2012-4324. In the Matter of Exelon Corporation; Constellation Energy Group, Inc.; Nine Mile Nuclear Station, LLC; Nine Mile Point Nuclear Station, Units 1 and 2; Order Approving Application Regarding Proposed Corporate Merger and Indirect Transfer ...

I

Nine Mile Point Nuclear Station, LLC (NMPNS, LLC, or the licensee) is the holder of Renewed Facility Operating License No. DPR-63, which authorizes the possession, use, and operation of Nine Mile Point Nuclear Station, Unit 1. NMPNS, LLC is also the 82 percent owner and the licensed operator of Renewed Facility Operating License No. NPF-69, which authorizes the possession, use, and operation of Nine Mile Point Nuclear Station, Unit 2. Long Island Power Authority owns the remaining 18 percent of Nine Mile Point Nuclear Station, Unit 2. The facilities are located at the licensee's site in Oswego County, New York.

II

By letter dated May 12, 2011, as supplemented on June 17, August 12, October 13, November 10, November 11, November 18, and November 22, 2011, and January 19, and January 25, 2012 (collectively, the application), Exelon Generation Company, LLC (Exelon Generation), acting on behalf of itself, Exelon Corporation (Exelon), and Exelon Ventures Company, LLC (Exelon Ventures), and Constellation Energy Nuclear Group, LLC (CENG), acting on behalf of itself, and the licensee, requested that the U.S. Nuclear Regulatory Commission (NRC, the Commission), pursuant to Title 10 of the Code of Federal Regulations (10 CFR) 50.80, consent to the proposed indirect license transfer of Renewed Facility Operating License Nos. DPR-63 and NPF-69, to the extent held by NMPNS, LLC, that would be effected by the indirect transfer of control of the ownership and operating interests in NMPNS, LLC. Long Island Power Authority is unaffected by the merger and associated indirect license transfers. The transfers being sought are a result of the proposed merger between Exelon and one of CENG's parent companies, Constellation Energy Group, Inc. (CEG), whereby CEG would be merged into Exelon and ownership of CEG's 50.01 percent of CENG would be transferred to Exelon. The remaining 49.99 percent ownership of CENG is held by EDF, Inc.

The licensee is a direct wholly owned subsidiary of Constellation Nuclear Power Plants, LLC, which, in turn, is a direct wholly owned subsidiary of CENG.

The proposed merger will be accomplished in several steps and the involvement of the following entities: CEG, Exelon, Exelon Generation, Exelon Ventures, Bolt Acquisition Corporation (Bolt) (an Exelon subsidiary formed for the sole purpose of merging with CEG), and Constellation Nuclear, LLC (CNL) (a wholly owned subsidiary of CEG and intermediate parent company of NMPNS, LLC). Following the closing of the transfers, Exelon will be the ultimate parent company of CNL, CENG, and the licensee.

Exelon Ventures and Bolt are direct wholly owned subsidiaries of Exelon. Exelon Generation is a direct wholly owned subsidiary of Exelon Ventures. First, the acquisition of CEG by Exelon will be effected by the merger of Bolt with and into CEG, with CEG being the surviving corporation. As a result of the merger, CEG will be a direct wholly owned subsidiary of Exelon, and former CEG shareholders will become shareholders of Exelon. Immediately after the merger, CEG will distribute to Exelon, as a dividend, 100 percent of the equity interests of several companies unrelated to CEG's nuclear and other generation business, including Baltimore Gas and Electric Company. Second, and concurrent with the distribution of CEG's equity interests in RF HoldCo LLC (the holding company for Baltimore Gas and Electric Company), CEG will merge into Exelon, resulting in the termination of CEG's corporate existence. Exelon will then contribute 100 percent of its equity interest in CEG to Exelon Ventures, which, in turn, will contribute the equity interest to Exelon Generation, resulting in CEG becoming a direct wholly owned subsidiary of Exelon Generation. CEG will then cease to exist, making CNL a direct wholly owned subsidiary of Exelon Generation. Exelon will indirectly own 100 percent of CNL through its wholly owned subsidiary, Exelon Generation.^[1]

CNL, through wholly owned subsidiaries, has a 50.01 percent ownership interest in CENG; EDF Inc. has a 49.99 percent ownership interest in CENG. EDF Inc. is a U.S. corporation organized under the laws of the State of Delaware and is a wholly owned subsidiary of E.D.F. International SAS, a limited company organized under the laws of France, which is, in turn, a wholly owned subsidiary of Electricité de France SA, a French limited company. As a result of the merger, CNL, as a direct subsidiary of Exelon Generation, will continue to indirectly hold a 50.01 percent ownership interest in CENG; EDF Inc. will continue to have a 49.99 percent ownership interest in CENG. EDF Inc.'s 49.99 percent ownership interest in CENG is unaffected by the merger of Exelon and CEG and associated indirect license transfers.

No physical changes to the facilities or operational changes are being proposed in the application.

Notice of the request for approval and opportunity for a hearing was published in the Federal Register on July 7, 2011 (76 FR 39910). No comments or hearing requests were received.

Pursuant to 10 CFR 50.80(a), no license, or any right thereunder, shall be transferred, directly or indirectly, through transfer of control of the license, unless the Commission shall give its consent in writing. Upon review of the information in the application as supplemented and other information before the Commission, and relying upon the representations and agreements in the application, the NRC staff has determined that the proposed indirect transfer of control of the subject licenses held by the licensee to the extent such will result from the proposed merger of CEG and Exelon, as described in the application, will not affect the qualifications of the licensee to hold the respective licenses and is otherwise consistent with the applicable provisions of law, regulations, and Orders issued by the NRC pursuant thereto, subject to the conditions set forth below.

The findings set forth above are supported by a safety evaluation (SE) dated February 15, 2012.

III

Accordingly, pursuant to Sections 161b, 161i, 161o, and 184 of the Atomic Energy Act of 1954, as amended (the Act), 42 U.S.C. Sections 2201(b), 2201(i), 2201(o), and 2234; and 10 CFR 50.80, it is hereby ordered that the application regarding the indirect license transfers related to the proposed corporate merger, as described herein, is approved, subject to the following conditions:

1. All conditions contained in the “Order Superseding Order of October 9, 2009, Approving Application Regarding Proposed Corporate Restructuring,” dated October 30, 2009, concerning the corporate restructuring of CENG and associated indirect transfer of control of the operating licenses held by NMPNS, LLC, shall remain in full force and effect and are incorporated herein as if fully set forth, except as they are amended therein.

2. The Nuclear Advisory Committee of Constellation Energy Nuclear Group, LLC, shall prepare an Annual Report regarding the status of foreign ownership, control, or domination of the licensed activities of power reactors under the control, in whole or part, of Constellation Energy Nuclear Group, LLC. The Report shall be submitted to the NRC within 30 days of completion of the Nuclear Advisory Committee Report, or by January 31 of each year (whichever occurs first). No action shall be taken by Constellation Energy Nuclear Group, LLC, or any entity to cause Constellation Nuclear, LLC, Exelon Generation, LLC, or their parent companies, subsidiaries or successors to modify the Nuclear Advisory Committee Report before submittal to the NRC. The Report shall be made available to the public, with the potential exception of information that meets the requirements for withholding such information from public disclosure under the regulations of 10 CFR 2.390, “Public Inspections, Exemptions, Requests for Withholding.”

3. Records of all votes by EDF Inc., or its representatives, on the Constellation Energy Nuclear Group, LLC, Board of Directors and the use of the Chairman's casting vote will be sent to the Nuclear Advisory Committee and shall be reviewed by the Nuclear Advisory Committee to ensure that no foreign interests have exercised foreign ownership, control, or domination over the licensed activities of Nine Mile Point Nuclear Station, Units 1 and 2, and that no action taken by a foreign interest involved with licensed activities is inimical to the common defense and security. The results of the Nuclear Advisory Committee's review shall be summarized in the Nuclear Advisory Committee Report and shall include discussions of any use of the Chairman's casting vote, determinations whether an exercise of foreign ownership, control, or domination has occurred, or that foreign involvement with licensed activities was inimical to the common defense and security.

4. Exelon Generation, LLC shall enter into the $205 million Support Agreement for Constellation Energy Nuclear Group, LLC, as described in the November 11, 2011, supplement to the May 12, 2011, indirect license transfer application, no later than the time the proposed transactions and indirect license transfers occur. The Exelon Generation, LLC, Support Agreement shall supersede the Support Agreement provided by Constellation Energy Group, Inc., and shall be consistent with the representations contained in the application. Constellation Energy Nuclear Group, LLC, shall take no action to cause Exelon Generation, LLC, or its successors and assigns, to void, cancel, or materially modify the Support Agreement or cause it to fail to perform, or impair its performance under the Support Agreement, without the prior written consent of the NRC. The Support Agreement may not be amended or modified without 30 days prior written notice to the Director of the Office of Nuclear Reactor Regulation or his designee. An executed copy of the Support Agreement shall be submitted to the NRC no later than 30 days after the completion of the proposed merger and the indirect license transfers. Constellation Energy Nuclear Group, LLC, shall inform the NRC in writing no later than 10 days after any funds are provided to Constellation Energy Nuclear Group, LLC, or any of the licensees by Exelon Generation, LLC, under the Support Agreement.

5. Upon consummation of the merger, Constellation Energy Nuclear Group, LLC, shall submit to the NRC, the amended and restated Constellation Energy Nuclear Group, LLC, Operating Agreement, reflecting the terms set forth in the Settlement Agreement, including the proposed revisions provided in the January 25, 2012, supplement to the application. The amended and restated Operating Agreement may not be modified in any respect concerning decisionmaking authority over nuclear safety, security, and reliability without the prior written consent of the Director, Office of Nuclear Reactor Regulation.

6. Should the proposed corporate merger not be completed within 1 year from the date of this Order, this Order shall become null and void, provided, however, upon written application and good cause shown, such date may be extended by Order.

It is further ordered that, after receipt of all required regulatory approvals of the proposed indirect transfer action, Exelon Generation shall inform the Director of the Office of Nuclear Reactor Regulation in writing of the date of the closing of the corporate merger of Exelon and CEG.

This Order is effective upon issuance.

For further details with respect to this Order, see the initial application dated May 12, 2011 (Agencywide Documents Access and Management System Accession No. ML11138A159), as supplemented by letters dated June 17 (ML11173A067), August 3 (ML112150519), August 12 (ML11234A062), October 13 (ML113050083), November 10 (ML11335A024), November 11 (ML113180265), November 18 (ML11325A258), and November 22, 2011 (ML113260456), and January 19 (ML12019A0346), and January 25, 2012 (ML12032A153), and the SE dated February 15, 2012, which are available for public inspection at the Commission's Public Document Room (PDR), located at One White Flint North, Public File Area 01 F21, 11555 Rockville Pike (first floor), Rockville, MD. Publicly available documents created or received at the NRC are accessible electronically through ADAMS in the NRC Library at http://www.nrc.gov/​reading-rm/​adams.html. Persons who do not have access to ADAMS, or who encounter problems in accessing the documents located in ADAMS, should contact the NRC PDR reference staff by telephone at 1-800-397-4209 or 301-415-4737, or by email to [e-mail].

Dated at Rockville, Maryland, this 15th day of February 2012.

For the Nuclear Regulatory Commission.

Michele G. Evans,

Director, Division of Operating Reactor Licensing, Office of Nuclear Reactor Regulation.

Footnotes

1.  See Revised Figure 3, “Post-Transaction Final Organization,” from letter dated November 11, 2011.