Vermont Senators Patrick Leahy and Bernie Sanders along with Representative Peter Welch recently introduced the Nuclear Plant Decommissioning Act of 2020. The bill, if enacted, would provide grants to local communities affected by the closure and decommissioning of a nuclear plant. One grant would provide funds to support local decommissioning advisory boards, which would eventually be paid for by a filing fee for Post-Shutdown Decommissioning Activities Reports (PSDARs). The other grant would provide economic development funds to local communities affected by plant closures. Along with these two grant programs, the bill would also establish direct payments to communities where spent nuclear fuel is stored during and after decommissioning at a rate of $15 per kilogram of spent fuel.
The Internal Revenue Service (IRS) and the US Department of the Treasury (Treasury) published a final rule in the September 4 Federal Register updating IRS regulations under Internal Revenue Code (Code) Section 468A. The final rule adopts most of the changes from the notice of proposed rulemaking (NOPR), which was released for comment in December 2016. That said, the IRS and Treasury made a few important changes to the final rule, as discussed below.
A federal grand jury in the Eastern District of Kentucky issued an indictment against an individual for transportation of radioactive material generated from fracking activities without compliance with US Department of Transportation hazardous materials regulations. The indictment comes on the heels of increasing focus at the state and federal levels on the safe disposal of so-called “TENORM” wastes, i.e., technologically enhanced naturally occurring radioactive material wastes that are generated as a result of certain mining and manufacturing activities, including hydraulic drilling or “fracking.” The indictment highlights the need for companies to plan for the disposal of TENORM generated during their operations, including performing appropriate due diligence on any contractors they may engage to assist with disposal.
To comply with the provisions of the Dodd-Frank Act, the NRC must amend its decommissioning financial assurance mechanisms in 10 CFR Part 30. The NRC promulgated these regulations in the 1980s and 1990s to allow licensees to use parent company and self-guarantee decommissioning financial assurance mechanisms. Owners and/or operators and parent company guarantors could qualify to use these guarantee mechanisms by either meeting financial test metrics or minimum guarantor bond credit rating criteria.
But following the financial crisis of 2007–2008, Congress determined that “ratings on structured financial products have proven to be inaccurate” and that “[t]his inaccuracy contributed significantly to the mismanagement of risks by financial institutions and investors, which in turn adversely impacted the health of the economy.” Accordingly, Section 939 of the Dodd-Frank Act directed each federal agency, including the NRC, to remove any reference to or requirement of reliance on credit ratings and to substitute standards of creditworthiness as each respective agency shall determine as appropriate for such regulations. In accordance with the Dodd-Frank Act, the NRC is proposing to amend 10 CFR Part 30 to remove these credit rating–based requirements.
The NRC recently issued its report to Congress on the best practices for the establishment and operation of local community advisory boards (CABs) associated with decommissioning nuclear power plants. This report was required by Section 108 of the Nuclear Energy Innovation and Modernization Act (NEIMA), which was signed into law on January 14, 2019. To date, CABs have been put in place for some, but not all, decommissioning nuclear power plants and there is no formal protocol for their makeup or charter.
The US Nuclear Regulatory Commission (NRC) recently released a draft report from the agency’s Working Group on Reactor Decommissioning Financial Assurance (DFA). Comments on the draft report are due by April 21, 2020.
The agency assembled the working group in 2019 to examine the implications of an increasing trend in the use of third-party business models for decommissioning nuclear power plants. The working group, composed of NRC personnel from the Office of Nuclear Material Safety and Safeguards, Nuclear Reactor Regulation, Regional Offices, and the Office of the General Counsel, undertook a comprehensive review of current DFA requirements to identify potential regulatory gaps or policy issues and recommend potential program enhancements.
The NRC’s Reactor Decommissioning Financial Assurance Working Group recently held a public meeting to receive comments on potential guidance updates before publishing its final report. Prior to the public meeting, the working group shared a presentation summarizing its findings and proposals.
As background, the working group was established in September 2019 to review the NRC’s current decommissioning financial assurance processes in response to the growing use of third-party decommissioning business models. In general, this business model has the licensee sell its assets, including the decommissioning trust fund, and transfer its license—either temporarily or permanently—to a third party who then performs the decommissioning work before the license is terminated and the site released for unrestricted use. The working group was tasked with identifying potential regulatory gaps or policy issues related to adequate financial assurances and making recommendations to address them.
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.
It is a fairly common misperception that operating nuclear power plants in the United States depress local property values. This assumption was refuted in recent regulatory proceedings in the Northeast, where detailed studies of local real estate records confirmed earlier studies finding no adverse impact on the property value of homes in proximity to a nuclear power facility or its associated spent fuel. Specifically, perceptions of risk and stigma associated with operating nuclear facilities do not appear to translate into market behavior in the form of a reduction of home sale prices in the vicinity of such facilities. In fact, those studies suggest there may be a positive impact on surrounding communities in the form of reduced residential property taxes for a given level of public expenditures. In practice, it seems that home buyers and sellers are far more pragmatic in their decisions.
The US Nuclear Regulatory Commission (NRC) on October 11 issued its consent to the transfer of the Vermont Yankee Nuclear Power Station (Vermont Yankee) from Entergy Corporation (Entergy) to NorthStar Group Services, Inc. (NorthStar). The transfer paves the way for the accelerated decommissioning of Vermont Yankee, which could be completed as early as 2026.
Just as importantly for the nuclear industry as a whole, the NRC’s consent to the proposed transfer signals for the first time its willingness to consent to a transfer of a nuclear power plant license where: (1) title to the spent fuel is transferred to the new owner; and (2) spent fuel management costs will be recovered in a future settlement of litigation with the US Department of Energy (DOE). These are new precedents that have significant implications for future transfers of shutdown plants.