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By following this approach, the NRC most closely adheres to its long-established agency policy of not becoming unnecessarily embroiled in ancillary approvals and most closely adheres to its long-standing and effective process of ensuring the Staff confmns the conditions necessary for license transfer.
ND would like to resolve this matter expeditiously and allow the RC to meet the current committed schedule. If further discussions between D and the Staff are needed, please contact me at your earliest convenience.
Sincerely, ~1~~ Chief Executive Officer & Chief uclear Officer uclear Development, LLC cc: Omid Tabatabai, Senior Project Manager U.S. uclear Regulatory Commission
Regional Administrator, Region II U.S. uclear Regulatory Commission
State Health Officer Alabama Dept. of Public Health P.O. Box 303017 Montgomery, AL 36130-3017
Mr. Timothy Rausch Chief uclear Officer Tennessee Valley Authority 1101 Market Street Lookout Place 3R Chattanooga, T 37402-2801
DBl/ 115873069 UNITED STATES NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20555-0001
May 29, 2003
G. Paul Bollwerk, Ill Jerry R. Kline Administrative Judge Administrative Judge U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission Atomic Safety and Licensing Board Panel Atomic Safety and Licensing Board Panel Mail Stop: T-3F23 Mail Stop: T-3F23 _ Washington, D.C. 20555 Washington, D.C. 20555
Peter S. Lam Administrative Judge U.S. Nuclear Regulatory Commission Atomic Safety and !Licensing Board Panel Mail Stop: T-3F23 Washington, D.C. 20555
In the Matter of PACIFIC GAS & ELECTRIC COMPANY (Diablo Canyon Power Plant Independent Spent Fuel Storage Installation) Docket No. 72-26-ISFSI; ASLBP No. 02-801-01-ISFSI
Dear Administrative11udges:
Enclosed, for inclusion in the record of this proceeding, is the "Order Approving Transfer of Licenses and Conforming Amendments," issued May 27, 2003 with respect to proposed transfer of the 1 O C.ER. Part 50 licenses for Diab lo Canyon Nuclear Power Plant, Units 1 and 2. Please note that ttis NRC approval does not effactuate the license transfers. Although the Order of approvaLhasbeen issued, the conforming license amendments will not be issued until the transfers are1:con~1'eted. The transfer cannot be completed until certain actions are taken by the U.S. Bankrupt;, Court for the Northern District of California and the Federal Energy Regulation Commission.
Nevertheless, fue:issuance of this NRC approval represents a significant milestone with respect to the proposec:Ltransfers, a subject that has been extensively addressed in pleadings in this proceeding. ltiiS:sl:Jtrnitted because of the frequent references in this proceeding to the pending Part so:uceme transfer application. Its issuance has no effect on this proceeding, in that it does ndt.atfecttielegitimacy of Pacific Gas and Electric Company as the Applicant in this proceeding.
Sincerely, _y~-L~ "iJl.~~ st;~H'.' Lewis Counsel for NRC Staff
Enclosure: Asstated
cc: Service ttst May 27, 2003
Mr. Gregory M. Rueger Senior Vice President, Generation and Chief Nuclear Officer Pacific Gas and Electric Company Diablo Canyon Nuclear Power Plant P. 0. Box3 Avila Beach, CA 93424
SUBJECT: DIABLO CANYON NUCLEAR POWER PLANT, UNITS 1 AND 2 - ISSUANCE OF ORDER APPROVING TRANSFER OF LICENSES FROM PACIFIC GAS AND ELECTRIC COMPANY TO ELECTRIC GENERATION LLC AND DIABLO CANYON LLC, AND APPROVING CONFORMING AMENDMENTS {TAC NOS. MB3523 AND MB3524}
Dear Mr. Rueger:
The enclosed Order is in response to your application dated November 30, 2001, as supplemented by letters dated January 18 and May 1, 2002, requesting approval of the transfer · of the licenses for the Diablo Canyon Nuclear Power Plant, Units 1 and 2, held by Pacific Gas and Electric Company, to Electric Generation LLC and Diablo Canyon LLC, and approval of conforming amendments, pursuant to Sections 50.80 and 50.90 of Title 1O of the Code of Federal Regulations. The enclosed Order provides consent to the proposed license transfers. It also approves conforming license amendments to be issued at the time the transfers are completed, with the changes as indicated in Enclosure 2.
Enclosures 3 and 4 are the nonproprietary and proprietary versions, respectively, of the staff's safety evaluation {SE) related to the preceding action. Proprietary information is contained on pages 3 and 4 of Enclosure 4. The nonproprietary version of the SE will be placed in the NRC Public Document Room and added to the Agencywide Documents Access and Management .. Mr. Gregory M. Rueger -2-
System's Publicly Available Records System library. The Order has been forwarded to the Office of the Federal Register for publication.
Sincerely,
IRA/
David N. Jaffe, Acting Project Manager, Section 2 Project Directorate IV Division of Licensing Project Management Office of Nuclear Reactor Regulation
Docket Nos. 50-275 and 50-323
Enclosures 1. Order 2. Conforming Amendments (DPR-80 and DPR-82) 3. Safety Evaluation (nonproprietary) 4. Sat ety Evaluation (proprietary)
cc w/encls: See next page Diablo Canyon Power Plant; Units 1 and 2 cc w/o Enclosure 4:
NRC Resident Inspector Mr. David H. Oatley, Vice President Diablo Canyon Power Plant and General Manager c/o U. S. Nuclear Regulatory Commission Pacific Gas and Electric Company P. 0. Box369 Diablo Canyon Power Plant Avila Beach, CA 93424 P.O. Box56 Avila Beach, CA 93424 Dr. Richard Ferguson, Energy Chair Sierra Club California Mr. James R. Becker, Vice President 1100 11 th Street, Suite 311 Diablo Canyon Operations Sacramento, CA 95814 and Station Director · Pacific Gas and Electric Company Ms. Nancy Culver Diablo Canyon Power Plant San Luis Obispo P.O. Box 3 Mothers for Peace Avila Beach, CA 93424 P.O. Box 164 Pismo Beach, CA 93448 City Editor The Tribune Chairman 3825 South Higuera Street San Luis Obispo County Board of ·P.O. Box 112 Supervisors San Luis Obispo, CA 93406-0112 Room 370 County Government Center Mr. Ed Bailey, Radiation Program Director San Luis Obispo, CA 93408 Radiologic Health Branch State Department of Health Services Mr. Truman Burns P.O. Box 942732 (MS 178) Mr. Robert Kinosian Sacramento, CA 94234-7320 California Public Utilities Commission 505 Van Ness, Room 4102 Mr. James D. Boyd, Commissioner San Francisco, CA 94102 California Energy Commission 1516 Ninth Street (MS 31) Diablo Canyon Independent Safety Sacramento, CA 95814 Committee ATTN: Robert R. Wellington, Esq. Legal Counsel 857 Cass Street, Suite D Monterey, CA 93940
Regional Administrator, Region IV U.S. Nuclear Regulatory Commission 611 Ryan Plaza Drive, Suite 400 Arlington, TX 76011-8064
David F. Locke, Esq. Pacific Gas & Electric Company P.O. Box 7442 San Francisco, CA 94120 Enclosure 1. Order 7590-01-P
UNITED STATES OF AMERICA
NUCLEAR REGULATORY COMMISSION
In the Matter of ) ) PACIFIC GAS AND ELECTRIC COMPANY ) Docket Nos. 50-275 ) and 50-323 (Diablo Canyon Nuclear Power Plant, ) Units 1 and 2) )
ORDER APPROVING TRANSFER OF LICENSES AND CONFORMING AMENDMENTS
I.
Pacific Gas and Electric Company (PG&E or the licensee) is the holder of Facility
Operating Licenses Nos. DPR-80 and DPR-82, which authorize the operation of the Diablo
Canyon Nuclear Power Plant, Units 1 and 2 (DCNPP or the facility) at steady-state power levels not in excess of 3411 megawatts thermal. The facility is located at the licensee's site in
San Luis Obispo County, California. The licenses authorize PG&E to possess, use, and operate the facility.
II.
Under cover of a letter dated November 30, 2001, PG&E submitted an application requesting approval of the transfer of Facility Operating Licenses Nos. DPR-80 and DPR-82 for
DCNPP from PG&E to Electric Generation LLC and Diablo Canyon LLC. The licensee also
requested approval of conforming license amendments to reflect the transfer. The application was supplemented by submittals dated January 18 and May 1, 2002, collectively referred to as the "application• herein unless otherwise indicated.
Diablo Canyon LLC, a California limited liability company, is a wholly-owned subsidiary of Electric Generation LLC, also a California limited liability company. Electric Generation LLC is an indirect wholly-owned subsidiary of PG&E Corporation, the current parent of the licensee. - 2 -
According to the application, Diablo Canyon LLC will become the owner of the facility, while
Electric Generation LLC will operate and maintain DCNPP under the terms of a lease that will make Electric Generation LLC responsible for all costs of operation. Diablo Canyon LLC will be responsible for providing decommissioning funding assurance for DCNPP. With respect to authority to possess, use, and operate the facility, the conforming license amendments would remove references to PG&E from the licenses and add references to Electric Generation LLC and Diablo Canyon LLC, as appropriate, and make other administrative changes to reflect the proposed transfer. The application also proposed certain changes to the antitrust conditions attached to the licenses, which are discussed in more detail below.
PG&E requested approval of the transfer of the licenses and conforming license amendments pursuant to 1O CFR 50.80 and 50.90. Notice of the request for approval and an opportunity to request a hearing or submit written comments was published in the Federal
Register on January 17, 2002 (67 FR 2455). The Commission received petitions to intervene and requests for hearing from the following: the Northern California Power Agency (NCPA); the
Official Committee of Unsecured Creditors of Pacific Gas and Electric Company (Committee); the California Public Utilities Commission (CPUC); the Transmission Agency of Northern
California, M-S-R Public Power Agency, Modesto Irrigation District, the California Cities of
Santa Clara, Redding, and Palo Alto, and the Trinity Public Utility District, in a joint filing
(collectively, TANG); and the County of San Luis Obispo (County). In a Memorandum and
Order, dated June 25, 2002 (CLl-02-16), the Commission denied several of the petitioners' requests for intervention and referred the petitions of the County and CPUC to the. NRC staff as comments for appropriate consideration. On February 14, 2003, the Commission denied the remaining petitioners' requests for hearing and terminated the proceeding. Pacific Gas and
Elec. Co. (Diablo Canyon Nuclear Power Plant, Units 1 and 2), CLl-03-02, 57 NRC 19 (2003). -3-
ln CLl-03-02, the Commission addressed, among other things, the changes proposed in the application to the antitrust conditions appended to the licenses, which PG&E assumed would be carried forward if the licenses were transferred. These proposed changes would have retained PG&E as a licensee in the antitrust conditions, would have added a new transmission company (ETrans LLC) to the antitrust conditions, and would have added Electric Generation
LLC {but not Diablo Canyon LLC) to the conditions, for the purpose of implementing the conditions. The Commission ruled that if the proposed license transfers are approved, the antitrust license conditions should not be included in {i.e., not remain part of) the transferred licenses. 57 NRC at 36. Accordingly, the conforming license amendments approved by this
Order reflect the Commission's ruling in this regard.
Under 1 O CFR 50.80, no license, or any right thereunder, shall be transferred, directly or indirectly, through transfer of control of the license, unless the Commission gives its consent in writing. After reviewing the information submitted in the application and other information before the Commission, and relying upon the representations and agreements contained in the application, the NRC staff has determined that Electric Generation LLC and Diablo Canyon LLC are qualified to be the holders of the licenses to the extent proposed in the application, and that the transfer of the licenses to Electric Generation LLC and Diablo Canyon LLC is otherwise consistent with applicable provisions of law, regulations, and orders issued by the Commission, subject to the conditions set forth below. The NRC staff has further found that the application for the proposed license amendments that reflect the transfer of authority to possess, use, and operate the facility and the transfer of authority concerning the receipt, possession, or use of nuclear material from PG&E to Electric Generation LLC and Diablo Canyon LLC complies with the standards and requirements of the Atomic Energy Act of 1954, as amended {the Act), and the Commission's rules and regulations set forth in 10 CFR Chapter I; the facility will operate in -4- conformity with the application, the provisions of the Act, and the rules and regulations of the
Commission; there is reasonable assurance that the activities authorized by the proposed license amendments concerning the possession, use, and operation of the facility and concerning the receipt, possession, or use of nuclear material can be conducted without endangering the health and safety of the public and that such activities will be conducted in compliance with the Commission's regulations; the issuance of the proposed license amendments concerning the possession, use, and operation of the facility and concerning the receipt, possession, or use of nuclear material will not be inimical to the common defense and security or the health and safety of the public; and the issuance of the proposed license amendments concerning the possession, use, and operation of the facility and concerning the receipt, possession, or use of nuclear material will be in accordance with 10 CFR Part 51 of the
Commission's regulations and all applicable requirements have been satisfied. The findings set forth above are supported by the NRC staff's safety evaluation dated May 27, 2003.
Ill.
Accordingly, pursuant to Sections 161 b, 161 i, 161 o, and 184 of the Atomic Energy Act of 1954, as amended, 42 U.S.C. 2201(b), 2201(i), 2201(0), and 2234; and 10 CFR 50.80, IT IS
HEREBY ORDERED that the transfer of the licenses as described herein to Electric Generation
LLC and Diablo Canyon LLC is approved, subject to the following conditions:
(1) Before the completion of the transfer of DCNPP, Electric Generation LLC and Diablo
Canyon LLC shall provide the Director of the Office of Nuclear Reactor Regulation
satisfactory documentary evidence that Electric Generation LLC and Diablo Canyon LLC
have obtained the appropriate amount of insurance required of licensees under
1O CFR Part 140 of the Commission's regulations. -5-
(2) Prior to the closing of the license transfers, all necessary regulatory and/or judicial
approvals of the bilateral power sales agreement (PSA) referenced in Enclosure 7 to the
November 30, 2001, submittal must be obtained without any material changes to the
PSA that would adversely impact the five-year financial projections proffered in the
application such that indicated sources of funds would not be sufficient to cover
projected costs of operation of the facility.
(3) On the closing date of the transfer of DCNPP, Diablo Canyon LLC shall obtain from
PG&E all of the accumulated decommissioning trust funds associated with the facility,
and ensure the deposit of the funds into a decommissioning trust(s) for DCNPP
established by Diablo Canyon LLC. The amount of the funds must meet or exceed the
minimum amount required for the facility pursuant to 10 CFR 50.75. In the event that
the transfer of DCNPP occurs prior to December 24, 2003, the decommissioning trust
agreement(s) shall be consistent with the provisions contained in 10 CFR 50.75(h)(1)
{67 FR 78350, published December 24, 2002), as if such provisions are in effect at the
time of transfer. Notwithstanding the date of the transfer, the decommissioning trust
agreement(s) must be acceptable to the NRG.
(4) Diablo Canyon LLC shall take all necessary steps to ensure that the decommissioning
trust(s) is maintained in accordance with the application and the requirements of this
Order, and consistent with the safety evaluation supporting this Order.
(5) Notwithstanding the transfer of ownership of DCNPP to Diablo Canyon LLC, Electric
Generation LLC shall at all times following the transfer of the DCNPP licenses to Diablo
Canyon LLC and Electric Generation LLC be fully responsible for all costs associated
with the possession, use, operation, maintenance, and decommissioning of DCNPP
(including costs associated with the receipt, possession, and use of byproduct, source, ------
- 6 -
and special nuclear material), except for decommissioning costs covered by the
decommissioning trust funds transferred to Diablo Canyon LLC at the time of the license
transfers. Diablo Canyon LLC shall be responsible for the payment of decommissioning
costs for DCNPP at least to the extent of the accumulated decommissioning trust funds
transferred to Diablo Canyon LLC and earnings associated with such funds.
(6) Electric Generation LLC shall provide the Director of the Office of Nuclear Reactor
Regulation a copy of any application, at the time it is filed, to transfer (excluding grants
of security interests or liens) from Electric Generation LLC to its direct or indirect parent,
or to any other affiliated company, facilities for the production of electric energy having a
depreciated book value exceeding ten percent (10%} of Electric Generation LLC's
consolidated net utility plant, as recorded on Electric Generation LLC's books of
account.
(7) After receipt of all required regulatory and judicial approvals of the transfer of DCNPP,
PG&E shall inform the Director of the Office of Nuclear Reactor Regulation in writing of
such receipt within 5 business days, and of the closing date of the transfer of DCNPP no
later than 7 business days prior to the date of closing. If the transfer of the licenses is
not completed by May 31, 2004, this Order shall become null and void, provided,
however, on written application and for good cause shown, this date may be extended in
writing.
IT IS FURTHER ORDERED that, consistent with 10 CFR 2.131 S(b}, license
amendments that make_ changes, as indicated in Enclosure 2 to the cover letter forwarding this
Order, to conform the licenses to reflect the subject license transfers are approved. The
amendments shall be issued and made effective at the time the proposed license transfers are
completed. -7-
This Order is effective upon issuance.
For further details with respect to this Order, see the initial application dated
November 30, 2001, and supplements thereto dated January 18 and May 1, 2002, and the safety evaluatjon dated May 27, 2003, which are available for public inspection at the
Commission's Public Document Room, located at One White Flint North, 11555 Rockville Pike
(first floor), Rockville, Maryland, and are accessible electronically through the ADAMS Public
Electronic Reading Room link at the NRC Web site (http://www.nrc.gov).
Dated at Rockville, Maryland, this 27th day of May 2003.
FOR THE NUCLEAR REGULATORY COMMISSION
IRA/
R. William Borchardt, Acting Director Office of Nuclear Reactor Regulation