01-16388. In the Matter of Calvert Cliffs Nuclear Power Plant, Inc.; Order Approving Transfer of Licenses and Conforming Amendments

I

Calvert Cliffs Nuclear Power Plant, Inc. (CCNPPI or the licensee) is the holder of Renewed Facility Operating Licenses Nos. DPR-53 and DPR-69, which authorize operation of Calvert Cliffs Nuclear Power Plant, Unit Nos. 1 and 2 (CCNPP or Calvert Cliffs), and Materials License No. SNM-2505, which authorizes operation of the Calvert Cliffs Independent Spent Fuel Storage Installation (ISFSI). The facilities are located at the licensee's site in Calvert County, Maryland. The operating licenses authorize CCNPPI to possess, use, and operate Calvert Cliffs. The materials license authorizes CCNPPI to receive, possess, transfer, and store power reactor spent fuel at the ISFSI.

II

By application dated December 20, 2000, as supplemented by submittals dated February 22, April 10, May 30, and June 7, 2001 (collectively, the application), CCNPPI requested that the Commission consent to certain proposed license transfers that would be necessary in connection with the realignment of the corporate organization of CCNPPI's ultimate parent, Constellation Energy Group, Inc. (CEG, Inc.). Under this realignment, CEG, Inc. is separating its merchant energy business (largely comprising wholesale generation and power marketing) from its retail services business. With respect to its merchant energy business, several limited liability companies will be formed, including Calvert Cliffs Nuclear Power Plant, LLC (CCNPP LLC). CCNPP LLC will be formed as a subsidiary of Constellation Nuclear Power Plants, Inc., following the formation of Constellation Nuclear Power Plants, Inc. as a subsidiary of Constellation Nuclear, LLC, the current direct parent of CCNPPI. Constellation Nuclear, LLC is a wholly-owned direct subsidiary of CEG, Inc. Following the formation of CCNPP LLC, CCNPPI will be merged into CCNPP LLC, effectively resulting in the assets and associated liabilities of CCNPPI being directly transferred to CCNPP LLC. After this merger, as a subsidiary of Constellation Nuclear Power Plants, Inc., and indirect subsidiary of Constellation Nuclear, LLC, and CEG, Inc., the ultimate parent, CCNPP LLC will be the owner, and have responsibility for the operation, of Calvert Cliffs and the ISFSI. CEG, Inc. will then form New Controlled as a subsidiary, which will acquire Constellation Nuclear, LLC from CEG, Inc. At this point, CEG, Inc. will own New Controlled, which in turn will own Constellation Nuclear, LLC, which in turn will own Constellation Nuclear Power Plants, Inc., which in turn will own CCNPP LLC. New Controlled's acquisition of Constellation Nuclear, LLC will result in an indirect transfer of the licenses for Calvert Cliffs and the ISFSI to New Controlled, albeit with CEG, Inc. remaining, at this point, the ultimate parent of CCNPP LLC.

Following the above realignment of CCNPPI's parent organization, Virgo Holdings, Inc., (Virgo) an indirect subsidiary of The Goldman Sachs Group, Inc., will acquire an equity interest in CCNPP LLC and a corresponding voting interest in New Controlled, up to 17.5%. After the Virgo acquisition of a voting interest in New Controlled, CEG, Inc., the shares of which are widely held, will distribute its shares of New Controlled to current CEG, Inc. shareholders, effectively resulting in Virgo possessing the largest single voting interest in New Controlled, assuming a 17.5% voting interest is acquired. CEG, Inc. will ultimately change its name to BGE Corporation, while New Controlled changes its name to Constellation Energy Group, Inc. No physical changes to the facilities or operational changes were proposed in the application.

Approval of the direct and indirect transfers of the operating licenses and conforming license amendments was requested by CCNPPI pursuant to 10 CFR 50.80 and 50.90, and approval of the direct and indirect transfer of the materials license and conforming amendment was requested by CCNPPI pursuant to 10 CFR 72.50 and 72.56. Notice of the request for approval and an opportunity for a hearing was published in the Federal Register on March 13, 2001 (66 FR 14599). No hearing requests or written comments were received.

Pursuant to 10 CFR 50.80, no license, or any right thereunder, shall be transferred, directly or indirectly, through transfer of control of the license, unless the Commission shall give its consent in writing. In addition, pursuant to 10 CFR 72.50, no license shall be transferred, directly or indirectly, through transfer of control of the license, unless the Commission gives its consent in writing. After reviewing the information in the application from CCNPPI and other information before the Commission and relying upon the representations and agreements contained in the application, the NRC staff has determined that CCNPP LLC is qualified to be the holder of the licenses, that the establishment of New Controlled as a new intermediate parent of CCNPP LLC will not affect the qualifications of CCNPP LLC as the holder of the licenses, that the acquisition by Virgo of up to a 17.5% voting interest in New Controlled coupled with CEG, Inc.” distribution of its voting shares of New Controlled to CEG, Inc.'s shareholders, resulting in Virgo becoming the largest single voting shareholder of the ultimate corporate parent of CCNPP LLC, will not affect the qualifications of CCNPP LLC as the holder of the licenses, and that the direct transfer of the licenses to CCNPP LLC, and indirect license transfers to the extent effected by the foregoing transactions, are otherwise consistent with applicable provisions of law, regulations, and orders issued by the Commission, subject to the conditions set forth below. The NRC staff has further found that (1) the application for the proposed license amendments complies with the standards and requirements of the Atomic Energy Act of 1954, as amended, and the Commission's rules and regulations set forth in 10 CFR Chapter 1; (2) the facilities will operate in conformity with the application, the provisions of the Act, and the rules and regulations of the Commission; (3) there is reasonable assurance that the activities authorized by the proposed license amendments can be conducted without endangering the health and safety of the public and that such activities will be conducted in compliance with the Commission's regulations; (4) the issuance of the proposed license amendments will not be inimical to the common defense and security or the health and safety of the public; and (5) the issuance of the proposed amendments will be in accordance with 10 CFR Part 51 of the Commission's regulations, and all applicable requirements have been satisfied. The foregoing findings are supported by a safety evaluation dated June 19, 2001.

III

Accordingly, pursuant to sections 161b, 161i, and 184 of the Atomic Energy Act of 1954, as amended, 42 U.S.C. 2201(b), 2201(i), and 2234, and 10 CFR 50.80 and 10 CFR 72.50, It Is Hereby Ordered that the direct transfer of the licenses, as described herein, to CCNPP LLC, and the indirect transfer of the licenses, to the extent effected by the proposed transactions described above, are approved, subject to the following conditions:

(1) CCNPP LLC shall, prior to completion of the subject direct transfers, provide the Director of the Office of Nuclear Reactor Regulation satisfactory documentary evidence that CCNPP LLC has obtained the appropriate amount of insurance required of licensees under 10 CFR Part 140 of the Commission's regulations.

(2) The decommissioning trust agreement for Calvert Cliffs and the ISFSI, at the time the direct license transfers are effected and thereafter, is subject to the following:

(a) The decommissioning trust agreement must be in a form acceptable to the NRC.

(b) With respect to the decommissioning trust funds, investments in the securities or other obligations of CEG, Inc., New Controlled, or their affiliates, successors, or assigns are and shall be prohibited. In addition, except for investments tied to market indexes or other non-nuclear-sector mutual funds, investments in any entity owning one or more nuclear power plants are and shall be prohibited.

(c) The decommissioning trust agreement must provide that no disbursements or payments from the trusts, other than for ordinary administrative expenses, shall be made by the trustee unless the trustee has first given the NRC 30-days prior written notice of the payment. The decommissioning trust agreement shall further contain a provision that no disbursements or payments from the trusts shall be made if the trustee receives prior written notice of objection from the Director of the Office of Nuclear Reactor Regulation or the Director of the Office of Nuclear Material Safety and Safeguards.

(d) The decommissioning trust agreement must provide that the agreement cannot be amended in any material respect without 30-days prior written notification to the Director of the Office of Nuclear Reactor Regulation and the Director of the Office of Nuclear Material Safety and Safeguards.

(e) The appropriate section of the decommissioning trust agreement shall state that the trustee, investment advisor, or anyone else directing the investments made in the trusts shall adhere to a “prudent investor” standard, as specified in 18 CFR 35.32(a)(3) of the Federal Energy Regulatory Commission's regulations.

(3) CCNPP LLC shall provide decommissioning funding assurance, to be held in decommissioning trusts for Calvert Cliffs and the ISFSI upon the transfer of the licenses to CCNPP LLC, in an amount equal to or greater than the balance in the Calvert Cliffs and ISFSI decommissioning trusts immediately prior to the transfer. In addition, CCNPP LLC shall ensure that all contractual arrangements referred to in the application to obtain necessary decommissioning funds for Calvert Cliffs and the ISFSI through a non-bypassable charge from Baltimore Gas and Electric Company are amended as represented in the application and will be maintained until the decommissioning trusts are fully funded, or shall ensure that other mechanisms that provide equivalent assurance of decommissioning funding in accordance with the Commission's regulations are maintained.

(4) CCNPP LLC shall take all necessary steps to ensure that the decommissioning trusts are maintained in accordance with the application, the requirements of this Order, and the related safety evaluation.

(5) At the time of the direct transfers, CCNPP LLC shall enter or shall have entered into an intercompany credit agreement with CEG, Inc. with substantially the same terms that exist in the current intercompany credit agreement dated July 1, 2000, referenced in the application between CEG, Inc. and CCNPPI. Furthermore, at the time New Controlled becomes the ultimate parent company of CCNPP LLC, CCNPP LLC shall enter or shall have entered into an intercompany credit agreement with New Controlled with substantially the same terms that exist in the current intercompany credit agreement dated July 1, 2000, referenced in the application between CEG, Inc. and CCNPPI. At such time, the intercompany credit agreement between the current CEG, Inc. legal entity and CCNPP LLC may be canceled. Except as otherwise provided above, CCNPP LLC shall take no action to void, cancel, or modify any intercompany credit agreement referenced above, without the prior written consent of the Director of the Office of Nuclear Reactor Regulation and the Director of the Office of Nuclear Material Safety and Safeguards.

(6) CCNPPI shall inform the Director of the Office of Nuclear Reactor Regulation of the date of the closing of the direct transfers no later than two business days prior to such date. If all of the direct and indirect transfers of the licenses approved by this Order are not completed by June 30, 2002, this Order shall become null and void, provided, however, upon written application and for good cause shown, such date may in writing be extended.

It Is Further Ordered that, consistent with 10 CFR 2.1315(b), license amendments that make changes, as indicated in Enclosure 2 to the cover letter forwarding this Order, to conform the licenses to reflect the subject direct license transfers are approved. The amendments shall be issued and made effective at the time the proposed direct license transfers are completed.

This Order is effective upon issuance.

For further details with respect to this action, see the initial application dated December 20, 2000, supplemental submittals dated February 22, April 10, May 30, and June 7, 2001, and the safety evaluation dated June 19, 2001, which are available for public inspection at the Commission's Public Document Room, located at One White Flint North, 11555 Rockville Pike (first floor), Rockville, Maryland. Publicly available records will be accessible from the Agencywide Documents Access and Management Systems (ADAMS) Public Electronic Reading Room on the Internet at the NRC Web site, http://www.nrc.gov/​NRC/​ADAMS/​index.html. If you do not have access to ADAMS or if there are problems in accessing the documents located in ADAMS, contact the NRC Public Document Room Reference staff at 1-800-397-4209, 301-415-4737 or by e-mail to [e-mail].

Dated at Rockville, Maryland, this 19th day of June 2001.

For the Nuclear Regulatory Commission.

R. William Borchardt,

Acting Director, Office of Nuclear Reactor Regulation.

Martin J. Virgilio,

Director, Office of Nuclear Material Safety and Safeguards.