Entergy Nuclear Indian Point 3, LLC; and Nuclear Asset Management Company, LLC for a Declaratory Ruling Docket No

STATE OF NEW YORK PUBLIC SERVICE COMMISSION

Joint Petition of Entergy Nuclear Indian Point 2, LLC; Entergy Nuclear Indian Point 3, LLC; and Nuclear Asset Management Company, LLC for a Declaratory Ruling Docket No. 19-E-0730 Disclaiming Jurisdiction Over or Abstaining from Review of the Proposed Transfers or, in the Alternative, an Order Approving the Proposed Transfers Pursuant to Section 70 of the New York Public Service Law.

FORMAL COMMENTS OF THE TOWN OF CORTLANDT, VILLAGE OF BUCHANAN, AND HENDRICK HUDSON SCHOOL DISTRICT IN OPPOSITION TO JOINT PETITION FOR A DELARATORY RULING DISCLAIMING JURISDICTION, ABSTAING FROM REVIEW, OR APPROVING PROPOSED TRANSFERS

Daniel Riesel Dane Warren SIVE PAGET & RIESEL P.C. Attorneys for Intervenors 560 Lexington Avenue, 15th Floor New York, NY 10022 [email protected] [email protected] (212) 421-2150

Dated: May 1, 2020

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Table of Contents TABLE OF AUTHORITIES ...... iv INTERVENORS ...... 1 PRELIMINARY STATEMENT ...... 2 POINT ONE THE COMMISSION HAS JURISDICTION OVER THE PROPOSED TRANSFERS UNDER PUBLIC SERVICE LAW § 70 ...... 7 POINT TWO THE COMMISSION SHOULD NOT ABSTAIN FROM EXERCISING JURISDICTION OVER THE PROPOSED TRANSFER ...... 14 POINT THREE IN ITS CURRENT FORM, THE PROPOSED TRANSFER OF THE IPEC FROM ENTERGY TO HOLTEC IS NOT IN THE PUBLIC INTEREST ...... 20 A. The Petition Fails to Adequately Demonstrate that Holtec has the Financial Integrity to Own and Decommission the IPEC...... 21 1. Holtec’s Critical Assumption that the Department of Energy Will Begin Accepting Spent Nuclear Fuel by 2030 is Untenable ...... 22 2. Holtec has not Adequately Accounted for Unanticipated Costs ...... 26 3. Holtec’s “Contingency Allowance” Does Not Actually Account for Unanticipated Costs ...... 32 B. Holtec’s Corporate Structure, Lack of Assets or Revenue Streams, and Inexperience Make It Financially Unfit to Decommission Indian Point...... 34 C. At a Minimum, the Commission Must Impose Conditions That Realign Holtec’s Incentives and Return Any Funds Remaining in the DTF to Ratepayers and the Local Community...... 41 CONCLUSION ...... 44

iii

TABLE OF AUTHORITIES

CASES PAGE(S)

Aer Ny-Gen, LLC & All. Nygt, LLC, No. 11-E-0701, 2012 WL 1511874 (Mar. 21, 2012) ...... 18

Altice N.V. & Cablevision Sys. Corp. & Subsidiaries, No. 15-M-0647, 2016 WL 3386592 (June 15, 2016) ...... 18

Brooklyn Union Gas Co. v. Pub. Serv. Comm’n, 34 A.D.2d 71 (3d Dep’t 1970) ...... 8

Caithness Long Island LLC, Caithness Brookhaven LLC, Caithness Brookhaven II LLC, Caithness Energy LLC, & Brookhaven Elec. LLC, No. 12-E-0197, 2012 WL 2952758 (July 16, 2012) ...... 21, 35

Cassadaga Wind LLC, Trireme Energy Dev. LLC, & Innogy Renewables Us LLC, No. 18-E-0333, 2018 WL 3817926 (July 17, 2018) ...... 12

Dynegy Danskammer LLC, No. 13-E-0012, 2014 WL 1320304 (Mar. 28, 2014) ...... 4, 11, 12, 18

Dynegy Roseton LLC & Cci Roseton LLC, No. 13-E-0012, 2013 WL 1785508 (Apr. 22, 2013) ...... 9, 10, 11, 12

Entergy Nuclear Fitzpatrick, LLC, Entergy Nuclear Indian Point 2, LLC, Entergy Nuclear Indian Point 3, LLC, Entergy Nuclear Operations, Inc, Newco & Entergy Corp., No. 08-E-0077, 2008 WL 3856764 (Aug. 14, 2008) ...... 21

Exelon Generation Co., LLC, No. 17-M-0302, 2017 WL 3437454 (Aug. 3, 2017) ...... 18

Helios Power Capital, LLC, Danskammer Energy, LLC & Mercuria Energy Am., Inc., No. 14-E-0117, 2014 WL 2987951 (June 27, 2014) ...... 4, 11, 12

Iberdrola, S.A., Energy E. Corp., Rgs Energy Grp., Inc., Green Acquisition Capital, Inc., New York State Elec. & Gas Corp. & Rochester Gas & Elec. Corp., No. 07-M-0906, 2008 WL 2486831 (June 16, 2008) ...... 21

In re Competitive Opportunities Regarding Elec. Serv., 168 P.U.R.4th 515 (May 20, 1996) ...... 18

In re Consol. Edison Co. of New York, Inc., 29 P.U.R.4th 327, 1979 WL 461901 (Apr. 6, 1979) ...... 20

TABLE OF AUTHORITIES

CASES PAGE(S)

In re Consol. Edison Co. of New York, Inc., No. 01-E-0040, 2001 WL 1587290 (Aug. 31, 2001) ...... 14, 29, 42

In re Consol. Edison Co. of New York, Inc., No. 02-M-0741, 2007 WL 1213672 (Apr. 24, 2007) ...... 42

In re Empire State Pipeline, 31 N.Y.P.S.C. 129 (Mar. 1, 1991) ...... 43

In re Entergy Nuclear Indian Point 2, LLC, 213 P.U.R.4th 162, 2001 WL 1572710 (Aug. 31, 2001) ...... 14

In re Entergy Nuclear Vermont Yankee, LLC, And Entergy Nuclear Operations, Inc. (Vermont Yankee Nuclear Power Station), No. 15-940-03-LA-BD01, 2015 WL 5883370 (Aug. 31, 2015), vacated as moot, 83 N.R.C. 463, 2016 WL 8260626 (June 2, 2016) ...... 25, 28

In re First Wind Holdings, Inc., No. 11-E-253, 2011 WL 4942281 (Sept. 21, 2011) ...... 17

In re Horizon Wind Energy LLC, No. 06-E-0006, 2006 WL 344605 (Feb. 8, 2006) ...... 16

In re Keyspan Energy, No. 99-F-1625, 2009 WL 3256555 (July 21, 2009) ...... 43

In re NRG Energy, Inc., No. 07-E-0584, 2007 WL 2089281 (July 23, 2007) ...... 15

In re Rochester Gas & Elec. Corp., No. 03-E-1231, 2004 WL 1206964 (May 20, 2004) ...... 42

Luyster Creek, LLC v. New York State Pub. Serv. Comm’n, 18 N.Y.3d 977 (2012) ...... 8

Mach Gen LLC & New Athens Generating Co. LLC, No. 14-E-0022, 2014 WL 1713078 (Apr. 25, 2014) ...... 16, 17, 19

New York v. Nuclear Regulatory Comm’n, 681 F.3d 471 (D.C. Cir. 2012) ...... 35

Niagara Mohawk Power Corp. v. Pub. Serv. Comm’n of State of N.Y., 218 A.D.2d 421 (3d Dep’t 1996) ...... 13

TABLE OF AUTHORITIES

CASES PAGE(S)

Noble Envtl. Power, LLC, Noble Altona Windpark, LLC, Noble Bliss Windpark, LLC, Noble Clinton Windpark i, LLC, Noble Ellenburg Windpark, LLC, Noble Chateaugay Windpark, LLC, Noble Great Plains Windpark, LLC, Noble Wethersfield Windpark, LLC, No. 15-E-0597, 2015 WL 9686498 (Dec. 17, 2015) ...... 16

Nuclear Energy Inst., Inc. v. Envtl. Prot. Agency, 373 F.3d 1251 (D.C. Cir. 2004) ...... 26

People ex rel. Cayuga Power Corp. v. Pub. Serv. Comm’n, Second Dist., 226 N.Y. 527 (1919) ...... 13

Red-Rochester, LLC, Red Inv., LLC, Red Parent, LLC, Ironclad Energy Partners LLC, Ironclad Energy Ventures, LLC & Stonepeak Infrastructure Fund II LP, No. 16-M-0370, 2016 WL 4161126 (Aug. 2, 2016) ...... 16, 19

Rensselaer Holdings LLC & Louis Dreyfus Highbridge Energy LLC, No. 11-E-0663, 2012 WL 1066443 (Feb. 22, 2012) ...... 18

Sys. Fuels, Inc. v. United States, 818 F.3d 1302 (Fed. Cir. 2016)...... 23, 26

TC Ravenswood, LLC, TC Ravenswood Servs. Corp. & Helix Generation for Expedited Approval of a Transfer & Fin. Pursuant to Lightened Regulation, No. 17-E-0016, 2017 WL 2226002 (Apr. 19, 2017) ...... 20, 34

STATUTES

New York Public Service Law § 2 ...... 4, 8, 10

New York Public Service Law § 70 ...... passim

REGULATIONS

10 C.F.R. § 20.1402 ...... 29

10 C.F.R. § 50.82(a)(4) ...... 33

10 C.F.R. § 961.11 ...... 26

Continued Storage of Spent Nuclear Fuel, 79 Fed. Reg. 56,238 (Sept. 19, 2014) ...... 24, 25

TABLE OF AUTHORITIES

REGULATIONS PAGE(S)

16 NYCRR §§ 5.3, 5.4 ...... 38

OTHER AUTHORITIES

Applicants’ Answer Opposing Petition for Leave to Intervene and Hearing Request Filed by Town of Cortlandt, Village of Buchanan, and Hendrick Hudson School District at 35 (March 9, 2020) (ML20069K761) ...... 6, 19, 24, 25

Application for Order Consenting to Transfers of Control of Licenses and Approving Conforming License Amendments Indian Point Nuclear Generating Units 1, 2 and 3 (Nov. 21, 2019) (ML19326B953) ...... 21, 39

Congressional Research Service, Civilian Nuclear Waste Disposal (Sept. 2018), https://fas.org/sgp/crs/misc/RL33461.pdf ...... 23

DEC, Cleanup Guidelines for Soils Contaminated with Radioactive Materials (April 30, 2013), https://www.dec.ny.gov/regulations/23472.html ...... 29

EPRI, Connecticut Yankee Decommissioning Experience Report (Nov. 2006) ...... 30

Joint Proposal, Case 01-E-0040, http://documents.dps.ny.gov/public/MatterManagement/ CaseMaster.aspx?MatterCaseNo=01-E-0040&submit=Search (docket no. 29) ...... 30

Ltr. from A. Sterdis, HDI, to NRC Document Control Desk, “Request for Exemptions from 10 C.F.R. 50.82(a)(8)(i)(A) and 10 C.F.R. 50.75(h)(1)(iv)” (Feb. 12, 2020) (ML20043C539) ...... 7, 22, 41

Ltr. from NRC, to Southern California Edison Company, Revised NRC Special Inspection Report 050-00206/2018-005, 050-00361/2018-005, 050-00362/2018-005, 072-0041/2018-001 And Revised Notice of Violation, San Onofre Nuclear Generating Station, EA-18-155 (Dec. 19, 2018) (ML18341A172) ...... 31

Oyster Creek Decommissioning, Holtec Decommissioning International, https://hdi- decom.com/our-fleet/oyster-creek-decommissioning/ (last visited May 7, 2020) ...... 38

USDOE, Report to Congress on the Demonstration of the Interim Storage of Spent Nuclear Fuel (2008), https://www.energy.gov/sites/prod/files/edg/media/ES_Interim_Storage_Report_120108.pdf ...23

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TABLE OF AUTHORITIES

OTHER AUTHORITIES PAGE(S)

U.S. Dep’t of Energy, Strategy for the Management and Disposal of Used Nuclear Fuel and High-Level Radioactive Waste (Jan. 2013), https://www.energy.gov/sites/prod/files/ Strategy%20for%20the%20Management%20and%20Disposal%20of%20Used%20Nuclear%20F uel%20and%20High%20Level%20Radioactive%20Waste.pdf ...... 22

U.S. Gov’t Accountability Office, Disposal of High-Level Nuclear Waste, https:// www.gao.gov/key_issues/disposal_of_highlevel_nuclear_waste/issue_summary#t=0 ...... 23

U.S. Nuclear Regulatory Commission, Generic Environmental Impact Statement on Decommissioning of Nuclear Facilities, Supplement 1 (Nov. 2002) ...... 31

U.S. Nuclear Regulatory Commission, Generic Environmental Impact Statement for Continued Storage of Spent Nuclear Fuel (Sept. 2014) ...... 31

What the Dow’s 28% Crash Tells Us About the Economy, Bloomberg (March 18, 2020), https://www.bloomberg.com/graphics/2020-stock-market-recover-dow-industrial-decline/ ...... 36

viii

INTERVENORS

Intervenors, the Town of Cortlandt, the Village of Buchanan, and the Hendrick Hudson

School District are all municipal entities organized under the laws of New York, and all will be adversely affected by the proposed transfer of the Indian Point Energy Center (“IPEC”) from

Entergy Nuclear Operations, Inc. (“Entergy”) to an independent entity, Holtec International

(“Holtec”).1

The IPEC is within the taxing and geographic jurisdictions of each of the Intervenors and constitutes a large land mass, approximately 240 acres, within the borders of the Intervenors. The

Intervenors achieved intervenor status by virtue of their February 21, 2020 filing, and no party has opposed Intervenors’ participation in this proceeding.

The Intervenors constitute the community surrounding Indian Point. Mishaps in decommissioning, unforeseen circumstances, and miscalculations in the amount of money available to return Indian Point to productivity will have a direct effect on the local community.

An unremediated or partially remediated IPEC presents significant radiological and non- radiological concerns, risking substantial environmental and public health impacts. These concerns are amplified by the genuine risk, outlined in detail below, that the decommissioning trust funds will be depleted under Holtec’s proposed stewardship of the IPEC.

Moreover, a closed, unremediated, or partially remediated nuclear generating plant will be a blight on the surrounding community, adversely affecting property values and future development. Intervenors, with State assistance, have conducted studies that demonstrate that a

1 Unless otherwise indicated, in these Formal Comments Entergy refers to Entergy Nuclear Operations, Inc. (“ENOI”); Entergy Nuclear Indian Point 2, LLC (“ENIP2”); and Entergy Nuclear Indian Point 3, LLC (“ENIP3”); and Holtec refers to Holtec International and Holtec Decommissioning International, LLC (“HDI”).

1 prompt, careful and complete remediation of the Indian Point site is needed to maintain the current level of services in these communities, and to avoid the syndrome of falling property value. Any delay that fails to return Indian Point to productive use will create a drain on the local community.

In sum, Intervenors have a substantial and ongoing interest in a prompt, safe, and complete decommissioning of the IPEC.

PRELIMINARY STATEMENT

The Town of Cortlandt, the Village of Buchanan, and the Hendrick Hudson School District submit these formal comments in opposition to the Joint Petition for a Declaratory Ruling from the New York Public Service Commission (the “Commission”) Disclaiming Jurisdiction Over or

Abstaining from Review of the Proposed Transfers or, in the Alternative, an Order Approving the

Proposed Transfers Pursuant to Section 70 of the New York Public Service Law (the “Petition”).

The Commission has jurisdiction over the Petition and should exercise that jurisdiction to deny the

Petition as presently constituted because approving it, for the reasons set forth below, is not in the public interest.

The Commission is currently considering an application filed by Entergy Nuclear Indian

Point 2, LLC, Entergy Nuclear Indian Point 3, LLC, and Nuclear Asset Management Company,

LLC (“Petitioners”). As a result of the proposed two-part transaction, the entirety of the IPEC, including the $2.1 billion Decommissioning Trust Fund (“DTF”)2 set aside to decommission and restore the Site, would be transferred from subsidiaries of Entergy to subsidiaries of Holtec.

2 In this Petition, the Decommissioning Trust Fund or DTF refers collectively to the decommissioning trust funds for Indian Point Unit 1, Indian Point Unit 2, and Indian Point Unit 3. According to the Post-Shutdown Decommissioning Activities Report (“PSDAR”) submitted by Petitioners, the total value of the DTF stood at approximately $2.1 billion as of the date the Petition was filed. See Petition at 44; see also PSDAR 100– 05 tbls. 5-1a, 5-1b & 5-1c (Dec. 19, 2019).

On January 17, 2020, the Commission issued a Notice seeking comments on whether to grant the Petition in whole or in part, whether any conditions should be imposed on granting the

Petition in whole or in part, and whether the Commission should take any other action with respect to the Petition. Because the Petition asks the Commission to disclaim jurisdiction entirely, the

Notice first seeks public comment “whether the Transfers should be reviewed pursuant to PSL

§ 70.”3 The Commission also requests public comment on whether the Petition outlines the proper legal framework for reviewing the transfers, and whether the transfers are in the public interest and so should be approved under New York Public Service Law (“PSL”) § 70.4

As a general matter, the Intervenors support the concept of a prompt, environmentally sound decontamination and restoration of the IPEC to return the Site to productive use. However, as the representatives of the community most affected by the retirement of the IPEC, the

Intervenors will bear the brunt of the financial, environmental, and public health and safety consequences of a funding shortfall. Accordingly, the Intervenors have a significant interest in ensuring that Holtec has the financial and technical capabilities to safely decommission the IPEC, restore the Site to productive use, and manage the spent nuclear fuel onsite — possibly indefinitely.

In its current form, granting the Petition is not in the public interest.

Entergy and Holtec have structured the proposed transaction with the singular goal of evading review by the Commission. First, the Petition seeks a declaratory ruling from the

Commission unconditionally disclaiming jurisdiction over the proposed transfers.5 To achieve this, Entergy and Holtec have proposed to delay the transfers until May 2021, immediately after

3 Notice Seeking Comments at 5 (Jan. 17, 2020). 4 Id. 5 Petition at 3.

3 the Indian Point Unit 3 reactor shuts down on April 30, 2021.6 Citing this self-imposed timeline,

Petitioners argue that the moment the IP Unit 3 reactor stops producing electricity, the IPEC will immediately become a run-of-the-mill industrial facility rather than an “electric plant” under

PSL§ 2(12). And because the IPEC will no longer be an “electric plant,” Petitioners argue that neither Entergy nor Holtec will be “electric corporations” subject to the Commission’s jurisdiction under PSL § 2(13).7 Although Petitioners appear to concede that the IPEC and its owners/operators are currently subject to the Commission’s jurisdiction, Petitioners submit that the Commission nonetheless lacks jurisdiction to review transfers under PSL § 70 today because the transfers will actually be consummated in the future.8

The PSL does not compel such an arbitrary result. The Commission’s review of proposed transfers under PSL § 70 is flexible and designed to adapt to the particularities of individual transactions. As the Commission has held, “PSL § 70 affords [the Commission] the discretion to craft the procedures necessary to properly implement the statute in the public interest.”9 The

Commission should exercise that broad discretion here to ensure that the proposed transfers are consistent with the public interest. Petitioners simply cannot manipulate the Commission’s jurisdiction to avoid regulatory scrutiny, especially given that the proposed transfer would hand

6 Petition at 3. 7 Id. at 33–37. 8 Id. 9 Helios Power Capital, LLC, Danskammer Energy, LLC & Mercuria Energy Am., Inc. - Joint Petition for Expedited Approval for the Lease, Sale & Operation of the Danskammer Generating Facility Under Lightened Regulation & for Related Relief, No. 14-E-0117, 2014 WL 2987951, at *18 (June 27, 2014) (“Helios”); see also Dynegy Danskammer LLC - Petition for Waiver of the Generation Facility Ret. Notice Period & Requesting Other Related Relief, No. 13-E-0012, 2014 WL 1320304, at *11 (Mar. 28, 2014) (“Dynegy II”) (“PSL § 70 . . . does not prescribe any procedures or timeframes through which approval of a transaction must be considered. We have broad latitude under PSL §70 in determining the ‘public interest,’ in adapting procedures to unusual circumstances, and in exercising our discretion to decide when a transfer is ineffective because made ‘without [our] written consent,’ as the statute provides.”).

Holtec the $2.1 billion, ratepayer-funded DTF with no strings attached. At the very least, the

Commission must exercise jurisdiction and review the proposed transfers.

Next, Petitioners attempt to avoid regulatory scrutiny by arguing that even if the

Commission has jurisdiction, it should “abstain” from reviewing the proposed transfers. Here again, Entergy and Holtec have structured and characterized the transaction specifically to escape regulatory scrutiny. Although the entire transaction will happen virtually simultaneously,

Petitioners state that the IPEC transfer will occur in two steps: one to transfer the direct ownership of the IPEC to newly formed Entergy subsidiaries, and a second to transfer ownership of those newly formed subsidiaries to Holtec. In framing this as a two-part transaction, Petitioners seek to obtain the benefit of two separate Commission doctrines that limit review of corporate restructurings and certain upstream corporate ownership transfers.10 However, the reality is far simpler: the end result of this synchronized transaction is that both the direct and upstream ownership of the IPEC will transfer to Holtec. Transfers of this kind fit squarely within the

Commission’s jurisdiction under PSL § 70, and Petitioners have not cited any case in which the

Commission declined to review such a transaction. Moreover, Petitioners concede that even under their approach, the Commission still has the discretion to review the Petition to determine whether

Holtec’s ownership is in the public interest.11 In its current form, the Petition fails that test.

Petitioners’ efforts to evade the Commission’s jurisdiction are especially concerning in light of their representations to the Nuclear Regulatory Commission (“NRC”) in the federal license transfer proceedings. In public filings before the NRC, Entergy and Holtec resisted commonsense financial assurance conditions by suggesting that such public interest regulation was best left to

10 See infra notes 52–53 and accompanying text. 11 See infra notes 64–65 and accompanying text.

5 the PSC.12 In other words, Holtec has asked both principal regulatory authorities to defer to the other, hoping that neither body will scrutinize this transaction. The Commission cannot sanction that result.

With these threshold issues resolved, the Commission should decline to approve the

Petition. In its current form, the Petition fails the public interest standard because Holtec has not adequately demonstrated that it has the financial and technical qualifications to safely decommission the IPEC, restore the Site, and meet its ongoing spent fuel management obligations.

First, Holtec rests its financial qualifications exclusively on its prospective ownership of the DTF.

However, a review of Holtec’s PSDAR and its accompanying Decommissioning Cost Estimate reveals that Holtec has ignored several identifiable, non-speculative cost-overrun scenarios that could create a substantial shortfall in the DTF. These scenarios include Holtec’s untenable assumptions regarding spent fuel management costs, the possibility that on-site radiological and non-radiological contamination will prove more serious than expected, and Holtec’s illusory

“contingency allowance” that does not properly account for unforeseen costs.

Moreover, Holtec’s corporate structure, lack of independent assets or revenue streams, and distorted incentives further endanger Holtec’s financial stability. As stated, Holtec bases its financial qualifications entirely on its prospective ownership of the DTF. Indeed, because federal law prohibits owners from spending decommissioning trust funds on spent fuel management and site restoration costs, Holtec has requested a regulatory exemption permitting it to spend freely

12 Applicants’ Answer Opposing Petition for Leave to Intervene and Hearing Request Filed by Town of Cortlandt, Village of Buchanan, and Hendrick Hudson School District at 35 (March 9, 2020) (ML20069K761) (“Holtec NRC Answer”) (“[T]he NRC’s mission is solely to protect the public health and safety. It is not to make general judgments as to what is or is not otherwise in the public interest—other agencies such as . . . state public service commissions, are charged with that responsibility.” (internal quotation marks omitted)).

6 from the DTF to cover those costs.13 Absent additional safeguards, Holtec’s corporate ownership and flawed incentives create an unacceptable risk of prematurely depleting the DTF, saddling the

State and the local community with the responsibility to decommission the IPEC and restore the

Site to productive use.14

POINT ONE

THE COMMISSION HAS JURISDICTION OVER THE PROPOSED TRANSFERS UNDER PUBLIC SERVICE LAW § 70

The Public Service Law requires the Commission to review the transfer of electric and gas plants in New York. PSL § 70 states, subject to exceptions not relevant here, that “[n]o electric corporation shall transfer or lease its franchise, works or system . . . without the written consent of

13 See Ltr. from A. Sterdis, HDI, to NRC Document Control Desk, “Request for Exemptions from 10 C.F.R. 50.82(a)(8)(i)(A) and 10 C.F.R. 50.75(h)(1)(iv)” (Feb. 12, 2020) (ML20043C539) (“Exemption Request”). 14 The Commission has already identified several of the concerns raised herein. In its Notice Seeking Comments, the Commission requested input on the following topics: (a) the financial wherewithal of Holtec and its subsidiaries to take ownership of Indian Point and the associated assets and liabilities and to take responsibility for decommissioning and site restoration at Indian Point; (b) the technical fitness of Holtec and its subsidiaries, including HDI and CDI, to decommission and perform site restoration at Indian Point; (c) the cost estimates and decommissioning and site restoration plans provided in the Petition, its Exhibits, and the PSDAR and DCE; (d) whether additional information or assurances are needed regarding site restoration; (e) risk of shortfalls or bankruptcy and means to address such risks and impacts on the trust funds, decommissioning, and site restoration; (f) the sufficiency of the Petition, its Exhibits, and the PSDAR and DCE in addressing the Petitioners’ responsibilities under relevant laws, regulations, guidance, and orders, including, but not limited to, the Commission order approving the sale of IP Unit 1 and IP Unit 2 to Entergy and its subsidiaries and the Commission rulings approving lightened regulation for ENIP2, ENIP3, and ENOI; and (g) the status of any money that may remain in the trust funds after decommissioning and site restoration is complete. Notice Seeking Comments at 5–6.

7 the commission.”15 As the Commission’s Notice Seeking Comments explains, several Entergy subsidiaries “are electric corporations subject to the jurisdiction of the Commission.”16 Thus, as a general matter, all parties agree that Petitioners would ordinarily need the Commission’s approval before transferring the IPEC to a new owner.

To avoid this straightforward result, Entergy and Holtec have structured and timed their proposed deal specifically to evade the Commission’s jurisdiction. For context, the IPEC contains three separate nuclear reactors, known as IP Unit 1, IP Unit 2, and IP Unit 3. IP Unit 1 was permanently retired in 1974.17 “Pursuant to a settlement agreement entered into by the State of

New York, several state agencies including the Department of Public Service, the Attorney

General of the State of New York, Riverkeeper, Inc., ENIP2, ENIP3, and ENOI, IP Unit 2 and IP

Unit 3 will cease operations no later than April 30, 2020, and April 30, 2021, respectively.”18

Entergy and Holtec have set the targeted closing date for their transaction as May 2021, immediately after IP Unit 3 reactor ceases operations.19 Citing this self-imposed timeline,

Petitioners claim that once the IP Unit 3 reactor retires, the entire IPEC will no longer qualify as an “electric plant”20 under the PSL and that, as such, Petitioners will no longer qualify as “electric corporation[s]”21 subject to the Commission’s jurisdiction. In other words, Petitioners argue that

15 See Luyster Creek, LLC v. New York State Pub. Serv. Comm’n, 18 N.Y.3d 977, 978 (2012) (describing PSL § 70); Brooklyn Union Gas Co. v. Pub. Serv. Comm’n, 34 A.D.2d 71, 72 (3d Dep’t 1970). 16 Notice Seeking Comments at 2. 17 Id. 18 Id. 19 Petition at 2–3. 20 PSL § 2(12) (defining an “electric plant,” as equipment and property “used or to be used for or in connection with or to facilitate the generation, transmission, distribution, sale or furnishing of electricity”). 21 PSL § 2(13) (defining an “electric corporation” as an entity “owning, operating or managing any electric plant”).

8 the moment the IP Unit 3 reactor retires, the entire IPEC immediately becomes an unregulated

“industrial property that is not subject to the Commission’s jurisdiction.”22 This is so, Petitioners contend, despite the fact that Petitioners seek approval of their proposal today, when all agree that both the IPEC and its owners are within the Commission’s jurisdiction.

The text of the PSL does not require the result Petitioners seek. Recall that PSL § 70 states, in relevant part, that “[n]o electric corporation shall transfer or lease its franchise, works or system

. . . without the written consent of the commission.” By its terms, this provision applies to any

“electric corporation.” The IPEC currently generates electricity, and so all agree that the Entergy subsidiaries that own and operate the IPEC are currently “electric corporations subject to the jurisdiction of the Commission.”23 Those Entergy subsidiaries have contracted to transfer the

IPEC, and they now seek approval of that transfer while they are concededly subject to the

Commission’s jurisdiction. Thus, the plain text of PSL § 70 requires the Commission’s sign-off.

To support their contrary reading of the PSL, Petitioners rely on a single case involving the

Danskammer generation facility, a 530-MW coal-fired power plant located in Newburgh, New

York.24 But that case is both factually and legally distinct and so cannot bear the weight Petitioners assign to it. In that case, Dynegy filed a notice of its intent to retire the facility and sought permission “to proceed with the retirement prior to the expiration of the 180-day notice requirement provided for the Generation Retirement Order.”25 Importantly, unlike here, the

22 Id. at 3. 23 Notice Seeking Comments at 2. 24 Dynegy Roseton LLC & Cci Roseton LLC Petition for Expedited Approval of a Transfer Pursuant Pub. Serv. Law § 70 & Related Approvals. Dynegy Danskammer LLC - Petition for Waiver of the Generation Facility Ret. Notice Period & Requesting Other Related Relief, No. 13-E-0012, 2013 WL 1785508, at *1 (Apr. 22, 2013) (“Dynegy I”). 25 Id. at *3.

Danskammer facility was inoperable at the time Dynegy filed its request, owing to significant damage to “motors and switch gear within the facility” caused by Superstorm Sandy.26 In addition to its request to retire the facility early, Dynegy also maintained that it could “proceed to demolition and salvage without any further review under the PSL.”27 The Commission agreed, noting that “[a]s of the date the retirement takes effect, the Danskammer facility would no longer constitute electric plant, as defined in PSL § 2(12).”28

This case is distinguishable for several reasons. First, as noted, the Danskammer facility was already inoperable at the time its owner approached the Commission.29 Here, in contrast, the

IPEC is fully operational. Second, the principal question presented in Dynegy was whether retirement of the Danskammer facility was in the public interest, not whether the subsequent transfer was within the Commission’s jurisdiction.30 The fact that the facility would later be transferred and demolished was relevant only insofar as it “show[ed] that the retirement is irreversible and that the equipment will not be returned to electric service at the Danskammer site.”31 To the extent the Commission said anything about jurisdiction, it simply held that once the Commission deems a facility formally retired, the Commission no longer has jurisdiction over the facility.32 Petitioners seek to expand that holding to set the jurisdictional marker at the precise moment a facility ceases operations, rather than the date the Commission determines a facility is

26 Id. 27 Id. at *7. 28 Id. (emphasis added). 29 Id. at *3. 30 Id. at *7. 31 Id. 32 Id. (“As of the date the retirement takes effect, the Danskammer facility would no longer constitute electric plant, as defined in PSL §2(12).” (emphasis added)).

10 retired. In this way, Petitioners seek to arrogate to themselves the power to determine a facility’s formal retirement date and thus dictate the scope of the Commission’s jurisdiction.

Additionally, fissile nuclear material will remain at the IPEC long after April 30, 2021, and

Holtec could conceivably seek permission to reinstate its NRC operating licenses if circumstances change.33 Indeed, that is precisely what occurred in the Danskammer litigation, where a future owner sought permission to “un-retire” the Danskammer facility and restart operations.34

Ironically, Entergy intervened in that case to oppose the reinstatement of the Danskammer facility, arguing, contrary to its position here, that “§70 approval . . . must be obtained prior to the transfer of electric plant.”35 The Commission rejected this approach, holding that its prior evaluation that the Danskammer plant would be retired “cannot be transmogrified into a surrender of our PSL jurisdiction over a transfer to a new owner.”36 In short, Petitioners have cited no case in which the

Commission disclaimed jurisdiction in circumstances like those presented here — that is, where

33 Id. at *8 (distinguishing between retired equipment and “mothballed” equipment, and noting “because there is the possibility that [a mothballed facility] will be returned to service there at a later time[,] . . . the owner of mothballed equipment remains an electric corporation subject to the requirements of the PSL”). 34 Dynegy Danskammer LLC - Petition for Waiver of the Generation Facility Ret. Notice Period & Requesting Other Related Relief, No. 13-E-0012, 2013 WL 5880642, at *1–2 (Oct. 28, 2013) (noting changed circumstances “raise the potential that it might be appropriate for reconsideration of the finding, relied upon in the Notice Period Order, that the retirement of the Danskammer facility would not adversely affect the public interest because operation was no longer economically feasible”). 35 Dynegy II, No. 13-E-0012, 2014 WL 1320304, at *3 (emphasis added). In that case, after the Commission entered an order approving the retirement of the Danskammer facility, Dynegy transferred ownership of the facility to Helios Power Capital LLC (“Helios”). However, Helios did not secure the Commission’s approval for the transfer under PSL § 70. Having failed receive permission before executing the transfer, Entergy argued that Helios had no choice but to retire the facility in conformance with the Commission’s April 2013 Order. Id. at *3. The Commission rejected this rigid approach to its jurisdiction under PSL § 70 in favor of a more flexible procedure to permit commonsense public interest regulation. If anything, the lengthy saga of the Danskammer litigation proves that the Commission should hesitate before disclaiming jurisdiction based on a snapshot of current circumstances. 36 Helios, No. 14-E-0117, 2014 WL 2987951, at *15.

11 the owner of a currently operational facility structures a transfer to occur immediately after a facility ceases operations, thereby evading the Commission’s jurisdiction.

More fundamentally, the Commission has consistently interpreted PSL § 70 flexibly to allow the Commission to account for real-world complexities and discharge its obligation to regulate in the public interest. Indeed, in later proceedings involving the reinstatement of the

Danskammer facility, the Commission rejected a rigid application of the PSL. Specifically, the

Commission held that PSL § 70 “does not prescribe any procedures or time frames through which approval of a transaction must be considered. We have broad latitude under PSL §70 in determining the ‘public interest,’ in adapting procedures to unusual circumstances, and in exercising our discretion to decide when a transfer is ineffective because made ‘without [our] written consent,’ as the statute provides.”37 The Commission later reiterated the point, holding that “PSL §70 affords [the Commission] the discretion to craft the procedures necessary to properly implement the statute in the public interest.”38 In fact, in the Dynegy case on which

Petitioners so heavily rely, the Commission specifically noted that its holding would “not adversely affect the public interest” because its “authority under the PSL is sufficient to prevent a retirement for the purpose of evading jurisdiction.”39 The Commission has since applied this flexible approach in an analogous situation to hold that the transfer of a certificate of public need and local development rights to an unfinished wind farm qualifies as a “transfer” within the meaning of PSL § 70, despite the fact that the facility was not yet built or operational.40 The

37 Dynegy II, No. 13-E-0012, 2014 WL 1320304, at *11. 38 Helios, No. 14-E-0117, 2014 WL 2987951, at *18. 39 Dynegy I, No. 13-E-0012, 2013 WL 1785508, at *7 (emphasis added). 40 Petition of Cassadaga Wind LLC, Trireme Energy Dev. LLC, & Innogy Renewables Us LLC for A Declaratory Ruling That Pub. Serv. Law Section 70 Does Not Apply to A Proposed Acquisition or, That No Further Review of the Acquisition Is Required, No. 18-E-0333, 2018 WL 3817926, at *5 (July 17, 2018).

Commission held that “[t]he narrower interpretation urged by Petitioners, if adopted, would unduly limit the intended scope of PSL § 70.”41

Applying this adaptable framework here, the Commission should refuse Petitioners’ invitation to disclaim jurisdiction. The IPEC is currently an operating “electric plant,” and its owners are “electric corporations” subject to the Commission’s jurisdiction.42 That was true when the Petition was filed, and it remains true today. Under Petitioners’ view of the PSL, a facility transfer that occurs one day before IP Unit 3 ceases operations would require comprehensive review by the Commission under § 70, but an identical transaction that occurs just one day later would receive no scrutiny at all. The PSL and the relevant case law do not require such an arbitrary result, much less a result subject to manipulation by regulated parties. As the New York Court of

Appeals has long held, “[t]he Legislature did not mean that the power of regulation and supervision, exercised by the commission as its delegate, should be so readily evaded.”43

Moreover, retiring a nuclear facility is simply different than retiring a conventional fossil fuel plant. Retiring a nuclear facility requires decades of cleanup and decontamination, which calls for tailored regulatory oversight. Indeed, as Petitioners concede, the Commission has already held that it has authority to regulate spending out of the DTF to ensure that funds are available to cover non-radioactive decommissioning. Indeed, as a condition of approving lightened regulation of Indian Point following the transfer of the IPEC from Con Edison to Entergy in 2001, the

Commission required Entergy to “continu[e] . . . funding for non-radioactive decommissioning”

41 Id. 42 Notice Seeking Comments at 2. 43 People ex rel. Cayuga Power Corp. v. Pub. Serv. Comm’n, Second Dist., 226 N.Y. 527, 533 (1919); Niagara Mohawk Power Corp. v. Pub. Serv. Comm’n of State of N.Y., 218 A.D.2d 421, 427 (3d Dep’t 1996) (rejecting argument that timing of start of construction of an electric plant could alter the Commission’s jurisdiction to approve its operation under PSL § 68 and “declin[ing] to construe the statute as requiring such an absurd result”).

13 and emphasized that it “retained” “jurisdiction over reports on and the spending of that fund is retained.”44 Petitioners contend that this regulatory authority “does not provide a basis for

Commission jurisdiction over the transfer of the IPEC Facility itself or over its owners following permanent retirement.”45 For the reasons explained, Petitioners are wrong that the Commission lacks jurisdiction over the transfer. But even Petitioners acknowledge that the Commission at the very least has the authority to safeguard the adequacy of the DTF. The Commission should exercise that authority to ensure Holtec’s financial incentives align with New York ratepayers’ interests by, for instance, requiring that any funds remaining in the DTF be returned to the local community in the form of enhanced site restoration projects and other community benefits.46

POINT TWO

THE COMMISSION SHOULD NOT ABSTAIN FROM EXERCISING JURISDICTION OVER THE PROPOSED TRANSFER

Petitioners next attempt to skirt review by arguing that even if the Commission has jurisdiction, it should abstain from reviewing the proposed transfers.47 Here again, Entergy and

Holtec have structured and characterized the transaction specifically to avoid regulatory scrutiny.

Petitioners represent that the proposed transfer of the IPEC will occur in two discrete steps.

First, in what Petitioners label the “Internal Transfers,” Entergy will restructure its ownership of the IPEC in order to transfer “the assets and liabilities of ENIP2 and ENIP3 . . . to Indian Point

44 In re Entergy Nuclear Indian Point 2, LLC, 213 P.U.R.4th 162, 2001 WL 1572710 (Aug. 31, 2001) 45 Petition at 36–37. 46 See infra Pointe III.C (describing conditions the Commission should place on the DTF); In re Consol. Edison Co. of New York, Inc., No. 01-E-0040, 2001 WL 1587290 (Aug. 31, 2001) (requiring that 50% of Indian Point DTF be returned to New York ratepayers under certain circumstances). 47 Although Petitioners repeatedly ask the Commission to “abstain” from reviewing the proposed transfers, it appears that the Commission has never described either of the two doctrines on which Petitioners rely as “abstention” doctrines.

14 l&2, LLC and Indian Point 3, LLC, two Delaware limited liability companies.”48 In other words, the Internal Transfers will change the direct ownership of the IPEC. Petitioners state that the

Internal Transfers are intended to “facilitate” the sale of the IPEC to Holtec.49

Immediately after completing the Internal Transfers, Entergy states that it plans to transfer the newly formed subsidiaries holding the assets and liabilities of the IPEC, including the $2.1 billion trust fund, to Holtec. As the Commission describes it:

The second part of the two-part transaction is a transfer of the membership interests in Merchant Properties, LLC to NAMCo, a wholly-owned subsidiary of Holtec. This will result in NAMCo, and therefore Holtec, indirectly owning Indian Point and the related assets and liabilities formerly owned by ENIP2 and ENIP3. NAMCo will subsequently merge with Merchant Properties, LLC, resulting in NAMCo directly owning Holtec Indian Point 2, LLC and Holtec Indian Point 3, LLC, which will directly own the portions of Indian Point and assets and liabilities formerly owned by ENIP2 and ENIP3, respectively.50

Petitioners label this the “Holtec Transaction.”51

Entergy has carefully timed these transfers to take advantage of two separate doctrines in an effort to shield the proposed transfer from the Commission’s review. Specifically, Petitioners argue that the first step of this transaction — the Internal Transfers — constitutes an intra-corporate transfer of direct ownership of a facility that falls outside the scope of of PSL § 70.52 Next,

48 Petition at 31–32; see also Notice Seeking Comments at 3 (“The first part of the two-part transaction contemplated in the Petition is an internal reorganization involving the transfer of Indian Point and other assets and liabilities from ENIP2 and ENIP3 to two limited liability companies whose membership interests will ultimately be owned by another limited liability holding company, Merchant Properties, LLC, which will be an indirect wholly-owned subsidiary of Entergy.”). 49 Petition at 5. 50 Notice Seeking Comments at 3 51 Petition at 32–33. 52 Joint Petition for A Declaratory Ruling Regarding an Intra-Corp. Restructuring, No. 17-M-0072, 2017 WL 1036448, at *3 (Mar. 13, 2017) (“Accordingly, the restructuring falls within the ambit of the NRG, Horizon, and PPM Rulings, where it was decided that intra-corporate transactions that do not affect ultimate ownership do not require further regulatory review, even if the restructuring includes an intra-corporate transfer of direct interests in a jurisdictional operating company.”); see also In re NRG Energy, Inc., No. 07-E-0584, 2007 WL 2089281, at *2 (July 23, 2007) (“Inserting a holding company into an ownership

Petitioners argue that the second step — the Holtec Transaction — fits within the Wallkill

Presumption, a PSC doctrine under which the PSC will review “transactions involving parent entities upstream from the entities owning wholesale electric generation facilities located in New

York” only in certain circumstances.53

For this gambit to work, Petitioners repeatedly emphasize that these transactions are separate, discrete events, each of which is subject to an independent doctrine that avoids scrutiny.54

The problem with Petitioners’ position is that these two allegedly discrete parts of the transaction will occur virtually simultaneously, and both parts of the deal are designed to accomplish a single goal: to transfer the direct ownership of the IPEC from subsidiaries of Entergy to newly formed subsidiaries of Holtec.55 “It is well established that a full PSL § 70 review is conducted whenever ownership interests in [an] electric plant or the direct owners of electric plant are transferred to

structure upstream from lightly-regulated entities that operate electric plant does not amount to a transfer under PSL §70 because there is no change in the identity of the ultimate ownership.”); In re Horizon Wind Energy LLC, No. 06-E-0006, 2006 WL 344605, at *3 (Feb. 8, 2006) (“Replacing a direct ownership interest with an indirect ownership interest, through the insertion into a corporate structure of an intermediate entity that is wholly-owned by an existing owner in that structure, does not amount to a transfer under PSL §70, because there is no change in the identity of the ultimate ownership.”). 53 Joint Petition of Red-Rochester, LLC, Red Inv., LLC, Red Parent, LLC, Ironclad Energy Partners LLC, Ironclad Energy Ventures, LLC & Stonepeak Infrastructure Fund II Lp for A Declaratory Ruling Establishing the Wallkill Presumption, or Alternatively, Approval of Upstream Transfer of Ownership Interests of Red-Rochester, LLC, No. 16-M-0370, 2016 WL 4161126, at *3 (Aug. 2, 2016) (“Joint Petition of Red-Rochester, LLC”); Mach Gen LLC & New Athens Generating Co. LLC F Petition for A Declaratory Ruling or, in the Alternative, Approval of the Indirect Transfer of New Athens Generating Co. LLC Pursuant to Pub. Serv. Law § 70, No. 14-E-0022, 2014 WL 1713078, at *3 (Apr. 25, 2014) (explaining the Wallkill Order “decided that PSL § 70 regulation would not adhere to a transfer of ownership interests in parent entities upstream from the affiliates owning and operating New York competitive electric generating facilities, unless there were a potential for harm to the interests of captive utility ratepayers sufficient to overcome the presumption”); see also Petition of Noble Envtl. Power, LLC, Noble Altona Windpark, LLC, Noble Bliss Windpark, LLC, Noble Clinton Windpark i, LLC, Noble Ellenburg Windpark, LLC, Noble Chateaugay Windpark, LLC, Noble Great Plains Windpark, LLC, Noble Wethersfield Windpark, LLC for A Declaratory Ruling Invoking the Wallkill Presumption or for Expedited Approval Pursuant to Section 70 of the Pub. Serv. Law, No. 15-E-0597, 2015 WL 9686498, at *3 (Dec. 17, 2015). 54 Petition at 31–33 (describing transactions). 55 Id. at 31 (explaining that the Internal Transfers will be done “[f]or internal business purposes and to facilitate the Holtec Transaction”).

16 another entity.”56 That is precisely what the Petition seeks to do here. Because one “aspect of this complex transaction -- the change in the identity of the direct owner of [the IPEC] -- . . . does not qualify for the Wallkill Presumption treatment, the entire transaction is deemed subject to review under PSL §70(1).”57

The Commission has consistently rejected efforts to evade regulatory scrutiny in this way.

In First Wind Holdings, Inc., for instance, the petitioners sought approval of a complex transaction involving both internal corporate restructuring and a change in ultimate ownership of a generation facility.58 Like Petitioners here, the petitioners in First Wind Holdings sought to “divide the proposed transaction into two components,” arguing that one component was an intra-corporate restructuring outside the Commission’s jurisdiction and that the other component was a transfer of upstream corporate ownership subject to the Wallkill Presumption.59 The Commission rejected this approach and reviewed the proposed transfer in accordance with PSL § 70:

[T]he transfers do not consist of two separate components or a reorganization, but are instead a complex intertwined restructuring of the direct and indirect ownership of the Cohocton and Dutch Hill wind farms. Consequently, the Petitioners’ contention that the merger of CPP I and II into ‘CPPH I and II‘ is an intra-corporate reorganization is rejected, a Declaratory Ruling will not be issued here under the Wallkill Order or otherwise, and a full review of the entire transfer transaction will be conducted under PSL §70(1).60

56 In re First Wind Holdings, Inc., No. 11-E-253, 2011 WL 4942281 (Sept. 21, 2011); see also Mach Gen LLC, No. 14-E-0022, 2014 WL 1713078, at *4 (“A change in the ownership of an entity that is the direct owner of a generation facility is outside the scope of the Wallkill Presumption.”). 57 Mach Gen LLC, No. 14-E-0022, 2014 WL 1713078, at *4. 58 In re First Wind Holdings, Inc., No. 11-E-253, 2011 WL 4942281. 59 Id. 60 Id. (footnote omitted). The Commission ultimately approved the particular transfer in First Wind Holdings under PSL § 70, based in part on a finding that the new upstream corporate owner “appears sufficiently capitalized.” Id.

The Commission has since reaffirmed this holding several times and consistently looked beyond corporate formalities to ensure that regulated parties do not evade scrutiny of facility transfers under PSL § 70.61

The Commission should reject Petitioners’ formalistic approach and review the both halves of this synchronized transaction for what they are: a single transaction that changes both the direct and upstream owner of the IPEC.62 Properly understood, the proposed transfers fit comfortably within the Commission’s obligation to review significant franchise and asset transfers under § 70 of the Public Service Law. It is against sound public policy to allow a regulated party to structure a transaction deliberately to evade regulatory scrutiny and frustrate protection of the public interest.63

61 See, e.g., Petition of Exelon Generation Co., LLC for A Ltd. Declaratory Ruling That Intra-Corp. Restructurings Require No Further Review Under Section 70 of the Pub. Serv. Law, No. 17-M-0302, 2017 WL 3437454, at *5 (Aug. 3, 2017) (“Any transfer to an unaffiliated party would not constitute an intra- corporate restructuring and cannot benefit from the reasoning, summarized above, that limits regulatory review of intra-corporate transactions.”); Aer Ny-Gen, LLC & All. Nygt, LLC - Joint Petition for an Order Approving A Transfer Pursuant to Pub. Serv. Law § 70 & Approving A Lightened Regulatory Regime, No. 11-E-0701, 2012 WL 1511874, at *3 n.6 (Mar. 21, 2012) (“Because interests in an entity directly owning electric plant are transferred here, the transfer is not an intra-corporate reorganization outside the scope of PSL §70 review.”); Rensselaer Holdings LLC & Louis Dreyfus Highbridge Energy LLC - Petition for A Declaratory Ruling Regarding the Transfer of Interests In rensselaer Cogeneration LLC, No. 11-E-0663, 2012 WL 1066443, at *3 n.3 (Feb. 22, 2012) (“The Petitioners initially requested review under the presumption established in Case 91-E-0350, Wallkill Generating Company, Order Establishing Regulatory Regime (issued April 11, 1994); because interests in an entity directly owning electric plant are transferred here, that presumption does not adhere.”). 62 Cf. In re Competitive Opportunities Regarding Elec. Serv., 168 P.U.R.4th 515 (May 20, 1996) (“[R]egulators cannot ignore market realities.”); Joint Petition of Altice N.V. & Cablevision Sys. Corp. & Subsidiaries for Approval of A Holding Co. Level Transfer of Control of Cablevision Lightpath, Inc. & Cablevision Cable Entities, & for Certain Fin. Arrangements, No. 15-M-0647, 2016 WL 3386592, at *1 (June 15, 2016) (“As stated above, the Commission’s application of the public interest standard must be undertaken in the context of existing public policy objectives and the realities of the telecommunications and cable television marketplaces.”). 63 Dynegy II, No. 13-E-0012, 2014 WL 1320304, at *11 (noting the Commission has “broad latitude under PSL §70 in determining the ‘public interest[]’” and in “adapting procedures to unusual circumstances”).

Even if the Wallkill Presumption did apply here, the Commission should nonetheless exercise its discretion to review the proposed transfers.64 By its own terms, the Wallkill

Presumption simply teaches that the Commission will not scrutinize upstream corporate ownership transfers that do not result in a change in direct ownership “unless there [is] a potential for harm to the interests of captive utility ratepayers sufficient to overcome the presumption.”65 For the reasons explained in greater detail in Point Three, infra, there is genuine doubt about Holtec’s financial qualifications, including its ability to steward the ratepayer-funded DTF and safely decommission the IPEC. These concerns, which directly harm the interests of utility ratepayers and the local community, are sufficient to overcome the Wallkill Presumption and warrant close scrutiny from the Commission. In its current form, the proposed transfer is not in the public interest.

Petitioners’ efforts to evade the Commission’s jurisdiction are especially concerning in light of their representations to the NRC in the federal license transfer proceedings. On October

30, 2019, Entergy and Holtec jointly petitioned the NRC for approval to transfer the operating licenses to the IPEC, and Intervenors here petitioned the NRC for permission to intervene in that proceeding and to hold a hearing.66 After urging this court to disclaim jurisdiction or abstain from review in this proceeding, Entergy and Holtec filed opposition papers before the NRC in which they argued that regulation “in the public interest” should be left to “state public service commissions” that “are charged with that responsibility.”67 In other words, Holtec has asked both

64 Joint Petition of Red-Rochester, LLC, No. 16-M-0370, 2016 WL 4161126, at *3 (noting that the Wallkill Presumption is a presumption rather than a rule). 65 Mach Gen LLC, No. 14-E-0022, 2014 WL 1713078, at *3. 66 Petition by the Town of Cortlandt, Village of Buchanan, and Hendrick Hudson School District for Leave to Intervene and Hearing Request (Feb. 12, 2020) (ML20043F054). 67 Holtec NRC Answer at 35 (internal quotation marks omitted).

19 principal regulatory authorities to defer to the other, hoping that neither body will scrutinize this transaction. This slight-of-hand suggests that Petitioners are seeking to evade regulatory scrutiny of the proposed transaction altogether. The Commission cannot sanction this result.

The Commission has regulated the IPEC and its owners/operators for decades, resulting in dozens of published PSC decisions.68 Now, Petitioners ask the Commission to forego meaningful review of perhaps the most important transaction involving the IPEC to date: transferring the $2.1 billion ratepayer-funded DTF to a company with no independent financial qualifications and no experience successfully decommissioning and restoring a nuclear facility. The Commission should refuse to do so and review the Petition in accordance with PSL § 70.

POINT THREE

IN ITS CURRENT FORM, THE PROPOSED TRANSFER OF THE IPEC FROM ENTERGY TO HOLTEC IS NOT IN THE PUBLIC INTEREST

“The Commission uses a public interest standard in its review of proposed transfers under

PSL § 70.”69 “Among the factors the Commission considers in making such a determination are affiliations that might afford opportunities for the exercise of market power or pose the potential for other transactions detrimental to captive ratepayer interests, the financial integrity of the transferee, and the transferee’s ability to render safe, adequate and reliable service.”70 “There is no question that the Petitioners have the burden of proof in this case under Section 70 of the Public

68 See, e.g., In re Consol. Edison Co. of New York, Inc., 29 P.U.R.4th 327, 1979 WL 461901 (Apr. 6, 1979) (setting procedure for recovering decommissioning costs from ratepayers). 69 Petition of TC Ravenswood, LLC, TC Ravenswood Servs. Corp. & Helix Generation for Expedited Approval of a Transfer & Fin. Pursuant to Lightened Regulation, No. 17-E-0016, 2017 WL 2226002, at *2 (Apr. 19, 2017). 70 Id.

Service Law,” and to meet that burden Petitioners must show that “the transaction . . . generate[s] a net positive benefit for the citizens of the state.”71

Even “[w]hen reviewed with the reduced scrutiny applicable under lightened regulation,”72 the Petition fails this test. For the reasons explained in greater detail below, the proposed transferees — Holtec Indian Point 2, LLC; Holtec Indian Point 3, LLC; and Holtec

Decommissioning International, LLC73 — have not adequately demonstrated the financial integrity to take on the responsibility of decommissioning the IPEC.

A. The Petition Fails to Adequately Demonstrate that Holtec has the Financial Integrity to Own and Decommission the IPEC.

As the Petition makes clear, Holtec bases its financial qualifications to own and decommission the IPEC exclusively on its prospective ownership of the DTF.74 Indeed, because the Holtec subsidiaries that will own and operate the IPEC have no assets or independent sources

71 Petition of Entergy Nuclear Fitzpatrick, LLC, Entergy Nuclear Indian Point 2, LLC, Entergy Nuclear Indian Point 3, LLC, Entergy Nuclear Operations, Inc, Newco & Entergy Corp. for A Declaratory Ruling Regarding A Corp. Reorganization or, in the Alternative, an Order Approving the Transaction & an Order Approving Debt Financings, No. 08-E-0077, 2008 WL 3856764, at *17 (Aug. 14, 2008); see also Joint Petition of Iberdrola, S.A., Energy E. Corp., Rgs Energy Grp., Inc., Green Acquisition Capital, Inc., New York State Elec. & Gas Corp. & Rochester Gas & Elec. Corp. for Approval of the Acquisition of Energy E. Corp. by Iberdrola, S.A., No. 07-M-0906, 2008 WL 2486831, at *19 (June 16, 2008) (noting “the net positive benefits requirement . . . consistently has been part of the Commission’s interpretation of PSL § 70”). 72 Caithness Long Island LLC, Caithness Brookhaven LLC, Caithness Brookhaven II LLC, Caithness Energy LLC, & Brookhaven Elec. LLC - Petition for A Declaratory Ruling Regarding the Application of Pub. Serv. Law §§ 69 & 70, No. 12-E-0197, 2012 WL 2952758, at *5 (July 16, 2012). 73 As a result of the proposed transaction, Holtec Indian Point 2, LLC and Holtec Indian Point 3, LLC “will directly own the portions of Indian Point and assets and liabilities formerly owned by ENIP2 and ENIP3, respectively.” Notice Seeking Comments at 3. Holtec Decommissioning International “will oversee and manage decommissioning, site restoration, and spent fuel management operations at Indian Point.” Id. 74 Petition at 5 (“Holtec’s site-specific cost estimate which is summarized in Exhibit 3 establishes that the IPEC NDT funds are sufficient and Holtec will have the financial wherewithal decommission the IPEC Facility under its DECON Plan.”); see also Cover Letter at 4, Application for Order Consenting to Transfers of Control of Licenses and Approving Conforming License Amendments Indian Point Nuclear Generating Units 1, 2 and 3 (Nov. 21, 2019) (ML19326B953) (“NRC License Transfer Application”) (“[B]ecause HDI’s funding plan for spent fuel management and site restoration activities relies on the use of [the DTF], HDI plans to request an exemption to allow HDI to use a portion of the NDT funds for these activities.”).

21 of revenue, Holtec has requested an exemption from the federal law that would otherwise prohibit spending trust funds on non-decommissioning expenses, specifically spent fuel management and site restoration costs.75 But Holtec’s Decommissioning Costs Estimate is plagued with omissions and untenable assumptions. As a result, the Petition fails to demonstrate that Holtec is financially qualified to own the IPEC and decommission the Site.

1. Holtec’s Critical Assumption that the Department of Energy Will Begin Accepting Spent Nuclear Fuel by 2030 is Untenable

Holtec’s Decommissioning Cost Estimate, found in the PSDAR, rests in large part on a single assumption: that the Department of Energy (“DOE”) will begin accepting spent nuclear fuel by 2030.76 This assumption, for which Holtec offers no evidentiary support, carries through each of Holtec’s Decommissioning Funding Cash Flow Analyses, found at Tables 5-1a, 5-1b, and 5-1c of the PSDAR. But this assumption withers under the slightest scrutiny, and without it, Holtec’s financial qualifications become suspect at best.

The notion that the DOE will begin accepting spent nuclear fuel from the IPEC by 2030 is a fantasy, and Holtec’s own justification for its assumption proves as much. Holtec bases this assumption entirely on a 2013 DOE report titled “Strategy for the Management and Disposal of

Used Nuclear Fuel and High-Level Radioactive Waste,” which described the DOE’s goal of developing a pilot interim storage facility for shuttered reactor sites that would open by 2021, with a larger facility to be available by 2025.77 But as Holtec concedes, “no progress has been made in the repository program since DOE’s 2013 strategy was issued except for the completion of the

75 See Exemption Request. 76 See PSDAR at 64. 77 Id.; see also U.S. Dep’t of Energy, Strategy for the Management and Disposal of Used Nuclear Fuel and High-Level Radioactive Waste (Jan. 2013), https://www.energy.gov/sites/prod/files/ Strategy%20for%20the%20Management%20and%20Disposal%20of%20Used%20Nuclear%20Fuel%20a nd%20High%20Level%20Radioactive%20Waste.pdf.

Yucca Mountain safety evaluation report.”78 Since then, Congress has appropriated no funding to restart the Yucca Mountain licensing process,79 and the DOE currently lacks the legal authority under the Nuclear Waste Policy Act to build and operate an interim storage facility.80

Notwithstanding the fact that the DOE has not and legally cannot begin accepting spent nuclear fuel, Holtec somehow “assumes a start date for DOE fuel acceptance of 2030.”81

Put another way, seven years ago the DOE issued an aspirational document calling for the implementation of a pilot program that would begin in 2021, one year from now, and virtually no progress has been made since. From this, Holtec has somehow divined that the DOE will begin accepting spent fuel in 2030, notwithstanding the fact that more recent evidence suggests that this assumption is unreasonable. Indeed, in contract litigation before the Federal Circuit in 2016, counsel for an Entergy affiliate estimated that the DOE would not begin accepting spent nuclear fuel until 2048, well after Petitioners’ estimate in this proceeding.82 Holtec must do better than plucking critical assumptions out of thin air.

Not only does Holtec’s own Petition demonstrate that its spent fuel assumption is baseless, several expert reports issued by federal agencies suggest that on-site nuclear fuel management will likely be required for decades longer than Holtec suggests.83 For instance, the NRC’s Continued

78 PSDAR at 64. 79 See Congressional Research Service, Civilian Nuclear Waste Disposal at 17 (Sept. 2018), https://fas.org/sgp/crs/misc/RL33461.pdf (“CRS Report”). 80 See USDOE, Report to Congress on the Demonstration of the Interim Storage of Spent Nuclear Fuel at 6–8 (2008), https://www.energy.gov/sites/prod/files/edg/media/ES_Interim_Storage_Report_120108.pdf; see also CRS Report at 17. 81 PSDAR at 64. 82 See Sys. Fuels, Inc. v. United States, 818 F.3d 1302, 1304 n.2 (Fed. Cir. 2016). 83 See, e.g., U.S. Gov’t Accountability Office, Disposal of High-Level Nuclear Waste, https:// www.gao.gov/key_issues/disposal_of_highlevel_nuclear_waste/issue_summary#t=0 (documenting lack of progress by DOE).

Storage Rule explicitly states that spent fuel may be stored on-site for hundreds of years, if not indefinitely.84 Holtec has not attempted to account for this scenario. In what the NRC has called the “most likely scenario,” spent fuel would be stored onsite for “60 years . . . after the end of a reactor’s licensed life for operation.”85 Even under this assumption, spent fuel would remain onsite until at least 2080, two decades longer than Holtec posits.86 Holtec’s Decommissioning Cost

Estimate fails to mention these facts, much less calculate alternative cost projections in the event that its baseless assumption turns out to be incorrect.

This error has enormous consequences for Holtec’s entire Decommissioning Cost

Estimate. To see why this is so, consider Holtec’s projected costs for spent nuclear fuel management. Based on the fanciful notion that the DOE will begin accepting spent fuel by 2030,

Holtec estimates that “IP2 spent fuel removal will begin in 2031 and complete in 2048,” that “IP1 spent fuel removal will begin in 2048 and complete in 2049,” and that “IP3 spent fuel removal will begin in 2049 and complete in 2061.”87 These assumptions are then reflected in Holtec’s

Decommissioning Funding Cash Flow Analyses. In those figures, Holtec estimates that spent fuel management costs will drop to zero for IP1 and IP2 in 2048, and then drop to zero for IP3 in 2063.

84 See Continued Storage of Spent Nuclear Fuel, 79 Fed. Reg. 56,238, 56,245 (Sept. 19, 2014) (describing a long-term scenario, which assumes continued storage for 160 years, and an indefinite scenario, which assumes no final repository becomes available) (“Continued Storage Rule”). 85 Id. 86 In its opposition papers before the NRC, Holtec claimed that its estimated spent fuel timeline “generally aligns with the” Continued Storage Rule. Holtec NRC Answer at 12. As explained above, this is simply incorrect. More fundamentally, Holtec’s cost estimate fails to account for the plausible scenario that spent fuel remains at the IPEC for decades, even hundreds of years. Continued Storage Rule, 79 Fed. Reg. at 56,245. Holtec also claimed in its opposition papers that the NRC’s Continued Storage Rule is “not relevant to HDI’s site-specific DCE and cash flow analysis” simply because the Rule was issued to fulfill the NRC’s obligations under NEPA. Holtec NRC Answer at 13. It is difficult to understand why the NRC’s expert evaluation of on-site storage timelines, issued to comply with a federal statute, is irrelevant to the plausibility of Holtec’s assumptions. To the contrary, it is likely the best evidence we have. 87 PSDAR at 64.

Crucially, Holtec has offered no alternative calculation for its ongoing spent fuel management costs if this unsupported assumption turns out to be incorrect.

Without an alternative cash flow analysis from Holtec, the Commission and the public are left to guess what impact this assumption has on the stability of the DTF and Holtec’s ability to safely decommission the IPEC. When pressed on this point before the NRC, Holtec suggested, for the first time in its opposition papers, that its ongoing spent fuel costs would total approximately “$12.5 million per year for all three units” after 2030.88 Yet Holtec still refuses to estimate how long it could pay those costs without fully depleting the DTF in a long-term storage scenario. Even a simplified cost estimate illustrates the problem. Assuming a DTF surplus of approximately $263,253,000 (as Holtec estimates), just twenty years of ongoing spent fuel management costs at $12.5 million per year would exhaust the DTF.89 Although these figures illustrate the problem, the fundamental error is that the Petition fails to account for these scenarios and thus fails demonstrate Holtec’s financial qualifications.

Holtec has also failed to account for the cost of long-term storage of spent nuclear fuel and transferring that fuel to the DOE. The NRC has stated that in an intermediate or long-term storage scenario, each reactor operator will be required to build a dry transfer system to move spent fuel into new dry casks every 100 years.90 Moreover, even if DOE eventually accepts spent fuel at some point, Holtec has also failed to account for the cost of repackaging spent fuel at the IPEC for delivery to DOE, which is a licensee’s responsibility under the standard contract for disposal of

88 Holtec NRC Answer at 14–15. 89 Even assuming the DTF grows at a rate of 2%, as Holtec hopes, ongoing spent fuel management costs alone would decimate the DTF surplus within 25 years. 90 See Continued Storage of Spent Nuclear Fuel, 79 Fed. Reg. at 56,245; see also In re Entergy Nuclear Vermont Yankee, LLC, And Entergy Nuclear Operations, Inc. (Vermont Yankee Nuclear Power Station), No. 15-940-03-LA-BD01, 2015 WL 5883370, at *12 (Aug. 31, 2015), vacated as moot, 83 N.R.C. 463, 2016 WL 8260626 (June 2, 2016) (“[I]ndefinite storage of spent fuel on-site is a very possible outcome”).

25 spent nuclear fuel.91 As the Federal Circuit explained in a case involving an Entergy affiliate, “the

DOE cannot accept for transport any of the canistered fuel as is,” and as such, spent fuel owners

“will incur costs to unload this fuel from the storage casks and canisters and to reload it into transportation casks if and when the DOE performs.”92 Holtec has not accounted for either of these costs, which could prove substantial.

Thus, if DOE fails to accept all spent nuclear fuel on Holtec’s arbitrary schedule, Holtec’s own analysis suggests that it will incur significant and ongoing cost overruns for spent fuel management, costs that could total hundreds of millions of dollars and bankrupt the DTF. Indeed, if Holtec is unable to make those payments due to dwindling funds in the DTF — again, its only source of funding to cover spent fuel management costs — Intervenors or the State of New York will either have to pick up the tab or face the dire environmental and public health consequences caused by mismanagement of highly radioactive material.93 These environmental and public safety risks will be substantially borne by Intervenors and the local communities they represent.

2. Holtec has not Adequately Accounted for Unanticipated Costs

Holtec’s Decommissioning Cost Estimate also fails to account for several significant and foreseeable cost overrun scenarios. These costs include, at a minimum, the discovery of previously unknown radiological or non-radiological contamination and the possibility of a severe radiological incident. These costs could prematurely deplete the DTF, causing significant public health, safety, and environmental risks.

91 10 C.F.R. § 961.11. 92 Sys. Fuels, 818 F.3d at 1306. 93 See, e.g., Nuclear Energy Inst., Inc. v. Envtl. Prot. Agency, 373 F.3d 1251, 1258 (D.C. Cir. 2004) (noting that “[a]t massive levels, radiation exposure can cause sudden death,” and even “[a]t lower doses, radiation can have devastating health effects, including increased cancer risks and serious birth defects”).

As with Holtec’s flawed spent fuel management projections, Holtec’s own submissions demonstrate the problem. In the PSDAR, Holtec concedes that it has not performed a detailed on- site characterization of the IPEC.94 Instead of using on-site analysis to drive its projections,

Holtec’s cost estimates are based on a “draft Historical Site Assessment” that did not include any on-site study of hazardous and non-hazardous waste at the IPEC Site.95 Until Holtec conducts a full site characterization, including a complete assessment of the extent of radiological and non- radiological contamination in the soil, groundwater, and bedrock, Holtec’s cost estimate simply cannot account for the foreseeable risk that such costs will outstrip the funds earmarked for remediation and waste disposal.

Indeed, the PSDAR specifically raises one such cost-overrun scenario but then fails to adequately account for it. As the PSDAR recognizes, “[a] plume of radiologically-contaminated

[sic] ground water associated with the IP1 and IP2 spent fuel pools was discovered in 2005.”96

The primary contaminants in the plume are tritium and strontium-90, common decay products of nuclear fission.97 Without a site characterization, the current scope of this contamination is unknown. Holtec states that these contaminants are already being addressed as part of a Long-

Term Monitoring Program (“LTMP”) overseen by the NRC, and maintains that “HDI will continue the LTMP, including provisions of the program intended to detect inadvertent releases that may affect ground water, until the objectives of the selected MNA remedy are achieved.”98 In other

94 See PSDAR at 10 (noting “site characterization activities,” including “identification, categorization, and quantification of radiologic, regulated, and hazardous wastes” “will be performed during the decommissioning process” (emphasis added)). 95 Id. at 63. 96 Id. at 30. 97 Id. 98 Id.

27 words, Holtec simply plans to leave the contaminated groundwater in the ground, unremediated.

Holtec does not describe the cost of remediating this contamination should New York regulators require further action. In sum, despite acknowledging this known source of contamination, the

PSDAR makes no effort to account for the entirely plausible scenario that such contamination could prove more significant, and thus costlier to remediate, than Holtec currently perceives.

Similar cost overruns are commonplace in nuclear decommissioning operations. For example, in Matter of Entergy Nuclear Vermont Yankee, Entergy filed a license amendment request with the NRC seeking to “replace plant-specific license conditions related to its decommissioning trust fund” and an exemption to allow Entergy to expend trust funds for spent fuel management and site restoration.99 The State of Vermont filed a petition to intervene and requested a hearing on several contentions, arguing in part that Entergy’s cost projections failed to account for unanticipated costs and so failed to comply with various provisions of federal law.

Specifically, Vermont identified the “recent discovery of strontium-90 . . . in the groundwater near

Vermont Yankee” as a cost not adequately considered in the PSDAR.100 On review, the NRC agreed with the State and so granted the petition to intervene. In addition to the recent discovery of new radiological contamination, the NRC cited previously unknown discoveries contamination at the Maine Yankee, Connecticut Yankee, and Yankee Rowe nuclear facilities and recognized that such contamination “could greatly increase the costs of decommissioning and site restoration.”101 Holtec’s PSDAR similarly does not account for unforeseen expenses, such as cost of remediating the known Strontium-90 contamination, which could easily prove more expensive

99 In re Entergy Nuclear Vermont Yankee, LLC, And Entergy Nuclear Operations, Inc., No. 15-940-03-LA- BD01, 2015 WL 5883370, at *1. 100 Id. at *11. 101 Id. at *11 (finding contention regarding unforeseen expenses admissible and granting Vermont’s request for a hearing).

28 than currently anticipated. More fundamentally, however, these examples illustrate that cost overruns at nuclear facilities are the rule, not the exception. Allowing Holtec to take on the massive task of decommissioning the IPEC, without any additional financial backing beyond the

DTF, would place New York ratepayers and the local community in serious jeopardy of being forced to pick up the tab for decommissioning the IPEC if the DTF proves insufficient.

Holtec has also failed to account for the possibility that stricter state-law radiological remediation standards will increase site restoration costs. Specifically, under the most recent New

York Department of Environmental Conservation (“DEC”) guidance, to qualify for unrestricted release of a site the radiologically contaminated soils must be remediated to a 10 millirem annual dose limit above the radiation absorbed from background levels of radiation in any one year.102

However, Holtec has only committed to meeting the NRC’s “unrestricted release criteria found in” 10 C.F.R. § 20.1402, which sets a 25-millirem standard.103 Holtec fails to even mentioned the

DEC’s more stringent remediation standard. More importantly for present purposes, Holtec has not accounted for the cost of meeting those higher remedial standards.

Indeed, Holtec is bound by those requirements under a prior Order from the Commission.

In 2001, Con Edison and Entergy petitioned the Commission, pursuant to PSL § 70, for approval to transfer the IPEC to Entergy.104 The parties entered into a settlement agreement with PSC Staff and jointly petitioned the Commission for approval of that settlement.105 As relevant here, the proposal specifically sought approval of that settlement “pursuant to the terms of” the Asset

102 See DEC, Cleanup Guidelines for Soils Contaminated with Radioactive Materials (April 30, 2013), https://www.dec.ny.gov/regulations/23472.html. 103 PSDAR at 37. 104 In re Consol. Edison Co. of New York, Inc., No. 01-E-0040, 2001 WL 1587290. 105 Id.

Purchase and Sale Agreement between Con Edison and Entergy.106 The Asset Purchase and Sale

Agreement, in turn, required Entergy and its successors to take on all environmental liability at the Site, defined to include all state environmental laws, including DEC Technical Administrative

Guidance Memoranda like the one described above.107 Entergy has also expressly agreed “to decommission the Site to a greenfield status,” and Holtec would be bound by that obligation as well.108 Thus, Holtec would be compelled by the Commission’s own precedent to remediate the

IPEC in compliance with stricter state law requirements than those contemplated in the PSDAR.

Holtec has not accounted for those costs in its cost estimates.109

Holtec has also failed to adequately account for unforeseen costs associated with remediating non-radioactive contamination at the IPEC. As noted above, Holtec’s own filings indicate that it has not yet conducted a site characterization at the IPEC, resting its projections instead on what it calls a “draft Historical Site Assessment.”110 The Commission and the public are left to wonder what that review entailed, but it is startling that Holtec would base its cost projections on nothing more than the historical records of a decades-old industrial site. Indeed,

Holtec does not even claim to have conducted a Phase 1 environmental review. Given this glaring deficiency, Holtec’s cost estimates associated with remediating non-radiological contamination are necessarily speculative and unsupported.

106 Id. 107 Joint Proposal at 2, Case 01-E-0040, http://documents.dps.ny.gov/public/MatterManagement/ CaseMaster.aspx?MatterCaseNo=01-E-0040&submit=Search (docket no. 29). 108 In re Consol. Edison Co. of New York, Inc., No. 01-E-0040, 2001 WL 1573044 (Aug. 17, 2001). 109 As an example, previously unknown radiological contamination and the need to comply with the State of Connecticut’s stricter 19-millirem remedial standard at the Connecticut Yankee facility required extensive excavation and remediation that cost over $55 million and generated significant delay. See EPRI, Connecticut Yankee Decommissioning Experience Report at 6-1, 6-3, 9-1 (Nov. 2006). 110 See PSDAR at 10, 63.

Moreover, the PSDAR fails to consider the potential costs associated with a radiological incident at the IPEC Site. The NRC has released several reports cataloging the severe consequences of a radiological accident occurring as a result of on-site spent nuclear fuel management. Specifically, the 2002 Generic Environmental Impact Statement (“GEIS”) on

Decommissioning of Nuclear Facilities identifies several categories of risk associated with decommissioning activities, including fuel-related incidents with spent fuel pools.111 The 2014

GEIS on Continued Storage of Spent Nuclear Fuel similarly considers the ongoing risks associated with spent fuel pool storage and dry cask storage.112 The 2014 GEIS notes that the transfer of spent fuel to dry cask storage in particular presents a risk human error, including “dropping the cask during handling,” which could result in serious environmental consequences.113 To be sure, the risks associated with such an accident decline once a reactor is retired, but the risk of decommissioning-related incidents at Indian Point is heightened by Holtec’s inexperience, aggressive decommissioning timeline, and incentive to cut corners to speed up the decommissioning process. Holtec has already faced regulatory scrutiny from the NRC from such an incident at a California facility, which caused in significant delays and resulted in a substantial fine.114 Even a single radiological event at the IPEC could result in exorbitant costs from delays alone, yet Holtec has not accounted for this possibility.

111 U.S. Nuclear Regulatory Commission, Generic Environmental Impact Statement on Decommissioning of Nuclear Facilities, Supplement 1 (Nov. 2002). 112 U.S. Nuclear Regulatory Commission, Generic Environmental Impact Statement for Continued Storage of Spent Nuclear Fuel (Sept. 2014). 113 Id. at 4-88. 114 Ltr. from NRC, to Southern California Edison Company, Revised NRC Special Inspection Report 050- 00206/2018-005, 050-00361/2018-005, 050-00362/2018-005, 072-0041/2018-001 And Revised Notice of Violation, San Onofre Nuclear Generating Station, EA-18-155, at 1 (Dec. 19, 2018) (ML18341A172).

3. Holtec’s “Contingency Allowance” Does Not Actually Account for Unanticipated Costs

These concerns are heightened by the fact that Holtec’s so-called contingency allowance is woefully deficient. Initially, Holtec’s cost estimate for the IPEC relies on an undisclosed

“Monte-Carlo” analysis, which we are told resulted in an 18 percent contingency allowance for license termination, spent fuel management (except for ISFSI decommissioning, for which a 25% allowance was selected), and site restoration costs.115 Because the PSDAR does not contain the

Monte-Carlo simulation risk modeling analysis on which Holtec claims to have relied, the

Commission and the public have no way to evaluate that analysis. The PSDAR also states that the contingency analysis is built in large part on an analysis of “discrete risk events.”116 Yet the

PSDAR fails to identify which discrete risk events it considered in its analysis. We are then told that, as a result of this undefined analysis, Holtec determined that an 18 percent contingency allowance was appropriate for the IPEC.117 But the PSDAR contains no justification for that precise figure or how Holtec reached it, nor does the PSDAR explain how that 18 percent figure is applied to particular items in the cost estimate.

More fundamentally, even if Holtec’s 18 percent figure is accurate, the contingency allowance does not actually account for unforeseen contingencies. Indeed, as the PSDAR makes clear, Holtec expects that the contingency allowance will be “fully consumed” during the decommissioning process.118 In other words, the contingency allowance accounts only for costs

Holtec expects to incur. Holtec’s so-called contingency allowance is not a contingency allowance at all.

115 PSDAR at 93–95. 116 Id. at 94–95. 117 Id. at 95. 118 Id. at 95.

The inclusion of a genuine contingency allowance to account for unforeseen costs demonstrates the problem. For instance, even a 25% contingency allowance would result in a significant funding shortfall.

Chart 2 (Cost in Thousands)

IP1 IP2 IP3 Total IPEC

Holtec’s Projected $598,184 $701,822 $1,002,378 $2,302,384 Cost of Retirement

Projected Trust $19,993 $72,677 $170,582 $263,253 Funds Remaining

Total Cost of $747,730 $877,277.5 $1,252,972.5 $2,877,980 Retirement (25% Contingency)

Projected Trust -$129,553 -$102,778.5 -$80,012.5 -$312,344 Funds Remaining (25% Contingency)

The fundamental question before the Commission is whether the Petition proves that

Holtec has the financial integrity to safely and successfully decommission the IPEC. Although the PSDAR and its accompanying Decommissioning Cost Estimate are prepared to comply with federal law,119 the Petition itself demonstrates that Holtec’s financial qualifications rest exclusively on its prospective ownership of the DTF.120 As such, the PSDAR is the single most important document in evaluating whether Holtec is financially qualified to own the IPEC; indeed, that is precisely why Petitioners filed the PSDAR in this proceeding. For the reasons explained herein, the PSDAR fails to demonstrate that the DTF will prove sufficient to cover decommissioning, spent fuel management, and site restoration costs. Accordingly, absent additional financial

119 See 10 C.F.R. § 50.82(a)(4). 120 See supra note 74.

33 assurances imposed by the Commission, Petitioners have not adequately demonstrated Holtec’s financial integrity, and so the Commission cannot find that the transfer is in the public interest under PSL § 70.

B. Holtec’s Corporate Structure, Lack of Assets or Revenue Streams, and Inexperience Make It Financially Unfit to Decommission Indian Point.

Holtec’s corporate structure, lack of assets or revenue streams, and inexperience further demonstrate that Holtec lacks the “financial integrity” to own and decommission the IPEC.121

As a result of a series of intricate corporate transfers proposed in the Petition, the IPEC would be transferred to an entity called Nuclear Asset Management Company, LLC (“NAMCo”), a wholly owned subsidiary of Holtec. NAMCo, in turn, would directly own two special-purpose entities called Holtec Indian Point 2 (“Holtec IP2”) and Holtec Indian Point 3 (“Holtec IP3”), and those entities would directly hold the assets and liabilities of the IPEC.122 In addition, another

Holtec subsidiary called HDI would “oversee and manage decommissioning, site restoration, and spent fuel management operations at Indian Point.”123 Holtec IP2 and Holtec IP3 would hold the

DTF, and those entities would pay HDI to cover the costs of post-shutdown operations, including decommissioning, spent fuel management, and site restoration costs.

This web of corporate ownership raises several red flags that warrant careful attention by the Commission. First, all of the corporate entities that would be directly responsible for decommissioning the IPEC — HDI, Holtec IP2, and Holtec IP3 — are limited liability companies.124 This raises significant concerns. At the very least, placing the IPEC in the hands

121 Petition of TC Ravenswood, LLC, No. 17-E-0016, 2017 WL 2226002, at *2. 122 Notice Seeking Comments at 3 (describing transfers). 123 Id. 124 Petition at 27 (depicting corporation organizational chart)

34 of limited liability companies means that if these entities at some point have liabilities that outstrip their assets — for instance, if cost overruns or flawed assumptions deplete the DTF — these entities could simply declare bankruptcy and walk away, having squandered the only resource set aside to decommission the IPEC. That prospect could result in significant public health and safety risks that Holtec has neither considered nor accounted for in the PSDAR.125 As representatives of the local community that has housed the IPEC for decades, the burden of these unanalyzed environmental and public safety risks would fall squarely on Intervenors.

Although the Commission often approves transfers involving limited liability companies, this transaction is particularly troubling because the special purpose entities that would own the

IPEC have no independent assets or revenue streams to fall back on. Indeed, as part of evaluating a proposed transferee’s financial qualifications, the Commission routinely evaluates whether a proposed transferee is “sufficiently capitalized,”126 and whether a transferee’s “own revenues and assets” demonstrate its suitability.127 Here, in contrast, the Holtec subsidiaries that would own the

IPEC rest their financial qualifications exclusively on the DTF.128 Accordingly, if any of the foreseeable cost-overrun scenarios described herein occur, these entities have no financial backstop. Holtec does not even attempt to contend that these special purpose entities are independently qualified to own the IPEC and safely decommission the Site. Moreover, the recent

125 See, e.g., New York v. Nuclear Regulatory Comm’n, 681 F.3d 471, 474 (D.C. Cir. 2012) (noting spent nuclear fuel “poses a dangerous, long-term health and environmental risk” and “will remain dangerous for time spans seemingly beyond human comprehension” (internal quotation marks omitted)). 126 Caithness Long Island LLC, 2012 WL 2952758, at *5. 127 Joint Petition of Entergy Nuclear Fitzpatrick, LLC & Exelon Generation Co., LLC Pursuant to Section 70 of the New York Pub. Serv. Law for Approval of the Transfer of the James A. Fitzpatrick Nuclear Power Plant & Related Assets & for A Declaratory Ruling Continuing Lightened Regulation, No. 16-E-0472, 2016 WL 6906263, at *6 (Nov. 17, 2016). 128 Petition at 5.

35 and precipitous decline in the stock market illustrates the folly in accepting this arrangement.129

Indeed, whatever surplus in the DTF that might have existed may well have disappeared in recent months. Ultimately, if the funds remaining in the DTF prove insufficient, nothing will stop

Holtec’s single-asset LLCs from declaring bankruptcy, leaving ratepayers, along with the

Intervenors and the local community, to bear the burden of decommissioning the IPEC.

Holtec’s layers of corporate ownership raise yet another concern. As consideration for the

IPEC, Holtec will pay Entergy just $1,000.130 In exchange for this meager sum, Holtec would take ownership over the entire Decommissioning Trust Fund valued at $2.1 billion. Entergy, in turn, would be completely released from the responsibility to decommission the IPEC, manage spent nuclear fuel, and restore the Site. Given the awesome responsibility (and liability) that Holtec plans to take on, the deal makes sense for Holtec only if it can be compensated from the trust fund above and beyond the actual work completed at the Site. Indeed, this fact is reinforced by the layers of corporate ownership and responsibility Holtec proposes to create. Rather than creating single entity (or entities) to hold title to the trust funds and spend those funds to remediate the Site,

Holtec has created HDI, another entity with no assets or revenue, and tasked it with coordinating the decommissioning operation. Doing so allows HDI to mark up its services and take a cut of the trust fund. Holtec has also formed another LLC known as Comprehensive Decommissioning

International, LLC (“CDI”), a jointly held entity owned by HDI and a subsidiary of SNC-Lavalin

Group, Kentz USA, Inc. Through a general contractor agreement, CDI would manage and perform day-to-day activities at the IPEC, allowing it to take yet another slice of the trust fund. Through another layer of corporate ownership, HDI, Holtec IP2, and Holtec IP3 would be owned by Holtec

129 What the Dow’s 28% Crash Tells Us About the Economy, Bloomberg (March 18, 2020), https://www.bloomberg.com/graphics/2020-stock-market-recover-dow-industrial-decline/. 130 See PSDAR, Attachment B, Membership Interest Purchase and Sale Agreement § 1.2.

Power, Inc., which is finally owned by Holtec International, Holtec’s parent company. These entitles make up a fraction of Holtec’s larger corporate enterprise, all of which appears to be privately held. Holtec also states that it plans to hire numerous subcontractors to actually complete the decommissioning activities at the IPEC, each of which will presumably take a profit. In short, each of these layers of ownership and operational authority creates an opportunity to siphon millions of dollars from the trust fund. Rather than creating assurances of available funds, Holtec’s corporate structure increases the risk of depleting the trust fund.

These concerns are heightened by the fact that Holtec and its subsidiaries are closely held, independent companies, not rate-regulated utilities, which raises the specter of insolvency in the face of cost overruns. If Holtec has underestimated the costs of decommissioning the IPEC — a highly likely eventuality, as explained above — Holtec cannot recover those costs from ratepayers during the ratemaking process. Despite this, Holtec has not offered any guarantee that Holtec IP2,

Holtec IP3, or HDI (the entities that would own and operate the IPEC) could obtain funding for cost overruns from their parent company, Holtec International. Indeed, the proposed transfer has been structured precisely to avoid that result. Absent the Commission placing conditions on granting the Petition, Holtec International would have no obligation to fulfill its subsidiaries’ obligations, which include restoring the IPEC to “greenfield status.”131

Holtec and its corporate subsidiaries are all closely held entities for which virtually no financial information is available to the public. This opacity makes it impossible to properly gauge

Holtec’s financial qualifications. The Department of Public Service staff has issued several discovery requests that ought to shed light on Holtec’s financial integrity, but when the Intervenors

131 In re Consol. Edison Co. of New York, Inc., No. 01-E-0040, 2001 WL 1573044.

37 requested that Petitioners share that information as required by the Commission’s regulations,132

Petitioners refused. Petitioners’ refusal is especially disconcerting given that, to the best of

Intervenors’ knowledge, Petitioners agreed to produce the very same information to DPS Staff and the State of New York. Petitioners’ refusal to meaningfully engage on discovery issues raises the perception that Petitioners hope to secure approval for the transfer without ample public review.

Holtec’s inexperience raises additional red flags. Holtec has never operated a nuclear facility, must less decommissioned one. HDI, the entity tasked with managing the decommissioning of the IPEC, did not even exist until 2018. Its first decommissioning job is the

New Jersey Oyster Creek facility, which it acquired in July 2019.133 Holtec and its subsidiaries are learning on the job. And because these entities are closely held, virtually no financial information is available to the public. Holtec acknowledges its lack of experience in the Petition, stating that CDI (the entity tasked with day-to-day decommissioning work) “will subcontract with industry vendors who have consistently demonstrated expertise in the nuclear field in the areas of dismantlement and decommissioning.”134 Holtec also states that it “will offer employment to all employees who are employed by Entergy at the IPEC Facility at the time of the transaction closing who would otherwise be required to leave New York to continue service within the Entergy fleet or be laid off.”135 Notably, this promise applies only to those employees who are working at the

IPEC “at the time of the transaction closing,” so this promise may prove hollow depending on how many employees Entergy retains after IP Unit 2 ceases operations in April 2020.136 Even so, this

132 See 16 NYCRR §§ 5.3, 5.4. 133 Oyster Creek Decommissioning, Holtec Decommissioning International, https://hdi-decom.com/our- fleet/oyster-creek-decommissioning/ (last visited May 7, 2020). 134 Petition at 50. 135 Id. at 6. 136 Notice Seeking Comments at 2 (noting Unit 2 will cease operations no later than April 30, 2020).

38 promise does not make up for Holtec’s lack of experience, since the current IPEC staff, who have worked at an operating nuclear plant, presumably have no decommissioning experience.

Holtec also claims that it will fill any knowledge gaps through its “ready access to technical and project resources” based on “its affiliation with both Holtec International and SNC-Lavalin, its large corporate parents.”137 But this too offers little comfort, given that neither of those entities has successfully decommissioned a nuclear plant, and neither entity has provided any meaningful financial assurances to back the project. Moreover, Holtec’s inexperience provides further reason to doubt its rose-colored cost projections, which are not based on experience with decommissioning other nuclear facilities. In short, Holtec has not demonstrated the technical qualifications necessary to take ownership over the IPEC.

The Petition’s final efforts to bolster Holtec’s financial credibility also do not hold water.

The Petition first claims that Holtec may recover money from the DOE “through litigation or settlement of its claims for the spent fuel management costs it will incur as a result of the DOE’s breach of its obligations to dispose of the IPEC Facility’s spent nuclear fuel.”138 Holtec has curiously declined to include DOE recoveries in its Decommissioning Cost Estimate, and it has steadfastly refused to commit to reinvesting that money back into the DTF to offset its spending on spent fuel management. Thus, under Holtec’s one-sided approach, Holtec subsidiaries would be permitted to spend freely from the ratepayer-funded DTF to cover spent fuel management costs

— costs that legally should be borne by the DOE, not ratepayers — only to then retain any recovery secured from the DOE through litigation or settlement. In other words, Holtec would be free to spend public money on spent fuel management costs and then keep any money it recovers from

137 NRC License Transfer Application at 16. 138 Petition at 46.

39 the DOE. To cure this deficiency, the Commission must, at a minimum, require Holtec to reinvest any DOE recovery back into the DTF or return those funds to the local community, either as an economic development fund or a site restoration measure.

The Petition also claims that, if the DTF runs out, its subsidiaries will have “the backing of Holtec International’s financial stability, long-term performance, and contingent funding commitment.”139 This promise rings hollow. Since Holtec has structured the transaction so that

Holtec International will not directly own the IPEC or be responsible for the work, it is difficult to understand how ratepayers will benefit from Holtec International’s “financial stability” or “long- term performance.” The Petition also references a “contingent funding commitment,” but the precise nature of that commitment remains unclear. Petitioners state in a footnote that Schedule

6.4(m) of the Membership Interest Purchase and Sale Agreement obligates Holtec International and NAMCo to deposit “$25 million in contingent funding assurance” if HDI has not achieved

“Partial Site Release of IPEC” by 2051.140 $25 million is a drop in the bucket compared to the

$2.3 billion price tag of decommissioning the IPEC.141 And since this trivial promise is triggered by achieving a partial site release only, this provision offers no meaningful assurance that Holtec’s subsidiaries will meet their ongoing spent fuel management and total site restoration obligations.

All of these concerns boil down to one simple fact: if the DTF falls short for any reason, the entities responsible for decommissioning the IPEC have nothing to fall back on. HDI has no assets or capital of its own. It has no revenue stream beyond the DTF. It has never decommissioned a nuclear facility before. And Holtec’s corporate structure is designed

139 Id. at 44. 140 Id. at 29 n.37. 141 Id. at 45.

40 specifically to avoid HDI’s parent company from making good on HDI’s promises. As a result,

Holtec’s corporate structure does not provide adequate financial assurance that the decommissioning of the IPEC can be completed in manner that protects New York ratepayers and the local community.

C. At a Minimum, the Commission Must Impose Conditions That Realign Holtec’s Incentives and Return Any Funds Remaining in the DTF to Ratepayers and the Local Community.

As part of the proposed transfer, Holtec would take ownership of all assets and liabilities of the IPEC, including the $2.1 billion DTF, and Holtec intends to spend a significant portion of those funds on non-decommissioning activities, including spent fuel management and site restoration.142 This arrangement creates a dangerous incentive for Holtec’s subsidiaries to cut corners to give Holtec the largest payout possible when the IPEC is fully retired. The Commission should take steps to reverse these incentives. Out of an abundance of caution, Intervenors do not allege that Holtec will do so, only that the prudent exercise of discretion suggests that such an arrangement is not in the public interest.

The DTF is designed to guarantee that adequate funds are available to safely decommission the IPEC, while ensuring that the public is not left holding the bag for this expensive, complex, and dangerous task. The DTF was never intended to be used to enrich private corporations while creating incentives to undertake perilous, cost-cutting decommissioning operations. Too much rides on the safe and successful decommissioning of nuclear plants for the Commission to sanction a transfer that so distorts the incentives of a license holder. This one-sided incentive structure is inconsistent with the public interest, and sanctioning it would violate the Commission’s duty to protect New York citizens and ratepayers.

142 See Exemption Request.

To alleviate these concerns, the Commission should exercise its broad authority to impose conditions that protect ratepayers.143 First, the Commission should realign Holtec’s incentives by capping the profits that Holtec can extract from the DTF and requiring that Holtec return to the local community any funds remaining after retiring the IPEC. Indeed, the Commission ordered a similar condition as part of the 2001 transfer of the IPEC from Con Edison to Entergy. In that proceeding, the Commission specifically approved a contract provision that stated: “if Entergy does not immediately decommission the Indian Point generating facilities via dismantlement and removal at the end of the Indian Point 2 operating license (i.e., should Entergy place the plants into

Safstor or decommission by entombment), 50% of the funds remaining in the decommissioning trust funds upon completion of the alternate or delayed decommissioning will be returned to ratepayers.”144 The Commission called this “a reasonable and fair allocation of the potential benefits and risks being transferred by Con Edison and being assumed by Entergy,”145 and later stated that these terms “ensured that the purchasers did not receive an unintended and undue windfall.”146 The Commission should exercise its authority to impose a similar condition here to realign Holtec’s incentives by designating additional funds to restoring the IPEC and rapidly returning the Site to productive use, and by guaranteeing that Holtec will meet its ongoing tax obligations to the local community.

143 See, e.g., In re Consol. Edison Co. of New York, Inc., No. 02-M-0741, 2007 WL 1213672, at *4 (Apr. 24, 2007) (noting, in case brought under PSL § 70, that “[t]he Commission can impose appropriate conditions on utility actions as a basis for its approval”). 144 In re Consol. Edison Co. of New York, Inc., No. 01-E-0040, 2001 WL 1587290. 145 Id. 146 In re Rochester Gas & Elec. Corp., No. 03-E-1231, 2004 WL 1206964 (May 20, 2004) (comparing case to prior Indian Point proceedings and noting terms of Indian Point transfer “ensured that the purchasers did not receive an unintended and undue windfall”).

Additionally, because the Holtec subsidiaries have no assets or revenue streams, the

Commission should approve the transfer only if Holtec’s parent companies agree to provide substantial guarantees. Specifically, the Commission should require Holtec’s parents to commit to robust financial assurance mechanisms that ensure that sufficient capital exists to complete the decommissioning of Indian Point should the DTF become depleted due to the reasonably foreseeable cost overruns described herein. Such financial assurances could include, at a minimum: parental guarantees, letters of credit, performance bonds, escrow accounts, or insurance products that address unforeseen expenses associated with decommissioning, spent fuel management, and site restoration. Indeed, the Commission has frequently ordered conditions of this kind.147 These commonsense financial conditions will ensure that the decommissioning process can be safely completed in the (not unlikely) event that decommissioning, spent fuel management, and site restoration costs exceed Holtec’s estimates.

As currently constructed, the Petition fails to demonstrate that Holtec has the financial integrity to decommission the IPEC in a manner that protects the health and safety of the public and the interests of New York ratepayers.

147 See, e.g., In re Keyspan Energy, No. 99-F-1625, 2009 WL 3256555 (July 21, 2009) (“To ensure the funds would be available when needed, Ravenswood’s parent, KeySpan Corporation (KeySpan), supplied a corporate guarantee, which was buttressed by a requirement that Ravenswood execute and submit a letter of credit and a standby trust agreement in the event that KeySpan’s financial strength declined to a point below the level of pre-established financial metrics.”); In re Empire State Pipeline, 31 N.Y.P.S.C. 129 (Mar. 1, 1991) (“The Applicant’s parent companies, as defined in this proceeding, shall guarantee the financial ability of the Applicant to construct in accordance with the EM&CP for the pipeline as approved by the Commission, and as amended after the commencement of construction.”).

CONCLUSION

For the reasons set forth herein, the Commission should exercise jurisdiction over the proposed transfer of the IPEC under PSL § 70, decline to abstain from review, and decline to approve the Petition in its current form. Absent additional financial assurances such as those proposed herein, the proposed transfer is not in the public interest.

Respectfully submitted,

Daniel Riesel

Signed (electronically) by

Daniel Riesel SIVE PAGET & RIESEL P.C. Attorneys for Intervenors 560 Lexington Avenue, 15th Floor New York, NY 10022 [email protected] (212) 421-2150

Dane Warren SIVE PAGET & RIESEL P.C. Attorneys for Intervenors 560 Lexington Avenue, 15th Floor New York, NY 10022 [email protected] (212) 421-2150

STATE OF NEW YORK PUBLIC SERVICE COMMISSION

CERTIFICATION OF SERVICE

Pursuant to 16 NYCRR 3.5(e), I certify that copies of th e Formal Comments in Opposition to the Joint Petition in the above-captioned proceeding were served on all parties via the PSC’s

Document and Matter Management System on this 1st day of May, 2020.

Signed (electronically) by

Daniel Riesel SIVE PAGET & RIESEL P.C. Attorneys for Intervenors 560 Lexington Avenue, 15th Floor New York, NY 10022 [email protected] (212) 421-2150