On February 24, 2022, the Nuclear Regulatory Commission (NRC) issued three unusual decisions pertaining to the agency’s review of subsequent license renewal (SLR) applications.  The Commission orders reversed a previous Commission decision—CLI-20-03—pertaining to environmental reviews conducted by the NRC under the National Environmental Policy Act (NEPA) for SLRs.

In two of the orders the Commission reversed previously granted SLRs for four reactors—two reactors at Florida Power & Light Co.’s (FPL) Turkey Point nuclear power plant (CLI-22-02) and two reactors at Constellation Energy Corp.’s (Constellation) Peach Bottom nuclear power station (CLI-22-04). These orders, in part, moved the license terms back to their previous expiration dates and provided further direction to the NRC staff regarding next steps for the licenses.

The third Commission order provided further direction for conducting the environmental reviews for pending SLR proceedings, involving nine additional reactors at four more plants (CLI-22-03).

We walk through the three Commission decisions in more detail below, after providing a brief overview of SLRs and the regulations at issue.

1.  What is Subsequent License Renewal?

Typically, at initial licensing, the NRC issues a license for commercial reactors to operate for up to 40 years.  NRC regulations permit these licenses to be renewed beyond the initial 40-year term for an additional period of time, limited to 20-year increments per renewal There are no specific limitations in the Atomic Energy Act or the NRC’s regulations restricting the number of times a license may be renewed.  Initial license renewal generally extends a plant operating license from 40-60 years, while so-called “subsequent license renewal”—or SLR—extends a plant operating license from 60-80 years.

In deciding whether to grant a renewed license, the NRC evaluates whether the nuclear facility can continue to operate safely during the period of extended operation.  The review is conducted in accordance with both safety (10 C.F.R. Part 54) and environmental (10 C.F.R. Part 51) requirements.

a.  Environmental Reviews During License Renewal

In addition to a safety review, the renewal of a nuclear power plant operating license requires the preparation of an environmental impact statement (EIS) to comply with the requirements of NEPA. The EIS includes the Staff’s analysis that considers and weighs the environmental effects of the proposed action.  To support the preparation of EISs, the NRC published the Generic Environmental Impact Statement for License Renewal of Nuclear Plants (GEIS) in 1996, and updated the GEIS in 2013.

The GEIS for license renewal assessed the environmental impacts associated with the continued operation of nuclear power plants during the license renewal term.  The NRC also promulgated a rule that codified the findings of the GEIS into its regulations in 10 C.F.R. Part 51, Subpart A, Appendix B, Table B-1 (“Table B-1”).

As explained in the Commission decision CLI-20-03 (at page 5), the intent of the GEIS was to improve the efficiency of license renewal by determining which environmental impacts would result in essentially the same impact at all nuclear power plants (i.e., generic or “Category 1” issues) and which ones could result in different levels of impacts at different plants and would require a plant-specific analysis to determine the impacts (“Category 2” issues).  In developing the GEIS, the NRC relied on the following factors:

  • License renewal will involve nuclear power plants for which the environmental impacts of operation are well understood as a result of lessons learned and knowledge gained from operating experience and completed license renewals.
  • Activities associated with license renewal are expected to be within this range of operating experience; thus, environmental impacts can be reasonably predicted.
  • Changes in the environment around nuclear power plants are gradual and predictable.

For the issues that could not be generically addressed—the Category 2 issues—the Staff prepares plant-specific supplements to the GEIS, i.e., a plant-specific supplemental EIS, or “SEIS”.

While the NRC is responsible for complying with NEPA, the process of creating an EIS begins with the license renewal applicant. Under 10 C.F.R. §§ 51.45(a) and 51.53(c)(1), license renewal applicants must submit an environmental report to the NRC “to aid the Commission in complying with section 102(2) of NEPA.”  See 10 C.F.R. § 51.14(a) (definition of “environmental report”). The NRC staff reviews the environmental report submitted by the applicant and uses it to draft the plant-specific SEIS.  See CLI-20-03 at 6.

Under 10 C.F.R. § 51.53(c)(3), “[f]or those applicants seeking an initial renewed license…the environmental report…for the operating license renewal stage is not required to contain analyses of the environmental impacts of the license renewal issues identified as Category 1 issues in [Table B-1].”  Therefore, applicants meeting this criteria may rely on the GEIS and Table B-1 in preparing their environmental reports, and the NRC staff may subsequently rely on the GEIS and Table B-1 when preparing its SEISs.

b.  Status of License Renewal Reviews

As of January 2022, the NRC has completed initial license renewal for 94 commercial nuclear reactors—58 have entered their extended period of operation, while 8 of those have since ceased operations.  An additional reactor with a renewed license shut down before reaching 40 years of operation.

The first SLR application, for Turkey Point Units 3 and 4 reactors, was submitted to the NRC in January 2018, and the NRC issued the Turkey Point SLRs in December 2019.  As of January 2022, the NRC had issued SLRs for six reactors, and SLR applications are under review for an additional nine reactors.

Completed SLR Applications (as of January 2022):

Plant Name and Unit(s) Application Date Renewed License Issued Date Entering Subsequent Period of Extended Operation
Turkey Point Units 3 and 4 01/31/18 12/04/19 07/19/32 (Unit 3)
04/10/33 (Unit 4)
Peach Bottom Units 2 and 3 07/10/18 03/05/20 08/08/33 (Unit 2)
07/02/34 (Unit 3)
Surry Units 1 and 2 10/15/18 05/04/21 05/25/2032 (Unit 1)
01/29/2033 (Unit 2)

SLR Applications Currently under Review:

Plant Name and Unit(s) Application Received
St. Lucie Plant, Units 1 and 2 08/03/2021
Oconee Nuclear Station, Units 1, 2, and 3 06/07/2021
Point Beach, Units 1 and 2 11/16/2020
North Anna, Units 1 and 2 08/24/2020

*Tables are taken from the NRC website.

2.  Summary of Commission Position before February 24th Orders

The Commission’s February 24th orders reversed a prior Commission decision—CLI-20-03.  The matter specifically before the Commission in CLI-20-3 was whether 10 C.F.R. § 51.53(c)—and therefore the GEIS and Table B-1—applied to SLRs or only initial license renewals.  At issue was the language in the regulation that stated that the regulation applied to “those applicants seeking an initial renewed license” and whether this language limited the applicability of § 51.53(c) to only initial license renewal and not to SLRs.

The matter had been referred to the Commission by the Licensing Board in the Turkey Point SLR proceeding.  When faced with this issue, the Licensing Board had determined the plain regulatory language does not resolve whether § 51.53(c)(3) can be applied to SLR applicants, explaining: “it neither directs the Commission to apply section 51.53(c)(3) to [subsequent license renewal] applicants, nor does it forbid the Commission from doing so.”  Because the Board found the regulations silent as to SLR applicants, the Board looked to “regulatory language and structure; regulatory purpose and history; the agency’s interpretative rules; and administrative efficiency, logic, and practicality.”  Based on its analysis, the Board concluded that the Commission intended § 51.53(c)(3) to apply to all license renewal applicants, including those for SLR.  See CLI-20-03 at 8-9 (citing LBP-19-3, 89 NRC 245 (2019)).

In affirming the Licensing Board’s decision, the Commission held in CLI-20-03 that, in SLR proceedings, the NRC staff may rely on the NRC’s GEIS and Table B-1, and could exclude consideration of “Category 1” issues from their environmental reports absent new and significant information that would change the conclusions in the GEIS.  See CLI-20-03 at 29 and 10 C.F.R. § 51.53(c)(3)(i).  Therefore, under CLI-20-03, an applicant’s environmental reports need only address “Category 2” issues and the NRC staff need only address the same information in their SEISs.  See 10 C.F.R. § 51.53(c)(3)(ii).

3.  Commission February 24th Orders

In the Commission’s February 24th orders, the Commission reversed its previous decision in CLI-20-03, and determined that the GEIS, Table B-1, and 10 C.F.R. § 51.53(c)(3) only apply to an initial license renewal (i.e., from years 40-60 of a plant’s operating life) and not subsequent license renewal (i.e., from years 60-80 of a plant’s operating life).  This decision impacts pending SLRs as well as already-issued SLRs as explained below.

Commissioner Wright also dissented from the majority decision, as further explained below.

  • Turkey Point and Peach Bottom. With respect to the four licenses at the Turkey Point and Beach Bottom plants, the Commission determined that as a result of overturning CLI-20-03, the environmental review of these license renewal applications is incomplete.  See CLI-22-02 at 2 and CLI-22-04 at 3.  The Commission directed that the NRC staff roll back the license dates for these facilities to where they were before the SLR, and directed the parties to submit their views on the practical effects of (1) the subsequent renewed licenses continuing in place and (2) the previous licenses being reinstated.

In the Turkey Point decision, the Commission explained the effects of its decision as follows (CLI-22-02 at 14):

The interpretation we apply today is consistent with the intent and text of NEPA and the APA, as well as judicial interpretations of those laws. This decision aligns the agency interpretation of section 51.53 with the plain language of the regulation.

We conclude that the Staff did not conduct an adequate NEPA analysis before issuing FPL licenses for the subsequent license renewal period.  While FPL’s subsequently renewed licenses became immediately effective upon issuance, the environmental analysis associated with the previous licenses analyzed the impacts of operation until 2032 and 2033 for Units 3 and 4, respectively. We conclude that it is appropriate for FPL to maintain its current subsequently renewed licenses, but with shortened terms to match the end dates of the previous licenses … until completion of the NEPA analysis.  Accordingly, we direct the Staff to amend the licenses to this effect. Given the timeframe involved, we fully expect that the Staff will be able to evaluate the environmental impacts prior to FPL entering the subsequent license renewal period. While we recognize that FPL and other subsequent license renewal applicants have relied on CLI-20-03 and prior agency statements, our holding today will ultimately promote the agency’s goals of clear communication with the public and transparency in our actions.

We would note that it is unusual for the NRC to alter pre-existing decisions without a demonstration of new information, especially in light of the fact that a licensing action had already been taken by the NRC based on a Commission decision.  This unusual course of action is further addressed in the overview of Commissioner Wright’s dissent below.

We would further note that Dominion Energy Inc.’s Surry nuclear power plant also received approval for a subsequent license renewal in 2021, but for reasons unclear at present to the blog authors is not named in the NRC’s recent decisions.

  • SLR Reviews Generally (CLI-22-03). The NRC issued a third order applicable to pending SLR proceedings.  The order addressed the existing proceedings as well as the previously granted license extensions.  With respect to SLRs in general, in light of its decision regarding CLI-20-03, the Commission stated that:

1. No SLRs will be issued until the “NEPA deficiencies” are addressed in each application.

It is directing the NRC staff to review and update the GEIS so that it covers operation during the SLR period. The Commission prefers that the staff update the GEIS before appropriate action be taken regarding the specific pending SLRs. However, the Commission concedes that applicants may not wish to first wait for completion of the generic analysis and rulemaking, so an applicant may instead submit a revised environmental report with information on impacts during the SLR period. Petitioners or intervenors could then submit new or revised contentions based on information in the revised site-specific EIS.

2. In the meantime, licensing reviews should continue to move forward, and in adjudicatory matters, any contentions that do not challenge the contents of the GEIS or site-specific environmental impact statement should proceed.

  • Commissioner Wright’s Dissent. Presently, there are only three NRC Commissioners—with two of the three Commissioners supporting the February 24th orders to reverse CLI-20-03, and one dissenting (Both Commissioner Baran and Commissioner Wright were Commissioners at the time of the CLI-20-03 decision, with Commissioner Baran dissenting at the time).  In his dissent, Commissioner Wright explained that he disagrees with the rationale reversing CLI-20-03, and had “serious concerns about the message this action sends to the public, applicants, licensees, and other stakeholders.”

Commissioner Wright explained that the reversal of CLI-20-03 was both arbitrary and inconsistent with the NRC’s Principles of Good Regulation (CLI-22-02, dissent at 1):

I view the majority’s decision to reverse direction now as arbitrary and inconsistent with the NRC’s Principles of Good Regulation. The majority’s decision is arbitrary because my colleagues do not base the reversal on any new information or arguments beyond what we previously considered and rejected in issuing CLI-20-03. The reversal is also contrary to the NRC’s Principles of Good Regulation, particularly the principles of Openness, Clarity, and Reliability. For the NRC to function as an effective and credible regulator, our stakeholders must be able to rely on our statements and positions. Such reliance is impossible when we may change our position at any time, based on nothing other than the information and arguments previously considered and rejected.

Moreover, changing course in this proceeding under these circumstances short-circuits our agency’s well-established and predictable adjudicatory process, set forth in the Atomic Energy Act 1954, as amended and detailed in our regulations.

         Commissioner Wright further states:

The majority also asserts that their reversal of CLI-20-03 promotes clear communication and transparent decision-making. I disagree and find that the reversal directly contravenes those goals. We previously clearly communicated our position on this matter in CLI-20-03. My colleagues note that “[a]gencies may change positions and interpretations, so long as they explain their reasoning for doing so.” While I agree in principle, the majority has not explained its reasoning here; rather, the majority is reversing CLI-20-03 based on information previously considered and rejected. In my view, that does not provide a sufficient basis for reversal.

4.  Next Steps

  • In the Turkey Point and Peach Bottom license proceedings, the NRC staff will need to amend the licenses to reflect the reversal in the operating dates of the licenses—e., for Turkey Point, term dates should be July 19, 2032 and April 10, 2033 for Units 3 and 4, respectively, and for Peach Bottom, August 8, 2033 and July 2, 2034 for Units 2 and 3, respectively.
  • The parties will need to conduct next steps as instructed by the Commission, and the applicants will need to update their environmental reports in those proceedings to align with the Commission’s direction. Consistent with the orders, the NRC staff is directed to separately update the GEIS to cure the NEPA deficiencies by addressing the subsequent license renewal period.
  • It is also possible that licensees may challenge the Commission’s decisions in federal court under the Administrative Procedures Act (APA), especially in light of Commissioner Wright’s dissent stating that the NRC’s change in course is arbitrary. Under the APA, final agency decisions may be subject to judicial review, and courts evaluate whether an agency’s actions are deemed to be “arbitrary or capricious” when deciding whether to overturn or remand an agency action.
  • In the other pending SLR proceedings, the environmental reports will require similar amendments to address the Commission’s order.

For more information, please contact the blog authors, Amy Roma, Partner, Rob Matsick, Associate, or Stephanie Fishman, Associate.

The U.S. Department of Energy (“DOE”) recently completed a report titled “America’s Strategy to Secure the Supply Chain for a Robust Clean Energy Transition” on what it will take to secure the supply chains necessary to support the Nation’s clean energy goals.  The ultimate objectives DOE identifies are:  (i) to achieve diverse and resilient supply chains that will (ii) meet climate change goals, (iii) establish the United States as a leader in clean energy innovation and manufacturing, and (iv) create jobs in the clean energy economy.  DOE recognizes that nuclear energy is essential to achieving climate change objectives, and it also acknowledges the need for contributions from both the existing reactor fleet and the advanced reactor technologies and fuels that DOE has been actively supporting for some time.

The supply chain needs that DOE identifies for nuclear energy closely parallel the supply chain requirements for most other clean energy technologies.  These include secure sources of raw materials, research and development support, other financial support in the form of financing and tax credits, work force development and solutions to end-of-life waste issues.

Although the DOE report stresses the need for increasing domestic sources of supply, DOE does not present a “go-it-alone” supply chain solution.  It also recognizes the need for domestic efforts to be thoughtfully combined with foreign supplies, foreign investment and foreign markets as critical to a healthy clean energy economy.

Among the conditions DOE identifies as key contributors to supply chain problems in the nuclear industry are:

  • The lack of adequate domestic manufacturing and fabrication capabilities for advanced nuclear reactor technologies and advanced nuclear fuels.
  • The absence of clear market signals to support deployment of nuclear technology.
  • The lack of sufficient numbers of early career workers to replace retiring members of the nuclear workforce.
  • Even where domestic mineral resources are available, the complex set of issues that create challenges for uranium and other critical mineral mining.
  • The need to modernize aged and outdated nuclear equipment without further stressing the supply chain.

DOE responds to these conditions with a set of policy proposals, including:

  • In coordination with the Nuclear Regulatory Commission (NRC), support deployment of advanced nuclear reactors.  Specific actions DOE recommends are:
    • Enable private sector partnerships with national labs to demonstrate novel reactor concepts and share technical expertise with the NRC.
    • Ensure successful and efficient licensing of the next generation of technology in the near term.
    • Implement DOE programs for advanced reactor demonstration projects and for HALEU availability to support timely deployment of these new technologies by private sector.
  • Continue funding critical gaps in R&D infrastructure, including a fast neutron irradiation reactor or Versatile Test Reactor.
  • Amend the Nuclear Waste Policy Act to enable DOE to implement a consent-based, integrated waste disposal strategy (addressing interim storage, permanent disposal, and related transportation).
  • Support RDD&D funding, not just for DOE, but also for DOD and NASA, for the development and accelerated deployment of innovative nuclear energy systems.
  • Support global exports of U.S. nuclear technology through policy and strategic investments.
  • Expand mechanisms such as competitive grants, direct loans, and loan guarantees that support domestic manufacturing capabilities and job creation, including for nuclear component and supply chain critical minerals processing.
  • Provide tax incentives that send a clear demand signal and help U.S. manufacturers build and maintain a competitive edge in clean energy technologies, including nuclear energy.

It is not a criticism of the report and the accompanying “deep dive” assessment to say that these documents contain few startling new insights into what is needed.  Rather, DOE provides a thorough survey and compilation of all the many actions and institutions that need to come together to achieve reliable supply chains to enable the transition to a clean energy economy.  It is encouraging that nuclear energy figures in almost every area of policy and legislative needs DOE identifies as necessary to overcome the supply chain concerns that have the potential to thwart national clean energy objectives.

For more information, please contact the blog author, Mary Anne Sullivan, Senior Counsel.

On February 11, 2022, Department of Energy’s (DOE) Office Nuclear Energy announced the launch of the $6 billion Civil Nuclear Credit (CNC) Program aimed at preserving the existing U.S. fleet of nuclear power reactors and the low carbon power they produce.  The CNC Program was established in the Infrastructure Investment and Jobs Act (Infrastructure Act or the Act), which was signed into law on November 15, 2021.  We summarized the nuclear provisions in the Infrastructure Act, including the CNC Program in a previous blog.

To bring the CNC Program from paper to practice, earlier this month, DOE issued a “Notice of Intent and Request for Information Regarding Establishment of a Civil Nuclear Credit Program” (NOI/RFI).  It provides notice of DOE’s intent to solicit applications to certify nuclear reactors that would be eligible to submit sealed bids for DOE credits.  DOE would then allocate credits to be issued over a 4-year period to owners/operators of certified, at-risk reactors through an auction process.  The NOI/RFI also provides an opportunity for interested parties to submit to DOE a non-binding notice of their interest in submitting a confidential application for the CNC Program, and seeks input from stakeholders on the establishment of a CNC Program including the application, certification, and selection processes through a series of RFI questions.

Responses to the NOI/RFI addressing general program design and bid process are requested on or before March 17, 2022, however because DOE intends to develop initial draft guidance for the certification applications during the general comment period, substantive responses relating specifically to the certification process should be submitted by March 8, 2022 to ensure that this feedback can be used to meet DOE’s expedited schedule.

We walk through an overview of the CNC Program as it is described in the Infrastructure Act and the additional, clarifying information that DOE provided in the NOI/RFI below.

Overview of CNC Program

As specified in Section 40323 in the Infrastructure Act, DOE is directed to allocate credits to “certified commercial nuclear reactors” that are projected to cease operations due to economic factors.  Under the legislation, a “certified commercial nuclear reactor” is a nuclear reactor that competes in a competitive electricity market and that DOE accepts upon application to the Civil Nuclear Credit Program.  After acceptance, the owner/operator of the plant is eligible to submit a sealed bid to obtain the credit.  DOE has indicated that it would like to allocate credits to as many certified reactors as possible.

  • Certification Application.  In certifying an application, a nuclear power plant owner/operator that is applying for the CNC Program must submit information on its business finances, operating costs, payment arrangements from local state entities (including zero-emission credits (ZECs) or other nuclear generation credits), as well as economic and environmental factors applicable to the plant and the source of its uranium fuel.  DOE will protect an applicant’s confidential information and will not make public that an applicant even applied for an award until such time as the applicant receives the award.

Specifically, the certification application must include the following details—

    • Information on the operating costs such as:
      • average projected annual operating loss in dollars per megawatt-hour and the cost of operational and market risks expected to be incurred by the nuclear reactor over the 4-year period for which credits would be allocated;
      • private or publicly available data with respect to current or projected bulk power market prices;
      • any out-of-market revenue streams;
      • operations and maintenance costs, capital costs, including fuel, and operational and market risks.
    • An estimate of the potential incremental air pollutants that would result if the nuclear reactor were to cease operations;
    • Known information on the source of uranium and the location where the uranium is converted, enriched, and fabricated into fuel assemblies for the nuclear reactor for the 4-year period for which credits would be allocated; and
    • A detailed plan to sustain operations at the conclusion of the applicable 4-year period for which credits would be allocated—
      • without receiving additional credits; or
      • with the receipt of additional credits of a lower amount than the credits allocated during that 4-year credit period.
  • Application Selection for Certification.  DOE will certify a nuclear reactor if, after considering the information submitted in the application, DOE determines that the nuclear reactor is: (1) projected to cease operations due to economic factors; (2) air pollutants would increase if the nuclear reactor were to cease operations; and (3) the Nuclear Regulatory Commission (NRC) has reasonable assurance that the nuclear reactor will continue to operate in accordance with its regulations and poses no significant safety hazard.
  • Bidding Process.  Upon receiving notice that a reactor has been certified, the owner/operator must submit a sealed bid that (1) describes the price per megawatt-hour of the credits desired by the certified nuclear reactor, which shall not exceed the average projected annual operating loss; and (2) includes a commitment, subject to the receipt of credits, to provide a specific number of megawatt-hours of generation during the 4-year period for which credits would be allocated.  DOE proposes to establish a process for certified reactors to submit sealed bids for credits with a deadline not more than 30 days following notification of the nuclear reactor’s certification.
  • Application Selection for Credits.  DOE proposes to establish a review process, using a review panel comprised of DOE personnel, who will evaluate the bids and make a recommendation to the Secretary of Energy for selection of certified nuclear reactors to be allocated credits.  DOE proposes to award credits by starting with the most cost-effective bids and proceeding until available funds are exhausted. Money for the CNC Program will be available from 2022 through 2026, and credits may be allocated through 2031.
    • Allocation of credits.  A certified nuclear reactor will receive credits for a 4-year period.  DOE will periodically audit the certified nuclear reactor during the credit period.
    • Recertification.  The owner/operator of a certified nuclear reactor may seek to re-certify the nuclear reactor in accordance with DOE procedures at the end of the 4-year credit period.
    • Limitation.  DOE may not allocate any credits after September 30, 2031, and DOE provides for the recapture of the allocation of any credit to a certified nuclear reactor that, during the relevant period, terminates operations; or does not operate at an annual loss in the absence of an allocation of credits.

Additional Information on DOE’s NOI/RFI

The NOI/RFI provides notice of DOE’s intent to establish and implement the CNC Program.  It  proposes key elements, related rationale to guide its evaluation of applications for certification, and additional information on selection criteria.

DOE proposed a number of elements in the NOI/RFI, implementing and expanding upon provisions in the Act, and which include the following:

  • Acceptance of Applications.  The Infrastructure Act directs DOE to accept reactor certification applications 120 days following the Act’s enactment (i.e., by March 15, 2022), after which time DOE will evaluate and issue a decision on certification within 60 days.
    • Reactors that receive State assistance including State ZECs, State clean energy contracts, or other State program assistance may apply for certification.
    • All non-certified reactors may apply during subsequent annual application periods. DOE proposes that applications for certification should be submitted for each individual reactor seeking credits.
    • An exception is offered if the applicant asserts that there are multiple units at a given site with substantially identical financial situations, operations structures, and costs in which case a single application can be made for multiple reactors.
  • Standards of Analyses and Representation.  Recognizing that the economic factors facing each reactor are specific to each owner and/or operator, and further recognizing that operating and market assessments may be inherently uncertain, DOE proposes to request that applicants for certification make a representation of the economic situation of the reactor.  DOE further explains that it may require applicants to provide their modelling approach, data, or methodology to support their claims of projected ceasing operations.
  • Evaluation of Applications for Certification.  DOE proposes to establish a review process, using a review panel comprised of DOE personnel.  The panel will verify that the applicant has addressed each relevant aspect of certification, consistent with requirements and evaluation criteria as specified in the Request for Application.
  • Credit Allocation and Funds Disbursement.  DOE intends to allocate credits to as many certified nuclear reactors as possible consistent with the intent of the Act.  Each award is intended to cover the 4-year period, with funds distributed annually based on the allocation of credits.  DOE may obligate up to $1.2 billion of appropriated funds in Fiscal Year 2022 for the CNC Program and amounts in excess of $1.2 billion required to fund awarded credits for subsequent fiscal years will be subject to the availability of funds.
  • Audit.  Market and operations circumstances may change over the award period, and the economic loss forecasted in the nuclear reactor’s original bid may, in practice, be over- or underestimated.  DOE intends to conduct a period audit of awardees, requesting a yearly operational and economic report from each awardee to assess any divergences from the projections made at the time of certification and the actual situation in each year with respect to economic circumstances and the status of the awardee’s contractual commitments, such megawatt-hours produced.  The schedule for annual reporting and funds disbursement will be determined by DOE and will consider the awardee’s business processes, the extent possible.
  • Adjustment.  In the event that actual economic performance during the period is such that the nuclear reactor did ‘‘not operate at an annual loss in the absence of an allocation of credits,’’ Section 40323(g)(2) of the Act requires DOE to provide for recapture of  allocated credits.
    • To reduce the need for recapture, it may be appropriate for DOE to create an annual settlement mechanism through which the value of a reactor’s credit allocation would be adjusted based on the bundle of market prices to which it is exposed. Similar to the market indices that State ZEC programs use, applicants may be required to propose an index mechanism or a strike price against which market price values would be netted, or DOE may select a generic index to be applied to all applications.
    • If an indexing mechanism is employed, DOE proposes the index should be tied to economic factors related to the nuclear reactor’s operating profit or loss, and might include, for example, change in energy and capacity prices and benefits received from federal and state programs such as tax credits that reduce economic loss.
  • Recapture.  If an adjustment to allocated credits as described above is not possible despite material changes in economic performance, or if the reactor terminates operations, DOE may recapture the allocation of credits in part or in whole in accordance with the Act.  The Act directs the Secretary of Energy to provide for the recapture of allocation of credits from a nuclear reactor if the nuclear reactor (a) terminates operations; or (b) does not operate at an annual loss in the absence of an allocation of credits.

The Infrastructure Act delineates specific criteria and provides discretion for the Secretary of Energy to define additional eligibility criteria for certification of a qualifying nuclear reactor.  DOE included the following seven categories of application selection criteria in the RFI:

  • Competitive Electricity Market.  The applicant must demonstrate that the nuclear reactor competes in a competitive electricity market.  Under DOE’s interpretation of the Act, a reactor may be deemed to compete in a competitive electric market regardless of whether it is owned by am merchant generation company, a regulated utility, a public power utility, or another entity.  DOE proposes that the applicant describe in detail how it compete in a competitive electricity market based on its exposure to market prices and other factors.
  • Economic Factors.  The applicant must demonstrate that the nuclear reactor is projected to cease operations due to economic factors.  Economic factors applicants should discuss include, but are not limited to, anticipated cost of producing electricity, market pricing, regulated revenues, monetized risk of using reasonable methods for the specific market, which may include impacts of renewables and clean energy mandates, and operation and maintenance costs,  The sum of these factors provides a projection of the average profit or loss associated with the ongoing operation of the reactor.   The application for certification should clearly state what business, operational, and market risk is relevant to the operating unit profitability, and how those risks are monetized.
  • Emissions Impact.  The applicant must provide an estimate of the potential incremental air pollutants that would result if the nuclear reactor were to cease operation. DOE proposes to consider estimates containing assessment of the impact on emissions based on six air pollutants (carbon monoxide, lead, ground-level ozone, particulate matter, nitrogen dioxide, and sulfur dioxide).  Applicants must demonstrate an increase in these emissions if operations of the nuclear reactor were to cease and the power generation were replaced with other types of generation.
  • Post-Support Operations Plan.  The applicant must provide a plan to sustain operations of the reactor after the 4-year award period, either without future credits or with a reduced level of credits.  DOE recognizes that at the time of application for certification, the applicant may not know what level of assistance may be provided through the CNC Program, and that post-support operations plans will be uncertain.  DOE proposes that the applicant include a description of actions that may be taken after the award period, possible changes in the market conditions over the 4-year period, or other anticipated circumstances.
  • Uranium and Fuel Source. The applicant must identify, to the extent known, where fuel for the reactor will be sourced over the 4-year period for which credits may be allocated, including the uranium, conversion, enrichment, and fabrication source. In determining whether to certify a reactor, priority will be given to a nuclear reactor that uses, to the maximum extent available, uranium that is produced, converted, enriched, and fabricated into fuel assemblies in the United States.
  • NRC Assurance.  The Act requires that the NRC has reasonable assurance that the reactor will continue to operate in accordance with its licensing basis and that it poses no significant safety hazards.  DOE intends to rely on input from the NRC.
  • Other Information.  DOE may require an applicant to submit other information that DOE determines to be appropriate in meeting the fundamental objective of the Act, to enable clean and safe energy generation.  Other information may include external and internal impacts to the application that may not be covered in the above-stated certification criteria.

RFI Questions

The NOI/RFI seeks comments regarding all elements of the proposed approach for the CNC Program described therein.  DOE also set forth 12 additional questions for comment.  DOE requests expedited submission of comments on the proposed approach to certification and the specific questions with respect to certification.

RFI responses shall include:

  • NOI/RFI title and reference number;
  • Name(s), phone number(s), and e-mail address(es) for the principal point(s) of contact;
  • Institution or organization affiliation and postal address; and
  • Clear indication of the specific question(s) to which you are responding.

Non-Binding Statements of Interest

In order to provide advanced notice of the number and type of nuclear reactors (i.e., those that are or are not receiving State support) that may wish to participate in the program, DOE is requesting non-binding statements of interest.

NOI Responses shall include:

  • NOI/RFI title and reference number;
  • Name(s), phone number(s), and e-mail address(es) for the principal point(s) of contact;
  • Institution or organization affiliation and postal address; and
  • An organization’s non-binding expression of interest in the CNC Program.

For additional information regarding this development, please contact the blog authors, Amy Roma, Partner, or Stephanie Fishman, Associate.

In early 2022, blog author Amy Roma spoke with a Bloomberg Law reporter about the Nuclear Regulatory Commission’s (NRC) Part 53 rulemaking efforts to support advanced reactor licensing.  Amy’s position is that the NRC rulemaking process is both unique and complex, as it must be both “technology neutral” and “risk informed” across the wide range of advanced reactor technologies, none of which have been licensed yet by the NRC.

On February 7, 2020, Amy was quoted in a Bloomberg Law article titled, “The Nuclear Industry Argues Regulators Don’t Understand New Small Reactors.”  The article states:

But advocates of the idea insist that the folks in Washington who police their business have no idea how to assess it. Today’s rules are “really a square peg in a round hole for these advanced reactor designs,” says Amy Roma, a partner with the law firm Hogan Lovells who’s worked on dozens of license  applications. The Nuclear Regulatory Commission, she says, is “largely divorced of actually understanding—in depth—the technology.”

This quote has been edited and inserted into a context much different than the conversation it was originally stated in, which results in a change to its meaning.  Bloomberg Law has declined to correct the article.  To clarify Amy’s position and correct the record, we have a transcription of the actual question and context in which this discussion occurred.  As background information, the reporter had asked Amy about the current status of the NRC staff’s Part 53 rulemaking and what the process of developing new regulations included.  As mentioned above, Amy explained that the rulemaking was both “technology neutral” and “risk informed”, which is difficult to do for a wide range of technologies, and that the staff’s rulemaking was occurring before it had seen detailed design information for the technologies the rulemaking would address, as they would see in a license application review.

The question asked and Amy’s response are set forth below (see emphasis added to show the quote in context and what it was referring to).

Q – I can appreciate the challenge for the NRC to develop a totally new process, a new look at a different type of technology because they’ve always been looking at light-water reactors, it sounds like – I guess I’m curious, what about the process, is it more the process needs to change or the substance of what they’re looking at needs to change, or is it a little bit of both? Can you walk through what would be the ideal structure of Part 53?

A – So, that’s interesting, right, because you’re asking the NRC in a very short timeframe to develop an entirely new framework that is, again, risk-informed and technology neutral. So you think those are easy enough words to have rattle off your tongue. But they’re actually very complex when you look at how you’d implement them. Technology neutral means you develop a set of regulations that could be applied regardless of what type of reactor technology you have. When you at the vast differences in the reactor design and the sizes of them – the Oklo design was one megawatt, you know, the X-energy reactor design is 80 megawatts for one unit, but there’s multiple units on site. The TerraPower reactor design I think is 340 megawatts. All those different companies, whether it’s one megawatt, or 340 megawatts or 500 megawatts, are all supposed to have the same regulatory framework because it’s technology neutral.

But it’s also risk informed, which means you’re supposed to be able to right-size the regulation commensurate with the risk that the facility would introduce. So, arguably, the Oklo reactor, which is one megawatt, should be subject to significantly less prescriptive regulations under part 53, than a much larger facility, like a 500-megawatt facility, would be.

How that’s going to pan out in practice remains to be seen, and I think it’s something the NRC is going to have to come to terms with for how it would apply in practice. It’s complicated, and you have to remember, too, that the NRC is developing this framework largely divorced of actually understanding, in depth, the technology. Because they’ve seen some of the Oklo reactor – they had stated an initial review before they dismissed the application, I think last week, and then with X-energy their application has not gone in yet. With TerraPower, their application has not gone in yet. Kairos has just submitted – I used those two because they’re ARDP recipients, are you familiar with the ARDP?

Q- Yeah, yeah, I am.

A – So they’ll have facilities up and running by late 2027, early 2028, which means that they’ll start to engage in the NRC licensing process very, very soon. And then Karios submitted an application for a test reactor so it’s a fraction of the size of their full-scale commercial facility to demonstrate their technology. But the NRC has otherwise – they don’t have the detailed technical information for any of those facilities.”

For questions please contact the blog author, Amy Roma, Partner.

Those involved with advanced reactors are well aware of the issues associated with high-assay low-enriched uranium (HALEU) fuel: advanced reactors need HALEU to operate, but the U.S. doesn’t have domestic production capabilities to make it.  And there’s a “chicken” and “egg” issue to solving this problem—fuel cycle facilities don’t want to commit the resources towards developing a HALEU supply chain until they know they have an established market.  The established market cannot emerge until the reactors are built, and they cannot run without fuel.  We have blogged about this issue many times over the years, including developments in trying to stand up U.S. HALEU production capabilities (See, e.g., here).

What is HALEU?  Traditionally, the U.S. nuclear power plants are powered by uranium enriched up to 5% with uranium-235—the main fissile isotope that produces energy during a chain reaction.  HALEU is still low enriched uranium, but between 5-20%.

Who uses HALEU?  Most advanced reactor developers intend to rely on HALEU fuel.  Among other things, the higher enrichment levels enable the reactors to have a smaller design, better fuel utilization, and longer fuel cycles.  Both the Department of Energy’s Advanced Reactor Demonstration Program (ARDP) awardees—TerraPower and X-energy—use HALEU fuel.  These projects are expected to be completed by late 2027/early 2028, and they will likely not be able to procure their enriched uranium in the U.S.  Overall, the domestic nuclear industry anticipates it may need nearly 600 metric tonnes of HALEU by 2030 in order to deploy new reactors to market.

HALEU can also be used by the existing fleet, with the nuclear industry expressing interest in using fuels for light water reactors (LWRs) enriched between 5-10%.  Some advanced fuel developers are also looking at new LWR fuel designs at just under 20% enrichment levels.

Who makes HALEU commercially for advanced reactors?  Currently, no one in the U.S.

Is that a big deal?  Yes, because it undermines U.S. energy independence and security.  Also, HALEU production capabilities are very limited globally.  The only current options right now?  Pretty much just Russia.

Are we starting from scratch?  No, but it will take time to stand up a domestic production source. There is one operating uranium enrichment facility in New Mexico—Urenco—that makes uranium enriched up to 5.5%, but advanced reactors use HALEU much closer to the 20% threshold.  Urenco could expand its existing facility to add in HALEU production—the company is exploring this option as we have previously blogged about—but that is a time intensive and expensive task. Another company—Centrus—has been working with the Department of Energy to develop a new enrichment technology that could support HALEU production, but according to the company’s last quarterly report the project has experienced some delays and DOE may not continue funding through the operational phase without a competitive bid of some sort.  And in any event, a full-scale facility would still need to be licensed and constructed before being able to supply HALEU commercially.

What’s government’s role?  The Department of Energy (DOE) is supporting HALEU development.  In December 2021, DOE issued a Request for Information (RFI) for public input on its planned program to ensure domestic availability of HALEU for the U.S. fleet (responses to DOE’s RFI are due on February 14, 2022).  The Energy Act of 2020 authorized DOE to establish a program for domestic sourcing of HALEU for research, development, demonstration, and commercial use. We summarized the Energy Act provisions in a previous blog post.  The stalled Build Back Better legislation would have funded this program with $500 million (also summarized in a previous blog).

Recent developments: This month, the Nuclear Energy Institute (NEI) issued a white paper on “Establishing a High Assay Low Enriched Uranium Infrastructure for Advanced Reactors” which outlines their recommendations to support HALEU deployment for advanced reactors before 2030.  And late last month, the U.S. Nuclear Regulatory Commission (NRC) staff requested Commission permission to undertake a rulemaking to evaluate and amend the NRC regulations related to HALEU for the existing fleet, taking into account enrichment levels of up to 10%.  We summarize both briefly below.

NEI HALEU White Paper

NEI’s white paper walks through many of these issues—setting forth the underling HALEU issue and recommended next steps to developing a domestic production source.  Acknowledging that the greatest hurdle facing this effort is the tremendous upfront capital required—an estimate of more than $500 million for enrichment and deconversion—the paper explains that this capacity will not emerge without a governmental push to create a sustained customer base.

As outlined in the white paper, NEI’s recommendations to support development of domestic HALEU include the following:

  • DOE should expeditiously establish the Advanced Nuclear Fuel Availability Program authorized by the Energy Act of 2020 (summarized in one of our previous posts) and immediately commence the funding processes, and Congress should provide the requisite funding for this program
  • DOE should incentivize licensing, construction, and deployment of two U.S. commercial HALEU enrichment facilities, through a competitive procurement process
  • DOE and other agencies should not impede acquisition of HALEU by industry from international suppliers within the framework of existing trade agreements, and DOE should consider assisting with HALEU transportation and storage
  • DOE should support and incentivize development and deployment of deconversion facilities
  • DOE should support the certification and manufacturing of new shipping packages for certain HALEU
  • Processing of Experimental Breeder Reactor-II fuel should be expedited

NRC staff requests rulemaking to support domestic HALEU supply chain

In an activity that would impact fuel for the existing fleet, and potentially advanced reactors, on December 20, 2020, NRC staff submitted a memorandum to the Commissioners (SECY-21-0109) that requested permission to undertake formal rulemaking to evaluate the regulations impacting LWR fuel enriched greater than 5%.

The NRC identified at least two regulations that set forth an enrichment limit of 5% that would need to be amended.  In addition, the staff would perform a more comprehensive review of regulations associated with uranium enrichment throughout the life cycle of fuels for LWRs. The goal of this review would be to identify regulations that could be modified to increase flexibility and reduce exemption requests for the use of increased enrichment fuel while maintaining safety.

The staff further explained that while a rulemaking is not necessary to support the licensing of fuel enriched over 5%, the staff is recommending the rulemaking “to reduce unnecessary exemption requests and facilitate increased regulatory efficiency and consistency while continuing to ensure safety.” The rulemaking would also enable the “staff to thoroughly review the potential regulatory implications of increased enrichment fuels and identify and assess the potential costs and benefits of changing regulatory requirements that impact their use” as well as pursue a “generic resolution of these issues.”

While the NRC staff noted in the SECY paper that the LWR community was interested in fuel enriched between 5-10%, the NRC also recognized that advanced reactors intend to utilize greater enrichment levels—something the NRC is reviewing under its advanced reactor Part 53 rulemaking.  The staff explained that it “plans to further evaluate applicability to advanced reactor fuel designs in the regulatory basis to ensure alignment with the Part 53 rulemaking.” And that “if the rulemaking schedule and stakeholder interest align, this rulemaking scope could be expanded, or a separate rulemaking could be initiated for advanced reactor fuel designs.”

For additional information regarding these developments, please contact the blog authors, Amy Roma, Partner, or Rob Matsick, Associate.

On December 16, 2021, Sen. Joe Manchin (D-WV) and Sen. John Barrasso (R-WY)—the Chairman and Ranking Member of the Senate Energy and Natural Resources Committee, respectively—introduced a bill entitled “Fission for the Future” (the “Bill”). The Bill aims to prioritize commercial deployment of advanced nuclear reactors, with an emphasis on siting reactors in communities that have been hardest hit by the retirement of fossil fuel generation facilities.

The Bill would require the Secretary of Energy to create a federal financial assistance program to support the licensing, development, and construction of advanced nuclear reactors. The program’s stated aim is to enhance grid resilience, reliability, and security, as well as reduce carbon emissions. Funding is also intended for supply chain infrastructure tied to advanced nuclear or related technologies. Eligible funding recipients include state and local governments, tribal organizations, electric utilities, National Laboratories, institutions of higher education, and certain private entities specializing in both the development of advanced nuclear technology as well as related licensing and financing processes.

Funding priority is given to applicants with projects planned at or near fossil fuel electric generation facilities that have been retired or are scheduled to retire. This can help reduce infrastructure, transmission, and licensing costs, as well as productively reuse fossil fuel generation facilities and revitalize communities harmed by the closure or planned closure of these facilities.

Further prioritization is intended for certain nonelectric applications, including heat for energy storage, hydrogen or other liquid fuel production, industrial processes, and others.  An applicant’s ability to implement workforce retraining programs and an applicant’s cost competitiveness are other factors that the Bill prioritizes for funding decisions.

In a press release from the Energy and Natural Resources Committee, Chairman Manchin notes the carbon emission and power reliability benefits inherent to nuclear energy, and asserts that advanced reactor technologies provide a unique opportunity to repurpose retired fossil fuel generating plants and help displaced communities with high-paying jobs. As stated in the press release, the median wage for a nuclear reactor operator is over $100,000, and for every 100 jobs created by a nuclear plant, an additional 66 are created in the community surrounding that plant. These facts provide added incentive for communities to work with companies to site advanced nuclear plants across the country.

One example of this type of technology is from the Bill Gates-backed company TerraPower, which plans to build a $4 billion, 345 megawatt Natrium reactor demonstration plant at the site of the Naughton coal plant in western Wyoming that is due to shut down in 2025.  This is a first-of-its-kind advanced reactor—a sodium-cooled fast reactor leveraging technologies used in solar thermal generation, which can operate in sync with certain renewable power sources and take advantage of the existing infrastructure at retiring fossil fuel generation facilities.

As we have written about in this blog before, advanced nuclear energy can support a just transition for communities that were reliant on fossil fuels, including by replacing lost jobs and tax revenues.  For communities looking to make this transition, the Bill could provide some useful support.

For additional information, please contact the blog authors, Amy Roma, Partner, or Rob Matsick, Associate.

The UN Economic Commission for Europe (UNECE) recently released a report entitled “Life Cycle Assessment of Electricity Generation Options” (UNECE Report; Report).  The Report analyzes the environmental profiles of the full lifecycle of various technologies in order to evaluate their “all in” environmental costs—such as greenhouse gas emissions (GHG), human toxicity, water use, and other environmental and health metrics of different electricity sources—including wind, solar, coal, gas, hydro, and nuclear. In a finding that may be very surprising to many, but likely not those in the nuclear field, nuclear had some of the smallest impacts on the environment out of all the electricity sources analyzed.

The UNECE Report emphasized that decarbonization needs to be pursued with a “well-informed energy policy design.”  Report at 6.  To accomplish this, stakeholders need to ensure that the “cradle-to-grave” environmental impacts of electricity generation are evaluated, including mining the materials used in the facilities, manufacturing their components, and constructing, operating, and decommissioning them. Report at 8. Notably, the Report wants to ensure that we do not “shift the problem” by reducing environmental impacts from operating power generation sources, only to shift them someplace else, like to the operations needed to produce the materials for facilities, or to the land requirements needed to support them. Report at 8.

The Report undertook this evaluation for a wide range of electricity generation sources to better inform stakeholders in the decision-making process.  It notes upfront—and in bold—that all electricity generation sources create environmental impacts over their life cycles, and these impacts vary widely across sites and designs. Report at 7. However, as set forth in the Report, of all the electricity sources evaluated, nuclear was found to have some of the smallest impacts to the environment.  Across its entire life-cycle, nuclear power emits less greenhouse gases and uses less land than the other power sources studied, including all variants of wind and solar. Nuclear is also ranked as one of the most environmentally-friendly generation sources—second to only one variant of hydropower—when measured against the other power sources for consumption of mined minerals and metals, carcinogenic effects, and freshwater eutrophication.

As this blog and its authors routinely note, including in our recent blog summarizing the latest UN Intergovernmental Panel on Climate Change (IPCC) report, we must use everything in our arsenal to reduce GHG emissions.  Moreover, we need immense sources of energy that produce minimal greenhouse gases and can support a reliable electricity grid.  This will require the deployment of a range of technologies—including wind, solar, hydrogen, nuclear, battery storage, and carbon-capture and sequestration.  There is no one technology that is a “silver bullet” to combatting climate change.  Difficult decisions must therefore be made by stakeholders, who need objective and thorough supporting research to make informed choices.  As the UNECE makes very clear, all electricity sources impact the environment, and not necessarily in the way stakeholders might realize.

The Report further references the recent IPCC report, stating that because the most ambitious climate mitigation scenarios require electrification of ever-greater swathes of the U.S. and world economy, it is vital to evaluate the environmental impacts of various energy sources for future electricity generation. Report at 6. The UNECE Report did exactly that.  It studied six variations of hard coal technology, two variations of natural gas, two of hydropower, eight of solar power including photovoltaic, three of wind power, and conventional nuclear power.  The Report also assessed twelve regions worldwide, with varying load factors, methane leakage rates, background grid electricity consumption, and other factors.  Its objective was to assess the environmental impacts of delivering one kWh of electricity to the grid, on a global average, for 2020.

Conventional nuclear energy for electricity generation fared supremely well, and nuclear outpaced all or almost all studied generation sources in the following areas:

  • Carbon emissions. The Report’s model found that out of the 22 technologies studied, nuclear had the absolute lowest lifecycle greenhouse gas emissions, with an average of just 5.1-6.4 g CO2 eq./kWh (a measure of the GHG emission intensity of electricity generation, with a range to account for technological and regional variations). And it wasn’t even that close.

For comparison, the second-lowest emission intensity is 6.1-11 g CO2 eq./kWh for 360 MW hydropower (a figure that is much higher for 660 MW hydro, at 85-147). Solar photovoltaic ranges anywhere from around 8 to 83 g CO2 eq./kWh, depending on the specific technology and other factors.  Natural gas and coal are of course much higher, with hard coal ranging dramatically from a low of around 150 to a high of roughly 1,100 g CO2 eq./kWh.  Natural gas ranges from 403 to 513 by this metric—also not even in the same ballpark as nuclear.

  • Land occupation. The Report also shows that nuclear technology on average has the lowest lifecycle land occupation requirements out of any technology studied, dramatically lower than all types of coal, natural gas, and renewables.
  • Carcinogenic effects. Contrary to its unfairly-maligned reputation as a source of carcinogens—largely owing to the effects of nuclear radiation from atomic bombs and anachronistic, irresponsible nuclear weapons testing procedures—the production of nuclear power for electricity generation has the second-lowest rate of carcinogenic effects out of the 22 technologies studied. This is behind only 360 MW hydro, but ahead of 660 MW hydro and all other solar and wind variations studied.
  • Freshwater eutrophication. Freshwater eutrophication is caused by emissions of phosphorus compounds into freshwater bodies such as rivers and groundwater. For this metric, nuclear generation is the second best of the 22 technologies studied, again behind only 360 MW hydro, and ahead of all eight solar variations studied and all three wind variations.
  • Consumption of minerals and metals. Once again, nuclear outperformed all other electricity generation sources—both fossil fuels and renewables—except for 360 MW hydro, in its consumption of minerals and metals. The high energy density of the uranium (and sometimes plutonium) used in conventional nuclear reactors leads to a relatively minimal mining area per kWh.

The main downsides to nuclear generation as expressed in the Report are its water use requirements and its ionizing radiation.  However, the Report contextualizes these drawbacks against nuclear’s low carbon emissions and the other striking environmental benefits mentioned above.  And even with respect to radiation, the Report found that coal and geothermal cause more radiation dose to the public than does nuclear—and radiation from all types of studied power generation is far less than the average dose received by airline pilots.

To note, the Report focuses on conventional nuclear generation—as opposed to advanced reactor technologies and fusion—yet conventional nuclear still outshines competing renewable and fossil fuel generation sources on many key environmental indicators.  The gap between nuclear and the rest of the field further widens when one accounts for advanced reactor technologies, not to mention the emerging prospect of commercialized fusion energy.  These technologies have the potential to produce even more impactful environmental advantages for nuclear generation, on top of the significant benefits conventional nuclear power already boasts.

Many variables and detailed analyses went into the UNECE Report, and we recommend it as necessary reading for policy makers and other stakeholders—as well as supporters, opponents, and those still on the fence about nuclear power.  We also recommend it for anyone interested in becoming or staying informed about decarbonization of the electricity sector.  Combatting climate change is a complex task, with multiple facets that need to be understood and woven together into a coherent and effective strategy.  And this requires policy makers coming to the table with a full appreciation of what needs to be achieved.  The Report employs an in-depth quantitative methodology without a corresponding agenda, and is a significant contribution to the energy transition discussion and implementation.

Please contact Amy Roma, Partner, or Rob Matsick, Associate, with any questions or comments.

On December 7, 2021, Rep. Anthony Gonzalez (R-OH) and Rep. Elaine Luria (D-VA) introduced legislation to change the Nuclear Regulatory Commission’s (“NRC”) fee structure for licensing advanced technology.  The legislation, called the “Accelerating Nuclear Innovation through Fee Reform Act,” H.R. 6154, would amend Section 102(b) of the Nuclear Energy Innovation and Modernization Act (42 U.S. Code § 2215(b)), by removing the NRC’s review fees for applications for advanced fission and fusion reactors.

By eliminating NRC review fees for advanced reactor license applications, the legislation aims to accelerate innovation and maximize private sector investment in advanced reactor technologies.

Under the NRC’s existing regulatory framework, the agency charges $288 per hour per person (for FY 2021) to review license applications proposing to build new advanced nuclear reactors.

The legislation, which is supported by the Nuclear Innovation Alliance, ClearPath Action, and Third Way, has been referred for consideration to the U.S. House Energy and Commerce Committee and is now pending review.  The Nuclear Innovation Alliance compiled a report in 2021 analyzing the impact of NRC fee reform on public investment.  As explained in the report, under the current fee structure, advanced technology applications can face review costs of up to tens of millions of dollars—or higher—creating a disincentive to companies developing technologies and a hurdle to bringing novel concepts to market.  The report also describes how the NRC’s current fee system “poses a barrier” to advanced nuclear innovation by limiting NRC’s resources, flexibility and efficiency.

While H.R. 6154 would certainly lessen an administrative burden for applicants, one possible adverse impact may be that if the NRC removes these fees and has to rely on annual appropriations for conducting application reviews.  If funding falls short, or one application disproportionately takes up too many resources, it could result in unfair allocations for other applicants.

For more information, please contact the blog authors, Amy Roma, Partner, and Stephanie Fishman, Associate.

On Friday, November 19, 2021, the U.S. House of Representatives passed the President’s roughly $2 trillion budget reconciliation package, voting 220 to 213 in favor of H.R. 5376 the Build Back Better Act (“Reconciliation Bill”), kicking the bill over to the Senate. While the bill is not final, it demonstrates a clear commitment for clean energy, aligning with the clean energy commitments in the recently enacted $1.2 trillion Infrastructure Investment and Jobs Act  (“Infrastructure Act”), which was signed into law on November 15, 2021.

What happens next? The draft Reconciliation Bill is now in the Senate where revisions to the House-passed bill are expected and passage is not certain. Democrats are using the “reconciliation” procedure that would permit the bill to be approved in the Senate with just 50 votes, which would eliminate the need for support from Republicans.  But Democrats have no room for dissent—with exactly 50 Democratic Senators, every Senator and the Vice President, with her tie-breaking vote in the Senate, will need to support starting debate on the draft Reconciliation Bill and ultimately passing it.  A few Democrats have voiced concerns about various provisions in the bill and have not yet indicated their support.

The Democrats hope to bring the bill to a vote before Christmas, but it will likely go through some further revisions before that happens.  If the Senate makes changes, the legislation will be sent back to the House for a “take it or leave it” review.

What clean energy provisions are in the draft Reconciliation Bill? Generally, the latest version of the draft Reconciliation Bill includes roughly $550 billion for climate and clean energy programs to curb fossil fuel emissions, more than $320 billion in green energy tax incentives, close to $41 billion in energy-related programs, and covers a spectrum of spending from clean electricity production credits, eligible to facilities with carbon emissions at or below zero, to a federal “Green Bank,” a national greenhouse gas reduction fund meant to assist state banks contributing to clean energy.

And like the Infrastructure Act, which we discussed in a prior blog post (available here), the House-passed draft Reconciliation Bill contains substantial nuclear fission and fusion related provisions.

The proposed nuclear and fusion provisions in the draft bill are summarized below:

  • New production tax credit (PTC) for operation nuclear power plants. The bill creates a new PTC recognizing the zero-emissions benefits of nuclear power and intending to keep existing nuclear plants running. The bill adds a new provision to the Internal Revenue Service Code of 1986, as amended (IRS Code), section 45W, titled “Zero-Emission Nuclear Power Production Credit.”  (Section 136108; pages 1402-1409).  Generally, this new PTC credit rate is equal to a base credit of 0.3 cents/kWh produced at a qualifying nuclear facility and sold to an unrelated person during the taxable year (with the credit decreased by 16% of  excess gross receipts as power sale prices increase).  (Pages 1403-1404).

The credit is available for nuclear facilities that have not already claimed a credit for advanced nuclear power facilities under the existing IRS Code section 45J and that were placed in service before the date that the legislation is enacted.

  • Funding for the availability of fuel for advanced reactors. The draft bill appropriates $500 million for the Department of Energy’s (“DOE”) advanced fuel availability program for high-assay low enriched uranium (“HALEU”), as was authorized by section 2001 of the Energy Policy Act of 2020, which initially allocated $33 to $39 million in annual funding.  (Section 90002; page 942). This program enables DOE to support HALEU for advanced nuclear reactors.  The bill directs DOE to use a competitive process, to the maximum extent possible, to carry out the program. (Page 943).  We discussed the HALEU provisions in the Energy Policy Act of 2020 in a prior blog post (available here).
  • Fusion funding.  The draft Reconciliation  Bill also appropriates significant funds to support fusion R&D and demonstration.  As explained in a prior blog post, the Energy Policy Act of 2020 authorized a number of programs to support fusion commercialization.  The draft bill provides roughly $885 million for fusion R&D spending, with $325 million for a new milestone-based public-private partnership program, previously authorized by the DOE Research and Innovation Act (42 U.S.C. 18645(i)), $200 million for fusion materials R&D, $140 million for research and technology development in inertial fusion for energy applications, $200 million for alternative and enabling fusion energy concepts, and $20 million to initiate fusion reactor system design activities.  (Section 90001; pages 940-941).  The goal of the milestone-based program is to incorporate best practices from other cost-share partnerships, and for private  companies to build demonstrations in partnership with government entities to establish a new clean energy source.

A number of U.S. startup companies have made significant announcements pertaining to private sector investment in the past couple months, including Helion Energy, which announced the close of its $500 million Series E, with an additional $1.7 billion of commitments after that tied to specific milestones totaling $2.2 billion, and Commonwealth Fusion Systems (CFS), which said it has raised more than $1.8 billion in investment.  Helion is building a prototype that it intends to demonstrate net positive electricity by 2024, a key milestone to commercializing fusion.  CFS intends to complete its prototype facility in 2025.

  • Support for transitioning energy communities. The draft bill includes $1 billion, authorized by section 209 of the Public Works and Economic Development Act of 1965 (42 U.S.C. 3149), to provide economic support for development and job creation in distressed markets and communities.  (Section 110009; page 1036).  Of that amount, $240 million is for providing assistance, including grants for technical assistance, planning, and predevelop activities, to energy and industrial transition communities, including oil, gas, coal, nuclear, and biomass transition communities, and manufacturing transition communities.. (Section 110009; pages 1039-1040).

While the climate spending promised in the draft Reconciliation Bill is less than the $600 billion in the original draft, its current structure still makes up the largest spending category in the bill.

For more information, please contact the blog authors, Amy Roma, Partner, and Stephanie Fishman, Associate.

 

 

On Monday, November 15, 2021, the President signed into law the Infrastructure Investment and Jobs Act (“Infrastructure Bill” or the “Bill”), which contains a number of provisions supporting nuclear energy.

On November 5, the U.S. House of Representatives passed the bipartisan US$1.2 trillion Infrastructure Bill in a 228-206 vote, demonstrating one of United States’ largest commitments to decarbonization and creating significant opportunities for nuclear in the current energy transition.  The legislation first passed the Senate in August 2021, but was stalled in the House as Democrats negotiated key components of President Biden’s agenda.

While the Infrastructure Bill is wide-reaching, it includes a number of nuclear energy-related provisions, including support for keeping nuclear power plants facing economic hardship operating and funding for DOE’s Advanced Reactor Demonstration Program (ARDP).  These provisions are briefly summarized below:

  • US$6B civil nuclear credit program. The Bill establishes a civil nuclear credit program designed to preserve the existing nuclear fleet and prevent premature shutdowns of nuclear power plants. This provision is anticipated to preserve immense amounts of carbon free electricity as well as high-paying jobs.  The Bill both authorizes and appropriates US$6 billion through FY 2026 (US$1.2 billion per year) to the Department of Energy (“DOE”) to implement the program—therefore this program is fully funded. (Section 40323; pages 591, 594.)

The program is intended to provide support for economically troubled plants so that they can remain open.  Plant owners/operators would need to apply for the program, explaining their need.

Interestingly, in applying for the credit, applicants must provide “known information on the source of produced uranium and the location where the uranium is converted, enriched, and fabricated into fuel assemblies for the nuclear reactor for the 4-year period for which credits would be allocated.” In awarding the credits, the Secretary of Energy “shall give priority to a nuclear reactor that uses, to the maximum extent available, uranium that is produced, converted, enriched, and fabricated into fuel assemblies in the United States.” (Pages 592-93, emphasis added).

According to an E&E article, DOE promised to start the US$6 billion nuclear credit program within about four months from November 2021 to help keep U.S. reactors operating, and will require plant owners to submit a formal application to demonstrate a justifiable need.

  • Advanced Reactor Demonstration Program (ARDP) Support. The Bill includes both authorization and appropriations for DOE’s ARDP program, one of DOE’s most important programs for advanced nuclear.  The ARDP is intended to speed the demonstration of advanced reactors through cost-shared partnerships with U.S. industry.  Specific support in the Bill includes the following:
  • Authorizes the full amount to support the DOE’s ARDP Demonstration projects. The Infrastructure Bill contains funding approvals for DOE’s ARDP Demonstration projects and authorizes US$3.2 billion through FY 2027 for the advanced reactor demonstrations, which combined with the previously authorized funding from FY 2020 and 2021, makes the demonstration projects fully authorized.  Note, this provision is an authorization and not an appropriation. (Section 41002; page 699).
  • Appropriates US$2.4 billion to fund ARDP awards from FY 2022 through 2025. While Congress had previously appropriated funds to support DOE’s ARDP awards for FY 2020-2021, this provision of the Bill appropriates additional funds for existing ARDP awardees for FY 2022 to FY 2025. These funds are limited to “projects selected prior to the date of enactment of this Act” which would appear to reserve funds for all ARDP projects selected to date. Unlike the US$3.2 billion which is authorized for the advanced reactor demonstration awards, this funding may be used for the risk reduction and advanced reactor concept projects as well.  (Section 41002; page 949).  While this appropriation does not fully fund the ARDP awards already issued throughout the lifetime of the award, it does go a significant of the way there.

For context, DOE has three types of ARDP awardees:

  • Advanced Reactor Demonstrations Projects, which are expected to result in a fully functional advanced nuclear reactor by the end of a seven year term. DOE-NE has selected two awardees under this program. The ARDP currently authorized US$2.5 billion across seven years for two cost-sharing agreements—i.e. US$1.23 billion for each awardee—for nuclear reactor demonstrations that were first funded through fiscal year 2020 appropriations, with US$80 million provided in the first phase of the cost sharing plan.  The Bill officially appropriates funding for the rest of the seven year term for the selected awards.
  • Risk Reduction for Future Demonstrations, which supports up to five additional teams resolving technical, operational, and regulatory challenges to prepare for future demonstration opportunities. The goal of the Risk Reduction program is to design and develop safe and affordable reactor technologies that can be licensed and deployed over the next 10 to 14 years. DOE-NE has selected five awardees under this program and in 2020 DOE stated it expects to invest US$30 million for each awardee in the first year of the award.
  • Advanced Reactor Concepts 2020 (ARC 20), which supports innovative and diverse designs with potential to commercialize in the mid-2030s. The goal of the ARC-20 program is to assist the progression of advanced reactor designs in their earliest phases. DOE-NE has selected three awardees under this program, and in 2020 DOE stated it expects to invest a total of US$56 million in ARC-20 over four years, with industry providing at least 20 percent in matching funds.

Other nuclear provisions of the Infrastructure Bill include the following:

  • Establishes an Office of Clean Energy Demonstrations within DOE. The Bill establishes a new Office of Clean Energy Demonstration (“OCED”) within DOE to conduct project management and oversight of the ARDP demonstrations and other covered clean energy demonstration projects, to include providing independent oversight of project execution, independent cost estimates for proposals, and ensuring a balanced portfolio of investments in covered projects.  (Section 41201; pages 702, 949).

The Bill provides US$21.5 billion for the OCED.  According to a DOE Fact Sheet, the US$21.5 billion includes the $8 billion for clean hydrogen hubs, US$10 billion for carbon capture, 1 billion for demonstration projects in rural areas and US$500 million for demonstration projects in economically hard-hit communities.  The Bill also designates US$2.5 billion for advanced nuclear to the OCED, which appears to be the same funding authorized for the ARDP.

Currently the Office of Nuclear Energy has jurisdiction over ARDP, however, it appears that the new OCED is intended to cover all clean energy demonstration projects, which would include ARDP demonstration projects.  How this structure will work remains to be seen, but we anticipate the Office of Nuclear Energy will maintain jurisdiction over the ARDP projects until the new office is fully operational, so as to not introduce project delays, and that the two offices will ultimately work together to leverage the technical expertise in the Office of Nuclear Energy with respect to the ARDP projects. Further, the Bill states that the OCED shall consult and coordinate with technology-specific program offices to ensure alignment of technology goals and avoid unnecessary duplication. (Page 948).

  • Demonstration program for regional clean hydrogen hubs, which include nuclear. The Bill establishes “hydrogen hubs” with a number of different power sources The hubs are intended to (1) demonstrably aid the achievement of the clean hydrogen production standard; (2) demonstrate the production, processing, delivery, storage, and end-use of clean hydrogen; and (3) can be developed into a national clean hydrogen network to facilitate a clean hydrogen economy.  At least one of the regional clean hydrogen hubs must be to demonstrate the production of clean hydrogen from nuclear energy. The Bill appropriates US$8 billion in total for the Clean Hydrogen Hubs. (Section 40314; page 580-81).  Additional details on hydrogen and nuclear can be found here.
  • “Clean energy” project on current and former mine lands. The Bill authorizes a new clean energy demonstration on mine lands program and appropriates US$500 million for the program.   “Clean energy” is defined to include advanced nuclear. (Section 40342; pages 603-04).
  • Advanced reactor siting feasibility studies for isolated communities. The Bill authorizes assistance for feasibility studies for siting advanced reactors for the purpose of identifying suitable locations for the deployment of micro-reactors, small modular reactors, and advanced nuclear reactors in isolated communities. (Section 40321, subpart (d); page 589).
  • Property interests for advanced reactors. The Bill provides federal government authority to transfer real property for advanced reactor demonstrations and authorizes longer term protections for intellectual property related to nuclear technology used in demonstrations. (Section 40322; page 589-90).
  • Changes to DOE Loan Program related to calculating “reasonable prospect of repayment.” The Bill made changes that are expected to make the DOE Loan Program more usable by reducing the credit subsidy costs that borrowers must pay. (Section 40401; pages 605, 609).

Overall, nuclear is well supported in the Infrastructure Bill.  In addition to the nuclear-related provisions embedded in the Infrastructure Bill, the “Build Back Better Act” agenda still pending in Congress could provide even more benefits to the nuclear industry if it becomes law by including a production tax credit for operating and new nuclear plants.

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