors and subcontractors should know.

The Environmental Protection Agency (EPA) issued three rules on June 19, granting additional powers to states to determine their projected energy resource mixes, including nuclear energy. In response to the rules, utilities should be prepared for possible changes to state policies defining what constitutes “clean” energy and supporting reliability. The rules are intended to go into effect 30 days from their issuance. However, the implementation timeline for the rules is not certain because several states and organizations have stated they intend to challenge the rules in the federal courts.