Civil Nuclear Credit Program and Recapture of Credits

<RULE> DEPARTMENT OF ENERGY <CFR>10 CFR Part 612</CFR> <RIN>RIN 1901-AB57</RIN> <SUBJECT>Civil Nuclear Credit Program and Recapture of Credits</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Grid Deployment Office, Department of Energy. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Department of Energy (DOE or the Department) is adopting the interim final rule (IFR) published on January 8, 2024, as final, without change. This final rule establishes the procedure for the recapture of credits awarded under the Civil Nuclear Credit (CNC) Program in accordance with the Infrastructure Investment and Jobs Act. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This rule is effective on July 1, 2024. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Mr. Theodore Taylor, Civil Nuclear Credit Program Manager, U.S. Department of Energy, Grid Deployment Office, 1000 Independence Avenue SW, Washington, DC 20585, (240) 477-0458, <E T="03">CNC_Program_Mailbox@hq.doe.gov.</E> </FURINF> <HD SOURCE="HED">ADDRESSES:</HD> The docket for this rulemaking, which includes <E T="04">Federal Register</E> notices and comments, can be found at <E T="03">Regulations.gov</E> ( <E T="03">www.regulations.gov/document/DOE-HQ-2024-0005</E> ). The docket web page contains instruction on how to access all documents, including public comments, in the docket. <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Table of Contents</HD> <EXTRACT> <FP SOURCE="FP-2">I. Summary of the Final Rule</FP> <FP SOURCE="FP-2">II. Authority and Background</FP> <FP SOURCE="FP1-2">A. The Statute</FP> <FP SOURCE="FP1-2">B. Interim Final Rule</FP> <FP SOURCE="FP-2">III. Public Comments on the IFR</FP> <FP SOURCE="FP-2">IV. Section by Section Analysis of the Final Rule</FP> <FP SOURCE="FP1-2">A. Purpose, Applicability, and Definitions</FP> <FP SOURCE="FP1-2">B. Recapture</FP> <FP SOURCE="FP1-2">C. Notice and Reconsideration of Recapture Determination</FP> <FP SOURCE="FP1-2">D. Petition to the Department's Office of Hearings and Appeals</FP> <FP SOURCE="FP-2">V. Regulatory Review</FP> <FP SOURCE="FP1-2">A. Review Under Executive Orders 12866, 13563, and 14094</FP> <FP SOURCE="FP1-2">B. Executive Order 13132</FP> <FP SOURCE="FP1-2">C. National Environmental Policy Act of 1969</FP> <FP SOURCE="FP1-2">D. Paperwork Reduction Act of 1995</FP> <FP SOURCE="FP1-2">E. Regulatory Flexibility Act</FP> <FP SOURCE="FP1-2">F. Executive Order 12988</FP> <FP SOURCE="FP1-2">G. Unfunded Mandates Reform Act of 1995</FP> <FP SOURCE="FP1-2">H. Treasury and General Government Appropriations Act, 1999</FP> <FP SOURCE="FP1-2">I. Treasury and General Government Appropriations Act, 2001</FP> <FP SOURCE="FP1-2">J. Executive Order 12630</FP> <FP SOURCE="FP1-2">K. Executive Order 13211</FP> <FP SOURCE="FP1-2">L. Congressional Notification</FP> <FP SOURCE="FP-2">VII. Approval of the Office of the Secretary</FP> </EXTRACT> <HD SOURCE="HD1">I. Summary of the Final Rule</HD> Section 40323 of the Infrastructure Investment and Jobs Act (IIJA) (Pub. L. 117-58), codified at 42 U.S.C. 18753, also known as the Bipartisan Infrastructure Law, directs the Department to establish the Civil Nuclear Credit Program to prevent premature closures of nuclear power plants by providing financial support for existing nuclear reactors projected to cease operations due to economic factors. The IIJA also directs the Department to promulgate a regulation to provide for the recapture of credits awarded to a nuclear reactor if either (a) the nuclear reactor terminates operations during the 4-year award period or (b) the nuclear reactor does not operate at an annual loss in the absence of an allocation of credits. The purpose of this final rule is to establish the procedure for the recapture of credits under the CNC Program. The rule provides a mechanism for the Department to enforce the obligation of the nuclear reactor to continue operation during the 4-year award period and to relinquish its rights to credits if the nuclear reactor is not operating at a loss in the absence of the credits. To minimize the likelihood for the need to recapture credits under the rule, the Department has included in the CNC Program an audit and annual payment adjustment mechanism at the end of each award year during the 4-year award period to evaluate the financial results of operation for that year and to adjust payment of credits based on that evaluation. The recapture regulation ensures that a reactor cannot retain the value of credits if, despite the annual adjustment, the nuclear reactor would not have operated at an annual loss in the absence of an allocation of credits over the 4-year award period or if the nuclear reactor terminates operations despite its contractual obligation to operate for the entire 4-year award period. <HD SOURCE="HD1">II. Authority and Background</HD> <HD SOURCE="HD2">A. The Statute</HD> Section 40323 of the IIJA directs the Department to establish the CNC Program to provide financial support for existing nuclear reactors projected to cease operations due to economic factors in the form of credits to be awarded for a 4-year award period. Section 40323(g)(2) of the IIJA requires that the Secretary, “by regulation, provide for the recapture of the allocation of any credit to a certified nuclear reactor that during [the 4-year award period]—(A) terminates operations; or (B) does not operate at an annual loss in the absence of an allocation of credits to the certified nuclear reactor.” IIJA section 40323(g)(2). This final rule establishes the procedure for the recapture of credits in accordance with that requirement. This final rule relates only to the recapture provision. No other provision of the CNC Program is subject to implementation by regulation. <HD SOURCE="HD2">B. Interim Final Rule</HD> On January 8, 2024, DOE published an IFR and request for comments. 89 FR 864 (Jan. 8, 2024). The IFR established an interim final rule for the recapture of credits awarded under the CNC Program. DOE accepted public comments through February 7, 2024. DOE received three comments, none of which commented on the text of the regulation itself. <HD SOURCE="HD1">III. Public Comments on the IFR</HD> DOE received three comments from individuals in response to the IFR. These comments are available in the public docket for this rulemaking. One commenter expressed “strong support” for both the CNC Program and IFR. The commenter described the CNC Program as a “vital and timely policy” that supports grid reliability and resilience, promotes high paying jobs, enhances national security, and fosters innovation. The commenter stated that the recapture provision ensures “accountability and transparency of the program” and is “sound and consistent” with the IIJA. The commenter also offered feedback outside the scope of the IFR, recommending that DOE revise the CNC Program Guidance to define a “competitive market” and what constitutes a material amount of revenue from competitive sources, neither of which is necessary for the recapture rule. Another commenter stated that the CNC Program is “beneficial to the nation's movement towards cleaner energy” and expressed the importance of keeping existing nuclear power plants running for the people who rely on their power. The commenter also observed that these plants “won't be able to function forever” and urged that “this should be treated as a transitory period for these plants while we move towards a less harmful energy source” like wind and solar. The third commenter submitted a comment outside the scope of the IFR relating to energy costs. <HD SOURCE="HD1">IV. Section by Section Analysis of the Final Rule</HD> <HD SOURCE="HD2">A. Purpose, Applicability, and Definitions</HD> Section 612.1 of the final rule identifies the purpose of the regulations to set forth the procedure by which the Department may recapture credits awarded pursuant to the CNC Program. Section 612.2 provides that the regulations will apply to an owner or operator of a nuclear reactor that is awarded credits under the CNC Program. Section 612.3 contains defined terms used in the rule. <HD SOURCE="HD2">B. Recapture</HD> Section 612.4(a) of the regulation identifies the two circumstances in which credits will be recaptured: (1) if the nuclear reactor terminates operation during the award period or (2) at the conclusion of the award period if the nuclear reactor would not have operated at an annual loss in the absence of the credits. Section 612.4(b) addresses the first circumstance in which recapture will be pursued, namely termination by the nuclear reactor of operations during the award period. In that instance, the Secretary will rescind the award of any unpaid credits, including the credits for the award year in which the termination occurred and for any remaining award years in the award period. In addition, the Department will require the owner or operator to repay the value of credits paid with respect to a prior award year if the Department determines that the nuclear reactor terminated operations as a result of the owner or operator's failure to adhere to prudent industry practice in the operation of the nuclear reactor during the award period. Section 612.4(c) addresses recapture in the circumstance in which the Secretary determines that the nuclear reactor, during the award period, would not have operated at an annual loss in the absence of the credits. To make this determination, the Department will calculate the recapture amount in the same manner as the annual adjustment of credits is calculated. Although this scenario is unlikely because the recapture analysis will use the same evaluation methodology as the annual adjustment calculation, it could occur if, for example, subsequent information became available that diffe ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 25k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━