In a development that could cause every advanced reactor startup to reexamine its growth strategy, the US government (USG) yesterday afternoon issued a new framework concerning exports to China, which largely closes the export market to advanced reactor companies.

The framework document, which is available here and was described to a limited audience in a briefing yesterday that we attended, sets forth the following policy regarding exports of technology or technical data subject to the US Department of Energy (DOE) nuclear export control regulations in 10 CFR Part 810, and exports of equipment and materials under the NRC’s nuclear export control regulations in 10 CFR Part 110.

The DOE Part 810 export controls framework is likely of most interest to advanced reactor companies, and is summarized below:

  • Presumption of Denial for the Following Export Authorization Requests:
    • Any exports related of advanced reactor technologies (i.e., light water SMRs and non-light water reactors), and related fuel cycle exports.  It appears that fuel cycle exports that could benefit advanced reactors, even if designed primarily for traditional light water reactors, could get caught up in this “presumption of denial.”
    • Any export of codes or software.
    • Any exports at all to the company China General Nuclear (CGN) or its affiliates.  DOE will not provide a public list of affiliates, but applicants can go check with DOE beforehand.
    • Any “new technology transfers after January 1, 2018” are also presumed to be denied export authorization.  It is unclear exactly what this means, but it is potentially a catch-all to make clear the limited nature of those exports still permissible.
  • Exports for Which Approvals May Still be Attainable (Presumption of Approval, But After Heightened End User Review):
    • Amendments or extensions for existing authorizations “for technology transferred prior to January 1, 2018.”  This does not apply to advanced reactors.  It will also likely be an area of confusion going forward as to how the USG position against “new” technology transfers above will apply to these existing authorizations.
    • Certain technology transfers for operational safety purposes, with a clear operational safety benefit and after heightened review of the end user.
    • Transfers of technology required to support sale of an item that is “commercially available.”  This is likely to be limited in scope.

In case of a conflict, the presumption of denial appears to defeat the presumption of approval—e.g., exports to CGN appear off-limits no matter what.  A few other key points to relate:

  • NRC Export Control Policy Changes:  The changes to NRC export controls mimic those impacting DOE controls.  The key point is that any exports related to “direct economic competition with the United States” are presumed to be denied an NRC license.  Examples provided include sales to support the Hualong One and unique U.S. components for the CAP-1400 reactors.  Likely this would also catch any effort to support a Chinese advanced reactor.  Exports to support the AP-1000, or related projects in China that rely on current-gen technology, can potentially move forward, but will be heavily scrutinized.   In theory, sales of light water SMR or advanced reactors themselves are permitted too, but with no technology transfer above and beyond installation and operation.
  • Implications on Department of Commerce (DOC) Export Controls: Today’s action appears largely limited to 10 CFR Parts 110/810 nuclear export controls, and does not directly impact exports regulated by DOC.  However, we understand that DOC is currently considering potential new restrictions with regarding China.   These may involve changes in licensing policy, including adding licensing requirements for items that previously could be exported without a license.  Considering that DOC hosted this event, it would appear the agency staff at least agree in principle with the strong action taken there.
  • End User Reviews: There will be new, “case-by-case” heightened reviews for exports to non-CGN end users that assess risk of diversion, risk to parties in the deal, and risk to US national and economic security—and balance these risks against the economic and strategic benefits of the exchange.  DOE and the NRC may be able to place conditions on exports to mitigate the above-listed risks.    Exactly how these reviews will be conducted is likely still to be determined, including if DOE and NRC will want to go as far as what some other agencies (such as DOC) do with end user reviews.
  • Application to Chinese Nationals/Partially-Owned Businesses: To also make clear, this policy applies to hiring of Chinese foreign nationals in the United States, and can impact deals with entities that are just partially owned by Chinese nationals or businesses.  The authors asked the USG at the briefing as to whether this policy applied to deemed exports, and the USG panelists confirmed that it did.  They directed that questions related to partial ownership be directed to DOE for review.
  • Other Related Actions:  This policy change also highlights the recent CFIUS and DOC export controls legislation passed by Congress, which was again geared towards China.  To add, USG has started to implement parts of this legislation, including a CFIUS pilot program to implement the sections of that legislation concerning investments in critical technologies, likely including a broad scope of nuclear technologies.

All in all, this is just one more example of a renewed government focus on the national security implications of losing the US civil nuclear industry to foreign competitors, as highlighted in our Back from the Brink paper (which was featured in an event last week at the Center for Strategic and International Studies on Nuclear Energy, Naval Propulsion, and National Security).

Specific to China, since 2017 the USG has been looking at this issue, following a spate of IP theft and diversion cases that have not seemed to stem in recent years.  While the Allen Ho/CGN litigation was certainly a driver, USG panelists noted in their briefing many other examples of China allegedly diverting civilian nuclear resources and technology to military end uses, using a “whole nation” strategy.  This included forcing civilian institutions to do military nuclear work, comingling civil and military nuclear efforts (for example, in the area of floating reactors), diverting IP provided for civilian nuclear use to military end uses, and repurposing US civilian nuclear IP and codes for military end use.  The FBI representative appeared to indicate that there were other, classified examples.

For more information, please feel free to contact the authors.

Recently, the Hill has been taking a flurry of legislative actions that impact the advanced reactor community across all spectra.  We provide a summary of some of the major bills going through Congress below, including a couple which have recently become law or may become so soon.

Nuclear Energy Innovation Capabilities Act (NEICA) (S. 97). This bill, which has a long history before Congress, finally passed both the House and Senate on September 24, and was signed by the President into law Friday September 28.  The text of the enrolled bill (the bill that has passed both chambers of Congress in identical form and sent to be signed) can be found here.

NEICA tackles a number of issues, but as a theme largely directs the US Department of Energy (DOE) to move forward on a number of actions long advocated for by the advanced reactor community—including opening up the labs more for private sector use, advancing a test reactor plan, and increasing collaboration with the US Nuclear Regulatory Commission (NRC).  As provided in the bill summary, DOE is instructed to:

  • Determine the need for a versatile reactor-based fast neutron source, which shall operate as a national user facility, and put forward a plan to construct and operate such a facility by the end of 2025.
  • Enhance its high-performance computation modeling and simulation techniques for advanced reactors.
  • Lead a program for testing of advanced reactor concepts (including physical testing), with a focus on removing licensing and technical uncertainty.  As part of this, the DOE is to work closely with the NRC to share technical expertise developed from this testing program and grant NRC staff access to the program and related sites to learn from any testing.  The goal of this is to help ensure the NRC has sufficient resources to license any reactor designs being tested.
  • Submit a budget proposal to Congress to perform the above activities.
  • Submit a report to Congress on fusion technologies under development (fusion is included within the bill’s broad definition of “advanced reactor”), with a focus on those technologies that can provide net energy production within 15 years after the start of construction of test or prototype facilities.
  • Develop an “Advanced Nuclear Energy Cost-Share Grant Program” to assist in paying NRC licensing fees for new reactor designs, including early stage activities such as development of a licensing plan.

NEICA was signed Friday along with H.R. 589, the DOE Research and Innovation Act, which also aims to shape DOE’s research agenda and use of the national laboratories to improve research collaboration and technology commercialization.

Energy-Related Appropriations Legislation (H.R. 5895). The President signed a broad appropriations bill on September 21, which covered funding for DOE.  The text of the enrolled bill can be found here, but summaries of the bill’s core DOE funding provisions can be found in a conference report, and a summary provided by the American Institute of Physics (AIP) here.  As represented in the AIP summary, the bill is largely a victory for DOE, with funding increases seemingly across the board, including a 10% increase in funding to the Office of Nuclear Energy and $65 million set aside for the versatile fast-neutron test reactor described above.

Nuclear Utilization of Keynote Energy Act (H.R. 1320). This bill passed the House on September 25.  The text of the bill can be found here.  It is targeted at NRC reform, and seeks among other things to:

  • Codify that up to $10.3M of the NRC’s work for advanced reactor readiness is to be removed from fee recovery (it also puts a cap on many other licensees’ annual fees).
  • Study the effect of removing the Atomic Energy Act’s restriction on foreign ownership, control, or domination of nuclear licenses (primarily affecting reactor licenses).
  • Study the elimination of the mandatory hearing requirement for uncontested reactor license applications.
  • Allow for the adoption of more informal hearing requirements for licensing proceedings.
  • Instruct the NRC as to more efficiently processing license applications, with a 42 month timeline for issuing safety and environmental reports after docketing of the application.
  • Establish community advisory boards in areas where plants are undergoing decommissioning.

Nuclear Energy Leadership Act (S. 3422). This bill was introduced into the Senate earlier this month, with 9  The text of the bill can be found here, and we provide a thorough summary in our past blog entry.  This bill would build on the Nuclear Energy Innovation Capabilities Act to, among other things:

  • Direct the U.S. government to enter into long-term power purchase agreements with nuclear reactors.
  • Promote the development of advanced reactors and fuel by strategically aligning U.S. government and industry interests, which is intended to enable U.S. developers to compete with their state-sponsored competitors from Russia and China.
  • Further push DOE to construct a fast neutron-capable research facility, which is crucial to test important new nuclear technologies and demonstrate their safe and reliable operation. Currently the only two facilities in the world like this are in Russia and China.
  • Develop a source of high-assay low-enriched uranium, which is the intended fuel for many advanced reactor designs, from U.S. government stockpiles. Again, both China and Russia have these capabilities domestically, but the U.S. does not.

This bill recognizes the national security implications that come with the long-term neglect of our nuclear industry, which is outlined in our recent paper published by Center for Strategic and International Studies, entitled  “Back from the Brink: A Threatened Nuclear Energy Industry Compromises National Security.”

* * *

This review only highlights some of the nuclear-related bills currently before Congress—others of which also touch on reform to, e.g., our national nuclear export controls regime.  For further information on the bills described above or on other nuclear legislation, please contact the authors.

This month, the NRC published an early draft regulatory guide on the content of license applications for non-LWRs.  The document is designed to help license applicants apply the NRC’s movement towards a risk-informed/performance-based regulatory approach towards the drafting of an actual license application.

The document is in part the result of the Southern Company-led Licensing Modernization Project, which has resulted in the issuance of a number of informal reports discussing licensing reform for non-LWR reactors.  This draft regulatory guide is designed to more formally capture the results of those reports and follow-on discussions.   It addresses the designation of licensing basis events; safety classification and performance criteria for structures, systems, and components; and evaluation of defense in depth adequacy.  importantly, it largely adopts detailed draft industry guidance set forth in March of this year, although with certain clarifications.  One area of particular NRC focus concerns probabilistic risk analyses (“PRA”), where the agency appears to show a little hesitancy with the broad use of PRA proposed in the industry guidance.

The draft guidance is being issued to support future discussions, in particular an Advisory Committee on Reactor Safeguards meeting tentatively scheduled for October 30, 2018.  For more about the Licensing Modernization project, or recent NRC and industry guidance on contents for non-LWR license applications, please contact the authors.

In today’s international nuclear marketplace, foreign investment is a significant source of capital for U.S. next-generation nuclear ventures. However, about-to-be signed legislation has the potential to broadly expand the ability of the Committee on Foreign Investment in the United States (“CFIUS”) to review foreign investment into the United States directed towards the nuclear industry, as well as the ability of the U.S. government to control exports of emerging nuclear technologies.

The new legislation, expected to be signed today, will among other things: (1) increase the number of transactions falling under CFIUS jurisdiction, (2) make some CFIUS reviews mandatory, (3) and give CFIUS the ability to suspend pending investments.  The legislation will also (4) expand export controls for “emerging and foundational technologies.”  The advanced reactor community should be aware of the legislation as it could impact future investment plans.  The community may also want to involve itself in expected rulemakings that will clarify important parts of the legislation.

As background, CFIUS is a multi-agency committee, led by the Treasury Department, which has the ability to review foreign investments into the United States that pose a threat to national security. Under the current law, CFIUS is able to review transactions that allow a foreign entity to gain “control” over a US business that poses a national security risk—including U.S. businesses holding or involved in critical infrastructure and critical technologies, which includes nuclear power.  CFIUS works aside a separate, complex nuclear export control regime to police efforts by foreign powers to infiltrate critical infrastructure and technologies in a manner harmful to U.S. national interests.

The about-to-be-signed legislation, entitled the Foreign Investment Risk Review Modernization Act of 2018 and the Export Controls Act of 2018, have both been inserted into the John S. McCain National Defense Authorization Act for Fiscal Year 2019.  Hogan Lovells’ International Trade Practice has summarized key elements of the legislation in two client alerts (here and here).  The legislation has many components, but a few of which are worth calling out in more detail:

(1) Increasing the Scope of CFIUS Jurisdiction: Currently, the touchstone of CFIUS jurisdiction is whether any transaction would give a foreign entity control of a US business.   However, CFIUS will now be able to review many other types of transactions, including “any other investment[s]” (to be clarified by CFIUS by rulemaking) that concern critical infrastructure, critical technologies, or sensitive personal data of U.S. citizens.

Depending on how future CFIUS rulemaking efforts proceed, this could capture many types of investments in advanced reactor start-ups or fusion ventures, regardless if control is at stake—potentially even if the transaction just results in the foreign entity gaining access to material non-public technical information. CFIUS will also now be able to review changes to existing investor rights that could lead to the same result, as well as certain investments designed to get around CFIUS review.  Certain limited carve-outs exist for private equity and venture investments, but these are still to be clarified further.

(2)Making CFIUS Submissions Mandatory: Currently, while CFIUS can itself seek review of a transaction, generally no entity is required to submit a transaction to CFIUS for review (i.e., submissions are voluntary). However, businesses seeking investment involving foreign government backing will now have to submit “declarations” to CFIUS, and CFIUS would have 30 days to take a number of potential actions (again, to be clarified further by rulemaking). This piece of the legislation, like many others parts, is in response to increasing concerns around Chinese state-owned investment into sensitive US businesses.

(3) Allowing CFIUS to Suspend Transactions:  Currently, CFIUS can only recommend to the President that a transaction be blocked, making it in practice very hard and rare for a transaction actually to be blocked.  However, now CFIUS can suspend a proposed/pending transaction that appears to pose a threat to national security while it conducts its review.  This gives the committee a strong new tool to effectively kill transactions it does not favour.

(4)Intensifying U.S. Government Export Controls:  Alongside CFIUS reform, new legislation will allow the U.S. government to intensify how it controls exports of “emerging and foundational technologies.”  Currently such exports are controlled by a variety of regulators, including the U.S. Departments of Commerce and State, and in the case of nuclear power, also the U.S. Department of Energy and the U.S. Nuclear Regulatory Commission, under well-defined but also sometimes slow-to-change regimes.

This broad, new legislation appears designed to gives the Executive Branch important new mechanisms to quickly apply export controls to emergent fields that concern U.S. economic interests.  Within the nuclear space, this could impact both novel fission and fusion technologies that are either not covered or loosely regulated under current export control regimes—although its actual impact will follow only after this legislation is applied in practice.

While certain parts of this legislation may come into effect immediately, both CFIUS and the Executive Branch will have to undertake rulemakings and additional actions to fully implement its new powers.  This will provide opportunities for potentially affected parties to get their voice known, especially as the role of (and concern with) foreign investment in U.S. nuclear innovation is only expected to grow.

For more about CFIUS and nuclear export controls, as well as the above-described legislation, please contact the authors.

The NRC staff recently publicly released a major new paper embracing regulatory reform to advance risk-informed regulation for advanced reactors.  Included in this paper is a concept of a “10 CFR Part 53”—a potentially entirely new process for licensing advanced reactors.

SECY-18-0060, “Achieving Modern Risk-Informed Regulation,” proposes “several significant and specific revisions” to the NRC regulatory framework.  The staff introduced these proposals by first discussing the results from an outreach program, which found a “need for systematic and expanded use of risk and safety insights in decisionmaking.”  The review team also found recommendations for a more open and efficient decisionmaking process for licensing new technologies.  Of significance, the NRC staff explained in this paper that some of its proposals, reflecting feedback from its outreach, will require cultural change at the NRC—in fact, that “[a] shift in NRC culture will be key to the success of the transformation initiative.”

The paper then builds from this, to discuss ways to “transform” the NRC’s licensing process.  The first part of this discussion focuses on changes that can be made through guidance, in particular to adopt “approaches that use qualitative and quantitative safety and risk insights to scale the level of review needed to make a finding of reasonable assurance.”  As part of this initial reform, the NRC staff discusses use of “(1) expert panels to guide reviews of incoming submittals for new technologies and major licensing actions; (2) internal small groups of NRC staff and management to guide the licensing process (called ‘guiding coalitions’); and (3) ‘tiger teams’ consisting of small groups of NRC staff who are empowered to identify alternative solutions to resolve licensing challenges, without being unnecessarily constrained by current processes or past practice.”

However, then the NRC staff paper moves on to discuss much more significant regulatory reform—to essentially create a new licensing path for advanced reactors that focuses on “meeting high-level risk-informed, performance-based criteria.”  Enclosure 5 to the paper, which lays out “Additional Detail on Areas of Transformation,” delves into more detail, and also advocates for a “10 CFR Part 53” licensing process: “[A] new optional framework [that] would provide greater applicability for non-LWR applicants and minimize the need for exemptions.”  Although recognizing the challenges with a new rulemaking, the paper advocates for the approach and notes that “[t]he timing for a new rule is ideal right now, in that it will signal to the rising non-LWR community and other stakeholders that the NRC is committed to reviewing and licensing new reactor technology in a timely manner and in a way that relates directly to tomorrow’s technology.”

SECY-18-0060 represents the product of a great deal of work and research by the NRC staff, and promises significant, if not fundamental, reforms to the NRC’s licensing process at this critical juncture for the “New Nuclear” economy.  Expect to see significantly more analysis and attention to this effort as it moves forward.  For more information on the NRC’s regulatory reform initiative, please contact the authors.

On Sunday, the popular TV show Madam Secretary gave a starring role to the climate and security benefits of nuclear power. The episode, titled “Thin Ice,” which is still available on the CBS website, proffered a full-throated defense of the climate benefits of nuclear power, turned a grassroots activist organization into a supporter of nuclear energy, and showcased how a nuclear powered ice breaker protected the Arctic from a foreign incursion. It capped with Secretary McCord convincing the show’s President to revise the national nuclear policy. As Michael Shellenberger opined following the episode (he also walks through the episode in detail), this marks a turning point for Hollywood, and “represents a popular culture breakthrough for the pro-nuclear movement.”  We encourage everyone to watch the episode!

From there, the week has only gotten better for nuclear innovation. The U.S. Nuclear Regulatory Commission (NRC) completed “the first and most intensive phase of review for” NuScale’s Design Certification Application for its small modular reactor. The NuScale design review has six phases to its schedule; but the first review sets the tenor, as it establishes the NRC staff’s preliminary safety evaluation of the reactor and encompasses a large portion of the requests for additional information. NuScale performed admirably in both areas. Along with this significant milestone—which derisks the company’s regulatory path forward—NuScale also received US$40 million from U.S. Department of Energy to continue advancing its innovative new, passively safe reactor design. And even the issue of nuclear waste storage might see progress, as the Nuclear Waste Policy Amendments Act of 2018 will get a vote on the floor of the House soon. The bill will move forward interim storage of spent nuclear fuel, and seek resolution on the licensing of a final national repository.

And apart from advancements on earth, NASA successfully tested KRUSTY, or “Kilopower Reactor Using Stirling Technology,” a nuclear reactor for potential moon and Mars bases. NASA personnel stated after the successful Nevada trial that “[n]o matter what environment we expose it to, the reactor performs very well.” NASA, along with Hollywood and Congress it seems, has taken a renewed interest in the role nuclear power can play in space exploration.

If you wish to learn more about any of these encouraging events, please contact the authors.

On April 4, the U.S. Nuclear Regulatory Commission (NRC) issued Regulatory Guide 1.232, Guidance for Developing Principal Design Criteria for Non-Light Water Reactors.  The regulatory guide’s generic set of Advanced Reactor Design Criteria cover most non-light-water technologies. The guide also includes technology-specific criteria for sodium-cooled fast reactors and high temperature gas-cooled reactors.

The regulatory guide describes how the general design criteria (GDC) set forth in Part 50 of the NRC’s regulations may be adapted for non-light-water reactor (non-LWR) designs. The guidance may be used by non-LWR reactor applicants to develop principal design criteria for any non-LWR designs, as required under the NRC nuclear power plant regulations. Notably, the guide can be used by advanced reactor designers to align their concepts with relevant NRC regulations for nuclear power plants, and will assist the NRC staff when reviewing future license applications.

We had previously written about the draft regulatory guide published by the NRC last year here.  As we noted then, this is an important document that deserves close attention by the advanced reactor community.  It provides one of the first detailed insights into how the NRC views advanced reactors, how far it is willing to step away from the GDC framework, and what it finds of importance from a safety perspective for advanced reactors.

For questions on the guidance, please contact one of the authors.

The start of the month has proven to be an exciting one for nuclear innovation in D.C.  A number of legal and regulatory activities have taken place which have implications for the next-generation nuclear industry, just a few of which are noted below.  (And for those at the ARPA-E conference, see our blog author Amy Roma speak today at the 2:15 panel “Quantifying Technical Risk for Advanced Nuclear Reactors”).

  • Last week was “Nuclear Innovation Week” in D.C. It consisted of three events highlighting both nuclear innovation and legal/regulatory reform: (i) Third Way’s Annual Advanced Nuclear Summit, (ii) the Nuclear Energy Institute’s (NEI’s) Nuclear R&D Summit, and (iii) a joint symposium hosted by the Gateway for Accelerated Innovation in Nuclear, NEI, and the Electric Power Research Institute.  Recordings of events from the Third Way summit are available online, and Amy spoke there on the topic of “Will the US Be a Global Leader in Advanced Nuclear Energy.”
  • In Congress, the Nuclear Energy Innovation Capabilities Act (S.97) passed the Senate.  The legislation would help move advanced reactor concepts forward by encouraging the creation of a fast neutron test reactor, as well as a user facility called the National Reactor Innovation Center.  While it is unclear how money will follow, it is a step in the right direction and recognizes the critical need for test facilities for next-generation nuclear reactors. Of its other more notable elements, the bill would also push forward an “Advanced Nuclear Energy Cost-Share Grant Program,” under which DOE can make cost-share grants to applicants for the purpose of funding a portion of NRC licensing fees, including both pre-application and application reviews.
  • The NRC issued Regulatory Guide 1.232, “Guidance for Developing Principal Design Criteria For Non-Light-Water Reactors.” As we discussed when the draft regulatory guide came out, this is a critical guidance document for non-light water reactors.  Appendix A to 10 CFR Part 50 sets for the general design criteria for NRC-licensed reactors, which are essentially the bounding safety requirements every new reactor has to meet.  These requirements, however, are designed for light-water reactors and do not apply well to non-light water designs (e.g., Criterion 14 sets requirements concerning reactor “pressure” boundaries, but many advanced reactors would not operate above atmospheric pressure).  There are three appendices to the report, which set forth general “advanced reactor design criteria,” as well as specific design criteria for sodium-cooled fast reactors and modular high-temperature gas-cooled reactors.  This guidance document, which attempts to update the NRC’s general design criteria to address this disconnect, is the product of a years-long DOE-NRC effort, paired with industry and public input.

And the month is not letting up.  This week is the NRC’s annual Regulatory Information Conference, where advanced reactors are taking center stage.  This week is also the ARPA-E Energy Innovation Summit, with Amy speaking on the panel, “Quantifying Technical Risk for Advanced Nuclear Reactors” (2:15 Tuesday).  ARPA-E has established a program to fund enabling technologies for next-generation reactors, called “MEITNER.”  The program seeks to help nuclear innovators leapfrog in development by providing advanced modeling and simulation tools, access to subject matter experts from nuclear and non-nuclear disciplines, and collaborative design assistance.  APRA-E is in itself an novel concept for how to commercialize technology research, and uses unique funding mechanisms to more efficiently fund energy innovation.

For more on any of the above topics, or on what else is going on in the nation’s Capital in support of nuclear energy, please contact the authors.

The White House released its long-awaited infrastructure plan outline last week.  Leaving aside the funding proposals, the plan sets forth a number of potential revisions to the environmental permitting process for new infrastructure projects that may deserve a closer look (these are found in Part III of the infrastructure plan outline).  Hogan Lovells has issued a detailed review of the broader infrastructure plan here, but we wanted to also briefly touch on a few points that could potentially impact the environmental review and permitting process for next-generation reactors by the U.S. Nuclear Regulatory Commission (NRC).

A number of these proposals as to environmental permitting have been floating around for a number of years, many on both sides of the aisle, and in particular concern the National Environmental Policy Act (NEPA).  Even if the President’s proposal itself does not move forward, a number of them may find themselves in any final infrastructure bill or future legislation:

    • Section 3(I)(A) – NEPA & Permitting Timelines: The proposal would establish a 21-month timeline for an agency’s NEPA review, and a 24-month permitting process from start to finish. The idea of setting deadlines for agency permitting actions has historically faced significant pushback over the years for a number of reasons—one being that this may encourage agencies to deny permits as a default when the deadline arrives.  However, there have been successful cases where statutory timelines have led to efficient agency processing of permits.  For example the Committee on Foreign Investment in the United States (CFIUS) reviews complex foreign investment transactions into the United States for national security risks in a one-to-three month timespan.  Done properly amidst other reforms to NEPA, a timeline for NEPA reviews can lead to significant permitting efficiencies.
    • Section 3(I)(B)(2) – Tailoring Discussion of Alternatives: One interesting proposal is tailoring the “Alternatives” discussion of a NEPA analysis.  The “Alternatives” analysis is often termed the “heart” of NEPA, and “rigorously explores and objectively evaluates all reasonable alternatives including the proposed action.”  It also drives a lot of the length of NEPA reviews, and is in need of reform.  One issue is that agencies end up spending significant time and capital evaluating alternatives to a project that are not practically up for consideration or commercially feasible.  The infrastructure plan proposes to exclude from NEPA “Alternatives” analyses those options “outside [the permitting agency’s] authority or outside the capability of the applicant.”  A large part of nuclear plant environmental reviews concern alternatives that are simply not going to be pursued.  Done right, a review of the scope of “Alternatives” analyses could yield significant benefits.
    • Section 3(III)(A) – Performance-Based Pilot Projects: This program would select 10 projects to be evaluated along “environmental performance measures” in lieu of the typical NEPA process.  The project applicant would commit to meet environmental parameters set by the lead federal reviewing agency (in this case the NRC) with public and interagency input.  The program would “focus on good environmental outcomes rather than a lengthy environmental review process.”  Candidates for the pilot program would be chosen “based on project size, national or regional significance, and opportunities for environmental enhancements.”

New nuclear reactor projects would be well-situated to be selected for such pilot programs.  Moreover, the NRC has significant experience in pursuing performance-based regulation, as it has been attempting to implement a more performance-based regulatory framework for nuclear safety issues for some time.  It could be a strong pilot lead agency to implement this concept for environmental reviews.

    • Section 3(IV) – Judicial Review: The infrastructure plan proposes significant changes to the framework for reviewing NEPA determinations.  Among them is a proposal to limit injunctions to “exceptional circumstances.”  The courts have already cut back on injunctions in NEPA cases since a seminal Supreme Court decision in Winter v NRDC (which also eliminated the notion that an injunction is automatic after a NEPA violation).  However, the threat of a NEPA injunctions drives agencies to ‘throw in the kitchen sink’ in their NEPA reviews to prevent such a deleterious outcome, greatly driving up review time and cost.  Reducing the threat of injunctions when agencies conduct reasonable reviews will certainly be controversial, but if done right could allow agencies to focus on the key environmental issues and only supplement their review when needed.

Another proposed change to the NEPA judicial review process would be to provide more certainty that data collected the first time around remains valid over time.  Agencies would be instructed to develop guidance regarding when new, more current data is required for a NEPA review as time passes, and courts would defer to this guidance.  This provision may face legal challenges, but targets another area where agencies are forced to do more than may be legally required in order to avoid a court injunction.  The process of data gathering, especially for nuclear projects, is time consuming and costly, and represents an area where greater certainty can markedly reduce permitting costs.

Apart from the environmental permitting modifications, a number of the funding programs could also prove beneficial for next-generation reactors if developed further.  This includes, for example, $20 billion set aside for a “Transformative Projects Program” for “bold, innovative, and transformative infrastructure projects” that face unique risks but otherwise could be commercially viable.  Such programs could bring much-needed financing to new reactor developers looking to bridge the funding “valley of death” before a first plant is constructed.

For more on the White House infrastructure plan, or on environmental permitting for nuclear reactors, please contact the authors.

The House Committee on Energy and Commerce, Subcommittee on Energy held a hearing February 6, 2018 to discuss the challenges facing America’s nuclear infrastructure, including advanced reactor development.  The hearing was called “DOE Modernization: Advancing the Economic and National Security Benefits of America’s Nuclear Infrastructure.” A video of the hearing can be watched here.

A background memorandum released in advance explained that the hearing would explore the following important topics:

  • National security implications associated with U.S. nuclear leadership and a domestic nuclear energy industry;
  • The outlook for domestic and international development of nuclear energy and application of nuclear technologies;
  • Challenges and opportunities regarding maintaining the components of a domestic nuclear fuel cycle; and
  • Options to develop and deploy advanced nuclear technologies

The hearing witnesses included (their statements are also provided below):

  • Mr. Art Atkins, Associate Deputy Administrator for Global Material Security, U.S. Department of Energy, National Nuclear Security Administration: Witness Statement
  • Mr. Victor McCree, Executive Director of Operations, U.S. Nuclear Regulatory Commission: Witness Statement
  • Mr. Ed McGinnis, Principal Deputy Assistant Secretary, U.S. Department of Energy, Office of Nuclear Energy: Witness Statement
  • Mr. James Owendoff, Principal Deputy Assistant Secretary, U.S. Department of Energy, Office of Environmental Management: Witness Statement
  • Dr. Ashley Finan, Policy Director, Nuclear Innovation Alliance: Witness Statement
  • Ms. Maria Korsnick, President and CEO, Nuclear Energy Institute: Witness Statement
  • The Honorable Bill Ostendorff, Former NRC Commissioner and Distinguished Visiting Professor of National Security, U.S. Naval Academy: Witness Statement
  • Dr. Mark Peters, Director, Idaho National Laboratory: Witness Statement
  • Mr. David Trimble, Director, Government Accountability Office, Natural Resources and Environment: Witness Statement

Summary of Key Issues for Advanced Reactor Community

During his opening remarks, Full Committee Chairman Greg Walden (R-OR) noted that “[a]t root today, is a question of our nation’s capabilities not only to propel nuclear innovation generally, but to ensure an infrastructure that is critical to our economic and our national security.” He promised to align U.S. policy with a changing world: “we must recognize the world looks different than it did at the birth of the nuclear age. Consequently, we must take steps to update the relevant policies. These policies must be forward looking to enable innovation and the development and deployment of new advanced nuclear technologies.”

Once witness questioning began, the Subcommittee quickly honed in on issues facing the advanced reactor community and expressed bipartisan support for U.S. government help to develop and deploy these innovative new designs. Among the issues discussed were the following:

  • SMR commercialization and deployment schedule

The first question asked at the hearing, by Subcommittee Chairman Fred Upton (R-MI), was on small modular reactor (SMR) commercialization and when the U.S. was going to see SMR designs being approved and deployed in the commercial sector. In response, Ed McGinnis, Principal Deputy Assistant Secretary, U.S. Department of Energy, Office of Nuclear Energy explained: “We are at a tipping point,” with the U.S. leading in design development but challenged in deployment of the technologies. He went on to note that NuScale project that can be “game changing” if successfully deployed.

Last year, reactor designer NuScale submitted to the U.S. Nuclear Regulatory Commission the first SMR reactor design certification application  in the United States. The NRC recently approved–in a first of a kind decision–that NuScale would not need a safety-related electrical power system. This means that the NRC believes the reactor can remain in a safe condition in the event it loses electricity. Currently, all nuclear power plants in the U.S. have safety-related electrical power systems. And the fact that NuScale does not need one is a testament to the inherent different nature of SMRs—and the first time the NRC has recognized as such during its review of an application.

On that front, Victor McCree, the NRC’s Executive Director of Operations, explained during the hearing that the NRC’s decision about NuScale reflects a “philosophical” change that will lead to more efficient and effective reviews. Mr. McCree continued on to explain that an NRC approval of the NuScale design would open the market in a way that large reactors cannot, including by being more affordable and improving grid reliability. Mr. McGinnis further explained that with a number of large-scale reactors facing shutdown, getting SMRs into the pipeline is an imperative, and among other things, DOE was working on integrating SMRs with wind turbines and solar plants. With SMRs versatility and fast ramp up ability, Mr. McGinnis explained, SMRs could be paired with renewables to firm up their intermittent power and delivery of emissions free power.

  • Concern with amount of DOE funding to support SMR commercialization and deployment

Several members expressed concern that—with less than US$30 million invested in advanced reactors—whether DOE is really pushing for commercialization of SMRs. In response, Mr. McGinnis noted that a lot of work was being performed at the national labs and DOE continues to work on deployment matters.

  • High-assay LEU and Test Reactors

Mr. McGinnis from DOE also explained that DOE was working towards development of a fast neutron reactor and growing a capacity for high-assay LEU. Mr. McGinnis acknowledged that next-generation nuclear innovators need a test reactor, which itself would require high-assay LEU. He added that NNSA is taking seriously the challenge of developing a high-assay LEU capacity for testing and eventual industry use.

  • Deployment of US SMRs overseas

A number of members asked about deployment of US SMRs abroad. In response, Mr. McGinnis remarked that a number of countries are interested in U.S. SMR designs and watching their progress. He remarked that the U.S. is the world expert in designing SMRs, and that if the U.S. was able to prove the technology domestically it would open up the international market. The hearing participants also discussed ways to speed up the U.S. nuclear export approval process. On that last point, Congressman Bill Johnson (R-OH) noted that he intended to introduce legislation soon to improve the export control authorization process. At the end of 2017, Chairman Upton and Congressman Johnson sent a letter to Energy Secretary Rick Perry saying that the slow pace of DOE authorizations for commercial nuclear energy exports is having harmful consequences for U.S. competitiveness and national security. “While DOE is in the process of implementing some targeted reforms, more work remains to accelerate agency decision-making so that our domestic nuclear technology leaders have timely answers necessary to compete effectively with other nations’ nuclear programs,” the letter said.

  • NRC fee reform

When asked about if the NRC is undergoing reviews of its fee structure and looking for ways to improve methodology especially when non-LWR reactors look for licensing, Mr. McCree confirmed that the NRC is looking at this issue.

With a flurry of attention on advanced reactors lately, the hearing brings welcome attention the advanced reactor community needs. Please contact the authors with any questions.