SUPPLEMENTARY INFORMATION:

The text of the exemption is attached.

(Authority: 42 U.S.C. 2011 et seq.)

Attachment—Exemption

NUCLEAR REGULATORY COMMISSION

[Docket Nos. 50-616 and 50-617; NRC-2026-0265] SMR, LLC; Palisades SMR, LLC; Pioneer Units 1 and 2; Exemption

1.0 Background

By letter dated December 31, 2025 (Agency wide Documents Access and Management System (ADAMS) Accession Number ML25365A983), SMR, LLC, on behalf of Palisades SMR, LLC, a wholly-owned subsidiary of Holtec International (collectively, Holtec) submitted to the U.S. Nuclear Regulatory Commission (NRC) the first part of a phased construction permit (CP) application, including a limited work authorization (LWA) request, for a dual-unit ( printed page 55629) SMR-300 plant located at the Palisades Energy Center (PEC) in Covert, Michigan. The units are individually named Pioneer Unit 1 and Pioneer Unit 2. Part 1 of the phased CP application included a request for an exemption from Title 10 of the Code of Federal Regulations (10 CFR) Part 50, Section 50.10(c). The NRC staff has reviewed this request for an exemption, pursuant to 10 CFR 50.12, as it relates to Holtec's request to allow for construction of support of excavation (SOE) walls, which will remain in place after construction is complete, during the excavation for the Pioneer Units 1 and 2 plant and prior to issuance of an LWA, which is currently under review by the NRC.

The NRC staff reviewed relevant information provided in the application to support the LWA request and the exemption request to determine whether the requested exemption meets the criteria of 10 CFR 50.12(a) and (b). Granting this exemption would not constitute a commitment by the NRC to issue an LWA or CP for Pioneer Units 1 and 2. Holtec would construct SOE walls, assuming the risk that its LWA request or Part 2 of the phased CP application (not yet submitted) may later be denied.

2.0 Request/Action

The proposed action, as described in Holtec's request for an exemption from 10 CFR 50.10(c), would allow Holtec to construct permanent retaining walls within an excavation at the Pioneer Units 1 and 2 site which would otherwise be prohibited prior to issuance of an LWA or a CP. This exemption would authorize Holtec to install and abandon in place SOE walls including diaphragm walls, soldier pile soil-mix walls, and perimeter cutoff walls needed to maintain excavation stability, protect adjacent structures and utilities, manage groundwater pressures, and ensure personnel safety and constructability during deep excavations. According to Holtec, these SOE walls will serve no function in the completed SMR-300 plant and, because removal would be unnecessary and costly, the SOE walls will be retired in place and the space between the SOE walls and the permanent structures will be backfilled to bring the area to grade.

3.0 Discussion

Pursuant to 10 CFR 50.12(a), the Commission may, upon application by any interested person or upon its own initiative, grant exemptions from the requirements of 10 CFR part 50 when (1) the exemption is authorized by law, will not present an undue risk to public health or safety, and is consistent with the common defense and security; and (2) when special circumstances are present.

Under 10 CFR 50.12(b), to issue an exemption from 10 CFR 50.10 that would allow for construction of permanent SOE walls prior to the issuance of an LWA, the Commission may grant such an exemption upon considering and balancing the following factors: (1) whether conduct of the proposed activities will give rise to a significant adverse impact on the environment and the nature and extent of such impact, if any; (2) whether redress of any adverse environmental impact from conduct of the proposed activities can reasonably be effected should such redress be necessary; (3) whether conduct of the proposed activities would foreclose subsequent adoption of alternatives; and (4) the effect of delay in conducting such activities on the public interest, including the power needs to be used by the proposed facility, the availability of alternative sources, if any, to meet those needs on a timely basis, and delay costs to the applicant and to consumers.

10 CFR 50.12(a)(1): Authorized by Law

This exemption would authorize the Holtec to construct and abandon in place permanent SOE walls prior to issuance of an LWA for Pioneer Units 1 and 2. Granting Holtec's proposed exemption will not otherwise result in a violation of the Atomic Energy Act of 1954, as amended, the Commission's regulations, or any other law. Therefore, the NRC staff finds that the exemption is authorized by law.

10 CFR 50.12(a)(1): No Undue Risk to Public Health and Safety

To determine whether the proposed exemption would pose an undue risk to public health and safety, the NRC staff identified specific portions from its ongoing safety review of Part 1 of the phased CP application that could be impacted if the exemption is granted. The NRC staff identified that Holtec would need to perform certain actions and gather data related to Geologic Mapping and Geotechnical Engineering prior to and during the construction of SOE walls, such that its ability to demonstrate compliance with NRC regulations in the technically relevant portions of its phased CP application or a future Operating License (OL) application, would not be foreclosed. Therefore, the NRC staff evaluated Holtec's proposed methods relating to these technical areas.

Geologic Mapping

The excavation support structures that Holtec proposes to leave in place would cover the excavation walls and floor. The NRC staff reviewed the exemption request to determine whether the proposed activities would affect Holtec's ability to meet the relevant regulatory requirements in 10 CFR 50.34 (as referenced in 10 CFR 50.10(d)(3)), 10 CFR 100.21, and 10 CFR 100.23, in its phased CP application or a future OL application, specifically with respect to geologic mapping of the foundation-bearing rock unit, including the floor and walls of the open excavation. Once the excavation support activities described in the exemption request are completed, direct geologic mapping of the foundation-bearing rock unit within the open excavation would no longer be possible. Therefore, the NRC staff evaluated how Holtec proposes to conduct its activities under the requested exemption, such that it would not foreclose Holtec's ability to demonstrate that it meets the technically relevant NRC requirements in its phased CP application or a future OL application.

In Section 1.3.4 of Enclosure IV of Part 1 of the phased CP application (ML25365A989), Holtec stated that geologic mapping of the excavation is required and acknowledged the need to notify the NRC staff when the excavation is open for inspection. In a supplement to the application submitted by letter dated July 23, 2026 (ML26204A398), Holtec further clarified that the statement in Section 2.5.4.5.1, Excavation, of the Preliminary Safety Analysis Report (PSAR or LWA PSAR) provided in Enclosure II to the application (ML25365A987), regarding geologic mapping of exposed surfaces within the excavation lifts, as well as geologic mapping conducted when final grades of various excavation areas have been reached, applies to the activities covered by this exemption request.

The NRC staff reviewed Holtec's explanation of how geologic mapping will be performed on exposed surfaces within each excavation lift and at final grades, consistent with Regulatory Guide (RG) 1.132, “Geologic and Geotechnical Site Characterization Investigations for Nuclear Power Plants.” Based on this review, the NRC staff concludes that Holtec's approach to conducting geologic mapping during the progression of excavation activities provides reasonable assurance that the activities conducted under this exemption will not foreclose Holtec's ability to demonstrate that the requirements of 10 CFR 50.34, 10 CFR 100.21, and 10 CFR 100.23 related to geologic mapping would be met for the technically relevant potions of the NRC staff's review of the phased CP application, or a future OL application. As a result, the NRC staff determined that, regarding geologic mapping, approving this exemption request would not pose an undue risk to public health and safety.

Geotechnical Engineering

The NRC staff evaluated the geotechnical engineering aspects of Holtec's exemption request using the criteria in NUREG-0800, Section 2.5.4, “ Stability of Subsurface Materials and Foundations,” and the guidance in RG 1.132, and RG 1.138, “Laboratory Investigations of Soils and Rocks for Engineering Analysis and Design of Nuclear Power Plants.” In performing this evaluation, the NRC staff reviewed information relevant to this exemption provided in the application, to determine whether the proposed excavation support activities would pose an undue risk to public health and safety.

This exemption request describes the installation of SOE walls to maintain excavation stability, protect adjacent structures and utilities, control groundwater pressures, and ensure personnel safety and constructability during excavation. Holtec stated that the SOE walls will serve no function in the completed SMR-300 plant. The NRC staff evaluated PSAR Figures 2.532 through 2.537, which depict the SOE walls relative to safety related structures, and determined that based on the preliminary design presented in Part 1 of the phased CP application, following backfilling to plant grade, the SOE walls will remain structurally isolated from safety related structures and will serve no function after construction is complete. Further, Holtec stated that the ( printed page 55630) presence of retired SOE wall elements will be included in future soil-structure interaction (SSI) analyses to ensure a conservative and technically justified representation of subsurface conditions in the design of safety related structures, systems and components (SSCs).

As part of its review, the NRC staff examined the LWA PSAR Section 2.5.4.10.3, “Lateral Earth Pressures,” and Table 2.553, “Lateral Earth Pressure Design Parameters,” which describe the development of at rest (K₀), active (K_a), and passive (K_p) lateral earth pressure coefficients for each soil stratum. These coefficients were derived from site specific laboratory and field data, including effective friction angle (ø′), unit weight, and, where applicable, undrained shear strength. These parameters form the basis for calculating lateral forces acting on the SOE walls and are directly incorporated into the stability analyses. The NRC staff found that the coefficients were developed using state of the practice geotechnical engineering methods, are consistent with the site's stratigraphy, and are technically justified based on measured soil parameters and validated against industry standards and regulatory guidance. In validating these coefficients, the NRC staff confirmed that (1) the coefficients were developed from site specific, measured soil parameters obtained through standard laboratory and field investigation methods; (2) the analytical methods used to compute K₀, K_a, and K_p, were applied in accordance with the applicable NRC regulatory guidance including NUREG-0800, Section 2.5.4; RGs 1.132; and RG 1.138; and (3) the resulting values were evaluated for consistency with the site's stratigraphy and found to be technically justified through comparison with published data and accepted geotechnical practice.

The NRC staff also reviewed Holtec's proposed SOE system design description, which includes diaphragm walls, soldier pile soil mix walls, and perimeter cutoff walls. The NRC staff noted that the design incorporates groundwater conditions (including hydrostatic pressures below the water table), construction surcharges, and staged excavation using tiebacks or struts as necessary. As described in the LWA PSAR Section 2.5.4.5, the construction sequence specifies staged excavation with the installation of bracing elements at successive levels, consistent with accepted engineering practice for deep excavations. The NRC staff also noted that Holtec developed the lateral pressures through layer-by-layer analysis using site specific geotechnical parameters, ensuring that the SOE walls are designed to resist all anticipated loading scenarios.

Section 2.5.4.10.3 of the LWA PSAR specifies the monitoring and quality control measures to be used during excavation, including inclinometers, piezometers, load cells, and extensometers. The NRC staff determined that these measures provide reasonable assurance that deviations from design assumptions will be promptly detected and addressed.

Conclusion

Based on the evaluation of the exemption request and supporting technical information in the application, the NRC staff finds that there is reasonable assurance that the proposed exemption to allow installation and retirement in place of the SOE walls prior to issuance of an LWA would not pose an undue risk to public health and safety and would not adversely affect the safe design or siting of the plant. This determination is supported by the following:

1. The SOE walls are designed to provide support for the excavation during construction and will serve no safety related design function after construction is complete.

2. The area between the SOE walls and safety related structures will be backfilled to plant grade, providing structural and functional separation.

3. Holtec stated that it will include the presence of retired SOE walls in future SSI analyses, ensuring a conservative representation of subsurface conditions in safety related design, in the OL application.

4. Holtec stated it will perform comprehensive geologic mapping and data collection during excavation and will use this information to demonstrate the structural integrity of the Reactor Building in the OL application.

For these reasons, the NRC staff has reasonable assurance that construction of permanent SOE walls prior to issuance of LWA, if approved, will not adversely affect the performance or safety function of Pioneer Units 1 and 2 safety related structures and therefore, the exemption request does not pose an undue risk to public health and safety in accordance with the criteria of 10 CFR 50.12(a)(1). The NRC staff notes that in order to demonstrate that Holtec has met the regulatory requirements for the technically relevant portions of the phased CP application, or future OL application, Holtec must provide the information provided by this geologic mapping, and the presence of the retired SOE walls must be included in future SSI analyses, as technically relevant. Deviations from the commitments described in this exemption request or failure to notify the NRC when the excavations are open for inspection could result the NRC staff being unable to make its required safety findings pursuant to the Atomic Energy Act to issue an LWA, CP, or OL.

10 CFR 50.12(a): Consistent With Common Defense and Security

The proposed exemption would allow Holtec to install and abandon in place SOE walls needed to maintain excavation stability, protect adjacent structures and utilities, manage groundwater pressures, and ensure personnel safety and constructability during deep excavations and prior to issuance of an LWA. Because the exemption would allow for excavation wall support only, the exemption has no relation to defense and security issues. Therefore, the common defense and security is not impacted by this exemption.

10 CFR 50.12(a)(2): Special Circumstances

Special circumstances, in accordance with 10 CFR 50.12(a)(2)(iii), are present whenever “compliance [with a regulation] would result in undue hardship or other costs that are significantly in excess of those contemplated when the regulation was adopted”. Holtec cited undue hardship or other costs as a special circumstance that would warrant granting this exemption. Holtec stated that removal of the excavation supports, which would make them temporary and therefore not “construction” as defined in 10 CFR 50.10(a), would not be practical because of the high unnecessary cost associated with removal that would be added to the project. Holtec stated that the delaying of the SOE walls construction and associated excavation activities until LWA approval would result in substantial costs by negatively impacting the construction schedule for the Pioneer Units 1 and 2.

In 2007, the NRC issued a final rule to allow certain construction activities on production and utilization facilities to commence before a construction permit or combined license is issued and modified the scope of activities that are considered construction for which a construction permit, combined license or LWA is necessary (2007 LWA rule) (72 FR 57416). The Commission issued a regulatory analysis associated with the 2007 LWA rule (ML071870012). In Section 3.2.2 of the regulatory analysis, the Commission noted that “[a]pplicants' ability to perform pre-construction site preparation activities without obtaining prior permission from the NRC will lower the cost of construction by reducing the time interval between the outlay of capital for new plant construction and cost recovery realized through plant operation. The definition of construction in the final rule will minimize the time interval by allowing pre-construction, site preparation activities to proceed in parallel with the NRC's licensing process.” The staff noted in the associated SECY to the 2007 LWA rule, SECY-07-0030, that the LWA process allows for certain construction activities to proceed after a safety review is performed for the requested foundation activities, including related site characteristics, and an environmental review is conducted (ML070310298). The Commission further explained in the preamble to the 2007 LWA rule, that retaining walls fall within the definition of construction if they are permanent, but do not if they are temporary and are removed from the excavation before fuel load (72 FR at 57429).

The NRC staff has conducted safety (Section 3.0 of this exemption) and environmental (Section 4.0 of this exemption) reviews for the limited exemption request to install SOE walls and abandon them in place instead of removing them as temporary retaining walls. The staff notes that the SOE walls are not intended to serve a structural purpose in the SMR-300 design and are designed to support the excavation during construction. Further, the space between the SOE walls and the SSCs are intended to be backfilled to bring the area back to planned grade and the SOE walls are planned to be abandoned in place. Based on the staff's analysis of the preliminary design for the Pioneer Units 1 and 2, the staff found that the SOE walls will remain structurally isolated from safety-related structures and will serve no function after construction is complete. In the staff's analysis of this ( printed page 55631) exemption request, the staff concluded that it has reasonable assurance that the exemption to allow installation and retirement in place of the SOE walls prior to issuance of an LWA would not adversely affect the safe design or siting of the plant. However, removal of the SOE walls, which would cause the SOE walls to therefore not be defined as “construction,” is not practical for Holtec to complete for Pioneer Units 1 and 2 because of the high unnecessary cost and schedule delays that removal would add to the project. Furthermore, delaying SOE wall construction would also delay the associated pre-construction excavation activities until LWA approval, negatively impacting Holtec's construction schedule and potentially delaying plant operations. Therefore, removal of the SOE walls or delaying installation of permanent SOE walls until a LWA is issued, if approved, would not result in the cost benefits associated with allowing pre-construction and site preparation to proceed in parallel with the NRC's review of the phased CP application because it would either delay excavation activities or require costly removal of the SOE walls at a later date.

Therefore, the NRC staff has determined that special circumstances exist in this case because compliance with a regulation, 10 CFR 50.12(a)(2)(iii), would result in undue hardship and other costs that are significantly in excess of those contemplated when the regulation was adopted.

10 CFR 50.12(b): Balancing Factors

Pursuant to 10 CFR 50.12(b), the Commission may grant the exemption upon considering and balancing the following four factors: (1) whether conduct of the proposed activities will give rise to a significant adverse impact on the environment and the nature and extent of such impact, if any; (2) whether redress of any adverse environment impact from conduct of the proposed activities can reasonably be effected should such redress be necessary; (3) whether conduct of the proposed activities would foreclose subsequent adoption of alternatives; and (4) the effect of delay in conducting such activities on the public interest, including the power needs to be used by the proposed facility, the availability of alternative sources, if any, to meet those needs on a timely basis and delay costs to the applicant and to consumers. With respect to factor (1), the NRC staff has prepared an environmental assessment (EA) (ML26230A249) as discussed in Section 4.0 below and determined that the proposed action of granting of this exemption will not have a significant effect on the quality of the human environment.

With respect to factor (2), Holtec stated that should redress be necessary, the below-grade SOE walls will be retired in place, backfilled, and graded to conform to the adjacent land surface, allow stormwater runoff, and prevent soil erosion. The NRC staff reviewed the redress plan to the extent it discusses construction of the SOE walls included as Enclosure VIII and found that redress of the SOE walls can reasonably be effected. Therefore, the NRC staff determined that redress of any adverse environment impact from conduct of the proposed activities can reasonably be effected should redress be necessary.

Additionally, the NRC staff determined that issuance of an LWA will not foreclose subsequent adoption of alternatives as identified in factor (3). According to Holtec, retiring the SOE walls in place includes grading the impacted areas to conform to the adjacent land surface which will support adoption of subsequent alternatives. Also, although not anticipated to be necessary for adoption of subsequent alternatives, Holtec states that the removal of the SOE walls could be performed but would be costly.

Finally, the NRC staff considered factor (4) and the effect of delay in conducting construction activities authorized by the exemption on the public interest and finds that without the requested exemption, a significant time delay and increased construction costs could delay construction of Pioneer Units 1 and 2, which could delay 680 mega-watts of clean energy and a reliable lower cost energy supply for working families and small businesses in the state of Michigan. Further, the NRC staff reviewed the exemption request and Holtec's discussion of alternative energy sources in Chapter 9 of the Environmental Report (ER), (Enclosure III of the application), as a preliminary assessment of the information provided, and did not identify any alternative sources available that would outweigh the potential costs and time delay from not granting the exemption. Upon consideration and balancing of the four factors described above, the Commission has determined that the exemption should be granted.

4.0 Environmental Considerations

In accordance with 10 CFR 51.30, 51.31, and 51.32, the Commission has determined that the granting of this exemption will not have a significant effect on the quality of the human environment as discussed in the NRC staff's Environmental Assessment and Finding of No Significant Impact issued on August 25, 2026 (91 FR 54890). The ADAMS Accession number for the associated EA is ML26230A249.

5.0 Conclusion

Accordingly, the Commission has determined that, pursuant to 10 CFR 50.12(a), the exemption is authorized by law, will not present an undue risk to the public health and safety, and is consistent with the common defense and security. Also, special circumstances are present. Further, the Commission considered and balanced the factors of 10 CFR 50.12(b) and determined that the exemption should be granted. Therefore, the Commission hereby grants Palisades SMR, LLC, and SMR, LLC an exemption from the requirements in 10 CFR 50.10(c) for the construction of permanent SOE walls during excavation activities and prior to issuance of an LWA. Issuance of this exemption shall not be deemed to constitute a commitment to issue a construction permit or LWA.

This exemption is effective upon issuance.

Dated at Rockville, Maryland, this 28th day of August 2026.

For the Commission

/RA/

Ravi Penmetsa,

Director, Division of Advanced Reactor Science, Office of Advanced Reactors.

91 FR 55628